“China Is the Most Difficult Strategic Challenge the West Has Faced to Date”

SPIEGEL ONLINE: Some now argue that the assumption that China would open up and democratize as a result of being interconnected with the Western economic system and the liberal international order has proven to be false. Do you agree? 

Thorsten Benner: That was indeed an overly optimistic and misguided assumption by most of the Western elites. Instead, China has shown that the development of cutting-edge technology and economic success are possible within authoritarian state capitalism based on the absolute claim to power and control by the Communist Party. 

SPON: How did many in the West come to this assumption? 

Benner: They followed the classic Western modernization theory, which assumes that highly developed capitalism will inevitably lead to democracy. The theoretical basis of this assumption was very popular in the mid-1990s, when the assumptions about China were being formed. With the fall of the Soviet Union, the world had just witnessed the collapse of the Communist one-party system. Many concluded that a one-party state could not have economic prosperity, and that a middle class would fight for fundamental democratic rights with increasing prosperity. 

SPON: Was it a mistake to so closely integrate China? Isolation was hardly a viable alternative. 

Benner: I would not say that the entire strategy was a mistake. First, the opening of the West to China has allowed millions of Chinese to rise from abject poverty to increased prosperity. From a humanitarian perspective, this is an important achievement. Second, a country like Germany has profited greatly. This accounts for a significant part of our positive economic development since 2003. With the benefit of hindsight, what was mistaken is the naïve assumption that China would inevitably become more ​“like us” and quietly allow itself to be ​“socialized” into the Western-dominated international order. Now that we had to shed these illusions, we need to revisit further assumptions like the proposition that economic interdependence with China is beneficial since it encourages cooperation. We need more awareness of the risks and side effects of an interdependence that gives China leverage in our political economies. And for many countries, interdependence with China seems just a precursor of outright dependence. 

SPON: Do you think that opposition to the one-party system will emerge from within the Chinese population? 

Benner: We should not make the mistake of assuming that President Xi can now govern stably for decades to come. That is not the only conceivable future. China has many internal and external challenges to deal with. It is not certain that it can escape the middle income trap and seamlessly complete the move up the economic value chain. And yes, pressure could come from a middle-class that until now has contented itself with prosperity gains. The cementing of the one-party government under a single leader has not received unanimous approval from the Chinese population. Some argue the recent move to abolish term limits flies in the face of a central lesson from the period of the Cultural Revolution under Mao Zedong: never to have just one all-powerful leader again. 

SPON: Where else could pressure on the government come from? 

Benner: One open flank is the question of what will happen to the still very poor migrant workers who hardly have a place in the high-tech economy China aspires toward. That could become a source of unrest within the system, but not necessarily in the direction of democracy. Rather, it could destabilize the system. 

SPON: In what way is this political development in China specifically tied to President Xi? 

Benner: Since Mr. Xi assumed power, he has embarked on a steady, determined process of authoritarian consolidation. Some observers see China now firmly on the path toward a totalitarian system. Xi Jinping has sought to enforce the absolute claim to power and control of the Communist Party throughout every sector of Chinese society. 

SPON: How can the West respond to this development? 

Benner: Europe in particular needs to develop a clear strategy toward China. Europe cannot allow itself to be divided by Beijing, much less divide itself. This means a country like Germany, which maintains very strong bilateral ties with China including annual cabinet-to-cabinet summits, has a special responsibility to lead by example by Europeanizing its relationship with Beijing. At the same time, there should be more transparency about how China seeks to exercise influence, such as through payments to think tanks, universities, and European media outlets. Harmful investments should be prohibited. We have to defend and strengthen our own liberal democracies. 

SPON: What do you mean by harmful investments? 

Benner: Above all, this refers to all the investments with which China is trying to buy into high-tech companies in Europe in order to siphon off the technology. The Chinese government aspires to technological leadership with its ​“Made in China 2025” strategy and has recognized that it is helpful to buy into Western technology. Europe should not allow this selling-off. As French finance minister Le Maire put it, Europe should allow for investment but not ​“looting.” In addition, Europe should stop investments where there are security concerns, for example, when a state-owned Chinese energy company wants to take over 20 percent of the East German electricity grid operator 50Hertz or if a company like Huawei seeks to control parts of our communications infrastructure. Also, media outlets should be regarded as off-limits for takeovers by authoritarian investors since they are part of the critical infrastructure of democracy. 

SPON: So should European governments intervene more in the market? 

Benner: It is good that Germany is opening up to stronger Investment controls. The Ministry for Economic Affairs as well as the Chancellery now clearly see the risks associated with Chinese investments. There is more openness toward the French approach, with flexible tools to stop investments that run counter to our own long-term interests. 

SPON: Will Beijing’s pressure on individual European countries continue to increase rather than decrease, or is a reversal looming? 

Benner: This challenge will only continue to grow. The Chinese government is very successful in buying and using European political and economic elites for their own purposes. It also seeks to leverage major investment to exert political pressure and has already had success with the Greek and Hungarian governments which vetoed common EU positions on China. We are only beginning the process of formulating how Europe can respond to a rising China. A first step should be to make major investments in independent China expertise across Europe. Germany provides a model for this. The investment in the Mercator Institute for China Studies MERICS, a major new think tank providing independent expertise on China, has been a game-changer for the discussion on China. We need to repeat this across Europe to counter a situation like the one in much of Central and Eastern Europe, where Beijing sponsored researchers, media, and think tanks that dominate the public discussion about China. We also need to integrate independent China expertise much better across Europe. 

SPON: What role does the United States play in all of this? 

Benner: For Europe, Donald Trump has made everything a lot harder. Instead of devoting our full attention to the challenge of China, Europeans have to focus on how we can minimize the damage done by Trump’s trade and other policies. Additionally, by killing the Trans-Pacific Partnership, Trump has given away an important card in countering China. The champagne corks certainly popped in Beijing when Trump announced that decision. Despite policy differences on transatlantic trade and issues such as Iran, there are common interests between the EU and the Trump administration vis-à-vis China, including unfair trade practices or market access. In the recently released US National Security Strategy China is very clearly named as a security and economic challenger. 

SPON: Is there a danger of a new Cold War with President Xi’s China? 

Benner: We find ourselves in what Germans call a Systemwettbewerb, a ​“competition of systems” between liberal democracies and China’s authoritarian state capitalism, which is increasingly projecting its absolute claim to power beyond its borders. The Cold War situation was much clearer. We had an ideological and security antagonist who was not an economic competitor. There was a Chinese wall between the economies of the West and the Soviet Union. Today, we are confronted with an opponent who is a powerful economic competitor and is intricately involved in the political economy of the West. At the same time, we also depend on cooperation with China on transnational issues such as climate change and pandemics. China’s authoritarian state capitalist system with its hegemonic ambitions is by far the most difficult strategic challenge the West has faced to date.

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This is an adapted version of an interview conducted by Vanessa Steinmetz and published in German by SPIEGEL ONLINE on March 13, 2018. Thomas Glynn Hanley helped with the translation.