Yu Jie: “For China to innovate it needs to lose some political control”

This podcast was organised by EsadeGeo in association with the H2020 project ENGAGE, funded under grant agreement no. 962533.

The profound reconfiguration of the international order in the 21st century is primarily due to the emergence of new global actors, with China being the most prominent of them all. In this pódcast, the director of EsadeGeo, Angel Saz-Carranza, interviews Dr Yu Jie about the current challenges of China and its relations with the rest of the world. 

Dr Yu Jie is a senior research fellow on China in the Asia-Pacific Programme at Chatham House. Her research focuses on the decision-making process of Chinese foreign policy and China's economic diplomacy. She regularly briefs senior policy practitioners from the G7 member governments and the Silk Road Fund in Beijing and advises major FTSE 100 corporates and leading European financial institutions on China's political landscape. 

This article offers a briefed version of the interview, which you can listen to in full here.  

How is the China-Russia relationship today?   

It has evolved in the past ten years, particularly since President Xi Jinping came to power and put a renewed emphasis on getting closer to the Kremlin. But Russia's invasion of Ukraine made large parts of Europe and the US wonder how closely China would participate in the invasion. Now, there's a strange mixture in which, on the one hand, there's a fear that China could get closer to Russia to form a formal military alliance. On the other hand, particularly among the Europeans, there was hope that China could influence Putin to restrain his ideas of using nuclear power. However, the first significant change in the past 18 months is that, even though the officials in China declared this partnership had no limit, the term "no limit partnership" has been dropped completely. The second significant change is that, to this day, China has strengthened its economic relationship with Russia even further due to its energy demand, whereas, at the same time, China has been quite restrained in providing any meaningful military support to Moscow. Lastly, Beijing is also considering its own interests because Russia is China's largest neighbor, and the two countries share a border of around 4200 kilometers. If China is not able to handle Russia very well, then Russia will become a source of national security threat for China. Another reason why Beijing has decided to align with Russia is because they share grievances against US hegemony.  

The Belt and Road Initiative (BRI) has been a main strategic project for China. How has it changed since its inception? Where is it now? 

The BRI has not only projected China's influence but also attracted substantial criticisms regarding its financial viability, environmental sustainability, and lack of transparency, together with the narrative on the so-called debt-trap diplomacy. Beijing is also fully aware of the challenge to go forward on the BRI. Firstly, you can no longer rely only on China's state capital to generate all the investment. Secondly, Beijing also acknowledged the environmental challenge. Thirdly, because parts of the BRI involve developing countries that have suffered the most from COVID-19, many projects based in those countries are hard to continue. Since April 2019, Beijing has not invested any fresh state capital into the BRI. On top of that, Beijing also realizes that the demand for the BRI's physical infrastructure has become much smaller than when the initiative was introduced. Currently, we expect to see the BRI become more targeted in China's neighborhood. Also, there is a new initiative, the Global Development Initiative (GDI), which has a much stronger emphasis on building digital infrastructure, humanitarian assistance, and sustainable finance. GDI is trying to complement the BRI, and they will require appropriate coordination among different government departments within China.  

In China, there is tension between the need for innovation and scientific development and the idea of a stronger party control of the country. How does this dialectic work?  

That is the permanent contradiction question for the Chinese Communist Party. The idea of pursuing scientific self-reliance is a direct response to the US containment strategy towards China, particularly on China's tech sector and its ambition to become a tech superpower. China's response to the US Chip Act and Inflation Reduction Act is the 14th Five-Year Plan to develop certain sectors where China could have a competitive advantage. For example, it is trying to develop its entire semiconductor supply chain and work on devising China's aircraft engines. This is also related to a change in China’s economic development model, fueled by the realization that the country can no longer rely on the property sector to generate GDP. Instead, they are trying to switch to a model driven by tech innovation and basic research. But they would require a non-stop stream of scientific talent from within China and overseas — that would allow those talents to challenge existing authority and develop the whole narrative on critical thinking, which is often lacking in China. That's the permanent contradiction. China does have the financial infrastructure to drive innovation as a state-led model, but we know that innovation is derived from the challenge to the existing authority and, therefore, requires losing some control at the political level.   

Biden and Xi Jinping met recently in San Francisco. How do you interpret that meeting?  

We can call it a temporary reset of the world's most consequential bilateral relations. Both Xi Jinping and Joe Biden are interested in a much calmer relationship. Since the Chinese economy has not rebounded as expected, they need to calm the Western business community, hoping that foreign investors will return and the already existing will stay. From the Washington stand, Biden is now grappling with two wars: Russia's invasion towards Ukraine and the Israel-Hamas conflict. The last thing that the White House would need is another military escalation across the Indo-Pacific at this very moment. Therefore, both sides now have a very strong interest in putting this bilateral relationship back on track. The many grievances in this bilateral relationship cannot be resolved in a 4-hour meeting, but it is a very good start to avoid the inevitable conflict between China and the United States.  

What is your assessment of the current relationship between the EU and China?  

There's a fundamental difference between what America wants from China and what Europe wants from China. The US cares about what China is, but Europe cares about what China does in terms of whether China poses a substantive economic challenge and whether China's domestic practices align with European normative values. Europeans want to prepare to de-risk away from China but not to decouple from China; that shows the ambivalence. But I would bet that Europe will get even more aligned with the United States — the sense of transatlantic coordination towards China will strengthen. However, change could happen if a Trump or Trump-like president returns to the White House. The best we can hope for is that China and Europe are not necessarily entering a period of Cold War but a period of cold peace.  

What would you recommend the EU do to improve its relationship with China?  

I'm not in a position to make any strong recommendations, but I think China wants a reasonable economic relationship without dealing with European political matters. Also, the Chinese hope that the Europeans will be able to speak with one voice regarding other issues — so far, we have the Member States speaking on the one side and then the EU institutions speaking on the other. As long as Europeans are able to improve their policy coordination and send less confusing signals towards Beijing, that would be a good start to improve their bilateral relations.