China Watcher teamed up with POLITICO Europe's China Direct author STUART LAU to convene a transatlantic lawmaker duo to discuss the risks and opportunities of Chinese President XI JINPING'S looming transition to leader-for-life at next month's 20th Party Congress . Those lawmakers — Sen. CHRIS MURPHY (D-Conn.) and French legislator BENJAMIN HADDAD — unpacked what Xi's next decade at China's helm may mean for its relations with the U.S. and the European Union, We've distilled highlights of the exchange below, edited for length and clarity. And you can access the audio of the entire event here (starts at 4:12 mark). What should EU and the US priorities be in their relationship with China over the next few years? Murphy: The most important question is whether President Xi learns from his mistakes. His aggressive economic and political posture has really started to push many potential economic and diplomatic allies away from China and it has caused the United States and Europe to be engaged in a level of diplomatic economic and trade partnership that might not have been possible if it wasn't for [China's] new tactic of wolf warrior diplomacy. I don't think we are decoupling from China — I think the United States and Europe will continue to have a robust economic and trade relationship with China. But obviously we need to make the decision about several key industries and whether we can be completely reliant on China when it comes to high tech, health care, critical minerals, and so the work that we're doing together with Europe about trying to build a future common industrial policy, the launch of the Partnership for Global Infrastructure and Investment is incredibly important. We need to be in a position of strength when negotiating with China. Haddad: There is something similar in the challenges represented by Russia and China when you look at it from a European perspective. Both of them are breaking the myth of convergence that was really at the heart of a lot of European economic policy in the 90s and the 2000s. The idea that with tighter, deeper economic ties you would have a form of pacification of relations and opening of political systems. And what we've seen with Russia is that Russia has been leveraging energy relations with Europe as a means of geopolitical pressure. And we now see the same with China. So, I hope that the form of geopolitical awakening that we've seen in Europe since Feb. 24 will be long term and will also apply to revisiting relations with countries such as China. What policy adjustments should the U.S. and the EU make in their relations with China? Murphy: What this administration is doing right is deepening our engagement with Europe and other partners around the world to create a common industrial policy and common political strategy to deal with [China]. What we're not doing terribly well… is that for the first time the Chinese have more diplomatic posts, more consular offices around the world than the United States does. We simply are falling behind in the personnel fights. I remember being in Dublin a few years back when there was an open tender on a new telecommunication system. Huawei was a competitor and, in the lead-up to that decision, there was a doubling of the size of the Chinese Embassy. They were nimble enough to make sure that they had a massive upscale of diplomatic presence to help Huawei compete on that bid [Huawei won the bid to supply Ireland's Eir telecoms firm with 5G network equipment]. We're going to have to understand that industrial policy is not just about what happens inside the United States, it's also going to have to extend to what happens outside of the United States. Haddad: I think a lot of the measures that are being built right now are going in the right direction. The Europeans, starting with the French, the Brits also outside the European Union, but also other European actors could be stronger militarily in the Indo Pacific. I think Europe can be more proactive in its direct neighborhood. In the western Balkans all the [Covid] vaccines were Sinopharm vaccines that had been mostly distributed through Serbia. I think that's a huge, missed opportunity for the European Union, so finding a way to associate its direct neighborhood a little more closely to a few key policies such as vaccine distribution would be a big asset for the European Union [in countering China]. We talk about the Russia-China "no-limits" partnership — what limits do we have between the EU and U.S. on Taiwan? Haddad: There is an increasing number of parliamentary delegations from Europe going to Taiwan. What happened [is that] Lithuania decided to have closer ties with Taiwan and was targeted by China . [China was] hoping to divide Europeans and hoping to prove that European solidarity did not exist, which I think failed. There is a shift as well in European public opinion [on Taiwan] which is probably more prudent than what you would hear in the American political debate, but I think we're increasingly aligned on this issue. Murphy: There's no doubt that the shift that Benjamin is talking about is real and we'd be fools in the United States to not respond to China's provocations. I don't think that it would be wise to throw out the One China policy. I don't think it would be wise to move from a policy of strategic ambiguity to strategic clarity. I don't think we should treat the military invasion of Taiwan as inevitable, frankly, if we were to do so, we could essentially make that self-enforcing. Our work should be in more deeply integrating ourselves with Taiwan to make sure that they are ready for a potential invasion. Make sure their economy is stronger without necessarily signaling to the world that we believe a military invasion is inevitable and thus the United States needs to create a new [defense] guarantee. Question: What realistically can EU leaders' and President Biden's messaging be when they sit down at the G20 meeting in Bali in November with President Xi and talk about Russia? Murphy : Our ability to convince China to stay on the sidelines militarily of this conflict or to put more pressure on Russia to wind it down is directly related to the seriousness of the U.S.-European effort to decouple parts of our economy from the Chinese economy. So long as China believes that we are inextricably connected to them, then they are going to have little fear about potentially increasing their coordination and cooperation with Russia. [China's] willingness to step in to play a more productive role will be dependent on Europe staying together, Russia and China not being in a position to pick certain European players off from the coalition and an evaluation of the continued seriousness of U.S.- European efforts to try to integrate our economies for the long run. Haddad: My sense is we'll continue to see this slow distancing by China from Russia. What's most important is for Europeans and Americans to continue to support Ukraine. I think it's likely that China has seen with some surprise the strong Western reaction both in terms of sanctions and weapons delivery and the sustainability of it when it comes to supporting Ukraine. ADMINISTRATION SOOTHES PACIFIC SUMMIT FRICTION What a difference a day makes. Your host reported on Tuesday that dissension among participants of the first-ever U.S.-Pacific Island Country Summit opening Wednesday in Washington, D.C., was complicating the Biden administration's efforts to forge stronger ties with the region. Two of the summit's participants — the Marshall Islands and Solomon Islands — were publicly resisting Biden administration efforts to deepen U.S. influence in the region. Read my full story here. But Secretary of State ANTONY BLINKEN said Wednesday that the U.S. and Pacific Island leaders had sealed "a declaration of partnership between the U.S." Blinken didn't provide details, but his announcement suggests the administration had addressed aspects of the document that had prompted Solomon Islands' initial refusal to sign on. "[The declaration] was not done yesterday," a senior administration official told POLITICO. "Not only [with] Solomon Islands but several others … negotiations had not been completed." The official also disputed reports that the Marshall Islands had suspended talks with the U.S. on renewing its strategic partnership, or Compact of Free Association Agreement, to protest the perceived U.S. failure to address the economic, environmental and health legacy of U.S. nuclear weapons testing around the atolls from 1946 to 1958. "There never was an interruption in COFA talks with Marshall Islands — we met with their delegation earlier this week and agreed on the dates for next discussions," the official said. "So it was never the case that because of the nuclear issue, or because of whatever issue that we or they refused to meet, that was never the case." POLITICO's efforts to contact representatives of the Marshall Islands and Solomon Islands were unsuccessful. TRANSLATING WASHINGTON — LAWMAKERS DEMAND STRICTER CHINA INVESTMENT RULES: A bipartisan group of senators and House members is urging President JOE BIDEN to tighten rules governing U.S. private investment in China and Russia. "We urge your Administration to move forward with executive action—which can then be bolstered by statutory provisions—to safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries," the lawmakers — who include House Speaker NANCY PELOSI, Senate Majority Leader CHUCK SCHUMER and Sen. JOHN CORNYN (R-Texas) said in a letter to Biden on Tuesday. Chinese Foreign Ministry spokesperson WANG WENBIN responded by accusing the U.S. of "using national security as a catch-all pretext to ramp up unjustified investment review." — VP HARRIS SLAMS CHINA'S TAIWAN 'PROVOCATIONS': Vice President KAMALA HARRIS accused China of destabilizing the Indo-Pacific with its intensifying military intimidation of Taiwan. "We have witnessed disturbing behavior in the East China Sea and in the South China Sea, and most recently, provocations across the Taiwan Strait," Harris said in a speech on the deck of the Japan-based the USS Howard destroyer during her four day Asia trip. Wang shot back by calling the U.S. "a disruptor of international rules." — BLINKEN: PAKISTAN NEEDS CHINESE DEBT RELIEF: Blinken at a press briefing with Pakistani Foreign Minister BILAWAL BHUTTO ZARDARI on Monday called on the Chinese government to provide debt relief to Pakistan to assist its recovery from devastating floods. Chinese loans constitute 30 percent of Pakistan's foreign debt and the country is struggling to repay them. Wang, in turn, accused Blinken of "unwarranted criticism against China-Pakistan cooperation."
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