China-Europe Relations Get Complicated

David Shambaugh
David Shambaugh
David Shambaugh Gaston Sigur Professor of Asian Studies, Political Science & International Affairs; Director of the China Policy Program - Elliott School of International Affairs, George Washington University

May 1, 2007

After a decade of rosy rhetoric and steadily improving ties, China-Europe relations entered a more complicated phase. While the relationship between China and Europe has developed remarkably quickly and broadly since 1995, it now seems that the relationship may be passing from the “honeymoon” phase into the “marriage” phase of the relationship. Both parties are beginning to realize the complexities of the relationship, the fact that they do not see many issues identically, that outside factors and actors contribute to shaping the relationship—but that mutual areas of common interest and cooperation remain substantial and dominant.

The release in October 2006 of the European Commission’s latest official “Communication” on China, and the accompanying policy paper on EU-China trade and investment, signaled and made explicit many of the concerns about China that had been bubbling beneath the surface in Europe.1 In the Communication, for the first time in such a policy document, the European Commission made a number of requests of China:2

  • “open its markets and ensure fair market competition”;
  • “reduce and eliminate trade and non-tariff barriers”;
  • “level the [commercial] playing field”; “fully implement WTO obligations”;
  • “better protect intellectual property rights”; ”
  • end forced technology transfers”;
  • “stop granting prohibited subsidies”;
  • “work on clean energy technologies”;
  • “be a more active and responsible energy partner”;
  • “ensure balance in science and technology cooperation”;
  • “[recognize] the international responsibilities commensurate to its economic importance and role as a permanent member of the UN Security Council”;
  • “better protect human rights”;
  • “[ensure] more accountable government”; be more “results oriented with higher quality exchanges and concrete results” in the human rights dialogue;
  • ratify the UN Covenant on Civil and Political Rights;
  • enter into formal dialogue with the EU and “improve transparency” concerning aid policies in Africa; “maintain peace and stability in the Taiwan Strait”;
  • improve “transparency on military expenditures and objectives”;
  • “comply with all non-proliferation and disarmament treaties”;
  • “strengthen export controls of WMD-related materials”.

This laundry list of requests gave the 2006 Communication a harder edge than any of its predecessors, but it also reflected the new sobriety in Europe concerning certain aspects of China’s policies and behavior. The European Council ratified the Communication at its meeting on December 11, 2006, and produced its own 23-point list of observations and concerns about the relationship.3

These documents took China’s government and Europe Watchers by surprise. Both the tone and substance of the documents reflected a departure from the effusive rhetoric and lofty goals set forth in previous Communications, and led some notable Chinese Europe Watchers in Beijing to accuse Brussels of adopting confrontational or “containment” policies similar to what they sometimes perceive from the United States. Privately, Chinese Foreign Ministry officials apparently assured their official European counterparts that they “understood” European concerns and were not overly alarmed by the tone or the substance of the Communication. The Chinese decision to move ahead with negotiations on a new EU-PRC Partnership & Cooperation Agreement, and the warm reception given EU External Relations Commissioner Benita Ferrero-Waldner in launching the negotiations in January 2007, are perhaps indicative of the more pragmatic official reaction. Nonetheless, the EU documents do reflect a change in tone, substance, and approach to China from past precedent.

Shaping the Future of Sino-European Relations

Looking to the future, what variables will likely shape EU policy towards China? Six sets of variables can be identified.

The first is the impact of trade on the European economies and workforce. With an EU trade deficit with China in excess of ? 150 billion in 2006 (total China-EU trade topped ?260 billion in 2006), high unemployment rates in several countries (especially France, Germany, and Italy), hollowed-out tertiary industries (particularly in the Mediterranean countries), and relative lack of competitiveness in the “New 12” Central European member states, European economies are increasingly feeling the “China factor.” Thus far, it has not gotten the political traction that it has in the United States, but voices of concern and protectionism can be heard across the continent. European Trade Commissioner Peter Mandelson has publicly indicated, on a number of occasions, that these economic concerns can quickly snowball and possibly have a series of negative consequences—economically and politically.

The second variable is the degree of Chinese responsiveness to the numerous issues of concern noted in the 2006 Communication. These are not demands, but they are more than “markers.” They are serious requests put forward by the European side, in the spirit of partnership, to advance the China-Europe relationship. To be sure, China has its requests too—notably lifting the arms embargo and granting of Market Economy Status—that the EU needs to take seriously and be responsive to.

The third variable concerns relations between the EU member states and the European Commission and Council, and between the European Parliament and the Commission/Council. Prior to the release of the 2006 Communication on China it was apparent that civil society, the China expert community, and NGOs in several member states were unsettled and discontent with the European Commission’s ambitious and optimistic view of China. Many accused the Commission of being naïve. The manner in which the EU Commission and Council (mis)handled the arms embargo issue, creating an intra-European and transatlantic policy fiasco, only emboldened the critics of Brussels’ China policy.

It seems that the European Commission seriously reflected on this subterranean discontent between 2004 and 2006, undertook a rethinking of the relationship and a reexamination of Europe’s interests, and incorporated its findings in the new 2006 Communication. This, it would be assumed, will better position the Commission and Council with the member states, but also with voices heard in the European Parliament. As a result, China’s “free ride” in Europe may be over.

A fourth factor that will shape Europe’s policy towards, and relations with, China will be the pace and scope of internal reforms in China. The European Union has invested heavily—politically, financially, and rhetorically—in assisting China in a wide range of reforms. This has been the core of the EU’s approach to China and what sets the EU apart from the United States and other nations in its dealings with China. The EU has viewed China primarily through the prism of a developing country and transitional nation—in the midst of multiple reforms aimed at marketizing the economy, globalizing the society, and pluralizing the polity. In these reforms, Europeans believe they have much to share with China—given their own histories as welfare states and, more recently, the transition from socialist systems in Central Europe. This orientation differs markedly from the American approach to the “rise of China” —as Americans tend to be exclusively concerned about the external manifestations of China’s rise, while Europeans seem more concerned about its internal conditions.

Fifth, Europe now expects more from China in terms of contributing to global governance. This is made clear in the 2006 Communication. The EU welcomes China’s recent contributions to UN peacekeeping operations (PKO), to UN reform, to non-proliferation, to resolving the North Korean nuclear crisis, and generally Beijing’s new diplomatic activism. But, at the same time, the EU is deeply concerned about China’s support for non-democratic states and its “value-free diplomacy” and “no strings attached” aid programs with such states, particularly in Africa and with Myanmar (Burma). Similarly, the EU is closely monitoring Beijing’s worldwide quest for energy resources and raw materials. China may not yet be a global power, but it is increasingly a global actor. As such, Europe (and other nations) will be looking to Beijing to help address many of challenges and crises that afflict the international order.

The sixth variable affecting European policies towards China is the American factor and the new role that relations with China play in the transatlantic relationship. One positive side-effect of the arms embargo imbroglio has been that a greater appreciation of China-Europe relations began to take hold in the U.S. government and, concomitantly, a greater sensitivity and appreciation of U.S.-China relations and U.S. security commitments in East Asia developed in Brussels and other European capitals. As such, the “China factor” is now lodged more deeply in transatlantic relations. There now exists considerable consensus and broad agreement now between the U.S. and EU on a range of issues pertaining to China. It is apparent that the commonalities across the Atlantic concerning China far outweigh any differences.

Learning to Live with Complexity

The Sino-European relationship and “strategic partnership” remains an important one in world affairs and is, on the whole, a very positive one. Nonetheless, despite all the positives, it is also evident that the relationship has begun to emerge from its “honeymoon” phase. Thus far, none of these adjustments have been too wrenching, causing more minor tactical adaptations on both sides.

It is also evident that the changed—more sober—climate in relations since late last year comes primarily from the European side. In fact, when one reviews the rapid progress in relations over the 1995-2005 decade, it is evident that the EU had been the catalytic force in the relationship and played the role of ardent suitor. Brussels pursued Beijing more than vice versa. But, similarly, the lust seems to have begun to wear off more quickly on the European side. Going forward, the two sides will need to lower their expectations somewhat; clarify their rosy rhetoric; learn how to live with, narrow, or manage their differences; and develop the mechanisms to build a truly sustainable long-term marriage. Occasional frictions are to be expected, but the strong bonds and mutual interests will drive China and Europe closer and closer together over time.