EU's 'soft strengths' are enough to face China

Until recently, Europe had the luxury of focussing its integration process on mainly domestic issues and taking for granted that if some member states were laggards they would catch up eventually.

Now, the increasingly unsettled geopolitical landscape demands that the EU projects its interests more forcefully on the global stage while rule of law backsliding in some member states undermines its capacity to mount a concerted defence of its values.

With most EU policies implemented by member states, the rule of law is essential if a common policy is to produce the desired impact throughout the Union's territory.

While the separation of powers can never be absolute, the EU must stand firm against the application of rules with a clear political intention.

Only by maintaining its reputation for independence and integrity can Europe continue to wield its soft power effectively.

This is crucial to how Europe responds to the emergence of an increasingly assertive China as a major economic, political and technological power.

While the trans-Atlantic community of values has so far survived the presidency of Donald Trump, the EU is not a Pacific power and thus does not see China as a geopolitical competitor as the US does.

European interests in Asia in general are mostly commercial.

Confrontation with China is thus not an attractive policy, but the EU can limit the negative impact of the Belt and Road Initiative in Europe by insisting on its core principles of transparency, state aid and competition rules.

Nor should the EU react by succumbing to the temptation to create some ill-defined industrial policy just because China does so.

Siemens-Alstom

For instance, when the commission found that the size of Siemens' Chinese competitor was of little importance for the goal of preserving competition on the EU market, the finding was unanimously supported by all national competition authorities.

The blocked Siemens-Alstom merger does not therefore provide an illustration of the need to relax EU competition rules to create European champions.

Similarly, while artificial intelligence, with its reliance on large databases, might be considered a sector where state intervention could foster growth, the main obstacle is not EU competition policy, it is a fundamental issue of values.

Given the millions of engineers and other scientists being churned out by Chinese universities it is inevitable that the country will dominate in some technologies.

But it remains to be seen whether tight political control over public opinion is compatible with innovation. The long-term advantage of a democratic system should not be underrated.

Nevertheless, as the share of the EU in the global economy shrinks, the soft power of its economic instruments and the attraction of the internal market is destined to decline.

However, it now seems that 'hybrid power' is becoming more important than either the purely soft or hard variety.

Elements of hybrid power can be, for example, disinformation campaigns, cyber-attacks, export controls, and maybe even targeted strategic investment. It is in these new areas that Europe is being challenged and must find ways to react.

To preserve Europe's strategic autonomy and prosperity in this rapidly changing digitised global landscape, concrete actions are required, notably in cyber defence.

There is little need to create new structures. What is needed today is not a wholesale transfer of competences, which is politically unattainable anyway. Neither should the EU indulge in developing grand strategies or subjecting all of economic policy to geo-strategic objectives.

The best basis for prosperity remains an open and competitive internal market. Its value is first of all economic, of course, as it yields higher prosperity.

However, it is critical in other arenas where 'EU clout' derived from the single market matters, such as trade and investment negotiations, commitments on climate change and sustainable development, standard setting, rule-making for international financial stability and even labour laws.

European and global economic security can best be safeguarded by common action in key areas, both among EU member states and with like-minded countries in Asia.

Whatever the Brexit outcome, Shakespeare will still be with us, and Europe could usefully heed the words of Polonius in facing a sea of troubles: "to thine own self be true".