It’s a brave new world for Russia, China, and Europe

How the EU is coping with a new political-economic structure as war in Ukraine lets Moscow and Beijing reshape what they see as the old world order

Chinese President Xi Jinping (L) and French President Emmanuel Macron (R) chat during a stroll through the Pine Garden in Guangzhou, Guangdong Province, China, 07 April 2023 (issued 08 April 2023).
Chinese President Xi Jinping (L) and French President Emmanuel Macron (R) chat during a stroll through the Pine Garden in Guangzhou, Guangdong Province, China, 07 April 2023 (issued 08 April 2023).

It’s a brave new world for Russia, China, and Europe

Post-1945 truisms are now suddenly in doubt, as the world’s geopolitical and economic order goes through a sudden change. Rising powers see this as their moment and are acting accordingly.

War in Ukraine has turbocharged the shift, yet the process began a generation ago at the end of the Cold War. To some, the fall of the Soviet Union marked the first stage of the old world’s collapse.

Francis Fukuyama, who announced the “end of history” believing that liberal democracy was the peak of humanity’s ideological development, appears to have been wrong.

Likewise, Samuel Huntington’s ‘Clash of Civilisations’ theory, which posited cultural differences as a significant driver of post-Cold War conflicts, has also collapsed.

Ukrainian servicemen train to shoot a machine gun from M113 Armoured Personnel Carrier (APC) during a training session, amid Russia's invasion of Ukraine, in Donbas region, Ukraine April 8, 2023.

War in Ukraine has awakened national fanaticism and all political and economic interests have mobilised against this backdrop. Where once states relied on Nato and the European Union for protection, the expiry of the old world would today give doubt.

A brave new world

China and Russia reject American hegemony and have declared a move toward a new world order. At the summit in Moscow on 21 March 2023, Chinese President Xi Jinping and Russian President Vladimir Putin announced the end of an American-led era.

They said the Russia-China relationship had global significance, beyond simply bilateral ties, with President Xi saying they would work towards a multi-polar world that values democratic international relations and rejects the imposition of one country’s values on another.

Russia and China have announced the end of American hegemony and want to 'democratise' international relations with no imposition of values

Additionally, they declared their intention to contribute to the recovery of the global economy, improve the global governance system, and ensure global food and energy security, in what they call a "partnership without borders" which goes beyond bilateral relations.

They are both permanent members of the UN Security Council, as well as the G20, and are founding states of the Shanghai Cooperation Organisation and the BRICS (Brazil, Russia, India, China, and South Africa) group. Through these organisations, they are reshaping the world's economic, political, and security landscapes.

The summit's messaging was clear: reject the hegemony of the West; oppose any push for a new Cold War; work towards a new multi-polar world; and democratise international relations.

The role of Europe

During a meeting between US President Joe Biden and European Commission President Ursula von der Leyen at the White House on 10 March 2023, discussion focused on the Ukraine war and the need for the European Union to take a stronger stance against China.

Chinese President Xi Jinping (C) pose with French President Emmanuel Macron and European Commission President Ursula von der Leyen (R) before their meeting in Beijing.

The US has accused China of providing military assistance to Russia and hopes to persuade the EU to adopt a more uncompromising position, despite China's strong economic ties with countries such as Germany. Von der Leyen said the EU was on the same page and would not diverge from the Western consensus.

The US accuses China of arming Russia and hopes the EU will adopt a more uncompromising position towards Beijing, despite the strong economic ties

At the European Center for Chinese Studies on 1 April 2023, she had words of criticism for China, adding that future EU-China relations would depend on Beijing's position on the war in Ukraine.

She accused China of seeking to change the world order to impose its hegemony and of using economic and commercial repression and disinformation policies to achieve its goals.

Yet while von der Leyen took a strong stance, leaders of major EU countries such as German Chancellor Olaf Scholz, French President Emmanuel Macron, and Spanish Prime Minister Pedro Sanchez pursue a more pragmatic approach.

The EU's economic ties with China are vital for its states' economies, which have struggled to maintain adequate rates of growth. Economic disengagement with China is not an option. The goal is to contain the dangers of dealing with a country with which the EU had a $795 billion trade flow in 2021.

Von der Leyen knows that there is no united European front when it comes to China, that the issue is complex and controversial within the Union, and that boycotts and/or sanctions are on nobody's agenda.

The impact of war and inflation

War in Ukraine has had an impact on Europe's economy, leading to high inflation rates, an energy crisis, and slower economic growth. According to the Bruegel Research Center, in 2022 European states spent around EUR 800 billion helping its citizens cope with rising prices.

The UK is among the hardest hit, with an inflation rate hitting 11% in October 2022 before falling again. In France, the National Institute of Statistics and Economic Studies put last year's inflation at 5.2% with energy prices rising by 23.1% and food prices by 6.8%. In Spain, there was an increase of 52% in sugar, 28.5% in diesel, and 14.9% in oil prices.

In Germany, the industrial sector has been impacted, owing to its reliance on Russian gas. The head of the Federation of German Chambers of Industry and Commerce, Peter Adrian, said the cost to the German economy could be about EUR 160 billion by the end of 2023, equivalent to about 4% of the country's gross domestic product.

A turning point in relations

Russia's invasion of Ukraine has been a turning point in Moscow's relationship with Europe, prompting a great many countries to reevaluate their positions. Germany, in particular, has been dramatically affected by the war, sending a dark cloud over growth expectations.

China's President Xi Jinping (R) shakes hands with his French counterpart Emmanuel Macron after the signing ceremony in Beijing on April 6, 2023.

The German economy depends heavily on China - German exported EUR 107 billion of goods to China in 2022 but imported EUR 191 billion of Chinese good, so has a significant trade deficit. Still, the United States is pressing Germany to lead Europe in confronting Russia and to reduce its reliance on the Chinese economy.

In October, Chancellor Schultz said that while trade with China must continue, commercial relations with the rest of the world should also be prioritised. He is wary of over-reliance, as happened with German demands of Russia.

Whether Europe gets more heavily involved in the Ukraine war and confronts China, as the US wants, remains to be seen. The view in Washington is that the cost of war on Beijing is not yet significant enough to make it change its stance. Watch this space.

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