European Affairs

EUROPEAN UNION AND CHINA – GROPING TOWARD A RELATIONSHIP IN THE NEW WORLD ORDER     Print Email

As the EU has pursued its evolution toward more diplomatic coherence along the lines laid out in the kerry.brown1Lisbon Treaty of 2010, one of the closest observers of the process has been the Chinese government. China became the EU’s largest single trade partner in 2008, notably the largest destination for Chinese exported goods, and China’s investments and other financial interests in the EU expanded in the last half a decade.

By 2009, over 150,000 Chinese were studying in one or another of the 27 member states.  Increasing amounts of technology and foreign direct investment were coming from Europe. So the growing EU-China relationship, which as early as 2003, had been termed a “strategic partnership,” has fit nicely into China’s self-described “peaceful rise” in a multi-polar world where U.S. hegemony  is being gently but steadily curtailed.

In the interval since the Lisbon Treaty was signed, the EU has changed with the emergence of a more powerful European Parliament.  It has gained diplomatic infrastructure with its new European External Action Service and a raft of other administrative changes and regulatory initiatives have emerged and begun to be implemented.

Even with these developments, however, the EU remains fundamentally puzzling for China. Despite the EU’s success as a venture in multilateral cooperation, episodes continue to show  the EU’s inability to reach consensus on issues that matter to China, which confuses – and often irritates – Beijing.  When the EU pulled back in 2004-5 from a decision to lift its arms embargo on China, it was a shock in Beijing.  The ban, imposed after the Tiananmen Square incident in 1989, has become largely symbolic, because national stand-alone laws in individual EU member states place enough restrictions on the export of dual-use or sensitive equipment to be effective without needing a multilateral embargo. When the EU refused to change its stance, mostly due to pressure from the U.S., the outcome was read in Beijing as fresh evidence of the fact that, at the end of the day, the EU has a surfeit of soft power but remains limited in its ability to produce hard power, even in diplomacy.  In that regard, the Lisbon goals remain good intentions with often illusory substance.

This Chinese perception has been reinforced by the Eurozone crisis.  As countries’ credit has crumbled under the weight of debt, the fear of contagion has been matched by the unwillingness of the German government to override domestic pressures and act quickly to shore up the eurozone as a whole. Now the future of the single currency, a great EU achievement, seems under threat, the prospect of deepening economic turmoil has forced even non-eurozone members such as Britain, to speak, albeit guardedly, about closer fiscal union in order to avoid member states running up massive debts and overspending. In this uncertain time, the Chinese have joined in global concern about Europe. In recent months, both Premier Wen Jiabao and his likely successor, Vice Premier Li Keqiang, visited Europe and spoke at length about the need to actively bolster the euro. In January 2011, Li signed an agreement to purchase six million euros worth of eurobonds. In Germany, which he visited in June, Wen spoke publicly about the need to use the euro as an alternative to help to diversify away from U.S. bonds (of which China currently holds an estimated one trillion dollars. (Global financier and hedge fun visionary George Soros recently told the German news magazine Der Spiegel that China would do everything in its power to preserve the euro as a future alternative reserve currency to the dollar for Beijing.)

Despite these overtures from China’s leadership, the EU’s fundamental nature and its outlook still remain something of a mystery to the Chinese. This is not for lack of effort and resources being deployed by the Chinese to try to crack this particular nut. Chinese universities and think tanks across the country are rife with centres for the study of the EU. The Chinese Academy of Social Sciences has a highly respected research program devoted entirely to analysing the EU’S external relations, particularly those with China. China has no less than 56 separate strategic dialogues with the EU -- on top of their annual bilateral high-level economic dialogue.

So, there is ample talk between the two sides. But what seems to be lacking, strangely enough, is political will and focus on the side of the Europeans, who profess to be seeking a broader global voice. The result has the overall effect of irritating and confusing Chinese officials. How, they wonder, can such a vast single economic entity, which is putting so much official emphasis on the goal of speaking with a united voice often prove, in the end, so disunited?

On what we might call “negative issues” like demands for greater market access to China,  the EU can work well together, with the EU Chamber of Commerce in Beijing issuing comprehensive reports each year on the need to have open access for European companies for key sectors in China, and for the vast government procurement contracts that are still, largely  awarded to indigenous Chinese companies. On the other hand, the EU refuses to eliminate its own contention with Beijing -- the refusal to accord China “free-market status” because of the continuing role of the state in the economy.

In practice, attempts to articulate the more positive elements of the relationship remain elusive in results. Many Chinese specialists put the onus on the EU itself for this wavering diplomacy. Chinese academics cite the phrase of a visiting EU-based commentator who last May told his Beijing audience: “For Europeans, unity is abnormal.” The NATO-led emergency action against the government in Libya stands as a good example: Britain, France and Italy played vigorous roles but Germany vociferously opposed the military action.

This state of disunity has been widely acknowledged within the EU and Chinese leaders themselves have commented on it for several years now. There is far less consensus, however, on what to do about it. The important EU document released in 2006, “EU-China: Closer Partners, Growing Responsibilities”, stipulated that “Europe needs to respond effectively to China’s renewed strength. To tackle the key challenges facing Europe today – including climate change, employment, migration, security – we need to leverage the potential of a dynamic relationship with China based on our values.” To do this, the EU declaration pointed out five key objectives:

  • Supporting China’s transition towards a more open and plural society
  • Working together on sustainable development
  • Building trade and economic relations
  • Strengthening bilateral cooperation
  • Strengthening international and regional cooperation.

Such ambitious objectives are hard to achieve with China when there is still such a conspicuous lack of a unified voice for dialogue and action. Currently, the problem is complicated by the fact that leaders are distracted on both sides. For a decade, a period which was the high-tide of Chinese multilateralism, its leaders put time and effort into building links with the EU. Wen Jiabao in particular was Chinese leadership’s point man in dealing with the EU and talking up the need for a positive, constructive relationship. On the European side, major figures like former German Chancellor Gerhard Schroeder and French President Jacques Chirac visited China regularly and developed strong personal rapport with key leaders there. This rapport compensated, up to a point, for a lack of unity in Europe itself on issues of mutual interest with Beijing.

Now, however, Chinese and European leaders are preoccupied with issues in their own back yards – for different reasons.  The economy dominates discussion in Brussels and the other leading EU capitals. China is preoccupied with a leadership transition next year and a current increase in social contention among Chinese. (Public anger over the tragic high-speed train crash in July was only one of several recent signs of vocal popular dissatisfaction with what is perceived as government bungling.) These two issues consume the majority of the central government’s time and attention. The EU has to compete with a raft of international and domestic issues for “political airtime” in Beijing to get its agenda before top leadership.

True, there is still recognition in Beijing that the EU’s economic links, technology and soft power matter. But there is now a slow trend of giving diminishing weight to the EU’s potential value. Moreover, it is unclear, who will replace Wen as the main friend of Europe when the new leadership takes form in China at the end of 2012.

Perhaps one of the oddest features of this situation is how rarely the EU, China and the U.S. sit down collectively at any significant level of trilateral consultation. In reality, the fact is that on almost all major issues -- environment, energy, food security, hard-power question, the new infrastructure of the global economy – when the Chinese and the EU do sit down to talk, there is another partner at the table, the US, even though it is officially invisible. In this situation, it would be sensible, and not crazy or even far-fetched to propose a common effort to develop a G-3 that added the EU to the U.S.-China G-2. As things stand, there is little or no structure for these three to formally sit down and talk about their common concerns. What little “Trialogue” there is comes via the G-20.  It puzzles many analysts that so little effort is being made to fill this vacuum with a trilateral conversation.

The onus is now on the EU to muster the political will to create a more unified and strongly defined China policy.  This is clearly the case, given China’s internal issues and its attitude towards the EU. There are some good foundations for it.  Well-intentioned and excellently worded documents and dialogues have been created over the last few years; official links and  grass-roots ties have expanded massively. Now the time is ripe, even in currently adverse economic conditions, for EU politicians to show leadership and articulate a clearer view of how they see China and how they want to relate to it -- as an investor, a geopolitical actor, a technological and scientific partner and, in some areas, a clear competitor. For this, the EU needs to try harder to speak with one voice more consistently. European policy-makers need to work together to define the China-related issues that affect member states across the EU and then try to forge a core policy providing a common approach and set of messages that can be articulated by all the major EU players. Daunting as this will be to accomplish, the challenge is worth it: China has now become big enough and important enough to merit this attention.

If the U.S. can be involved in this initiative, so much the better. Some people may fear that Beijing would be wary at seeing more U.S. and European efforts at a dialogue on China. But the opposite is true: the prevailing absence of transatlantic co-operation on China only makes things more confusing for everyone, including the Chinese, at a juncture where there are so many clear areas of common interest. It is time for politicians to forge this kind of new alliance: in other words, not just speak about globalisation in this area but recognise and act on it.

Kerry Brown is Team Leader of the Europe China Research and Advice Network (ECRAN), details of which are at www.euecran.eu, and Head of the Asia Programme at Chatham House. The views here are personal and should not be taken as representing those of the European Commission
.