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Coming up, China sets a plan to boost its digital economy through AI manufacturing integration.
China's consumer inflation hits three-year high in February.
G7 countries look to take necessary measures to support energy supplies as the Iran conflict continues.
Ursula von der Leyen calls for EU foreign policy to be more realistic and interest-driven.
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First up, China has set a target of boosting the digital economy to account for 125 of the country's GDP by the year 2030.
The goal represents a significant increase from the 10.5% share achieved in 2025.
Activities in the digital economy are facilitated by data, the internet and artificial intelligence.
For 2026 alone.
Plans are underway on the part of the Chinese authorities to upgrade 5G networks in the country and connect factory equipment to enable more automated, digitalized and intelligent production systems.
For the first time, This year's government work report calls for creating new forms of smart economy, which can be seen as the next stage in terms of the evolution of the digital economy.
So joining us now on the line is Professor Jiang Gong from the University of International Business and Economics.
So thank you very much for joining us today, Professor Jiang Gong.
First of all, why do you think a hike of 2 percentage points in terms of the digital economy's share in China's GDP from 2025 to 2030 largely seen as a significant increase, and what does it take to achieve this hike?
Well, first of all, thank you very much for having me.
The concept of digital economy has been proposed quite a few years ago and my understanding is that it has different definitions, different ways of characterizing the exact meaning of digital economy.
I remember Back then.
McKinsey Consulting Company has a report about the extent of digital economy in China.
And since then, the latest paper that I have seen, if I remember this correctly, is that China's percentage of the GDP that is attributed to the digital economy I think it's like 37 percentage points.
You know, if you talk about 2 point increase On top of that 30, I mean that's actually a quite significant increase, right?
I think you know.
First of all, a two percentage points increase in share is a quite significant increase.
What does it take to achieve this high?
Well, I think you know there's a lot to do with our manufacturing or production model is transformed into using more and more digital technologies.
And that's the way the economy is going.
That's the way technology is going.
So we're moving in that direction.
That translates into a more competitive economy, more competitive industries.
So this is something we should strive towards.
Delivering this year's government work report, China's premier pledges to improve the fundamental systems for data as a production factor and construct high-quality datasets.
So why do you think China has recognized the data as a production factor and how can China build high-quality datasets?
Data has been labeled as the new production factor.
People sometimes say, well, data is oil, data is gold.
Data in itself creates productivity gain.
I think you know, in today's economy, today's production mode, there's more data being generated, especially with the proliferation of sensors and pretty much ubiquitous telecommunication networks coverage.
There will be more data being generated.
I mean tons of examples how data has created to productivity gain, more efficient economy, things of that nature.
I'll just give you one example.
Today, it's actually a very good example.
Today, for example, if you use the navigation tool of a map in China, in many cities, the navigation tool associated with the map when you're driving a car is tied to the traffic conditions of that particular city.
Right yeah, there's tons of data being generated because of sensors on the streets, because of uh you know cameras on the streets.
A lot of data is is collected regarding regarding the traffic condition, and navigation tool would optimize over the traffic conditions And that's saving time in driving.
And if one person can save two or three minutes of driving on each tour, we're talking about millions of minutes in a city.
So it's a huge saving.
This is a vivid example of how data can be used as a production factor.
Um so in 2024 um.
China's government work report first introduced the ai plus initiative and the report last year advocated for its continued advancement um.
This year, the report calls for creating new forms of smart economy for the first time, framing ai as an engine for a broader economic transformation.
So what does this upgrade in the government work report wording?
Tell us about how the digital economy is positioned in China's policy thinking.
Yeah, well, AI is the driving force.
It's a transformational technology, right?
And I think it's particularly attuned to applications in the manufacturing sectors, and China, being a manufacturing powerhouse, is particularly in a advantageous position to apply and use and promote these new productivity-gaining, efficiency-gaining tools associated with AI.
So I think we're in a fairly good position.
And as the Chinese government has always been doing, you know, in promoting and cultivating a industrial policy tied and surrounding the latest new technologies, has always been quite successful in driving China's economy moving ahead.
So I think, you know, this is no exception here.
You know, we're at the cross of AI revolution.
You know the government is not surprising to me that the government is devoted to that in promoting this technology.
Now, professor gong, some say china's manufacturing sector provides an excellent foundation for the future development of china's digital economy.
What is your take?
Yeah well, as i said, i think you know ai is particularly attuned to being applied in manufacturing sectors.
So uh, you know, we are manufacturing powerhouse, So this provides an actual foundation for the future development of China's digital economy.
So I think the market is already reacting to this.
The VC capitals are reacting to this.
The companies are reacting to this.
So there will be definitely resources being directed towards that direction.
And our government is providing guidelines, providing some assistance, essentially driving the entire industries to move in that direction.
Now China has already unveiled plans to establish seven pilot zones for the digital economy.
They will be located in Tianjin, the Xiong'an New Area, in Hebei, in Shanghai, in Jiangsu and Zhejiang, and Guangdong and Sichuan.
So Professor, what roles do you expect these planned pilot zones to play in terms of accelerating the development of the digital economy?
When we talk about the pilot zones in China in this particular context, usually what we mean by that is that there will be favorable policies being developed, maybe incentives, financial incentives, particularly supportive policies, things of that nature.
This is the very Chinese way of doing things from an industrial policy perspective.
The government has been doing this, has been adopting this kind of practice for many, many years.
So when the government provides this kind of incentive, the industries and companies will react to that.
And there will be a wave of companies devoted to this, as incentivized by these policies, by these initiatives, by these incentives.
And then more companies will follow.
So I think this is how a new sort of ecosystem is created.
And if you really think about it, I think it's more like a, Like a herding, right?
It's like a herding.
The government is acting like a shepherd.
German shepherd in a sense, right?
Driving the companies towards that direction.
This is what industrial policy is all about, I think.
By the way, what do you think China's deeper and more profound embrace of the digital economy might mean for average people living in this country?
Realistically speaking, does that mean that people in China will have to work on a day-to-day basis even harder than they are now?
Would you say people in China will have more time for leisure, for entertainment?
People will have more leisure time to spend on consumption, on services, etc.?
Well, I will raise two issues about this point.
The first thing is that, as a matter of fact, Chinese people work a lot harder than many other workers in other countries.
Definitely work much longer hours, much harder hours. than people in Europe, right?
A German chancellor famously mentioned that in one of his speeches recently after returning back from China.
So he's realizing this problem that China's workers are working harder and having less leisure time.
So that's the first thing I want to say.
Second thing is that the digital economy, all these sort of AI enabled tools, are supposed to make people's life easier, right?
It means that, you know, we don't have to work as hard in the past.
We should have more time to enjoy life and spend time with family members and kids.
So I think definitely, you know, The movement towards that direction, towards digital economy, should imply that people should have a happier life, should be having more time to spend with their families and kids, to have more leisure time and to enjoy life too.
Yeah.
So we know.
In the case of the United States actually, according to a 2025 report by the Interactive Advertising Bureau, which is an American advertising business organization,
Digital economy accounts for about 18% of the GDP of the United States.
So professor, as you look at China's determination to increase the share of the digital economy, Do you see any elements of China-US competition in this field?
Okay, so this number, 18%, is a much smaller number than the number that I've seen.
I think that's okay.
It depends on your definition of what the digital economy really means and different ways of measuring it.
So I think it's okay.
It's not a conflict here.
But nevertheless, I think the general drive to increase that number to make sure that the share of digital economy and the GDP is becoming larger and larger.
And the United States and China are engaging in fierce competition in the realm of high tech.
Yeah, there's a competition here.
And both countries are driving towards that direction.
And I think competition is healthy and it's good.
As long as it's played fair and square.
So I think you know, if the previous increase of 2 we're just talking about, if it's on top of this 18, that would be even more of a significant increase, right.
So, you know, I think China is in good shape and we have set a fairly ambitious target.
Okay.
Thank you very much for joining us.
Professor Zhang Gong, joining us from the University of International Business and Economics.
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Welcome.
I am Chuchu Zhang, Deputy Director at the Center for Middle Eastern Studies at Fudan University.
On the World Today program.
We will dive beyond the headlines to uncover the stories, trends and impacts that connect states across the globe.
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I'm Ding Hen in Beijing.
A political advisor from Hong Kong is calling for the city to serve as a springboard for Chinese brands going global, especially in the textile and garment sector.
Speaking at the ongoing two sessions, Dr Henry Tan, vice chairman and CEO of Luentai Group, says Chinese manufacturers have evolved from being the world's factory to building their own brands.
In an exclusive interview with my colleague Song Ruixin.
He has also highlighted the low-altitude economy, urging pilot projects like fresh food delivery across the Greater Bay Area in southern China to clear regulatory hurdles and scale the model globally.
Dr. Tan, it's very nice to meet you here today.
Over the past two years, you've focused a lot on greater Bay Area integration, from helping Chinese brands to go global to improving regional logistics.
Then what is your main focus this year?
Good to be here.
This year I have two main focus.
I believe that the Chinese manufacturers or Chinese brands has grown from our traditional role as factory of the world manufacturing for global brands.
And right now a lot of Chinese brands are mature and I think we should start to have Chinese brands going overseas.
And I believe that Hong Kong could be a very good springboard to bring the Chinese brands overseas.
The quality and price value of the Chinese brands, especially in the textile garment area, is very, very competitive.
A very, very good price value.
And I believe that the Hong Kong companies, we have been in Southeast Asia for many years.
In the old days, when the quota time, we manufacture in those countries.
And right now, many of us are also in retails there.
But I think we'll be able to support the Chinese brands to go overseas, especially in the ASEAN countries.
You've just mentioned logistics and cross-border connectivity.
One topic that has been getting a lot of attention recently is the development of the low-altitude economy.
From your observation which application scenarios in the low-altitude economy reflect real market demand and which are still more hype than substance.
Well, I look at it this way.
First of all, the low attitude economy has been the main point of the 15 five years plan.
And the Hong Kong government has also announced that Hong Kong this is the first time Hong Kong will have a five years plan.
And one of the areas is also a low attitude economy.
And I believe we have to select some product that is time sensitive. to make this happen.
So I have suggested to the authority that maybe we can look at some fresh products that we manufacture in Guangdong and try to bring them to Hong Kong.
And there is a lot of regulation hurdles that we have to go through.
But I think we need to have one product that will make this possible by moving the products from a factory in Guangdong to a destination in Hong Kong.
I do not believe that we can really just take it down from the factory to a custom area for clearance to another custom area for clearance.
We're going to make it through traffic.
And how do we do it?
I think there's a lot of regulatory hurdles in the Greater Bay Area when we have three custom territories.
But I think all this can be resolved, but we have to make it happen.
So could you elaborate more on that?
What are the main obstacles at this stage?
Let's say, you know, it's a fresh product.
So you get health standards, custom standards and regulatory, other low attitude use of the space or maybe others.
But I think you know I can see that both the Hong Kong government and the Guangdong government would like to do it.
But we've got to get one product and one company to get it started.
And once those hurdles are clear, And I believe there is willingness to get it done.
So we have to get all the nitty gritty done.
And I believe that this is what we need to do.
And if we try to do it with fresh products, which is time sensitive, and maybe in the future other products, whether it's medical medicines or others, that will be able to use the same theory to get it through.
And I believe that this is a very big undertaking of China.
And we have all the equipment and all the products.
And if it's successful, we can also replicate it in other countries, in some of our border towns in the country, or maybe even in ASEAN, where there are many smaller countries and those can be applicable.
I've seen low altitude transport is also often discussed in the context of green consumption.
So let's take drone delivery as an example, especially for fresh food logistics.
What do you see as the biggest friction point between this emerging model and the existing system?
And how can it be resolved?
I believe we need to have an economy of scale to make it happen.
We do not have it now, but many years ago.
We do not have the economy of scale for e-commerce too, but we make it happen too.
In China, I mean, our e-commerce is very, very successful.
And one of the things is we are able to develop the economy of scale.
So I believe that we have to get the regulatory hurdles through.
And then we will build it from there on.
And I believe that the cost will become very effective once we have the volume.
And this is what China is all about.
We test it, we run it, and it's successful.
We multiply it by millions.
And therefore it may become a new business model and a new delivery method, not only for the Greater Bay Area but for the whole world.
After Financial Secretary Paul Chan unveiled new initiatives on autonomous driving and the low altitude economy, Hong Kong appears to be moving quickly.
So in your view, what is the most decisive driver behind this acceleration?
I think in Hong Kong we are trying to catch up with some of the technology in Guangdong.
I mean, I have seen a driverless car, you know, in Shenzhen and in Dongguan, and I believe that Hong Kong will have to catch up.
And I think, Hong Kong being an international city, once we are able to get it done, there will be more foreigners will be able to see it, and then Hong Kong will also have a lot of traffic, a lot of complexity in our roads.
And if we are able to showcase to the world, this is working and I think we can replicate to the rest of the world too.
And I think this is not only good for Hong Kong, and I think our people will probably be able to get a taxi at a much lower cost.
And it will also help the whole system to be replicated globally.
I believe that the world can learn from China.
We already have some of those in the streets of Guangdong and other cities in China.
But once we get it done in Guangdong, and we should do it in Hong Kong, where common laws and where the legal framework is more similar to the rest of the world, and also if they see that it works in Hong Kong and also it may be and I believe it would be cheaper because using electrical vehicles, I mean the cost of operation is lower.
With our driver, the cost is also lower.
And therefore, if we are able to bring economic benefit to the people of Hong Kong, then such situation can be replicated in the rest of the world too.
So finally, Dr Tan, if we look at Hong Kong's longer-term development, as Hong Kong drafts its first five-year plan, which you have just mentioned, aligned with the national framework, how can it further consolidate its role as a super connector?
I know it's great that Hong Kong is drafting our first five-year plan.
And I believe that in China, not only the nation has a five-year plan, every city, every province has its own five-year plan.
And I believe that different industries in China also have a five-year plan by industry.
And Hong Kong should look at the different business and how can we be part of the national five-year plan yet where Hong Kong has the strength?
I mean, for example, I'm in the textile garment industry.
China has very, very big production, very good brands.
And Hong Kong, we know the overseas market better.
We are a lot more international.
And I think that's where the strength is in Hong Kong.
We should be able to utilize where Hong Kong is strong at, and we can go out together.
So we have to examine every industry in detail and come up with a plan.
And I think it's good that we're doing it now.
That was Dr Henry Tan, Vice Chairman and Chief Executive Officer of Luan Tai Group, talking with my colleague Song Reixin.
More to come.
China's consumer inflation hits three-year high in February.
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We'll be back after a short break.
You're back with World Today, I'm Ding Hen in Beijing.
China's consumer price index rose by 1.3% on a yearly basis last month.
The core CPI, which excludes food and energy prices, increased by 1.8%.
In this year's government work report, China keeps its CPI growth target at about 2% for 2026.
Meanwhile, data also showed that the PPI, or the producer price index for factories, went down by 09.
The decline in the PPI has narrowed continuously.
For more on this, my colleague Zhao Yang spoke with Dr Yao Shujie Chang Kong, Professor of Economics with Chongqing University.
So Professor Yao, China's CPI rose 1.3% year-on-year in February.
This is the highest level in nearly three years.
So what do you think are main factors driving this rebound?
First of all, I'm very encouraged by the figures because we have been suffering from very low inflation for the economy for a couple of years.
1.3% is for the first time in three years.
That means there is a significant recovery in the consumer confidence.
What are the particular factors?
I think, apart from the spring vegetables, The general confidence of the consumer is emerging and the factory gate in productions and also employment is getting more positive after a few years of pandemic.
And now we can see that the housing prices is also fairly stabilized now, although after a couple of years of sharp decline.
So consumer tends to have a larger stable expectation for the housing prices and for the consumption expectation.
So this is probably a very encouraging signal at the beginning of the new year.
And in the government work report it says that there will be steps being taken to further unlock the potential in consumption power.
And that also highlighted some areas like tourism, culture and sports events, health care.
So what are the new consumption scenarios and demand already emerged and which sectors are expected to see new demand?
Do you think?
Yes, if you cut the consumer demand into different segments.
The first segment is the basic necessity, such as food, clothing and other, you know water, electricity.
All these are the basic needs.
We can see that the general consumer confidence is very strong for this kind of basic necessity.
There is a growing demand as people's incomes is increasing, so they can spend more money on tourism, hoteling and other kinds of entertainment.
And really the demand and supply is balanced.
Because, As people require higher level of consumption and also higher level of entertainment, I think the market have to provide high quality services and also stable services so that there will be a balance match between supply and demand.
So how we can drive the future demand.
I think The top priority is to maintain stable employment and also to make sure that people get their income in time.
And other things is that government can also stimulate demand, like some sort of swap the old with the new, for example, like household electrical appliances, and also the continuous support for the demand of new vehicles.
So this, this and also i i think there are some other policies including, you know economy housing, including some sorts of better housing conditions.
So there are many kinds of things that the government can do.
And as the consumer confidence is now showing a growing trend, I think it's a great opportunity for China to maintain this sense of economic dynamic.
And China has set the inflation target for this year at around 2%.
So why is maintaining moderate inflation beneficial for China's economic growth and employment?
In general, there is no universal theory defending what level of consumer price should be.
But according to the past trend, whether it is longer term people be largest level of CPI.
Let's say 2 to 3.
3 could be too high, but 2 is probably more ideal for encouraging consumer confidence, especially to boost the confidence of the producer's markup.
Because without the CPI getting into a clear positive territory, I think PPI would be in the negative territory, which actually suppress, you know, produces profitability and it produces profitability is suppressed too much.
There will be lack of confidence in the investment and without strong confidence in investment they will, you know, draw back to the con, to the consumption, because it affect employment and people's incomes.
So to have the economy in a dynamic and positive growth territory, a moderate consumer price rise is better than close to zero in the negative territory.
And you mentioned the CPI rising and PPI still in negative territory.
How should the policymakers balance the price stability with economic growth?
And what are the fiscal policies can be used?
Well, you can see that I also have a fairly bright light in the PPI dimensions.
PPI increased actually over the previous months of 0.4%, although compared to last year, it's 0.9%.
But you remember that a couple of years ago or during the past 24 months.
PPI is in a highly negative territory.
Now it's in 0.9, it's less than one.
And I'm expecting this trend will continue, because it has been continuing in the last few months that the PPI decline has been stopped and it's on the rise.
So how can the government do?
I think the government, first of all to maintain the macroeconomic stability policy.
Stability encouraging investment and also encouraging innovation to improve the quality of product, so the consumers are more willing to pay a higher price for the same unit of goods and make the producers more profitable.
The other thing is encouraging further investment in the technological sector, you know, with technology embedded into the new product or the emerging products.
This would encourage the producers to produce better goods so that they can also have better profit.
With better profit and better goods, I think our factory products prices will continue to rise.
And I am expecting that in the next couple of months, we will see a zero PPI or even a positive PPI.
That would be very encouraging for the recovery of the producer sector.
And some emerging industries, including AI, robotics and green manufacturing, are seeing price increases.
So does it signal stronger demand in high-tech sectors?
Yes, I mean the high-tech sector.
In the economy terms, we call it the emerging sector or the future sector.
The emerging and the future sector is the direction of economic development.
And usually the emerging and the future sector.
The prices will be leading the way and also the productivity will lead in the way.
And the traditional industry.
Of course, they have to suffer from a certain level of contraction or decline and there will be transfer of the industrial chain, the production chain, from the relatively lower level to the higher level.
And this is a way of China's economy upgrading.
It will reflect China's socialist modernization in the industrial adjustment.
Yao Shujie, Chang Kong, Professor of Economics at Chongqing University, speaking with my colleague Zhao Yang.
Coming up.
G7 countries look to take necessary measures to support energy supplies as the Iran conflict continues.
This is World Today, we'll be back.
You're back with World Today, I'm Ding Hen in Beijing.
G7 nations have signaled readiness to take necessary measures to support the global supply of energy after the war in the Middle East sent oil prices surging.
However, a meeting of G7 finance ministers and the International Energy Agency ended without a deal to release strategic oil reserves.
Traffic through the Strait of Hormuz in the Middle East has come to a grinding halt since the US-Israel war with Iran began.
Some 20% of the global oil supply is usually shipped through the waterway.
Major disruption to energy supplies from the region is threatening to push up the prices for consumers and businesses across the world.
So joining us now on the line is Dr Zhang Chuchu, Deputy Director of the Center for Middle Eastern Studies at Fudan University.
Thank you very much for joining us.
Thank you for having me.
So G7 finance minister's assessment is that things are not there yet on the question of whether or not to release emergency oil stocks, but they say they are ready to take this measure.
How would you look at this particular assessment?
Well, I think this sort of assessment seems to signal a cautious and pragmatic stance, But at the same time, it also seems that this sort of assessment is inherently reactive rather than being proactive, while it's a reflection of the G7 group's internal divisions and also the broader uncertainty in global energy markets.
So, on the one hand, we can see that it's very important not to prematurely deplete reserves, as this could signal panic and further inflate prices in the long run.
And currently the IEA has already emphasized that current disruptions, while severe, have not yet caused a full-blown supply crisis, given alternative routes like Saudi Arabia's East-West Pipeline and also OPEC spare capacity.
However, on the other hand, this wait-and-see approach also risks underestimating the conflict's potential for prolongation.
And in fact, from shifting timelines at the moment, such as no quick end and also there lacks mechanism for the two sides to reach an agreement.
And also Iranian retaliation on Gulf facilities could further escalate shortage rapidly.
Meanwhile, it is very important to note that such actions should be coordinated internationally.
So there needs to be joint efforts to solve the problem of high oil prices.
Hmm.
Most recently, U.S.
President, Donald Trump has given some conflicting replies regarding when the war with Iran might come to an end.
He has.
For example, he has said that American goals may be pretty well complete, but he has also told House Republicans that, quote unquote we have not won enough.
So do you think oil prices is one of the issues leading to the U.S. leaders conflicting messages?
Well, from my observation, actually, Trump's statements are often inconsistent and wavering, right?
It's not the first time.
And he himself calls this a flexible strategy.
And this time, I would say, his statements were intended both to demonstrate his achievements and to justify his continued war efforts.
So, from my view, such inconsistency reveals the United States underestimation of Iran's asymmetrical capabilities, forcing a pivot from short war to open-ended campaign.
So at the moment, he is somehow trapped in a dilemma.
And as international oil prices continue to soar, Trump sought to alleviate the situation through various means in order to avoid a decline in his domestic approval ratings in the United States.
And at the same time, Trump also faced domestic public pressure, especially criticism from the Democratic Party.
And I think all these factors have prompted him to change his tone.
So actually President Donald Trump and his Russian counterpart, Vladimir Putin, they have held a phone call to discuss the war in Iran.
Trump is.
According to some media reports, he is considering easing the sanctions against Russia and other possible measures to try to cool oil prices.
Is that a viable option for Trump?
Well, Trump has always expressed different ideas.
So I think we should still follow the news and see what kinds of steps he's going to take in the next few days.
But I think easing sanctions on Russia as a tactic for stabilizing oil prices could be a viable short-term tactic for Trump.
At the same time, Trump's statement was also intended to sow discord between Russia and Iran.
But I think such an action may not yield immediate relief and may face a lot of problems within the Western world because domestically Trump could face bipartisan congressional opposition.
In particular, the Democrats are very likely to criticize his policy of easing sanctions as rewarding Russia.
And geopolitically speaking.
This kind of action might also alienate European allies reliant on United States LNG.
And moreover, it's very interesting to see that recently, Zelensky stated that 11 countries, including European states and United States, have sought Ukraine's assistance in dealing with drones launching from Iran.
So it could be very contradictory for Trump to simultaneously ally with Ukraine and leave sanctions against Russia.
Before holding this particular phone call with President Donald Trump, Putin emphasized that Moscow is a reliable energy supplier and will continue to be so to two countries that themselves are reliable partners of Russia.
He has reiterated that Russia is pondering diverting gas supplies from the European Union to other markets.
But he also added that if, If European buyers change their mind, then Moscow is very much ready to work with them again.
So, with that in mind, Dr Zhang, do you think the energy issue triggered by the Middle Eastern conflict we're talking about here has ended up creating a favorable position for Moscow in terms of the country's geopolitical bargaining with the West, especially European countries?
How do you think the war between the US and Iran might impact, let's say, the trajectory of the war between Russia and Ukraine?
Well, I think the energy disruptions from the Iranian war might create a favorable bargaining position for Russia vis-a-vis the West, as you have mentioned, by amplifying Moscow's leverage as a so-called reliable supplier amid global shortages.
And this kind of dynamic could indirectly prolong or alter the Ukraine war's trajectory, because higher oil revenues could bolster Putin's war chest, funding his military efforts and mitigating sanctions by it.
So I would say, currently European countries are facing a dilemma because, on the one hand, if they cannot obtain sufficient energy from both Russia and the Middle East, and if international oil prices continue to rise, then it means they will face energy shortages, economic recession and even an economic crisis.
But on the other hand, if they ease their stance towards Russia, then their previous aid to Ukraine would become meaningless.
So therefore, the game and struggling between Russia and major European powers is likely to be quite complex and fraught with uncertainty at the moment.
Thank you very much for joining us.
Dr. Zhang Chuchu, Deputy Director with the Center for Middle Eastern Studies with Fudan University.
Coming up, von der Leyen calls for EU's foreign policy to be more realistic and interest-driven.
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Hello, I am Dr Digby James Wren, a political analyst and international relations scholar specializing in China area studies.
World Today offers unmatched in-depth perspectives on China's politics economics business, technology and society.
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I'm Ding Hen in Beijing.
European Commission President Ursula von der Leyen has caught on Europe to adopt a more realistic and interest-driven foreign policy.
She made a remark when speaking to an audience of EU ambassadors on Monday, saying that Europe can no longer be a custodian for the old world order.
She also emphasized the need to reflect on whether the bloc's doctrine, institutions and decision-making are keeping pace with the speed of change.
Von der Leyen has faced criticism in most recent days for her handling of the war between the US and Iran.
On Monday, she avoided criticism of the United States and Israel for beginning this war.
So for more.
Joining us now on the line is Dr Kamal Makili-Aliyev, Associate Professor at the School of Global Studies, University of Gothenburg.
Thank you very much for joining us.
Thank you for having me again.
So if a more realistic and interest-driven foreign policy is what Ursula von der Leyen is calling for now, how would you define the EU's previous foreign policy?
Well, traditionally, the EU foreign policy has been normative and rules-based.
The Union positioned itself as a defender of multilateralism, international law and institutions such as the United Nations and other relevant organizations.
Its diplomacy often emphasized values like human rights, democracy and effective global governance, and sometimes more than hard geopolitical interests.
In this sense,
And that approach reflected the post-Cold War environment where the EU believed international rules and institutions would provide stability globally.
But over the last decade, especially after Russia's invasion of Ukraine and rising geopolitical competition and also United States' difference in its approach to the EU, the Union increasingly feels that the rules-based order alone is not enough to protect its interests.
And my interpretation of von der Leyen remarks would say that they signal a shift.
Europe should still defend its values, but Security, economic resilience, strategic autonomy is going to play a larger role in decision-making.
So if the European Union wants to keep pace with the speed of change around the bloc, what reforms do you think are genuinely needed in the bloc's doctrine, institutions and decision-making?
The biggest issue is decision-making speed and unity.
So you...
Foreign policy still largely requires unanimity among 27 member states, which often slows the responses to crisis.
And in this sense, free reforms are going to be crucial.
First, expanding qualified majority voting in foreign policy decisions so that a single member cannot block the action of the union.
Second, it would be strengthening European defence and security capabilities.
The EU is already discussing a new security strategy where the security becomes a central organising principle across defence technology, trade and infrastructure.
And third one is improving strategic coordinations between EU institutions and member states, so Europe can act more coherently during crisis.
I think without these changes, the EU is going to risk remaining a strong economic power but a slow geopolitical actor.
So in real practice, do you think it will be easy for the EU to pursue a more realistic and interest-driven foreign policy?
I mean, in reality, it's quite difficult.
The EU is not a single state.
It's a union of countries with different histories, threat perceptions and even geopolitical priorities.
So, for example, Eastern European states often focus on Russia and security issues, while South European countries prioritize migration and the Mediterranean security.
At the same time, countries like Germany and France may emphasize economic relations with major powers, because that's what's relevant for them.
So even if Brussels wants a more strategic foreign policy, national interests inside the EU will still diverge, and that will make the truly unified geopolitical action very challenging.
So when it comes to the Iran conflict, what do you think is at stake for the EU?
Well, the stakes for Europe is very high.
I think first it's regional stability, because escalation in the Middle East I think it can quickly affect Europe through migration pressures, tourism risks and energy disruptions.
We're seeing some of it coming to life.
Second, I would say economic security.
Wars in the region often affect oil and gas markets on the global trade routes, which directly impact European economies.
And I think the third factor would be, of course, transatlantic relations.
The EU must balance its partnership with the United States while also maintaining credibility as a defender of international law.
So I would say what the alliance remarks about political change in Iran are also politically sensitive.
On one hand, they criticize the Iranian regime, and this reflects European concerns about repression and regional destabilization.
And, on the other hand, openly discussing regime transition, can be perceived as taking sides in the conflict, which may complicate Europe's ability to act as a diplomatic mediator, should it acquire such a role.
So I think this is why some EU leaders have already expressed concern that abandoning the rules-based framework You know it could undermine Europe's credibility and its stance in international diplomacy.
So I guess you are talking about.
In the early days of the war, Mrs von der Leyen said that a credible transition in Iran was urgently needed.
So, in your opinion, making a remark like that is not necessarily in the best interests of the European Union.
Considering that Europe is very bad with the quick tactical shifts, especially in the international diplomacy, I think it's rather telling that the Wonderland speech was not perceived unilaterally as positive across even European countries.
So yes, I think it might not be in the best interest, and it reflects a broader debate about whether Europe should move from the values-first foreign policy towards a more strategic, security-driven approach in a much more unstable world.
So, very briefly, the final question before we let you go.
Dr Kamal Makili-Aliyev, when we talk about the EU's China policy, how do you think a more realistic and interest driven policy might look like?
Well, if you would take a look at the EU policy towards South Caucasus that focuses on the trade and energy rather than issues such as human rights and foreign policy based on values.
I think that's a great example of how it might look like.
But that's just one small part of it, I think.
Wonderland is hinting that they might be going towards its relations, for example, with Georgia, Armenia and Azerbaijan and that cluster of countries to the east.
Thank you very much for joining us and for your perspective.
Dr Kamal Makili-Aliyev, Associate Professor at the School of Global Studies University of Gothenburg in Sweden.
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I'm Dinghan in Beijing.
Thank you so much for listening.
Bye for now.
