The ‘China Honeymoon’ is Over

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

November 26, 2007

For Europe, the “China honeymoon” is over. As the 10th European Union-China summit meeting convenes in Beijing this week, and after 15 years of rapidly and dramatically developing ties, there are numerous indications of new strains emerging in the relationship.

Tensions have grown over the past year, for a number of reasons. In particular, there has been a changed mood in Europe about China. This is evident on a number of levels – public, corporate and governmental.

Positive public perceptions of China have dropped dramatically over the past year, dipping 15 to 20 percent in public surveys in France, Germany, Italy, Spain and Britain. This is primarily the result of job outsourcing and the ballooning EU trade deficit with China, which is growing at €15 million per hour and likely to rise from €128 billion in 2006 to more than €170 billion in 2007.

Europe’s mood has also been affected by publicized incidents of Chinese industrial espionage and attempted hacking into the computer networks of the German chancellor’s office and the British Foreign Office (and the Pentagon), as well as concerns over human rights in China, particularly Tibet.

Criticism of China’s human rights record has always been harsher among new EU member states in Eastern Europe – particularly the Czech Republic, Poland and Baltic states – which tend to view Beijing through the prism of their Communist past.

European corporations are also increasingly voicing their frustrations with China. A variety of discriminatory trade and investment practices plague European and other businesses in China, particularly the widespread theft of intellectual property and market-access barriers to China’s financial services industries, distribution networks and protected industries.

While trade is booming – €254 billion in 2006 and likely to exceed €300 billion this year – the burgeoning deficit and growing concerns over market access have rightly agitated EU governments and the EU trade commissioner, Peter Mandelson, who is criticizing China’s protectionist practices with increasing vigor.

The first indication of this was the release of the European Commission’s “Communication” on China in October 2006 – a policy paper with a markedly more sober and assertive tone than its predecessors. This was followed by an even tougher set of 23 European Council “Conclusions” in December 2006 and a downbeat “China Strategy Paper” earlier this year.

These EU policy documents laid down new benchmarks for China in a variety of policy areas: trade and investment, energy and environment, human rights, military transparency, non-proliferation, aid programs in Africa, relations with Taiwan and global governance.

Changes of British, French, and German leaders have also contributed to the change of atmosphere. Gone are the China-fawning Tony Blair, Jacques Chirac and Gerhard Schroeder, replaced by the more China-skeptical Gordon Brown, Angela Merkel and Nicolas Sarkozy.

Brown’s and Sarkozy’s China policies remain uncertain (Sarkozy’s will be clearer after his visit to Beijing Tuesday), but they will definitely be more centrist than their those of their predecessors. Chancellor Merkel currently finds herself embroiled not only in a dust-up with Beijing over her meeting with the Dalai Lama, but also within her coalition for allegedly aggravating ties with Beijing (German exports to China were the largest in Europe last year, amounting to €27.5 billion).

All these changes have created a greater convergence of perspectives and policies toward China across the continent than there has been in many years. The acrimony arising out of the arms embargo imbroglio of 2004-2005 has been replaced with a stronger sense of unity and political purpose.

This is true across the Atlantic as well, as the new EU mood better matches the “hedging” policies of the Bush administration toward China and the growing anger in Congress over a wide variety of trade-related matters.

This changed environment leaves China’s Europe watchers flummoxed. They had grown accustomed to the EU playing the role of ardent suitor, but now find the change in Europe’s attitude hard to explain to higher-level officials in Beijing.

When confronted with the new situation, the Chinese government has fallen back on divide-and-rule tactics. It appeals to old friends like ex-Chancellor Schröder, who has denounced Merkel’s China policy, while lashing out at “anti-China forces” in Europe.

Thus the atmosphere going into the EU-China summit meeting Wednesday is sour. Most likely, both sides will put on as positive a face as possible, but expect the acrimony to continue as both sides come to grips with an increasingly complicated relationship.