If you want a glimpse into the future, come to Berlin and walk down Kurfürstendamm, the bustling avenue often described as the city’s Champs-Élysées. At one of the most prominent corners sits a new car showroom unlike any I have ever seen: sleek, elegant, multistoried, with a cafe, design center, showrooms and more. As you enter, you see what looks like a Bugatti or a Ferrari, except more stylish. It’s an EP9, a top-of-the-line racecar that has been sold to a handful of customers for about $3 million each. The company behind it is Nio, one of China’s new carmakers, which is going to take the world by storm.
The rest of the world doesn’t see China the same way we do
Ten years ago, China exported a relatively small number of cars. Today, it is the world’s leading exporter of automobiles, handily ousting Japan from that position. It is especially strong in electric vehicles. Two of every three EVs made in the world are made in China. As we think about China’s weaknesses these days (and it has several), it is worth remembering China’s formidable strengths and the degree to which it is intertwined into the global economy. Nio’s cars are designed in Munich. It has research and development centers in San Jose and Oxford, England, as well as in Beijing and Shanghai. It assembles vehicles in Hefei, China.
Europe is an interesting place to think about China. I traveled to three European countries this week (Germany, Italy and Britain), and everywhere, the conversation turned to Washington’s policies toward China. Most of the political figures I spoke with were apprehensive. They were strongly behind the Biden administration’s policies toward Russia and credited President Biden with uniting the West and infusing it with strategic clarity and purpose. They were far more worried about policy toward China and more generally about Biden’s new international economic policies, as outlined recently by national security adviser Jake Sullivan.
Former British prime minister Gordon Brown explained the European dilemma. “Europe needs an industrial policy, but it cannot afford to mimic the [Biden] administration’s protectionism,” he told me. “For Europe, trade is vital; its prosperity is dependent on trade with the rest of the world, including China, in a way that America’s is not. [Unlike America, Europe] imports energy and is not self-sufficient. Despite the surface agreement across the Atlantic, this could become a growing divide.”
He acknowledged that the Biden administration has made moves to expand trade ties, but he expressed concern that all of them are bilateral or regional efforts that might undercut global trade. They come, he said, “at the expense of any real discussion of what a modern multilateralist order would look like.” Helle Thorning-Schmidt, former prime minister of Denmark, concurred. “Europe cannot divorce itself from China,” she explained. “That would be the end of globalization. That is why we want to de-risk, not decouple.”
“De-risking,” a term famously used by European Commission President Ursula von der Leyen, is the hottest buzzword in diplomacy these days. Even the Biden administration now says it also wants to de-risk rather than decouple. But many I spoke with in Europe said they worry that this is just a rhetorical change and that U.S. policies — and Chinese responses — will keeping moving the ratchet up.
When people in Washington hear these views, they often tend to dismiss Europe as too passive and pacifist, assuming that on China, the United States will have to build a new coalition with key Asian states such as India, Japan and Vietnam. But even with these Asian countries, there will be limits. China is a close second to the United States as India’s top trade partner, and New Delhi is well aware that its future growth depends on maintaining a healthy economic relationship with the Middle Kingdom.
Kishore Mahbubani, the former Singaporean diplomat and author of “The Asian 21st Century,” pointed out that discussions in the West often forget that the world’s growth is mostly coming from Asia. He used his own region as an example. In 2000, Japan’s economy was about eight times larger than Southeast Asia’s. In about three years, the Association of Southeast Asian Nations is projected to be the same size economically as Japan. The largest trade relationship in the world is between China and ASEAN — almost $1 trillion. And ASEAN countries cannot grow without open and vibrant trade, especially with China.
America’s strategic genius has always been to offer the world not a Pax Americana — designed simply to secure U.S. power and weaken its competitors — but rather a global system that was open, free and fair. “We all need a well-functioning and expanding global trading system and multilateral institutions that work,” Brown noted. Mahbubani recalled that President Bill Clinton often described the need for stronger global institutions by explaining that they would indeed constrain America but also constrain the new rising powers in the world. “We desperately need more of that enlightened self-interest from Washington these days,” Mahbubani said.
Opinion by Fareed Zakaria