31.08.2023

A Singaporean perspective on the EU’s and Germany’s engagement with China

Singapore is significantly intertwined with both US and China - even as the rivalry between them increases. Dr Yeo Lay Hwee shares her observations on Singapore's geopolitical posture and locates it in the context of the EU and Germany China strategy. She offers several ideas that can build on the partnership with their Indo-Pacific partners.

Singapore’s policies are dictated by two imperatives: the geographical constraints of a small state without a hinterland or natural resources, and the constant need to stay economically competitive and politically relevant in order to survive and thrive. The country’s approach to foreign relations is informed primarily by the realist perspective of the centrality of the state as the key actor and the over-riding need for the pursuit of policy based on rational interests. It utilises a range of tools and instruments, from building a strong military, to taking a pragmatic approach towards cooperation, and active participation in multilateral institutions with a firm commitment to the international norms and principles enshrined in the UN Charter.

Singapore has benefitted significantly in the post-Cold War era of hyper-globalisation and the growing economic connectivity between China and the West from the 1990s to the first two decades of the 21st century. The liberal economic order promoted by the US and the relatively stable political order in the Asia-Pacific underpinned by the mutually beneficial economic ties between the US and China has allowed not only Singapore but the whole region to develop and prosper.

Of all ASEAN countries, Singapore is the most intertwined with both superpowers. The US is the number one foreign investor in Singapore. In merchandise trade, the US is the 3rd largest partner after Malaysia and China. The US is the number one trading partner of Singapore when it comes to trade in services, and Singapore is one of the few countries in Asia with which the US registers a trade surplus. China is also emerging as a significant service trade partner, coming 4th in 2022. Singapore, a small city state, has since 2019 emerged as China’s number one foreign investor overtaking countries like Japan, Germany and the US.

Singapore while not an official ally of the US, has strong strategic and security links with the US. The US air force, navy and marines have access to Singapore’s air and naval bases, and Singapore also provides logistical support to the US military when they are in the region. At the same time, the Singapore government has played an important role in China’s development from building the Suzhou Industrial Park and the Tianjin Eco-city to participating in another government-to-government project -- the China-Singapore Chongqing Demonstration Initiative on Strategic Connectivity – to help China’s development of its western region.

The increasing strategic rivalry between the US and China is thus of utmost concern to Singapore which fears that this would lead to a bifurcation of the global economy, and pressures from the superpowers to pick one side or the other. 

Under such geostrategic pressures, Singapore and other ASEAN members have increasingly seen the EU as a potential partner to hedge against the risks from the downward spiral in US-China relations. It is in this context that Singapore is keenly observing the posture that the EU and its largest member state Germany are adopting toward China as they face pressure from the security situation in Europe with the war in Ukraine and the need to maintain a united Western front with the US to confront the “autocratic” challenge posed by countries such as Russia, and potentially China.

 

EU and German China Strategy

In response to the rapid opening up of China and its dramatic transformation from a centrally planned economy towards an increasingly market-driven economy, the EU in 1995 adopted its very first comprehensive policy for the future development of the EU’s relations with China.  Since then, the EU’s policy towards China has undergone several iterations (1998; 2003; 2006; 2016; 2019) – from one that was primarily focused on dialogue and economic opportunities to the 2019 Strategic Outlook paper calling China a partner, a competitor, and a systemic rival.

Similarly, the German approach to China based on “Wandel durch Handel” (change through trade) has been under increasing scrutiny. The Russian invasion of Ukraine challenged the idea that economic interdependence is a formula for peace and stability and has led the German government to look at how to recalibrate its relations with China. Increasing US-China strategic rivalry and China’s close relationship with Russia are factors that the German government and the EU need to consider as they develop a new strategy towards China.

As the EU and Germany re-evaluate their relationships with China in an increasingly difficult and complex environment they need to face up to some inconvenient truths:

  • China is widely integrated into the global economy and remains an almost indispensable economic partner for the EU – attempting to decouple from China would be catastrophic for economic growth in Europe, and would also have serious repercussions for the global economy;
  • The US is also an almost indispensable ally – but that does not mean that the US interests and the EU interests are always aligned;
  • Big power politics are driven by strategic interests and the EU and Germany need to engage in a more rational discussion on their core strategic interests and agree on a grand strategy to engage other partners as they navigate the rising tensions between the US and China.
  • As the world shifts from unipolarity to a far more dynamic multipolarity, the EU needs to be able to engage actors of all shades and find the strategic space to make a difference.  Importantly, the EU and Germany must get out of the tendency to think in a binary way and in doing so unnecessarily restrict themselves to false choices. 

As the US pushes its Indo-Pacific agenda to constrain China by corralling its allies in the Indo-Pacific through minilateral institutions such as the QUAD and AUKUS, the EU and Germany in rethinking their relations with China would need to embed it within the broader geopolitical and geoeconomic framework of developments in the Indo-Pacific and relationships with other Indo-Pacific partners.

China is a global player and while it denies having ambitions of global dominance, its actions in the Indo-Pacific reflect its expectations of a regional order with China at the centre. Therefore, to craft a strategy on China is not just thinking about China. It is a far more complex undertaking to reflect on the strategic rivalry between the US and China and what this means for the EU and Germany. It also requires a deeper understanding of the dynamics in the Indo-Pacific region and how the different actors in the region are positioning themselves.

The US-China rivalry is squeezing Europe’s space to develop its own China policy and its posture in the Indo-Pacific based on its own strategic interests. This is further compounded by the war in Ukraine. The US’s outsized role in supporting Ukraine and Europe against Russian aggression would have an outsized influence on how the EU and Germany re-evaluate their relations with China. Yet even as EU stands united with the US on Ukraine and seeks to strengthen its own backyard, the EU must not neglect the longer-term geopolitical realities in the Indo-Pacific and how to independently strengthen its relationship with its Indo-Pacific partners. How can the EU’s relationship with China and other Indo-Pacific partners be more self-directed amidst the rising tensions and shifting alliances in a dynamic multipolarity?  In crafting their new China strategy, the EU and Germany need to be aware of the role they could play in tilting the world either towards a bifurcated world of two opposing blocs or to be an independent pole working with other Indo-Pacific partners to coax the US and China toward responsible competition and striking a modus vivendi of peaceful co-existence.

 

Embedding China Strategy Within a Broader Indo-Pacific Posture

A sensible China strategy and an Indo-Pacific posture requires the EU and Germany to accept that international relations in the region are fundamentally about interests and not morality. Europeans must learn not to be driven primarily by events and emotions but to focus on long term trends and understanding the ground realities and be guided by their own strategic interests when engaging China and the Indo-Pacific.

If the EU and Germany in approaching China and other Indo-Pacific actors begin with a value-based approach, half the battle will be lost. Consider the 2023 survey by the ISEAS-Yusof Ishak Institute. While over 50 percent of the respondents in Southeast Asia said that the EU can be trusted to provide leadership in maintaining a rules-based order and upholding international law, this “trust” is underpinned by material considerations (the EU’s still considerable economic, institutional and military resources) and not underpinned by a similar political culture or worldview or admiration for Europe’s civilisation and culture.

How the EU and Germany position themselves in the strategic rivalry between the US and China, and whether the EU can exercise the strategic autonomy that it purportedly claims would be something that Singapore and its ASEAN neighbours would be looking out for. Can the EU act independently and work with other actors in the Indo-Pacific to develop a “third force” – an alliance of actors that support multilateral polarity?

The EU is only of added value to the other Indo-Pacific partners, and in particular to ASEAN as a strategic partner if the Union is indeed what it claims it wishes to do –strategically autonomous and acting in partnership to uphold multilateralism and a rules-based order. Of all the Indo-Pacific partners, it is in Southeast Asia where the desire for the EU to play a more independent role, and for the EU to support ASEAN centrality is crystal clear.  In “The State of Southeast Asia” survey conducted by the ISEAS-Yusof Ishak Institute since 2019, a majority of Southeast Asian partners see the EU as a trusted partner to uphold the rule of law and contribute to global peace, security and governance. This desire to have a partner to uphold an open, inclusive rules-based order was one of the reasons for ASEAN to upgrade its dialogue partnership with the EU to that of a strategic partnership in 2020.

The EU and Germany need to work with the Indo-Pacific partners to reshape the dynamic multipolarity of the region to that of multilateral polarity – one that recognises agency and autonomy of different actors that should and can be exercised within a set of negotiated rules and principles.

Specifically, there are several measures that the EU and Germany can take to reassure their Indo-Pacific partners while the Ukraine war rages on: that the Europeans still have the bandwidth, the staying power and the resources needed to stay engaged in the region vital to their interests:

Building a coalition of Indo-Pacific partners supporting the United Nations Convention of the Sea (UNCLOS) – The EU should support the Indo-Pacific partners and especially those Southeast Asian states that have disputes with China over claims in the South China Sea to uphold UNCLOS. Specifically, the EU and Germany can reiterate their support for the 2016 ruling by the Permanent Court of Arbitration at the Hague that China’s expansive South China Sea maritime claims have no basis in international law.

Freedom of Navigation – Invoking what is formulated in UNCLOS, the EU and Germany in sending frigates to the Indo-Pacific region should coordinate their actions not only amongst themselves but also with their Indo-Pacific partners. The fundamental mission should be to send China the message that what the EU is doing is reiterating the rights of innocent passage, rights of transit passage, right of archipelagic sea lanes and freedom of the high seas under UNCLOS.

Maritime Cooperation – The EU and its member states should ramp up cooperation in the maritime domain with not only its Indo-Pacific partners but also with China. Involving China and Indo-Pacific partners in Operation Atalanta – piracy is a scourge for commerce and the shipping industry which is an integral part of Asia-Europe trade – would be an important contribution of the EU towards regional and global security.

Dialogue with ASEAN on its Indo-Pacific Strategy – ASEAN is in the process of re-examining its 2019 ASEAN Outlook on the Indo-Pacific to take into considerations the developments in and further deterioration of the US-China relations since 2019. For the EU, its 2021 Strategy for Cooperation in the Indo-Pacific is perhaps also overtaken by events in Ukraine. A dialogue between the EU and ASEAN on the priorities of their respective Indo-Pacific strategies and how the two blocs can find greater synergies in their strategies would be a welcome strategic exercise.

A comprehensive Indo-Pacific strategy of the EU should not be one based on “containing” China but one that actively seeks to engage China together with its Indo-Pacific partners. An example would be understanding the connectivity strategies of  China, Japan, India and ASEAN in the region and cooperating in the best way that can truly deliver sustainable development for the region and profits for Europe.

Inviting Indo-Pacific partners to be more involved in Europe – The EU and Germany should move away from the Eurocentric arrogance that they are the ones who know what is best and have the solutions for the rest of the world. What is needed is for the EU to also invite Indo-Pacific partners to understand the various problems faced by the EU and encourage policy dialogue and learning. For example, instead of “pressuring” Indo-Pacific partners to condemn Russia without any reservations, the EU and Germany can engage in much more needed dialogue on how various Indo-Pacific partners can contribute in different ways to support the humanitarian situation in Ukraine and keep the channels of communication to Russia open.

In summary, the EU’s and Germany’s China strategy in this critical juncture of an epic US-China strategic rivalry should not be made without careful considerations of where the EU interests lie and the role it should play in the Indo-Pacific.  More importantly the EU should be proactively engaging the other actors in the Indo-Pacific to understand how they relate to China. The EU risks being pressured by the US to take a principled stance against China with the US narrative of autocracies against democracies. The actions by some European leaders in following the lead of some US politicians to make high profile visits to Taiwan to show solidarity for democracy is an example of unthinking posturing.

The EU and Germany must get rid of the tendency to frame issues in an either-or binary framework and be more creative in their approach toward the Indo-Pacific region and China. As a former Danish diplomat noted in his article “the art of diplomacy will often be to reconcile apparently contradictory issues and reply “both” to the question of “either-or””. Will the EU and Germany have the diplomatic dexterity and strategic empathy to forge a working relationship with China that can help to stabilise the broader geopolitical environment in Europe and the Indo-Pacific or will it sleepwalk into the binary trap of the West against China leading to a potentially bigger conflict engulfing the whole world?

 

Conclusion

In the survey done by the European Council on Foreign Relations (ECFR) and report in June 2023, it is gratifying to note that the European public have a much more nuanced view of the EU’s relations with Russia and China. One thing stood out – China is not Russia. To let the emotions over the Russian invasion of Ukraine dominate Europe’s discussion over its relations with China is dangerous. It is understandable that the EU sees the war in Ukraine as a war to define Europe’s future, and one that Europe should “win”. Hence, European leaders such as the European Commission President have made clear to China that the issue of Chinese support for Russia will be a factor in determining its future relations between the EU and China. While this makes strategic sense for the EU, the framing is important. China, as many other countries around the world such as India, Indonesia, Brazil and South Africa, would continue to engage Russia as they decide for themselves what is in their strategic interests.

The ECFR survey shows that 43 percent of the European public see China as a necessary partner, and only 22 percent see Europe’s economic relationship with China as bearing more risks than benefits.  Also, while an overwhelming majority also see Russia and China as partners, this did not lead them “to conclude that Europe should decouple from China as it has from Russia”.

The survey results are a timely reminder to the EU and to German leaders as they rethink their China strategy that in a world in flux, that they need to be ever more clear-minded in their assessment of the broader trends and steadfast in defining their own interests and strategy in dealing with the world.

Dr Yeo Lay Hwee is Director of the European Union Centre in Singapore and Senior Fellow at the Singapore Institute of International Affairs.

‘Note: This article has been written before the publication of Germany’s China Strategy’.

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