A review of Philippe Le Corre and Alain Sepulchre's new book China's Offensive in Europe
By David Wemer
Philippe Le Corre and Alain Sepulchre's brief analysis of China's growing economic footprint in Europe naturally focuses on how and why Chinese businesses have gained entrance into the European market. Although this book is clearly intended for those focused on Chinese economic and business policy, Le Corre and Sepulchre's work paints a dire picture of the European economy, now a target for Chinese intervention. The dramatic reversal of fortunes for the once dominant European continent should be the major take away, despite its being downplayed in the text.
The authors outline numerous cases of Chinese companies, often buoyed by dominance in the Chinese domestic market and saturated with cash from Chinese banks, swooping into Europe to make big-money acquisitions or large-scale investments in infrastructure. There is little for readers to learn from these cases, as they mirror other Chinese advances in both the Middle East and Africa over the last decade. The authors present Chinese intrusion into the European market as a unique phenomenon resulting from China's growing economic power, but they largely ignore a much more dramatic storyline: how Europe became such an easy target.
At first glance, it should be expected that most European policymakers would vigorously oppose Chinese business intervention on the scale outlined by Le Corre and Sepulchre. Chinese companies often struggle to incorporate European workers into their companies, especially when mixed with Chinese managers. Cultural misunderstandings and tensions often lead European employees to leave firms after Chinese takeovers, only to be replaced by Chinese counterparts. Furthermore, the often-explicit relationship between Chinese companies and Beijing should give European governments pause, especially when these companies are dealing with sensitive technology or infrastructure projects. As the authors point out, tech giant Huawei, the largest European venture for China, still has an open relationship with the People's Liberation Army, which should raise alarm bells throughout Europe.
It is the overcoming of these obstacles that make China's economic success in Europe so surprising, not the relatively trivial causes outlined by the authors, such as financial support from Chinese banks and growing ranks of foreign-educated Chinese managers; China's economic success is a result not of a coordinated offensive, but of European acquiescence. The devastating effect of the global financial crisis and the following half-decade of Euro-malaise has left European policymakers desperate to find outside sources of funding for infrastructure projects and new sources of employment for static labor markets. Chinese investors have proven an attractive option for cash-starved European companies and governments in need of investment, not just in the struggling southern European states and the still-developing East, but also in the economic giants of France, Germany, and the United Kingdom.
In their desire to paint an accurate picture of developing Chinese business practices, the authors largely miss the key drama of this story. After centuries of dominance in the global economy, where its companies could move into countries at will and completely dominate markets, Europe has found itself now a target for foreign investors. China, once the most visible examples of Western economic interference during the late nineteenth century, is now exploiting weak European domestic markets. Once endowed with almost unlimited economic power, Europe must now make sacrifices to make deals necessary for economic growth. In return for Chinese investment, control of former European industry stalwarts, for example Lenovo, Volvo, and Putzmeister, has been ceded to Chinese companies and management teams.
China is not the first economic force to hit Europe, as it has witnessed the dominance of the United States and the booms of Japan and South Korea before. But now the tide is not raising all boats. Rather than facing competitors with the strength of growing economies, Europe is facing China as the weaker party. Europe and China are heading in opposite economic directions, and investment deals are beginning to reflect that fact.
That is not to say that China's offensive is destined to succeed. The controversy surrounding the Transatlantic Trade and Investment Partnership with the United States has shown that Europeans remain skeptical of globalization and the benefits of multinational investment. Public opinion of China's economic exploits will only further sour should Chinese companies attempt to skirt around labor and environmental standards. More importantly, as Le Corre and Sepulchre consistently point out throughout, the ability of Chinese investors to target Europe is dependent on their success in the Chinese domestic market and could easily be reversed if China's economy slows its rapid growth rate.
Le Corre and Sepulchre's book provides detailed descriptions of China's growing economic presence in Europe and its root causes in Chinese domestic economic policy. The authors fail, however, to adequately attribute the role of European economic weakness in this story and ignore the glaring historical context that makes this phenomenon so different from similar stories of Chinese intervention in other global markets. The authors dive deep into analyses of China's strength and weaknesses, but choose to ignore the European elephant in the room. Le Corre and Sepulchre provide many of the facts, but come up short in conveying the whole story of China's latest economic offensive.
David Wemer received an MA in European Union Politics from the London School of Economics and is the Washington D.C. Program Coordinator for the Eisenhower Institute at Gettysburg College. David is also a Europe Fellow at Young Professionals in Foreign Policy.
China's Offensive in Europe, Translated by Susan Emanuel, Published by Brookings Institution Press (May 17, 2016)