Report from the China event form the day 12. 6. 2025
Author: Brane Maselj
The NAPREJ Institute and the Rotary Club of Ilirija hosted an in-depth discussion on the complex phenomenon of contemporary China, its global impact and strategic implications for Europe and Slovenia. The event, which attracted a wide range of experts and interested public, shed light on the multifaceted nature of China’s development, from economic expansion to value shifts and technological sovereignty.
The moderator began by highlighting a central theme: the nature of China’s rise – is it merely an economic and technological expansion, or is it also a transformation of the world order in terms of values? Europe and Slovenia are faced with the dilemma of how to strategically position themselves vis-à-vis China, which offers opportunities but also risks. The doctrine of “derisking”, introduced by the European Commission under Ursula von der Leyen in response to dependence on China’s new green technologies, has been mentioned. The question remains whether “derisking” is really just risk mitigation or a step towards disconnecting from all things Chinese in order to protect strategic interests. For Slovenia, which often offers itself as a soft entry point, this is particularly important. The panellists were invited to shed light on how to understand Chinese influence today.
Zorana Bakovic, a prominent journalist and China expert, pointed out that China defines itself mainly by its own will. It wants to be a regional power with enormous global influence, but it is not currently aspiring to be a global superpower, as it is aware of the dominant role of the US, with which it does not want direct conflict. China, like “the elephant that walks into the room looking for its space”, is the biggest winner from globalisation, even if it was initially afraid of it. For a long time, the term ‘globalisation’ was allowed to be used in the Chinese media only as ‘economic globalisation’, to avoid links to universal values, towards which China has a reserved attitude.
Baković stressed the importance of historical context: we should not only look at China in relation to other political systems, but also in the light of its 4000-year history, during which it has been largely considered the most advanced state system. The reforms that began in 1978 under Deng Xiaoping (called “fuxin”, meaning renaissance or regeneration) took place in three phases:
1. Exploitation of labour: the huge amount of surplus labour from rural areas (estimated at 400 million people) has enabled China to become a “world powerhouse”.
2. Copying and adapting technologies: China has copied, learned from and adapted foreign technologies. This was a period when accusations of intellectual property theft were made (e.g. a German factory that Chinese workers copied at night and built an identical factory in parallel).
3. Own innovation: today, China is in the process of developing its own technologies, especially in the fields of green technologies, electric vehicles, solar panels, nuclear energy and batteries, where it wants to become a world leader. Examples are high-speed trains (460-500 km/h), the first passenger aircraft (albeit with many imported components) and excellent electric cars (like BYD) sold at prices set by China.
Baković continued that China is taking a holistic approach to its development, similar to its traditional medicine. The dilemma over Huawei and 5G was comparable to the current situation where Europe needs to modernise its grid for its energy transition and electrification, and China offers the most comprehensive solutions. European “de-risking” is perhaps more a reflection of Europe’s own failures to keep up with technological developments than a real Chinese threat.
China has a long-term development plan until 2049 (the 100th anniversary of the People’s Republic of China). By 2035, it aims to be a medium-developed country (around USD 20,000 GDP per capita), with an economy twice as large as in 2020 (over USD 30 trillion GDP), state-of-the-art technology, industry and a progressive society with a high degree of soft power. The only serious threat to the world from China would be a military intervention in Taiwan, which Baković believes China does not want at the moment, as it would do more harm than good. It intends to control Taiwan in other ways. Therefore, China is considered to be a regional power with enormous global influence.
Baković believes that China does not profit at the expense of the misfortune of others (US, EU). As the “elephant in the room”, it needs a positive environment for its own and others’ development. It is not an “evil power” at the moment and its desire to grow does not pose a direct threat to the world, although there are tensions with its neighbours over unresolved border issues. China does not want to export its ideology (communism or one-party system) and even wants a strong, democratic and independent European Union that is not subordinate to US interests.
The danger for others is that China is “exporting its own rules of the game”. This is reflected in non-transparent investment, the use of its own workers and technologies (the Pelješac Bridge in Croatia is a case in point), and the offering of products at prices that are difficult for others to compete with (partly due to past exploitation of workers, although this is changing as technology develops). The EU does not yet have an effective response to China’s offers, which are often 20-30% cheaper than everyone else’s. China today offers products that Europe desperately needs for the green transition (electric vehicles, batteries, solar panels), but the EU is afraid of destroying its own industries. China wants a single EU that it can talk to “over the phone”. It is interesting that China, although a Communist country, is today defending globalisation and capitalism. The moderator added that China’s policy is probably guided by Sun Tzu’s philosophy of attacking when you are stronger, which means that will not attack Taiwan directly, but will try to turn the situation in its favour by waiting patiently and manoeuvring skilfully.
International relations expert Primož Šterbenc placed China in a broader international context. After the end of the Cold War and the period of US-led unipolarity, we are witnessing a transition to a multipolar world (with China, Russia, India, Brazil as major players; the EU is less influential due to disunity). Such transitions are historically dangerous.
Šterbenc recalled the “Thucydides Trap”: situations where a rising power (like Athens) threatens a ruling power (like Sparta) often lead to war. Graham Allison has identified 16 such cases in the last 500 years, 12 of which led to war. In only four cases was conflict averted through accommodation. World War I is one example where no accommodation took place (Britain against Germany at sea, Germany against Russia on land). Robert Gilpin also points out that hegemonic wars often resolve imbalances in the international system.
The tensions in the South China Sea are part of this dynamic. Sterbenc quoted Paul Kennedy (“The Rise and Fall of the Great Powers”), who argues that economic power always determines military power. China is converting its economic power into military power (it already has the largest navy in terms of the number of vessels). This is reminiscent of the US under Theodore Roosevelt, which built a powerful navy and took control of the Caribbean as the economy boomed. Unlike the UK, which has withdrawn from the Caribbean, the US has no intention of withdrawing from the South China Sea, as demonstrated by its freedom of navigation operations. The Trump administration has embarked on a policy of encircling China through various agreements with China’s neighbours.
The war in Ukraine, in Sterbenchev’s view, benefits China by diverting US attention. The Belt and Road Initiative (BRI) was also planned to pass through Ukraine. There are even theories that the Biden administration provoked the war. Sterbenc also mentioned Halford Mackinder and his Heartland theory, which stresses the importance of control over Eastern Europe for global domination. Trump is trying to separate Russia from China with a Nixon-like triangulation, as sanctions have pushed Russia into China’s embrace. Russia fears Chinese influence in its Far East (historical disputes over territories lost to China in the Aigun-Beijing treaties).
The representative of the Ministry of Economy, Tourism and Sport, Nejc Perhavec, presented Slovenia’s pragmatic stance. Although it is not directly involved in the Belt and Road Initiative, it participates in the 14+1 (now less) initiative between China and Central and Eastern European countries. China is adept at bringing smaller countries together, and Slovenia is active in this area (e.g. participation in the Ningbo fair). The economy needs integration to facilitate international business.
Slovenia is an export-oriented country (83% of GDP), but the ratio of exports to imports has been deteriorating in recent years. It is therefore important to look for new markets beyond the traditional ones (Germany, Austria, Italy, EU) such as China, India, Canada, the Middle East and Africa. Slovenia is updating its internationalisation strategy. Currently, around 5000 Slovenian companies import from China and 500 export to China. Despite China being the “elephant in the room” and the EU perceiving certain risks (e.g. FDI screening), Slovenia considers China as a priority market and invests significant human and financial resources to support Slovenian companies in China.
An in-depth look at China’s internal dynamics: the paradox of the “free market”
The moderator pointed out the paradox of cheap Chinese products (Temu, AliExpress) and the question already raised by Harari: does the Chinese combination of technological control, political stability and centralisation mean efficiency without freedom? Zorana Baković replied that China has shown that a free market can exist without free individuals in the Western sense. After Tiananmen, Chinese society practically exchanged political rights for security and living standards. Today, China is characterised by extremely intense competition (e.g. more than 50 electric vehicle manufacturers), starting as early as kindergarten and culminating in an extremely competitive university entrance exam (Gaokao).
Despite the absence of freedom of thought by Western standards, China is making scientific and technological progress. Living standards in the big cities are comparable to those in Europe and, before the pandemic, 168 million Chinese tourists travelled the world annually. Bakovic pointed out the difference: Americans can vote but hardly make a difference; the Chinese (politically) cannot vote but their standard of living is improving. In the US, 1% of the population owns 20% of the wealth; China is not socialist in the sense of equal opportunities, competition is relentless. Nevertheless, Chinese culture is flourishing.
China presents itself as a “civilising country”, where the relationship between state repression and societal needs (e.g. for freedom of speech) is constantly adapting. Horizontal organisation is forbidden. However, there are major problems with minorities such as the Uighurs and Tibetans, who want cultural autonomy and are subject to ruthless repression, because China will not allow anything to jeopardise its development and stability. Internal security is an absolute priority, and its budget exceeds that of the military. Despite the controls (social credits, cameras), Baković believes that this is not fundamentally different from some realities in the EU or the US. The key is a coalition of three elites: political, economic and intellectual. Xi Jinping continues the line of Mao and Deng, while Jiang Zemin and Hu Jintao were less important. It is interesting to note that, after Tiananmen, Zhao Ziyang was already thinking of compensating workers and even of introducing opposition parties. Xi Jinping is fighting corruption, raising the level of technology (‘Made by China’) and investing in education.
Bakovic also highlighted the flexibility within the Communist Party of China (CPC). Even Jiang Zemin has considered renaming the CPC as the Socialist Party, defining the Party as representing all social classes, including billionaires. Change in China will come from within, not so much from society as from the Party itself, which has around 100 million members and whose main objective is growth and development. Future change is uncertain, but it is crucial for Europe to define its values.
We should know that Chinese professors in fields related to scientific development are extremely well paid, and China also recruits foreign Nobel Prize winners without budget constraints for strategic research. The extensive investment in education is creating generations imbued with nationalism (both economic and general), to which Western sanctions are also contributing (e.g. encouraging the use of Huawei’s operating system). China’s ideology is no longer utopian communism, but increasingly a superpower. To be Chinese today is to be a citizen of a future leading economic and technological power that wants to replicate the achievements of its “four great inventions” (compass, gunpowder, printing, paper). China does not aspire to democracy because it believes that it has not solved the problems of poverty and war, but is looking for a ‘third way’. After Xi Jinping’s term of office, China will certainly have to adapt its political system, but probably not in the direction of democracy.
Primož Šterbenc criticised European policy towards Ukraine, saying that Europe was shooting itself in the knee by demonising Russia and ignoring its national interests. The war in Ukraine is hurting Europe the most (cheaper energy, disrupted supply chains). While the US is now showing signs of stopping the war, Europe is taking a hard line. The increase in EU defence spending (up to 5% of GDP) is, in his view, to prepare for a possible confrontation with China. By taking a hard line towards Russia, Europe is complicating US efforts to end the war in Ukraine and reducing Russia’s motivation to end the conflict.
Nejc Perhavec added that China currently has 163 producers of electricity technologies. Of the 57 key critical technologies, 44 are controlled by China, 7 by the US and none by Europe. The EU and Slovenia are already deeply dependent on Chinese rare earths. The EU is taking steps to reduce this dependence, but it will remain dependent for some time. That is why investment in people, education, research, development and clean technologies is essential. Slovenia has been pragmatic in this respect, e.g. by voting against European tariffs on Chinese electric vehicles, and has been working for good relations and foreign investment (e.g. talks with BYD and NIO). Trade between Slovenia and China amounts to €7-8 billion, with Slovenian exports accounting for only around €300 million.
Asked about the most common mistakes made by European companies in China, Zorana Baković pointed out that business and technological processes are often slower than political change. While China offers long-term stability, the key is to know its current priorities and anticipate change (as in the case of Tomos mopeds in Shanghai, which were banned overnight due to pollution and the demand for electric mopeds).
China is facing huge internal problems: economic, demographic (consequences of the one-child policy, young people now refuse to work in manufacturing), property crisis (real estate was the main investment) and corruption. It is crucial to observe how these problems are being tackled, e.g. encouraging domestic consumption (China is currently offering big incentives to buy energy-efficient household appliances). Successful foreign companies have always known the next three steps and have limited their targets to a specific area or city, not to the whole of China. Relationship building (guanxi) is also extremely important. Profits are difficult to export out of China; reinvestment is expected. Raising domestic consumption is the most difficult challenge for China; failure to do so will lead to overcapacity and pressure on foreign markets.
Primož Šterbenc pointed to the importance of food security and geostrategic issues such as China’s dependence on oil imports through the Strait of Malacca (70%), which represents a strategic vulnerability. The port of Gwadar in Pakistan is one of the attempts at diversification. Russia can also help with onshore energy routes. Zorana Bakovic added that food security is crucial for China; arable land is scarce and often polluted. Rare land is not scarce, but it is difficult to extract cleanly, and China is doing so without much environmental restraint. China has made great strides in cleaning up its air.
In the context of the war in Ukraine, she stressed that China is not an ally of Russia. Territorial integrity is sacred to it (Tibet, Xinjiang, Taiwan). The Belt and Road Initiative passed through Ukraine. There is a theory that Putin has started a war to break up this initiative because he cannot accept that Russia has become a junior partner to China. Just as Stalin provoked the Korean War to divert US attention, Putin could now use North Korea. Ukraine was also important for China in terms of food security (China’s extensive land concessions in Ukraine). That is why China wants to be involved in the peace negotiations and the reconstruction of Ukraine.
The new “scramble for Africa” was also mentioned, where China has an important role to play (e.g. in cobalt mining in the Democratic Republic of Congo).
The event offered a valuable and multi-faceted insight into China’s rise, its internal dynamics and the complex challenges and opportunities it brings for Europe and the world. It underlined the need for nuanced understanding and strategic reflection rather than simplistic approaches.
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