ZPP Newsletter
Warsaw, 29/10/2024
A goal for a safe Europe: militarily defeat Russia and economically challenge China
While we frequently discuss the need for economic security, European and Polish economies are increasingly infiltrated by companies that not only leverage unfair competition through subsidies and price dumping but also sometimes pose threats to the core stability of state institutions and civil liberties. We’ve known for years what needs to be done and how, yet tangible action remains scarce – as they say, “the Chinese hold on firmly,” often with the help of local lobbyists.
Security is a term recently used in all possible contexts – mainly in relation to military matters, but it’s impossible to ignore that it’s now resonating more in economic spheres as well. In the military sense, the potential adversary is clear and well-known for centuries. In the economic realm, the landscape is still taking shape, but it’s increasingly apparent who the key opponent will be for both Poland and, more broadly, for the European Union. Whether we look at industry, pharmaceuticals, or the digital sector, the primary source of concern comes from a single country – China.
THE CHINESE INDUSTRIAL STRATEGY
How can Chinese electric vehicles cost just a few thousand dollars – several times less than standard EVs? The answer lies in negative margins: manufacturers directly subsidize production for the domestic market, yet they are aggressively expanding into Europe, where the costs of compliance with standards are significantly higher. As early as 2019, the Kiel Institute estimated that Chinese subsidies for industry totaled around €220 billion annually, nominally double Poland’s entire state budget planned for 2025. Today, this figure is likely even higher. The consequences are predictable – various branches of European industry, from automotive to steel and energy production (particularly renewables), are losing competitiveness against Chinese rivals.
MEDICINE AVAILABILITY MUST NOT DEPEND ON ASIAN SUPPLIERS
Pharmaceutical security is another area of increasing concern. Currently, 80% of active ingredients in medications consumed by Poles are produced in China. This has been recognized as a significant risk in any potential crisis, yet despite years of discussion, progress remains limited.
The e-commerce sector provides another example, as Chinese platforms increasingly dominate the market. Unfortunately, many operate unfairly by exploiting legal loopholes that allow them to introduce products into Europe without tariffs or taxes, often bypassing regulatory and quality standards.
THE (UN)WILLING ALLIES OF THE CHINESE COMMUNIST PARTY
Given the importance of security in all its dimensions, why do these issues remain unresolved? Cybersecurity provides an instructive example. Work on amending the Cybersecurity Act, which would introduce essential protections for critical infrastructure against risks associated with equipment from authoritarian states, has been underway since 2020 – and remains incomplete. From the outset, the Ministry of Justice, led by Zbigniew Ziobro, for unknown reasons opposed key elements of the bill. Some major business organizations, such as the Lewiatan Confederation, Employers of Poland, and the Federation of Polish Entrepreneurs, joined the opposition, advocating for prolonged consultations and even proposing that we should stop working on the draft bill in favor of preparing a completely new one. In 2022, they openly argued that the Cybersecurity Act amendment was unnecessary at the time. Today, as we near the adoption of this critical law, similar voices are once again calling for new drafts, hearings, consultations, etc. In the last round of public consultations, the Union of Entrepreneurs and Employers was the only major cross-sector business organization explicitly calling for swift adoption of the proposed measures.
ENSURING SECURITY – SERIOUS DECOUPLING
Extending this approach to other areas of economic life poses significant risks to Poland’s security – especially as China, under the Communist Party, is not only an authoritarian regime that uses child labor but is also a de facto ally of Putin’s Russia. Economic threats can quickly translate into geopolitical and, ultimately, military risks. Does this mean that all EU-China cooperation is inherently problematic? Certainly not. Where fair competition exists on open market principles, business cooperation is natural. However, in areas where real security threats exist, it’s essential to enforce our regulations, pursue decoupling policies, and strengthen the competitiveness of European and Polish industries. Achieving this will be a considerable task for Prime Minister Donald Tusk and key ministers responsible for the economy and defense, including Deputy Prime Minister Władysław Kosiniak-Kamysz.
The article was published in Super Express on October 29, 2024.
