The European Union and China [1 ed.] 1137308303, 9781137308306

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THOMAS CHRISTIANSEN EMIL KIRCHNER UWE WISSENBACH

“This is one of the first books on EU-China relations which covers a wide range of key issues in bilateral relations as well as the EU and China on the world stage. It is both comprehensive and inspiring.” —Professor Jing Men, Director of EU-China Research Centre, College of Europe, Belgium “An informative and accessible, but nevertheless thorough and systematic, analysis of the various aspects of EU-China relations made by longstanding and renowned experts on the topic. This comprehensive book will provide students, academics, officials, NGOs and other stakeholders with the necessary insight to grasp the complexity of four decades of relations between the European Union and China.” —Professor Jean-Christophe Defraigne, Université catholique de Louvain, Belgium. “This is an informative, clearly written and timely book on an understudied, yet highly significant topic. The relationship between China and Europe is arguably one of the most crucial and consequential relationships in the world, but there has been no comprehensive textbook covering its history and present issues. The European Union and China, written by leading scholars in the field, will fill an important gap. It will be indispensable for students, researchers and policy makers alike and I recommend it highly.” —Klaus Mühlhahn, Freie Universität Berlin, Germany “This book provides a fresh, comprehensive and detailed overview of China–EU relations that are at the crossroads: the future of the transatlantic partnership is in question making relations with China more decisive for the continent and the rest of the world than ever before. This book is a knowledgeable toolkit and a ‘must-read’ for all who want to understand the past and aim to seize the chance of rethinking Europe’s China policy.” —Tim Rühlig, Swedish Institute of International Affairs, Sweden “This remarkably comprehensive and detailed study is one of the best ever on China– Europe relations. Its breadth and depth are impressive. Readers will not only gain a sense of the historical evolution of relations, but also the multiple functional spheres in which the EU and China interact. This book has a definitive title as it is a definitive volume and should be required reading for all those studying both EU Common Foreign and Security Policy, as well as China’s foreign relations.” —Professor David Shambaugh, George Washington University USA “In a new age of great power rivalry, a working EU-China partnership could be a much needed force for stability. Three renowned European experts provide an insightful analysis of this relationship, which should inspire students of China as well as those who make EU strategy on China.” —Professor Sven Biscop, Egmont – Royal Institute for International Relations in Brussels, Belgium “This is the most comprehensive text of EU-China relations, covering all the important areas in the relationship which is one of the most important in global politics today. It provides good resources for scholars and students in both European Studies and China Studies.” —Professor Xinning Song, Renmin University of China, China

“This text will be of great help to those attempting to trace and evaluate the development of relations between the European Union and China. It provides a rich historical background to the relationship, an understanding of key elements in the policy-making processes in Brussels and Beijing, and a wide-ranging review of a set of key policy areas. By doing so, it manages to link the external projection of policies with domestic cultural and political forces, as well as with the development of the global arena. In addition, by incorporating important analyses of people-to-people as well as government-to-government relations, the authors have gone beyond the normal range of analyses of EU-China relations to provide perspectives on societal forces and developments. The overall result is a comprehensive and analytically sophisticated text that will be useful to a wide range of students and teachers in Europe, Asia and beyond.” —Professor Michael Smith, University of Warwick, UK

THE EUROPEAN UNION SERIES General Editors: Neill Nugent, William E. Paterson

The European Union series provides an authoritative library on the European Union, ranging from general introductory texts to definitive assessments of key institutions and actors, issues, policies and policy processes, and the role of member states. Books in the series are written by leading scholars in their fields and reflect the most up-to-date research and debate. Particular attention is paid to accessibility and clear presentation for a wide audience of students, practitioners and interested general readers. The series editors are Neill Nugent, Emeritus Professor of Politics at Manchester Metropolitan University, UK, and William E. Paterson, Honorary Professor in German and European Studies, University of Aston. Their co-editor until his death in July 1999, Vincent Wright, was a Fellow of Nuffield College, Oxford University. Feedback on the series and book proposals are always welcome and should be sent to Andrew Malvern, Palgrave, 4 Crinan Street, London N1 9XW, or by e-mail to [email protected]

General textbooks Published Laurie Buonanno and Neill Nugent Policies and Policy Processes of the European Union Desmond Dinan Encyclopedia of the European Union [Rights: Europe only]

Desmond Dinan Europe Recast: A History of the European Union (2nd edn) [Rights: Europe only]

Desmond Dinan Ever Closer Union: An Introduction to European Integration (4th edn) [Rights: Europe only]

Simon Hix and Bjørn Høyland The Political System of the European Union (3rd edn) Dirk Leuffen, Berthold Rittberger and Frank Schimmelfennig Differentiated Integration Paul Magnette What is the European Union? Nature and Prospects John McCormick Understanding the European Union: A Concise Introduction (7th edn) Brent F. Nelsen and Alexander Stubb The European Union: Readings on the Theory and Practice of European Integration (4th edn)

Neill Nugent (ed.) European Union Enlargement Neill Nugent The Government and Politics of the European Union (8th edn) John Peterson and Elizabeth Bomberg DecisionMaking in the European Union Ben Rosamond Theories of European Integration Mette Eilstrup Sangiovanni (ed.) Debates on European Integration: A Reader Sabine Saurugger Theoretical Approaches to European Integration Ingeborg Tömmel The European Union: What it is and How it Works Esther Versluis, Mendeltje van Keulen and Paul Stephenson Analyzing the European Union Policy Process Hubert Zimmermann and Andreas Dür (eds) Key Controversies in European Integration (2nd edn) Also planned The European Union and Global Politics The Political Economy of European Integration

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The main areas of policy

Issues

Published Karen Anderson Social Policy in the European Union Michael Baun and Dan Marek Cohesion Policy in the European Union Michelle Cini and Lee McGowam Competition Policy in the European Union (2nd edn) Wyn Grant The Common Agricultural Policy Martin Holland and Mathew Doidge Development Policy of the European Union Jolyon Howorth Security and Defence Policy in the European Union (2nd edn) Johanna Kantola Gender and the European Union Stephan Keukeleire and Tom Delreux The Foreign Policy of the European Union (2nd edn) Brigid Laffan The Finances of the European Union Malcolm Levitt and Christopher Lord The Political Economy of Monetary Union Janne Haaland Matláry Energy Policy in the European Union John McCormick Environmental Policy in the European Union John Peterson and Margaret Sharp Technology Policy in the European Union Handley Stevens Transport Policy in the European Union Maren Kreutler, Johannes Pollak and Samuel Schubert Energy Policy in the European Union Sieglinde Gstöhl and Dirk de Bievre The Trade Policy of the European Union

Published Senem Aydın-Düzgit and Nathalie Tocci Turkey and the European Union Derek Beach The Dynamics of European Integration: Why and When EU Institutions Matter Christina Boswell and Andrew Geddes Migration and Mobility in the European Union Thomas Christiansen and Christine Reh Constitutionalizing the European Union Thomas Christiansen, Emil Kirchner and Uwe Wissenbach The European Union and China Desmond Dinan, Neill Nugent and William E. Paterson (eds) The European Union in Crisis Tuomas Forsberg and Hiski Haukkala The European Union and Russia Robert Ladrech Europeanization and National Politics Cécile Leconte Understanding Euroscepticism Steven McGuire and Michael Smith The European Union and the United States Wyn Rees The US–EU Security Relationship: The Tensions between a European and a Global Agenda Magnus Ryner and Alan Cafruny The European Union and Global Capitalism Doug Webber European Disintegration?

The European Union and China Thomas Christiansen, Emil Kirchner and Uwe Wissenbach

© Thomas Christiansen, Emil Kirchner and Uwe Wissenbach under exclusive licence to Springer Nature Limited 2019 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2019 by RED GLOBE PRESS Red Globe Press in the UK is an imprint of Springer Nature Limited, registered in England, company number 785998, of 4 Crinan Street, London, N1 9XW. Red Globe Press® is a registered trademark in the United States, the United Kingdom, Europe and other countries. ISBN 978–1–137–30830–6 hardback ISBN 978–1–137–30829–0 paperback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress.

From Thomas Christiansen: for Youngah From Emil Kirchner: for my granddaughter Verity  From Uwe Wissenbach: for Lin and Lili

Contents

List of Features

xii

List of Abbreviationsxiii Prefacexvi xviii

About the authors

1 1 Introduction Introduction1 2 Europe and China: The Role of History, Concepts and Ideas  6 Imbalances and Uneven Focus in EU–China Relations The Elephant in the Room: The Role of the United States in 8 EU–China Relations Conclusion10 2  The Evolution of the EU–China Relationship 13 Introduction13 The Evolution of EU–China Relations 14 Perspectives on the EU–China Relationship: Continuity and Change23 Conclusion26 3  EU Institutions and the Making of EU Foreign Policy 29 Introduction29 32 The Role of Member States in EU Foreign Policy 38 Supranational Institutions and EU External Relations  44 The Nature of European Foreign Policy Conclusion49 4  Chinese Institutions and Foreign Policy  51 51 Introduction: China’s Rise and Its Foreign Policy China’s New Assertiveness: Change or No Change of Foreign Policy? 52 Identity Issues: Respect, Recognition, Reciprocity 55 58 Chinese Foreign Policy Principles and Priorities 62 China’s Domestic Agenda and Foreign Policy Chinese Foreign Policy Actors: A Glimpse Behind the 65 Bamboo Curtain 68 Chinese Foreign Policy and the EU Conclusion69 5  The Political Dimension of EU–China Relations 71 Introduction71 Political Dialogues 74 ix

x  Contents Drivers of the Political Relationship 76 77 Human Rights Disputes 82 Other Contentious Issues in EU–China Relations Conclusion85 6  The Economic Dimension of EU–China Relations 88 Introduction88 Trade89 Foreign Direct Investment 98 103 Monetary Policy and the International Financial System 106 The Impact of the Eurozone Crisis on EU–China Relations Conclusion108 7  The Societal Dimension of EU–China Relations 110 Introduction110 Education and Research Collaboration in EU–China Relations111 The Role of Think Tanks, NGOs and Civil Society  114 The Role of Culture in the Relations Between the EU and China 116 118 Sport in EU–China Relations 119 Migration and Migrants  Tourism120 Conclusion  121 122 8  The Security Dimension of EU–China Relations Introduction122 The EU as (Non-)Actor in Asian Security 123 Chinese Focus on Regional Security 126 127 Chinese Practice of the Principle of Non-Interference 133 Issues for EU–China Security Cooperation Conclusion139 9  International Development Policy and EU–China Relations 140 Introduction140 The EU’s and China’s Approaches to Development 140 The EU, China and Developing Countries: A History of Competition and Cooperation 148 The EU’s and China’s Approaches to Development Assistance: Commonalities and Differences 152 160 Impact on EU–China Relations Conclusion162 10  China and the EU in the Global Context 164 Introduction164 European and Chinese Perspectives on Global Governance 165

Contents  xi Multilateralism/Multipolarity167 European and Chinese Attitudes to Global Regimes  170 Conclusion177 11  Conclusions and Outlook

180

Appendix: Milestones in the History of EU-China Relations

185

References

186

Index

208

List of Features

Tables 5.1 Overview of EU Dialogues with the ten Strategic Partners (as of June 2013) 6.1 World merchandise exports by region and selected economy, 1948, 1953, 1963, 1973, 1983, 1993, 2003 and 2013 in $ billions and percentage 6.2 World merchandise imports by region and selected economy, 1948, 1953, 1963, 1973, 1983, 1993, 2003 and 2013 in $ billions and percentage 7.1 European countries’ opinion of China: percentage responding favourably, 2005–2013 10.1  Energy mix of EU and China in 2011

74

90

92 117 175

Figures 3.1  Member states’ attitudes towards China 6.1  Share of Global GDP Growth (PPP) between 1991–2013 6.2  China’s FDI to EU member states in millions (Euros) 2000–2016 7.1  European countries attitudes on China: 2000–2011 9.1 Chinese foreign aid investment in $ billions between 1950 and 2009 9.2  Chinese foreign aid investment in $ billions, 2010–2012

33 94 101 113 153 154

Boxes 4.1  The Five Principles of Peaceful Coexistence 9.1  Development Assistance Committee Definition of ODA

xii

57 142

List of Abbreviations

ACP African, Caribbean and Pacific countries ADB Asian Development Bank AfDB African Development Bank AIIB Asian Infrastructure Investment Bank APEC Asia Pacific Economic Cooperation ARF Association of Southeast Asian Nations – Regional Forum ASEAN Association of Southeast Asian Nations ASEM Asia-Europe Meeting ATT UN Arms Trade Treaty AU African Union BIA Bilateral Investment Agreement (between China and the EU) BRI Belt and Road Initiative BRICS Group of Brazil, Russia, India, China and South Africa BWI Bretton Woods Institutions CADF China Africa Development Fund CTBT Comprehensive Test Ban Treaty CCP Chinese Communist Party CCS Carbon Capture and Storage CDB China Development Bank CEE Central and Eastern Europe CEIBS China Europe International Business School CESL China-EU School of Law CETA EU-Canada Comprehensive Economic and Trade Agreement CFSP Common Foreign and Security Policy COREPER Committee of Permanent Representatives (in the Council of the EU) CSDP Common Security and Defence Policy CSO Civil Society Organisation CWC Chemical Weapons Convention DAC Development Assistance Committee of the OECD DPRK Democratic People’s Republic of Korea EAS East Asia Summit EBA Everything But Arms EC European Community ECAN EU-China Academic Network ECB European Central Bank ECOWAS Economic Community of West African States ECRAN Europe China Research and Advice Network EDF European Development Fund xiii

xiv  List of Abbreviations EEAS European External Action Service EEP Energy Environment Programme EMU Economic and Monetary Union EP European Parliament EPA European Partnership Agreements ESCP European Studies Centres Programme ESS European Security Strategy EU European Union EUGS EU Global Strategy EUMC EU Military Committee EUNIC European Union National Institutes of Culture EXIM Bank Export-Import Bank of China FAC Foreign Affairs Council (in the Council of the EU) FOCAC Forum on China Africa Cooperation FP Foreign Policy (Chinese) FPDA Five-Power Defence Arrangements FTA Free Trade Agreement GATT General Agreement on Tariffs and Trade GHG Greenhouse Gases GSP Generalized System of Preferences HED High Level Economic and Trade Dialogue HEPCE Higher Education Platform for Cooperation and Exchange HKSARG HKSARG – Hong Kong Special Administrative Region Government HPPD High-Level People-to-People Dialogue HR/VP High Representative of the European Union for Foreign Affairs and Security Policy/Vice-President of the European Commission IAEA International Atomic Energy Agency ICAO International Civil Aviation Organization ICARE China-EU Institute for Clean and Renewable Energy ICCPR International Covenant on Civil and Political Rights ICESCR UN Covenant on Economic, Social and Cultural Rights ICJ International Court of Justice IMF International Monetary Fund ISAF International Security Assistance Force (in Afghanistan) JHA Justice and Home Affairs LA Latin America LDCs Least Developed Countries MDGs Millennium Development Goals MES Market Economy Status MFN Most Favoured Nation MOFA Chinese Foreign Ministry MOFCOM Chinese Ministry of Commerce NDB New Development Bank NDRC National Development and Reform Commission

List of Abbreviations  xv NGOs Non-governmental Organizations NPT Non-Proliferation Treaty NSC National Security Council OBOR One Belt One Road Initiative ODA Official Development Assistance ODI Overseas Direct Investment OECD Organization for Economic Cooperation and Development OLAF European Anti-Fraud Office PCA Partnership and Cooperation Agreement PRC People’s Republic of China PSC Political and Security Committee (of the Council of the EU) RCEP Regional Comprehensive Economic Partnership RMB Renminbi ROK Republic of Korea SAFE State Administration of Foreign Exchange (of China) SALW Small Arms and Light Weapons SAR Special Administrative Region SASAC State–owned Assets Supervision and Administration Commission SDGs Sustainable Development Goals SCO Shanghai Cooperation Organisation SCS South China Sea SSC South – South Cooperation SEZ Special Economic Zones SOE State Owned Enterprise STF Science and Technology Fellowship TAC Treaty of Amity and Cooperation UN United Nations UNCLOS United Nations Convention on the Law of the Sea UNGA United Nations General Assembly UNHCR United Nations High Commissioner for Refugees UNFCCC UN Framework Convention on Climate Change UNSC United Nations Security Council WEF World Economic Forum WMD Weapons of Mass Destruction WOAH World Organization for Animal Health WTO World Trade Organization

Preface

This book has been a long time in the making and brings together the authors’ insights from many years of working, researching and teaching on the topic of relations between China and the European Union. When we came together several years ago and shared our views on developments in this field, it occurred to us how important this relationship between two global powers is, and yet how there was no single textbook to introduce students, researchers and observers to the many facets of EU–China relations. With more than a little encouragement from Steven Kennedy, then the Commissioning Editor for the European Union Series at Palgrave, we embarked on the endeavour of writing such a textbook, and we would be pleased if our readers agreed that this book does indeed fill this gap in the literature. As always with such a major project, we had much support on the way, and hence we have to express many thanks. At Maastricht University, Shelly Tsui, Ludger Wortmann, James Coombs, Clemens Rasmusson and Nicolle Becke Franco all provided research assistance at various stages in the process, as did Susan Sydenham at Essex University. Drafts of individual chapters were presented at various conferences and research seminars, and we are grateful for the many comments and suggestions received on these occasions. In particular, we owe thanks to the many colleagues who read parts of the manuscript and provided us with valuable feedback. This includes Han Dorrussen, Duncan Freeman, Song Xinning, Gustaaf Geerearts, Jean-Christophe Defraigne, Frederik Ponjaert, and many others. Naturally, any remaining errors remain the responsibility of the authors. The authors also benefited from the opportunity of research stays and teaching opportunities outside our own institutions. Thomas Christiansen would like to thank the Robert Schuman Centre at the European University in Florence, the University of Macau and the East Asian Institute at the National University of Singapore for hosting him and facilitating both the writing of parts of the manuscript and the presentation of preliminary drafts. Emil Kirchner is similarly indebted to Renmin University of China in Beijing for hosting him on several occasions. Through the gestation period of this book, we had excellent support and encouragement from everyone at Palgrave. Our thanks go to Steven Kennedy, Stephen Wenham and Andrew Malvern who closely followed the writing and provided valuable input at various points, and to Lauren Ferreira for her help in obtaining permissions and preparing the final manuscript. xvi

Preface  xvii Above all, this is a moment to recognize the impact that working over several years on such a project has had on our families, and to thank our partners for the continuous support that they have been providing each of us in order to allow us to complete this book. Thomas Christiansen, Emil Kirchner and Uwe Wissenbach Maastricht, Colchester and Brussels, July 2018

About the authors

Thomas Christiansen Thomas Christiansen holds a Chair in European Institutional Politics in the Department of Political Science at Maastricht University, the Netherlands and Visiting Professor at LUISS Universitá Guido Carli in Rome, Italy. He is Executive Editor of the Journal of European Integration and co-editor (with Sophie Vanhoonacker) of the ‘European Administration Governance’ book series at Palgrave Macmillan. He has published widely on different aspects of European integration. He recently co-authored, with Christine Neuhold and Anna-Lena Högenauer, Parliamentary Administrations in the European Union (London: Palgrave 2016). Security Relations between the EU and China: From Convergence to Cooperation?, co-edited with Emil Kirchner and Han Dorussen, was published by Cambridge University Press in 2016.

Emil Kirchner Emil J. Kirchner is Jean Monnet Professor and Coordinator of the Jean Monnet Centre of Excellence at the University of Essex. He received his Ph-D from Case Western Reserve University. He is Advisory Editor and Chair of the Editorial Advisory Board of the Journal of European Integration, holder of the Order of Merit of the Federal Republic of Germany, a Fellow of the British Academy of Social Sciences, and was awarded a Lifetime Achievement Award by the University Association of Contemporary Studies. He has been a visiting professor at universities in various European countries, the United States and China. His recent book publications are (co-editor) EU-­Japan Security Cooperation, Routledge, 2018, and Security Relations between China and the European Union. He has published articles in International Organization, Review of International Studies, West European Politics, ­Journal of Common Market Studies, European Security, and Journal of European Public Policy.

Uwe Wissenbach Uwe Wissenbach is a diplomat and senior official with the European External Action Service in Brussels. He has been working since 1994 in the EU’s ­Delegations to China, Korea and Kenya as well as at EU Headquarters in Brussels. He obtained a PhD in international relations at the University Duisburg-­Essen in 2017. His contributions to this publication do not reflect official EU positions.

xviii

Chapter 1

Introduction

Introduction Formal relations between the European Union (EU) and China began in 1975 but took on greater significance only from the 1990s onwards with China’s opening up and reform policy. Both sides declared a strategic partnership in 2003. Fifteen years after this declaration, EU–China relations are undoubtedly one of the most important relations in the world, given that the two sides account for about 30 per cent of world trade. Furthermore, despite important differences in political systems and values, China and the EU have developed a very dense and regular interaction at multiple levels, from p ­ olitical-strategic and economic to people-to-people dialogues. From a diplomatic point of view, the relationship received a boost when Xi Jinping visited the EU institutions in April 2014 – the first such visit ever by a Chinese president. This occurred against the background of efforts between the two sides to further strengthen economic relations by negotiating an Investment Agreement. Since the first EU–China summit in 1998, in a relatively short period, EU–China relations have become substantially institutionalized through dozens of official meetings held every year including summits. Declarations by the EU and China frequently make reference to the similarity of interest in each other’s affairs, their common views on global issues such as trade and climate change, and their desire for closer cooperation and joint action. Most importantly, also with a view to the more fraught and antagonistic relations that China has with the United States, there is fundamental agreement in Brussels and in Beijing that the two sides are partners, and a strong emphasis on cooperation rather than confrontation in relations between the EU and China. However, far from being a cosy relationship, there are also profound differences and frequent conflicts that crop up in bilateral relations. This should come as no surprise – each side starts from a unique historical experience, from a distinct process of economic and political development, and from different geopolitical positions and interests. The history of the People’s Republic of China has few parallels with that of Europe, and in turn Europe’s economic development and political philosophy have few direct counterparts in China (Morris, 2011). China and Europe have very different geopolitical and security contexts yet are bound by an increasing economic interdependence and a sense of shared, but differentiated, international and global responsibilities such as those dealt with in the United Nations (UN) system or the G20 (Kirchner and Christiansen, 2013). 1

2  The European Union and China In order to address these questions systematically, the book starts with a short historical overview of EU–China relations in the next chapter. Based on this foundation, we proceed in the following chapters by taking a closer look at the foreign policy apparatus of both the EU (Chapter 3) and China (Chapter 4) – a proper understanding of the nature of the relations between the two depends on the knowledge of how each side formulates and executes their external relations. This is especially important considering the particularities of the foreign policy making process in both Europe and China. Subsequent chapters then address in turn developments in the key dimensions of the relations between the EU and China: political and diplomatic relations (Chapter  5); trade, investment and monetary policy (Chapter  6); the role of culture, educational contacts and people-to-people relations (Chapter 7); traditional as well as non-traditional security issues ­(Chapter 8); and relations in the area of development policy and humanitarian aid (Chapter 9). Chapter 10 explores developments in global governance, looking at the way in which the EU and China are involved in the politics of international institutions and regimes. We will look in some detail at how the economic and financial crisis since 2008, which for the EU has also been something of an institutional crisis, has affected relations between the two sides (Chapter 6).

Europe and China: The Role of History, Concepts and Ideas A very obvious and immediate recognition is that in studying EU–China relations we are looking at relations between a state and a regional polity, albeit one that has developed many of the trappings of statehood. Yet while the EU has legal personality and a significant degree of actorness in international affairs, it is important to recognize from the outset of this volume that the EU is not a state, and therefore acts differently in its external relations. The EU is often equated with ‘Brussels’ – journalistic shorthand for a bureaucratic and elitist process dominated by the EU institutions. Yet while there are, at the heart of the European Union, important common institutions that have, within limits, the power to act independently, the image of the EU as an all-powerful ‘superstate’ is grossly misleading. Beyond the presence of supranational institutions, the EU is defined by the interests of its member states which not only have to agree to decisions on a common European foreign policy, but which also maintain their own individual foreign policies vis-à-vis states such as China. Its hybrid nature and the coexistence of European and national foreign policies are essential attributes of the European Union – it is a complex, complicated and – some would argue – unique entity in global politics, and as such it is often a difficult player when seeking to relate to a traditional state such as China. Collectively the EU is the world’s biggest economy and single market, the largest trader and the biggest donor of development aid, and is a major stakeholder in both the global economy and in science and technology, as well as a favourite destination for students and tourists from all over the world.

Introduction  3 China itself is, of course, also not a state like any other. Having experienced a twentieth century characterized by the ravages of foreign occupation, colonization and invasion, prolonged periods of internal strife and civil war, and the economic devastation and cultural turmoil that followed, China only developed a degree of internal stability and legitimate authority from the 1970s. In its foreign policy, the People’s Republic then entered world politics only tentatively, following détente with the United States during the Vietnam War, and has generally concentrated on the economic aspects of its foreign relations. More recently, China has asserted itself as a major player, in particular in the Asia-Pacific region, but more generally as an economic superpower with wide-ranging global interests. The EU and China are clearly very different actors when it comes to their founding ideals, their normative aspirations, and their interests, capacities and resources, and we will encounter the difficulties and even conflicts a­ rising from these fundamental differences on many occasions throughout this volume. Yet, as relatively new arrivals on the scene of world politics, as actors with predominantly economic interests and deeply ingrained preferences for trade and international cooperation more generally, China and the EU also have much that unites them, and arguably it is this almost magnetic a­ ttraction between polar opposites that makes EU–China relations a ­fascinating subject. Part of the story is the physical distance between the two sides, occupying the opposite ends of the Eurasian landmass. Europe and China are far away from one another, a fact that creates difficulties for effective cooperation and the development of common interests, but also has the not unimportant effect of avoiding either side regarding the other as a threat. Physical distance, in that sense, can be a blessing in disguise, allowing the two sides to grow their relationship unencumbered by the risk of infringing on each other’s spheres of interest. Then again, the presence of a physical connection between Europe and Asia has provided the foundation for trade relations from ancient times, not least in the shape of the Silk Road. The recent Chinese push to strengthen trade and infrastructure links with Europe centred on the ‘Belt and Road Initiative’ (BRI) and harks back to these old ties, with it branded as a ‘new Silk Road’. Recognizing the importance of the physical space that Europe and China must overcome could also be seen as a metaphor for the political and cultural distance between them. A lack of deeper understanding of each other and how the other sees itself has made strategic thinking and building trust difficult. For example, the cultural perspective of Europe (including here the West at large) on China has been characterized by the French Sinologist Simon Leys (1991: 60–1) as: the other pole of the human experience, a total contrast and a complete otherness – allowing Europeans to better understand their own identity and to grasp what in Europe’s own culture is universal or parochial. For the Chinese, European powers are often still remembered as the source of colonialism, as instigators of the Opium Wars and the ‘century of humiliation’ that China experienced as a consequence. Even if this image is not

4  The European Union and China all-encompassing, and the Chinese are aware of the transformation that Europe has undergone since 1945, these echoes of the past remain important in the way Europe is perceived and as a driver of China’s ambition to resume a status of a global power. It is important to bear these historical perceptions in mind, given the influence that such perceptions and misconceptions may have on bilateral relations. For example, when the EU talks about human rights, or when US and EU policy-makers assume a link between open markets and liberal democracy, or talk about their expectation of China being a responsible stakeholder in the international community, then the underlying assumption is that relations with China would be easier for the EU if China were to become more ‘like us’. Much of the China policy was devised in this ­somewhat patronizing way on the basis of what Europeans (or Western officials more generally) wanted China to be, rather than what China itself was aspiring to. Little wonder, then, that China would reject such assumptions, also with a view to the ­historical baggage that Europe brings to the relationship. Touching on the different perceptions that Europeans and Chinese have of themselves and of each other brings us to a wider point, namely the recognition that a sound understanding of the EU–China relationship not only requires a solid grasp of the facts – historical dates, official statements, formal agreements, institutional arrangements, economic statistics, security policies – but also clarity on the paradigm through which exchanges between the two sides are being viewed. Indeed, it can be argued that only once there is agreement on the paradigm through which such facts are observed can these be meaningfully interpreted and debated. For this reason, it is important to present at the outset of such a text the different, contending perspectives that provide contrasting meanings of the EU–China relationship. In particular, three different such perspectives or paradigms can be identified, namely those of Realism, Liberal Institutionalism and Constructivism. Each of these constitute much wider approaches to the  understanding of International Relations more generally, but it is instructive to consider the impact also with respect to the particular relationship between two global powers that is under scrutiny here. From a Realist perspective there will be a strong emphasis on the ‘rise of China’ in the context of an emerging multipolar world. In such a view, China, together with the United States, Russia and, possibly, the European Union, is being regarded as one of the ‘poles’ that are in potential competition with one another. It is, arguably, the dominant view of the world in Washington, explaining the tendency of US policy-makers to regard China antagonistically as a rival that seeks to expand its influence at the expense of the US and which therefore needs to be contained, be it militarily or economically. In Europe, the debate about China’s arrival in Africa, and the dissonances that this has created v­ is-à-vis the EU, can also be seen as an example of such thinking. From such a ‘realist’ perspective, with its emphasis on national interests, state power and military capabilities, the EU–China relationship would appear to have clear limitations: while there may be no perception of mutually threatening behaviour, there is

Introduction  5 also little incentive for cooperation, given the underlying assumptions about the costs and benefits of bilateral relations being a ‘zero-sum game’. A different perspective is that offered by Constructivism, with its focus on the role of identity, on history, on the effects of cultural difference and on the intersubjective and constructed nature of understanding the social and political world. From a Constructivist perspective, these factors constitute drivers for both cooperation and conflict in bilateral relations. While the bloc mentality of the Cold War era may be largely a thing of the past, the EU, together with the US, is still widely seen as constituting ‘the West’, while China remains a country governed by an authoritarian regime, even after decades of economic liberalization and social transformation. Politically, the EU and China have contrasting approaches to key principles of international relations such as state sovereignty, the universality of fundamental rights and the responsibility for humanitarian intervention. Such a perspective, focusing on the way in which images of the ‘Self’ and the ‘Other’ are being constructed on either side, explains the cognitive gaps that remain between China and the EU despite decades of economic exchange and political engagement. A different perspective – arguably the dominant vision of EU–China relations held in Brussels – is being offered by Liberal Institutionalism. Here the focus is squarely on the mutual benefit of economic relations, and the emphasis on the common interests that both sides share in the stability, predictability and further deepening of this relationship and hence the creation of shared institutions and regimes to manage this relationship as well as global governance more generally. Trade is not seen as a ‘zero-sum game’ where one side’s gain is the other’s loss, but rather as a ‘positive sum game’, increasing the prosperity on both sides. While recognizing the competitive nature of the respective economies, and the resultant differences on issues such as market access, monetary policy and intellectual property rights, such differences are seen within a wider framework of growing trade relations and increasing foreign direct investments on both sides. Liberal Institutionalism does not assume that there are no differences or conflicts between the parties, but rather that there is mutual benefit – and hence a natural tendency – in overcoming such differences in a peaceful, negotiated and rule-based manner. The EU in particular is a champion of multilateralism rather than multipolarity. The sovereign debt crisis in the Eurozone, for example, can be seen as a powerful demonstration of this logic: while causing problems for growth in both Europe and China, it demonstrated to both sides the interdependence of the two economies and reinforced the sense of mutual benefits that comes from closer economic cooperation. It drove home to Europeans the significance of the Chinese export market that would allow manufactures to counterbalance the flagging demand at home, while demonstrating to the Chinese the importance of supporting growth in the EU, for example through investments, given their dependence on exports to Europe. This abbreviated overview of three key theoretical approaches demonstrates that EU–China relations appear in a very different light depending on the perspective adopted by the observer. This is important not only for

6  The European Union and China the way in which researchers frame their analysis of particular aspects of this relationship, but also because policy-makers themselves may adopt one or the other perspective, with the consequences that such a choice then has for the policies and discourses that result from these. For example, as we suggested above, EU decision-makers tend towards a Liberal Institutionalist view of the world, a perspective that is only to some extent shared by their Chinese counterparts. There is also much sympathy for Realism in China, in particular when it comes to security questions and the balance of power with the United States, while China’s dream of rejuvenating its glorious past has a strong Constructivist connotation. In this book, we do not adopt one or the other of these theoretical perspectives, but we will make reference to them on those occasions when the adoption of one over the other is relevant to our analysis, or when developments in EU–China relations can be best explained by reference to a particular approach.

Imbalances and Uneven Focus in EU–China Relations Arguably, China is seen as more important for the EU and most member states than the EU is for China. That is reflected in an ‘imbalance of initiatives’, in the sense that the EU has taken more initiatives than China in terms of the number of policy papers, proposals for dialogues, high-level visits, and cooperation programmes, and for launching the Partnership and Cooperation Agreement negotiations. That is also a consequence of the search by the EU for partners for multilateralism – by definition you can’t do multilateralism by yourself, so the EU needs to initiate partnerships and structures, while China’s independent foreign policy does not warrant such ‘outreach’ (Wissenbach, 2007). The number of EU policy papers can also be explained by other factors, such as (1) the need in a democratic society to justify engagement with a country which is perceived by the public as an undemocratic regime; (2) the self-justification of the role of the EU structures; (3) forging a minimum consensus among the diverse positions of member states; and (4) a reflection of a discursive political culture in the EU. China may also attach higher importance to some bilateral relationships with individual EU member states than with the EU as a whole, especially if they share a specific common interest –­for instance, competition between individual member states for lucrative commercial contracts in China, for attracting investment from China or for diplomatic support for individual issues such as United Nations Security Council (UNSC) seats. This internal diversity hampers the EU’s ability to become a global economic actor and to shape the rules of the game (Chapter 3). Another key challenge in the EU–China relationship is the imbalance between internal domestic and international priorities on each side’s agenda. China’s overwhelming focus is on domestic issues and development, while the EU has in the 2010s been preoccupied by its internal sovereign debt and then the migration crises. For China, international issues are usually afterthoughts dealt with through the prism of catch-all principles (such as a fair and democratic world

Introduction  7 order, peaceful development and respect for sovereignty) or at best issues to be managed by the specialized agencies such as the Chinese Foreign Ministry (MOFA) or the Ministry of Commerce (MOFCOM) (see Chapter 4). When a powerful domestic body has formulated a policy it is not going to be changed because of objections by MOFA or MOFCOM – MOFCOM also has its own domestic agenda being responsible for the trading interests of Chinese companies – and even less because of objections by foreigners (unless conveyed with costly signals which the US is better at sending than the EU). National interest comes first and this is not something that is negotiable. Presumably foreign objections do not even enter the domestic debate because the MOFA filters them, and are otherwise constrained by limited access to the top leadership, a lack of analytical capability or a previously formulated defensive line. Leaders typically ask a number of reputed experts or think tanks to provide them with analysis and proposals – which compete with each other and those of the Ministries. Decisions, however, are made in a black box, so the real influence of think tanks is hard to gauge. One major exception to this Chinese domestic–foreign imbalance was the World Trade Organization (WTO) accession process. This was used as an instrument to push through a tough domestic reform agenda that entrenched the market economy and pushed back vested interests on the basis of the higher national interest to be admitted to the WTO (in 2001). It is no coincidence that this period also saw one of the high phases of EU–China cooperation and seemed to confirm EU expectations for interdependence to lead to political reform. It is also no coincidence that soon after the WTO accession the relationship changed – for China the WTO accession was an end point, and a hard-won domestic victory over vested interests at a price of many concessions to foreigners; for the EU China’s WTO accession was only a beginning and China was soon asked to go beyond its WTO commitments, to implement not only the letter, but also the ‘spirit’ of the agreement. Besides the concrete trade interests the WTO membership was also seen as a means to an end – reforming China in a liberal way. No wonder trade irritants have increased since then. The Chinese focus in the ten years under Hu Jintao clearly was not on international questions and concessions or further market reforms, but on spreading economic growth from the coastal areas to the vast hinterlands, solving the vexing rural questions and making the Chinese economy more resilient and more sustainable. Thus the EU–China meeting of minds on the global trade agenda was a brief, albeit crucial, moment in the relationship that is unlikely to be continued or repeated. However, with Xi Jinping focusing more than his predecessors on China’s international influence, stature and markets, embodied in his signature ‘One Belt One Road’ (OBOR) initiative – since renamed as the ‘Belt and Road Initiative’ (BRI) in English (Ghiasy and Zhou, 2017) – we can expect a rapprochement with Europe as his visit to the EU in March 2014 indicates. The EU has long been a major source of study and learning on domestic Chinese reform and the EU–China cooperation programmes have actively contributed to fostering such exchanges. For domestic reform Europe’s

8  The European Union and China social and regional cohesion policies attracted considerable interest and the social-democratic parties in Northern Europe were studied as inspiration for ‘ruling party reform’ (Song, 2010). They became a key plank for ­EU–China cooperation projects and have been the ‘people to people exchanges’ avant la lettre. However, the attractiveness for China of European experiences is affected by two key trends. One is that China’s reforms more and more move in unchartered, very specific territory for which Europeans may not have analogies to study. Also in the past, Europe was one among many other experiences studied by China, for instance Singapore and Korea have been important sources of inspiration. The other trend is a more critical view of Europe’s overall situation after the global financial and the European debt crises (see Chapter  6). The interest in people exchanges from the EU to China has been much weaker and came to be organized much later (the EU–China Junior Managers Training programme marked a turning point in 1999). There are fewer China experts in the EU than Europe experts in China. This seems to indicate that also for the EU the domestic agenda has been more important than foreign issues. Indeed, the EU had been preoccupied for more than a decade with internal institutional reform, first with the project for a ‘European Constitution’ and subsequently the Lisbon Treaty which eventually came into force in 2009. Since then the sovereign debt crisis once again made leaders focus on the EU’s internal – this time economic governance – reform. It even led to the postponement of the 2011 EU–China summit, as European leaders had to deal with crisis at home. Since 2015 the refugee and migration crisis in Europe has been a major focus and thus provided further distractions from EU relations with China. With new leaders in both China and the EU, and both refocusing on economic reforms and international problems, the relationship is poised to evolve, albeit along familiar tracks as laid down in the 2020 Strategic Agenda for Cooperation. China’s recent focus on alternatives to Western multilateralist institutions, however, poses a challenge to the EU’s traditional ambitions.

The Elephant in the Room: The Role of the United States in EU–China Relations Linked to this imbalance of relative importance is the imbalance of importance in international relations and global politics more generally. Of course on both sides the respective other is not the number-one foreign policy priority. For the EU, Asia in general does not rank very high, at least politically. There are few non-economic interests at stake or conflicts that threaten Europe’s interests compared to those in the EU’s Southern and Eastern neighbourhood, or areas where Europe feels a moral responsibility to show the flag, for example in sub-Saharan Africa. Similarly for China, the US, its own neighbourhood and some important resource suppliers are a preoccupation for leaders, whereas the EU is taken for granted, not seen as threatening and considered largely problem-free. Thus for China the EU is simply not a big player that could make a difference in Asia, where China’s interests are

Introduction  9 focused. And where it is or tries to be the EU tends to side with the US (for instance, on the issues on the divided Korean peninsula or the South China Sea (SCS) debate). The EU also has strategic partnerships and/or Free Trade Agreements with many US allies in the region such as South Korea, Japan, Vietnam and the Philippines. This is where one of the big disappointments on the Chinese side comes in: for some reason – be it the reaction in Europe to the US invasion of Iraq or the French rhetoric on multipolarity and a more ‘European Europe’ (Shambaugh, 2004) – China’s strategists had hoped in the mid-2000s that the EU might join China as a counterweight to the US in a multipolar world. But not only does Europe continue to remain a key ally of the US, but in a more general sense the EU does not even engage in the game of multipolarity, given its fundamental commitment to multilateralism. The US remains in a stronger position to influence the rules of the game, although it is no longer unchallenged as the largest economy or biggest trader. Similarly, the EU is not able to influence US thinking on China: whereas the EU sees China as an economic opportunity and a strategic partner, US ­decision-makers tend to see it as a threat, even though their basic business positions are very similar – EU and US companies profit enormously from manufacturing and sales in China, and EU and US consumers similarly benefit from cheap imports, while both have similar market access issues (see Chapter  6). The EU considers China as a potential partner for global governance, whereas US decision-makers see control of the Western Pacific as a key strategic imperative and seem fixated by the idea of a strategic rivalry with China in the region (Green, 2017). And while the EU’s influence on US positions is therefore very limited, the US has a strong influence on EU security policy towards China, a factor that was demonstrated when the US effectively blocked the EU from lifting the arms embargo that it had imposed after the events in Tiananmen Square in 1989. A dialogue on China between the EU and US should have helped communication, but that dialogue was proposed by the US to tell the ­Europeans how they undermined US national security by trying to lift its arms embargo (Narramore, 2008). Yet even without this particular decision, China’s policy-makers would have fundamentally misjudged the strength of the transatlantic partnership if they were actually thinking they could balance Europe against the US. The turn towards ‘America First’ that US foreign policy has taken since Donald Trump assumed the US presidency in January  2017 has further exacerbated these differences, putting strains on the transatlantic partnership generally and on the capacity of European and US policy-makers to agree on a common approach to China. At the same time, it provides the EU with new opportunities to engage with partners in Asia, given the relative vacuum created by a more isolationist US. This is most evident in terms of multilateral trade following President Trump’s decision to abandon the Trans-Pacific Partnership (TPP) – a central plank in President Obama’s ‘pivot’ to the Asia-Pacific, and widely regarded as an attempt to contain China’s economic power in the region. The EU, by contrast, has engaged in a new

10  The European Union and China wave of economic partnership agreements around the globe, most notably with Canada and Japan. Beyond its impact on bilateral relations, Trump’s foreign policy has effectively pushed China and the European Union together, as both feel the need to take over leadership in global affairs. With the United States having removed itself from multilateral trade negotiations and the Paris Agreement on Climate Change, it falls to the Europeans and the Chinese to act as drivers of these processes. While for the EU such a leadership role comes relatively naturally, it is a new experience for the Chinese leadership – but one that China under President Xi Jinping appears to be willing to accept, as his speeches at the World Economic Forum in January 2017 and at the Chinese Communist Party Congress in October 2017 showed. Irrespective of the oscillations in future US foreign policy, the United States remains a key factor in the relations between the EU and China. With respect to security issues it continues to be a key player in East Asia – especially as long as the issue of North Korea’s nuclear and missile programmes remains near the top of the agenda for both the United States and China. In  other areas – trade, investments, climate change, economic development and infrastructure projects – the growing absence of the US from international cooperation may well have the unintended consequence of bringing the EU and China closer together. Either way, the role of the US is crucial in shaping the opportunities and the limitations for EU–China relations.

Conclusion The above discussion has highlighted and contextualized a number of key issues that this book will deal with in the following chapters. It will be evident by now how multifaceted and sometimes intriguing the EU–China relationship is, and how these relations are becoming defining issues for Europe, China and sometimes the world at large. This textbook does not propose a single, theoretical framework for the analysis of EU–China relations. Instead, as discussed above, there are a number of contending perspectives on how this relationship can be viewed. Beyond these theoretical perspectives, the text will also address a number of key questions that are derived from the discussion of contending perspectives or reflect key issues on the agenda in EU–China relations. First among these is the question of how and why the relationship between the EU and China is ‘strategic’, and indeed the very meaning of ‘strategic’ in this context. The nature of EU–China relations as being ‘strategic’ has been officially recognized since 2003, and has led to a number of formal dialogues, regular summit meetings and so on. However, questions remain about the deeper meaning and substance of this connotation: if relations are strategic, what is the strategy that is being pursued? This matters in particular in the context of debates concerning the role of values versus interests (Crookes, 2013; Kaya, 2014 ) – for example, is the EU’s strategy vis-à-vis China that of a normative power seeking to influence certain aspects of China’s domestic

Introduction  11 politics or foreign policy, and, if so, how would such a strategy be compatible with the economic interests that increasingly dominate relations? Furthermore, there is the potential clash between an EU committed to multilateralism and China seeing the world in terms of rivalries in the context of an emerging multipolar order. The EU has traditionally seen itself as the standard-bearer of multilateralism and of strengthening regional and international institutions. Even though this commitment to multilateralism may be waning, and may not reflect actual policy by either the EU or its member states, it remains a potential obstacle in relations with a China that tends to regard global politics in terms of multipolar relations among great powers, and that sees itself as the counterpart to the US in such an arrangement. The EU, by its very nature, is not a global power in the traditional Realist sense, and thus cannot easily be accommodated in this Chinese view of the world. This potential for either a strategic clash or a strategic cooperation between the EU and China is likely to play out on the shared Eurasian continent, where the EU, Russia and China are in the process of reorganizing the political and economic space, dealing with opportunities (new transport and energy links) and challenges (from terrorism, to climate change impacts, to intra- and interstate conflict). On paper China’s BRI initiative and the EU’s Global Strategy have similar ambitions promoting stability, resilience and interconnectivity through economic development and multilateral cooperation mechanisms (Ghiasy and Zhou, 2017: 45–56). However, this potential remains to be realized beyond the declarations of intent (such as the connectivity platform and numerous speeches). The differing assumptions and attitudes each has about the nature of statehood, the principle of sovereignty and other key concepts relating to the functioning of the international system are also pressing questions. State sovereignty has been the basic principle underpinning the ‘Westphalian’ state system for hundreds of years, but whereas in Europe there is a growing recognition (albeit contested by a vocal minority of populists) that national sovereignty is not very meaningful in an interconnected, interdependent and integrated world, for China, as for other emerging powers, the possession of sovereignty is a fairly recent development. The symbolism of ultimate and unquestioned control over territory that matters so much to China is at odds with an EU that relies on the sharing, pooling and indeed multilateralist transformation of sovereignty. Related to the above is the view that the EU and China have rather conflicting world views, with the former seeing itself more as a Kantian (­other-oriented) actor in the world system, and the latter perceiving itself more as a Hobbesian (self-centred) actor. The EU as an institution tends to have an ‘optimistic’ view of the world, in which cooperation and mutual interests are dominant, and where Europe’s best interest is in being anchored in a multilateral, rule-governed system. China, on the other hand, rather looks at the world in terms of a national interest that needs to be pursued, and the threats that it faces. Or, to put it bluntly, the EU faces an illiberal

12  The European Union and China China in a liberal world order (Dunne and McDonald, 2013). An important question is to what extent such different world views influence the foreign policies of the EU or China, and what impact they have on the relations between the two sides. This book, looking in greater detail at developments in the complex relationship between China and the EU across a range of important dimensions, aims to provide the necessary foundation to give informed answers to these questions. In doing so, it will be evident how this multifaceted relationship has developed over time, which policy choices it has involved on both sides, and how the EU and China play an increasingly important role in global politics. In a multipolar world faced with contradictory processes of fragmentation and globalization, the evolution of EU–China relations is critical not only for the future trajectory of each partner, but also for global governance more generally.

Chapter 2

The Evolution of the EU–China Relationship

Introduction EU–China relations officially date back to 1975 when diplomatic relations between the European Commission and the People’s Republic of China (PRC) were established, following China’s entry into the UN in 1971, US President Nixon’s famous trip to China in 1972 and a first visit by a European Commissioner to China in 1973. During the Cold War strengthening relations with socialist but anti-Soviet China was part of the US (and Western) strategy to weaken the USSR. Until 1988 China was thus the only socialist country that had diplomatic relations with the European Communities (EC). We use EU throughout, but readers should be aware of the evolution from the European Economic Community, to the European Communities and finally the European Union. The Lisbon Treaty did away with the different pillars and legal entities as laid down in the Maastricht Treaty and with them the EU also legally superseded the previous EC. After China embarked on economic and social reforms at the end of the 1970s and in particular since the end of the Cold War, the EU–China relationship changed significantly. These changes will be traced in this chapter. Today EU–China relations are about managing common political, economic and social interests and opportunities but also about managing competition and bilateral differences and obstacles. Moreover, in recent years the relationship has taken on more and more international questions and global governance issues. EU–China relations are also about understanding respective objectives, interests and values that lie hidden behind declarations of a strategic partnership. There is a history of unrealistic hopes, disappointed expectations and (un)justified fears on both sides which this chapter will investigate. Some analysts have likened the relationship to a marriage and talked about a honeymoon in 2003 when both the EU and China issued policy papers on each other and declared a strategic partnership (Shambaugh, 2004, who was quick to predict a new ‘axis’ in international politics). However, in fact, evidence for a marriage contract is hard to find in the first place. This chapter will structure the phases the EU–China relationship went through politically and economically over the last four decades based on key policy papers published by both sides.

13

14  The European Union and China After going through these phases the chapter reviews the juncture at which the relationship stands after the Lisbon Treaty, the global financial crisis and the leadership changes in both China (2012–2013) and the EU (2014), and we analyse the structures and imbalances in which it is embedded.

The Evolution of EU–China Relations 1949–1975: From the Founding of the PRC to the Establishment of Diplomatic Relations between the EC and China During the Cold War most European countries had diplomatic relations with Chiang Kai-shek’s Republic of China in Taiwan (until 1971) and some ­Europeans were actually fighting in hot wars that involved China (directly in Korea, indirectly in Vietnam) while the Central European countries which are now members of the EU at that time belonged to the same socialist camp as China. However, the socialist group increasingly became divided and in the 1960s the Soviet–Chinese split even led to a brief armed conflict between the USSR and the People’s Republic of China. From 1966 to 1976 China went through a prolonged period of internal turmoil (Cultural Revolution) and almost complete international self-isolation. Only a few West European countries had diplomatic relations with the People’s Republic of China before it took the UN seat from Taiwan (Republic of China) in October 1971: UK, Sweden, Denmark, Finland (1950), France (1964), Italy (1970), and Austria (1971). Only France and Italy were EC members at the time; Austria, Finland and Sweden were neutral nations and not part of the Western bloc. The PRC refused an exchange of Ambassadors with the UK and the Netherlands (diplomatic relations in 1954) until 1972. Most notably France established diplomatic relations with China in 1964. China had become a fellow nuclear power and like France at the time refused to sign the comprehensive nuclear test ban treaty, and was seen by France’s President de Gaulle as a counterweight to the superpowers, a role he also conceived for France. Likewise China appreciated France’s ‘independent foreign policy’ (MOFA, 2018). This perspective introduced geopolitical considerations into relations between the two countries. Such considerations of counterbalancing the superpowers and the building of a multipolar world have remained significant until today (e.g. opposition against the Iraq war in 2003) and in particular have for a long time influenced Chinese thinking about the EU as a whole.

1975–1989: The Nixon Effect – EU and China as Cold War Allies US President Nixon’s trip to China in 1972 changed the Cold War game. The US de facto engaged with China in an alliance against the USSR (at the expense of Taiwan; Green, 2017: 345–354) and due to that policy change West European countries and the European Community (in 1975) established diplomatic relations with China. At that time the EC had no competence for foreign policy, but merely for foreign trade and economic (or development)

The Evolution of the EU–China Relationship  15 cooperation. Trade with China was initially very low. A trade agreement was signed in 1978, the first with a socialist country. In 1985 the then EC concluded a trade and cooperation agreement after China had embarked on a reform course that made it an attractive trading partner with which the Europeans initially enjoyed a surplus. A European Commission Delegation was set up in 1988 in Beijing. The office reflected the EC competence on trade. From China, Europe was soon seen as an emerging pole in a multipolar world and like itself a counterweight to the two superpowers, but Europe was also welcome as a partner for domestic reform and development, especially for joint-venture investment, technology and know-how transfer.

1989–1995: The Tiananmen Effect The high hopes for China’s political reforms in the 1980s were dashed by the repression of the Tiananmen demonstrators on 4  June  1989. The contrast with the peaceful fall of the Berlin Wall just a few months later could not have been greater and that contrast has burned itself into the collective (sub)conscience in the West. The EU immediately took restrictive measures ­including an arms embargo and reduced development aid. Human rights in China became very prominent political issues. The EU and China had two very different post-Soviet experiences which shaped their identities and ­policies: what the Europeans saw as the greatest gift of History – the collapse of the Soviet Union and its ‘Empire’ – was the worst-case scenario for China and to be avoided at all cost for itself. China had to readjust to the end of the socialist world with accelerated domestic market reform, more cooperation with ASEAN and resistance against Western values that were seen as having brought chaos and disintegration to the USSR and ended the rule of the Communist Party there. After Tiananmen the EU was forced to put the relationship with China into a broader political and human rights context. But soon a fear of losing the China market to US and Japanese competition especially in investment (European Commission, 1995: 8) led to a political readjustment. After the entry into force of the Maastricht Treaty enlarging the EU competence in the political fields, 1994 saw the start of political dialogue, most sanctions were phased out (except the arms embargo) and new flagship cooperation projects were put on the rails. In 1995 the EC published its first policy paper on China (a long-term policy for China–Europe relations) to spell out this balancing act between trade, human rights and the strategic interest to have a solid relationship with China.

1995–2003: The WTO Effect This period was marked by fundamental developments such as the Asian financial crisis; a new regional engagement by China with its neighbours; the recovery of Chinese sovereignty over the last two European colonies in

16  The European Union and China Asia, Hong Kong (1997) and Macau (1999); and China’s successful quest for WTO membership. China’s economy and trade grew significantly over this period. The 1995 EU policy paper set out the stage for the subsequent developments and already covers most of the key topics that would remain on the EU–China agenda until today, in particular trade and economic cooperation, political dialogue and human rights. Topics such as anchoring the cooperation with China in a regional context (achieved through ASEM since 1996), non-proliferation and arms control, illegal migration and the environment have all been mentioned from the start. The departure point was China’s remarkable economic and political rise, but also the perceived fragility of its reform process. A stable, open and prosperous China was identified as a key strategic interest for the EU. The Communication therefore advocated supporting China’s reform while it made very critical comments on China’s human rights situation. The fear of losing an economic opportunity by leaving China’s huge market to US and Japan competition was also clearly articulated. The paper introduced a key theme that would remain in the subsequent documents: European trade and investment was believed to lead to a more open and democratic China. Whether this was a genuine expectation or a clever way of reconciling the economic engagement despite widespread criticism of China’s HR record, this approach toward a China as the EU wanted it to be remains a key feature of the partnership but led to frequent disappointment when trade and the economy progressed without the hopes for democracy, or at least political reform, materializing (see Chapter 5). The paper also shows a propensity of unilaterally conflating the EU’s with China’s interests that was to endure over the years. Only three years later a new policy paper on China (‘Building a Comprehensive Partnership with China’) was issued ahead of the first EU–China summit (in London in the margins of the 1998 ASEM summit). This came after the Asian financial crisis had cooled the high expectations of a coming Asian century. The 1998 paper for the first time notes an increasing assertiveness of China on the international scene, albeit then the word had a more positive connotation than it has today (see Chapter  4). The 1998 Communication no longer put human rights first and adopted a more positive tone by acknowledging an improvement over the last 20 years and recent advances, like the Human Rights Dialogue launched in 1995 and China’s signing of the UN Covenant on economic, social and cultural rights. It proposed jumping on the bandwagon of China’s enhanced engagement with the world by proposing holding EU–China summits (which have in principle been held on an annual basis since 1998) and improving the framework for political dialogue. This policy paper clearly reflects the angle of changes in identity of the actors as a reason to enhance the relationship: China’s international assertiveness and engagement in the world on the one hand, and Europe’s bolstered self-confidence as a global player after the Maastricht and Amsterdam Treaties created the EU with a High Representative for Common

The Evolution of the EU–China Relationship  17 Foreign and Security Policy (CFSP), the enhanced cooperation on Justice and Home Affairs (JHA), and decisions on Economic and Monetary Union (EMU) and Eastern enlargement on the other hand. The Asian financial crisis was seen as a warning on China’s development model and an opportunity for the EU to fill the gap left by Asian investors in China (in 2000 the EU overtook the US and Japan as top investors in China). The topic of climate change was mentioned for the first time as an important field for engagement, but it would take many years before concrete cooperation would materialize. Supporting China’s accession to the WTO remained a key theme in the final, difficult phases of the multilateral negotiation. The EU posed as the keenest advocate of early Chinese accession, but it showed its mettle and held out for a better deal even after China had reached a difficult agreement with the US and thought that this was it (Zimmermann, 2012). The EU saw China’s WTO membership as a boost to further reform and as a good business opportunity – but it enumerated a long list of conditions that remained to be fulfilled. Smart development aid (China–Europe International Business School, trade, social security, vocational training, judicial and legal cooperation, IPR, village governance) was to accompany the economic and social reform process. The 1998 paper’s conclusion is significant: China’s increasing assertiveness on the world stage therefore deserves a positive response from Europe. It also requires vision. This Communication seeks to set out that vision by laying the ground for a comprehensive partnership based on a set of specific, action-oriented initiatives. The focal point of that vision must be to ensure the successful and lasting integration of China as an equal partner in the world economy. This should be coupled with an active commitment to creating a strong and open civil society based on fundamental freedoms and human rights, in step with China’s move towards a market economy. China’s WTO accession process, as well as the EU’s bilateral trade agenda with China, remain key instruments, together with Europe’s elaborate cooperation programme with China, to bring this to fruition. At the same time, the EU must be ready at short notice to adapt its policy to any unforeseen changes prompted by the speed and scope of China’s transition. Thus the lucrative trade and investment relationship was put into an instrumental perspective as a means to achieve wider political aims for China’s reform from the outside and in line with EU values. Indeed, for a while China had used the international pressure and conditionality regarding WTO accession as a vehicle for domestic economic and legal reform, but in fact never subscribed to any political liberalization agenda the EU professed. Another paper in 2001 – on the eve of China’s accession to the WTO – basically reviewed and validated the earlier papers, but focused on fi ­ ne-­tuning the mechanics and improving the implementation of the partnership through

18  The European Union and China a long list of ‘action points’ which were regularly reviewed by leaders at annual summits. Thus we find characteristic elements of bureaucratic process and a focus on concrete ‘deliverables’ on the EU side. A first note of disillusionment was palpable as the EU singled out China as part of the problem, but also part of the solution for all global and regional issues and stated China was ‘not always an easy partner for the EU’. China’s reform process became seen as uneven and fragile after the Asian financial crisis and after reform architect Deng Xiaoping had passed away in 1997: ‘Nothing can be taken for granted. The reform process is not on permanent auto-pilot.’ The transfer of Hong Kong and Macau to Chinese sovereignty was a bilateral matter between China and, respectively, the UK and Portugal, but the EU (which had opened an office in Hong Kong in 1993) has instituted an annual reporting mechanism on the implementation of the ‘one country, two systems’ formula. From a Chinese perspective, this marked the formal end of European colonial occupation and brought a ‘century of humiliation’ to a close.

2003–2006: The Blind Date Strategic Partnership If anything, 2003 was an eventful year just as China had gone through a leadership change: divisions in Europe over the Iraq war; the ‘papering over’ of these differences through the forward-looking European Security S­ trategy; the subsequent issuance by both the EU and China of a policy paper on the other; and the SARS crisis, a contagious and often deadly respiratory disease which provoked a major public health crisis in China. It brought public life and international travel almost to a standstill and undermined public trust in the government. The drastic measures to ‘fight SARS’ led to a temporary economic slowdown. For China, SARS was a political crisis and a wake-up call for the party over the vulnerability of the political system. China’s good neighbourhood policy, multilateral engagement on the Korean peninsula through the Six Party Talks hosted by China (bringing together the ­ ussia, Japan, South and North Korea in several rounds between 2003 US, R and 2007 to discuss the North Korean nuclear programme) and fledgling support for multilateralism, but also its new doctrine of ‘peaceful rise’ (later rechristened more innocuously as peaceful development strategy) seemed encouraging as did China’s signature of the UN HR International Covenant on Civil and Political Rights (not yet ratified) (Song, 2010: 770–1). Change in Europe, China and the world since 2001 was thus the o ­ pening sentence of the 2003 EU policy document on China. It welcomed a new generation of Chinese leaders, WTO membership and China’s assumed ­ global role; while the EU felt more confident after achieving a good WTO deal with China due to strong cohesion around the European Commission as negotiator (Zimmermann, 2012), the successful introduction of the Euro, the upcoming eastern enlargement (2004) and its new European Security Strategy ­(Chapter  8). New issues lengthened the agenda: non-traditional security – terrorism, non-proliferation and public health (SARS). The 2003

The Evolution of the EU–China Relationship  19 EU paper is relatively short on new policies, but focuses, like in 2001, on the mechanics, efficiency and outputs (substance) of the relationship and thus contains even longer lists of ‘action points’. The style of the Chinese paper on the EU was totally different. It recalled China’s independent foreign policy, its desire to remould the international system on the basis of the five principles of peaceful coexistence (see C ­ hapter 4) and in a fairer way, that is, asking the West to make room for emerging countries such as China. It said that there were no fundamental conflicts of interest between the EU and China and that neither posed a threat to the other. China praised the EU’s achievements in language similar to the EU’s own self-perception. However, China then clearly spelt out its conditionality or ‘red lines’: strict adherence to the One China principle; no arms deals with Taiwan; no upgrading economic relations with Taiwan; no dealings with the ‘Dalai clique’ on Tibet; respect for the framework of Hong Kong and Macau’s status; no interference in domestic affairs there or anywhere else; and finally equality and mutual respect. The paper also formulated clear offensive interests such as the granting of market economy status (MES); abolishing anti-dumping and other trade restrictions; and, at the end of the document, the lifting of the arms embargo as conditions for progress in the political, economic and military fields. Contrary to what Geeraerts (2011: 62) describes as the EU policy being one of conditional cooperation, it is actually the Chinese who spelt out a clear conditional approach, whereas the EU has used an instrumental and more implicit approach (except for the more clearly delineated ‘hard’ trade ­ hina’s policy objectives and the c­ onditions for lifting the arms embargo). C strict conditionality was made clear in 2008 when  China postponed the 11th EU–China summit after French President  Sarkozy (who held the EU presidency that semester) had announced a meeting with the  Dalai Lama. China’s EU policy paper was thus not simply an ‘honorary distinction’ for the  EU – it made clear offensive demands and spelt out clear conditionality. The postponement of the summit showed that China was serious about these red  lines. There are issues of principles, identity and values between China and the EU. Kaya (2014) calls that rather dramatically a battle over­ norms, while Crookes (2013) calls for a resetting from a values-based to an interests-based relationship. The EU paper by contrast is a good example of how the EU conflates its own interests with those of China and assumes shared interests in sustainable development, peace, stability and global governance. The EU even defines itself as a stakeholder in China’s ‘transition to a stable, prosperous and open country that fully embraces democracy, free market principles and the rule of law’ – China not as it is, but as the EU wants it to be. This is at variance with the more selective, pragmatic Chinese learning from Europe on domestic reform (Song, 2010). In 2003, therefore, both sides declared a strategic partnership focusing on the common ground despite these actually quite different visions of the partnership. Interestingly, neither side consulted with the other ahead of their respective publication, a typical blind date. In 2006 the EU published yet another policy paper (‘EU China: Closer Partners, Growing Responsibilities’) with an annexed trade

20  The European Union and China policy paper right after an EU–China summit where this Communication was apparently not announced to the Chinese side. This lack of advance information was perceived by China as a breach of trust and the paper as overly critical.

2006–2010: Betrayed Hopes and Strategic Competition – China’s Rise in a New World In January 2007 negotiations for a Partnership and Cooperation Agreement were launched to replace the 1985 Trade and Cooperation agreement with a more comprehensive and political legal document. However, the negotiations proved to be protracted with both sides having different priorities. After more than ten years they still have not been concluded. In 2007 both sides agreed a High Level Economic and Trade Dialogue at the 10th EU–China summit that was first held in April 2008 when the European Commission President and nine Commissioners made an unprecedented group visit to Beijing. The dialogue was to address increasingly contentious trade and market access issues. The help of the EU and many European countries after the May 2008 Sichuan earthquake was well appreciated in China and a wave of empathy replaced the discussions on boycotting the Olympic Games. The Games’ opening ceremony was attended by many European leaders, but several were absent which was seen as a snub by Beijing. What seemed to start so well in 2008 turned sour after the summer. EU–China relations reached a low when China, infuriated about the French president’s meeting with the Dalai Lama despite China’s warnings, postponed the EU–China summit scheduled under the French presidency. Owing to the aftermath of unrest in Tibet in March 2008 public opinion in Europe on China plunged, while Europe’s reaction had the same effect in China (Pan, 2012). This was probably the most damaging episode in the partnership since 1989. It led, however, to a deeper introspection on each side on what the relationship should be about. A bit earlier, in 2006, another development affected the nature of the relationship beyond its bilateral character: China hosted a summit with African leaders which heralded a new era of South–South cooperation backed up with huge Chinese funds that were promised to flow without any political conditions or economic prescriptions. Many in Europe (and the US) reacted with accusations that China was undermining long-standing development policy and World Bank/IMF prescriptions (the Washington Consensus) and criticized China’s focus on raw materials as ‘neo-colonialism’ (Chapter 9). A minority of African leaders and several African NGOs voiced similar concerns, but the large majority welcomed China as an alternative development partner and denounced the West’s double standards (in two ways: the West was doing business with China without conditionality and Western countries were even more focused on unequal exchanges of raw materials against expensive manufactures with Africa) (Wissenbach, 2007a). In this tense situation the EU took the initiative to launch bilateral and trilateral dialogues with China and Africa (especially the AU) and signalled to China in a Communication in 2008 that it was ready to engage constructively and welcomed

The Evolution of the EU–China Relationship  21 China’s support for Africa’s development as a shared interest (Wissenbach, 2011). This remained for many years the last EU policy paper on cooperation with China. As in other fields of global governance the EU and China had similar priorities, but very different ways to pursue them. More broadly the episode showed that the Western and EU approach to foster China’s becoming a ‘responsible stakeholder in the international community’ on Western terms had run out of steam. China made clear it was no longer a rule taker (like when it had subscribed to the terms for WTO membership) but had its own approaches as an autonomous and alternative stakeholder in international society with a large following in developing countries.

2010–2020: Building a Realistic Strategic Partnership The political low point in 2008 was quickly overshadowed by the US financial crisis, with its global ramifications and in particular the ensuing European sovereign debt crisis. This will be dealt with in Chapter 11, but the crisis raised awareness in Europe and China about the depth and implications of economic interdependence and the pressing need to cooperate to find solutions in the mutual interest. The G20, but also forums such as the ASEM summit in 2010 and the EU–China summits and dialogues, proved to be effective mechanisms for communication and coordination (Drezner, 2012). The Chinese side made a – duly recognized – point of standing by its European partners in times of difficulty and need, one of the indicators (for China) of a strategic partnership. In 2010 the EU’s Lisbon Treaty entered into force, profoundly changing the nature and institutional set-up of the EU (Chapter 3). In particular the elected European Council presidency and a permanent High Representative for CFSP with a diplomatic service (the European External Action Service, or EEAS) to back them have created a more permanent European dialogue partner compared with the rotating Council presidencies in the past. This facilitated the creation of a High-Level Political Dialogue in 2012 and a Security Dialogue in 2012 for both of which on the European side the High Representative/Vice-President (HR/VP) has been the interlocutor. However, China argued that with the end of the EU’s rotating presidency the six-monthly rhythm of the Human Rights Dialogue should also be reduced to an annual meeting (see Chapter 5). China’s initiative to create a cooperation group with 16 Central and East European countries (involving Central European EU member states) was widely perceived as an attempt by China to divide the EU (Gebhardt, 2017; Stanzel, 2016). The new set-up in the EU also led to a more strategic effort to coordinate relations with China, culminating in June 2016 with the joint proposal by the HR/VP and the European Commission to the European Parliament and the Council of elements for a new China strategy (European Commission, 2016a). The protectionist and isolationist stance of the Trump presidency has done much to pull China and the EU together, to defend the global trade and climate regime and to strengthen the bilateral partnership. Some policy initiatives (for instance on dialogue with and on Africa) paid off, with China more willing to work with the EU on Sudan, South

22  The European Union and China Sudan, Somalia piracy, arms exports to Africa, Iran’s nuclear programme, and Afghanistan, Libya and Mali. There are still persisting ideological differences (on human rights, humanitarian intervention, sanctions as policy instruments) but attempts to manage them. In the economic realm trade has continued to increase even though new somewhat divisive issues have come up on the agenda – reciprocity, market access, level playing field, WTO dispute procedures – but there is also a clear and shared commitment to a global and open trade regime. Since 2008 the High Level Economic and Trade Dialogue (HED) has provided a valuable forum in times of crisis. The period has also seen continued cooperation on China’s domestic reforms with new instruments (after the end of development aid to China) like the urbanization partnership. In fact China’s 12th five-year plan and Europe 2020 strategy share similar objectives and priorities, which creates opportunities for enhanced cooperation in areas such as urbanization, energy, climate change and the green economy. This has led the HR/VP to speak about EU–China relations as an example for international cooperation in the twenty-first century. The new Chinese leadership under Secretary General Xi Jinping has since 2013 reprioritised the EU. Chinese initiatives led to the EU–China 2020 Strategic Agenda for Cooperation and a new impetus for investment and trade negotiations. This 2020 agenda was the first joint policy paper on the EU–China relationship. China updated its 2003 EU policy paper in April 2014 after the visit of Xi Jinping to the EU in March 2014, clear signs of a renewed, higher importance accorded to the EU (MOFA, 2014). The EU’s 2016 ‘Elements’ paper aims to put the EU’s own interests at the forefront of the relationship, with reciprocity and respect for rules and key offensive demands (European Commission, 2016a). The paper expresses concern about China’s economic slowdown, rebalancing industrial overcapacity, and the lack of progress in market reforms and access for EU companies. It lists demands on China in terms of levelling the playing field, market opening and fair competition, holding out the perspective of an EU–China Free Trade Agreement (FTA) if these demands are met. Among the differences the EU wishes to ‘manage constructively’ is the authoritarian response by China to domestic dissent (including in Hong Kong) while the EU reiterates its intention to uphold universal values and the protection of human rights and China’s international obligations in this field. This translates the EU’s Global Strategy (EUGS) of principled pragmatism into the EU–China context. More openly than in most previous policy papers the 2016 Communication underlines the fundamental importance of member states falling in line with EU policies and rules to allow a ‘strong, clear and unified voice’, a veiled criticism of the 16+1 Central and Eastern European cooperation with China. The paper also articulates more clearly than before the ‘fundamental importance of trans-Atlantic links, EU–US co-operation and co-ordination’ and puts the EU–China relationship also in the context of the EU’s other partnerships in the Asia-Pacific region. This latter point may adapt to the new reality of the America First policy since 2017 which weakens EU–US relations.

The Evolution of the EU–China Relationship  23 It is thus not surprising that in the context of the South China Sea (SCS) disputes the EU has positioned itself probably more clearly than China would have liked by not only backing – like in the past – in very general terms its support for the peaceful resolution of disputes and the need for freedom of navigation, but explicitly supporting the UN Convention on the Law of the Sea (UNCLOS) and its arbitration procedures (while China denied the applicability of those to the SCS). It calls on China to propose confidence-building measures, thus only implicitly blaming China for the regional tensions without directly antagonizing Beijing. The 2016 Communication also reiterates the 2008 proposals for cooperation on Africa which ‘offers the best opportunity for EU-China security co-operation’. But the EU’s immediate priorities are an Investment Agreement, China’s cuts in industrial overcapacity and improved access to China’s markets very much in line with traditional trade policy concerns. Since 2016 tensions have mounted also over China’s stance on Hong Kong where the EU fears that the ‘one country, two systems’ principle is being eroded by the detention of booksellers critical of the PRC and measures against student activists. Finally, the UK’s decision, following a referendum on EU membership, to withdraw from the EU (Brexit), has implications for EU– China relations. These will depend on the terms of the divorce, but the UK has long been an advocate against EU trade defence measures and for deeper cooperation with China, and of course its substantial trade and investment relations with China will no longer be part of EU–China economic relations and the UK’s position in the G20 will also be less aligned with the EU’s.

Perspectives on the EU–China Relationship: Continuity and Change This review of historical ties demonstrates that there has been a remarkable thematic consistency in the policy papers of the EU on China since 1995. At the same time both sides actually changed beyond recognition: the 9-member EC has become the 28-member EU; China has become the world’s second largest economy and a major power with global reach. Important themes such as helping China’s reform and opening up as a shared interest, as a process that would underpin progress in human rights and an open society, the importance of promoting human rights through dialogue and cooperation rather than confrontation, and the EU ambition to penetrate the China market are already present in the first policy paper of 1995 and would remain so until today. The paper explains with remarkable clarity the reasons for this consistency: Most observers agree on the existence of a great variety of possible future economic, and in particular political, scenarios for the decades to come. But whatever temporary ups and downs come in the wake of trade quarrels or political differences, EU policy should never lose sight of its strategic interests in China. (European Commission, 1995)

24  The European Union and China The 1995 paper already warned that if the EU and its member states didn’t cooperate ‘our voice will not be heard’. The debate about the word ‘strategic’ in the EU–China relationship has been ongoing ever since and has been a topic of many academic and think tank papers. In 2012 the question was even discussed by the European Council. The review has also shown that Europe and China had rather high expectations of each other, which did not always correspond to the other’s priorities. For instance, the EU saw China’s WTO accession as a starting point for more reform and opening up, while China saw it as the end point of reforms and concessions to foreigners designed to enhance its global status and gain membership of the WTO ‘club’. China considered the refusal of the EU to grant it Market Economy Status (MES) and to lift the arms embargo as political obstacles to making the partnership strategic and as indicators for status and respect. The two issues were thus framed repeatedly as conditions for an enhanced partnership by China while the EU insisted on the technical and legal nature of the MES issue and the link to human rights that had been the reason to impose the arms embargo. For at least the period of Chinese Premier Wen’s government (2002–2013), the arms embargo and the MES request were non-negotiable preconditions while the EU saw them as bargaining chips. Neither side has succeeded in its strategic objective, as the two approaches could not be reconciled. But below the level of this high-level divergence a dense interaction in a large number of policy fields has built up with currently almost a hundred dialogues, working groups or seminars per year. This density is an indicator of a strong and institutionalized relationship, but it also reflects the need to resort to dialogue to bridge differences and to actively identify common ground in many policy areas where the EU and China have divergent interests. Europe and China have become economically more and more interdependent (for good or bad). There are consequently dozens of dialogues and meetings to discuss issues ranging from intellectual property rights to food safety and from satellite navigation to urbanization and climate change. However, China’s and the EU’s political interdependence is low. On neither side have important political and strategic objectives been realized. After ten years of pressure China neither got the lifting of the arms embargo nor achieved MES nor received an acknowledgement of its progress on human rights. Likewise, the EU did not make much progress on improving human rights, political reforms in China, or strategic cooperation – rather than just dialogue – in Africa or other parts of the world. Market access and trade relations have become more divisive, with more disputes and public criticism of each other, but this falls short of a ‘trade war’ as both sides keep a key strategic interest in thriving economic relations and economic reform for domestic reasons. The EU’s collective clout vis-à-vis China has somewhat fractured with Brexit and the creation of the 16+1 cooperation, and more generally with the diversity of bilateral relations between EU member states and China. On the other hand, for the time being, the America First policy and the erratic nature

The Evolution of the EU–China Relationship  25 of the Trump presidency have prompted a realization on both sides that stable EU–China relations are crucial for both sides and for global governance. While the EU and China tend to agree on the importance of a number of global governance challenges there frequently are different approaches on how to handle them. The EU tends to prefer binding and enforceable international rules, sometimes through the extension of its own powers to regulate, most importantly its competition policy. China tends to reject international rules that could be used to restrict China’s policy autonomy: China insisted on the voluntary, non-binding character of the 2015 Paris Agreement on climate change while the EU sought binding commitments. China bitterly fought the EU’s attempt to impose emission trading on international flights and the EU had to back down and continue to seek international consensus in the International Civil Aviation Organization (ICAO). China and the EU are also at odds on representation in the IMF and World Bank and of course on human rights promotion, the role of international law, cybersecurity, the responsibility to protect and many other issues (see Chapter 8). The ‘ideological differences’ that China’s 2003 EU policy paper proposed to cast aside obviously plague the relationship the more it moves from the comfort zone of business relations to the political ground and the rules and norms of international society, on which the EU and China in fact hold very different views. On the positive side, trade between the EU and China has expanded beyond leaders’ expectations. It has become one of the most important trade relationships in the world. At the same time, economic complementarity between the EU and China has given way to a sense of competition on each other’s and international markets, with both sides accusing the other of unfair or protectionist practices and resorting increasingly to legal or dispute settlement measures (see Chapter 6). The departure of the UK, one of the key promoters of free trade, may eventually affect the EU’s trade relations with China. Moreover, owing to the economic and financial crisis, the European ­economic and social model – and with it its political model, with democracy being branded as inefficient and unrepresentative due to low turnout at elections and prone to populists with xenophobic agendas as well as captured by financial markets – has become less attractive to learn from and China may feel more and more justified to rely on its own distinct development path. On the positive side, a greater perception of shared responsibility for economic affairs beyond the bilateral relations through the G20 summit process has enhanced understanding and coordination between the EU and China in a more global context, and China has an interest in a strong European economy for its own development, which is in a phase of readjustment given its many domestic challenges. This enhanced like-mindedness on global issues (defence of an open trade regime and the Paris Agreement on Climate Change) was articulated in President Xi’s speech at the World Economic Forum in Davos in January 2017 and by the positive reactions in Europe to it (see Chapter 4). China also needs European technology and know-how for its next qualitative reform endeavours, things it cannot easily obtain from an

26  The European Union and China increasingly protectionist US and an increasingly nationalist Japan. For these various reasons, China has several times emphasized its support for EU integration and its confidence in the EU’s handling of the sovereign debt crisis (different from often very critical US comments towards the EU). China in this context underlined that it was giving support out of self-interest and was not ready to dole out rescue funds, as this would have been difficult to justify domestically. However, it seems that China, through more investment in Europe and continued or expanded holding of euro-denominated reserves, indirectly lent material support to EU efforts to stabilize the situation at critical moments. Thus, since the deep transformation of the EU by the Lisbon Treaty and the financial crises, the EU–China relationship has evolved significantly. US policy on China, interpreted as trying to contain China’s rise, has also reminded Beijing of its traditional policy to strengthen Europe–China relations as a counterweight to the US. Finally, more and more people travel in both directions for tourism, business, cultural exchanges, sports and education, underpinning a government-to-government relationship with new energy and complexity (see Chapter 7). This snapshot of issues dealt with in more depth in subsequent chapters has highlighted the critical aspects of the relationship at a juncture in the 2010s when the EU was grappling with its economic woes and China had to manage a leadership transition, the vagaries of a more global role and daunting economic and social challenges domestically. Yet, on both sides, governments and businesses have focused pragmatically on opportunities as well, including increasing Chinese investment in Europe. Both sides are looking to negotiate an investment agreement, moving beyond trade as a traditional platform for economic exchanges. Several new areas for cooperation have been identified by both sides such as urbanization, the green economy and people-to-people exchanges. In March  2014 Xi Jinping called for an EU–China partnership for peace, growth, reform and civilization, with China’s new EU policy paper outlining these items in more detail (MOFA, 2014).

Conclusion: Change in China and Europe – What Could it Mean for EU–China Relations? The new Chinese leadership that took office in 2012–2013 (and was reconfirmed in 2017) in general terms is likely to continue its domestic and foreign policy priorities along familiar and gradual paths but with a stronger emphasis on a ‘global China’, somewhat echoing the EU’s earlier ambition of a ‘global Europe’. However, China’s increasingly articulated self-confidence (often seen as assertive; see Chapter 4) has implications for EU–China relations that can be positive, such as when China and the EU pull their weight together on global governance, but that can also bring new tensions when Chinese policy is at odds with EU interests (market access, mergers and acquisitions of sensitive sectors, regulation of aviation and maritime greenhouse gases emissions, China’s support for Russia, the rolling back of civil liberties in Hong Kong and China and so on).

The Evolution of the EU–China Relationship  27 Some liberal reformers in China have been disappointed with the ‘lost decade’ of the Hu–Wen era (2002–2012) for reform, but others contend that China’s rural areas have seen a strong increase in prosperity and that overall China’s wealth and power have dramatically increased. Godement (2012) even speaks of a ‘success trap’. Similarly, over the next ten years it is likely that China’s policy will change once more, and maybe quite fundamentally, to address the missed opportunities and accumulated domestic challenges of this lost decade. The leadership will need to tackle the challenges resulting from developments that have created inequalities and increased corruption and tensions between interest groups and confront the debates in the new internet public sphere – itself a completely novel environment for the ­Chinese leadership which has been used to determining public opinion itself. The conflicting pressures for change are in any case obvious. Leadership communication with and attempts to control the new public sphere will increase and, like in other societies, words and deeds will need to be analysed carefully. The EU, traditionally a partner for China’s reform, will once more be tapped for its diverse know-how and technology for China’s social engineering in the new leadership decade. On the EU side by contrast the institutional changes (the creation of the European Council presidency, HR/VP and EEAS, and the reform of economic governance) may gradually lead to a more strategic and more pragmatic partnership with China as they provide a stronger, more consistent political plank – witness the creation of the EU–China High Level Strategic Dialogue and the more ‘realistic’ 2016 policy paper (European Commission, 2016a). Much will depend on the cohesion of EU member states around its new institutional set-up and the way in which multiple challenges such as the migration crisis and Brexit affect internal cohesion. A number of new issues have emerged already which the two sides have begun to address: urbanization, informatization and an upgrade of industrial development, a move into higher levels of the value chain which is changing the balance between complementarity and competition in EU–China economic relations and also beginning to affect China’s Overseas Direct Investment (ODI) into Europe and elsewhere (for instance, the BRI). But what if Chinese public opinion becomes critical of foreign investors who outsource environmental problems to the Chinese? A Bhopal-type incident in China would certainly entail a different scale of backlash against foreigners than it did in India. What if Chinese companies want to take over European industries and are rebuffed on grounds of national security or misgivings about corporate governance? China can now afford to retaliate or to pursue alternatives. What if China were to take more robust measures towards Tibet, for instance if there was a revolt following the Dalai Lama’s passing, or a bloody crackdown in Hong Kong? What if China were to enter into armed conflicts with the EU’s strategic partner, Japan? The EU would be exposed as a ‘paper tiger’ or would have to make costly changes to its China policy. In such cases the Chinese government’s current line (as articulated in the 2003 policy paper on the EU) that there are no fundamental conflicts of interest between China and the

28  The European Union and China EU may be affected as much as the EU’s benign policy on China’s rise. There is no need to overdramatize these scenarios or to expect such incidents to happen, but the EU–China relationship can no longer be expected to run smoothly on government-to-government autopilot and on the basis of policy papers. The chapters that follow will explore these latent changes further. The EU has not changed its basic strategy which still rests on the view that China through its reforms will become more liberal, more democratic and internationally more involved in multilateralism and the provision of public goods. However, the 2016 policy paper has become more sober and interest-focused, with an emphasis on reciprocity and clearly articulated ­ demands on China. Indeed, just as the Chinese foreign policy community is discussing new options for foreign policy that are more suitable to its current position in the world than the famous adage coined by Deng Xiaoping of lying low and hiding capabilities, Europe needs to be prepared for the fact that China’s reform course may not deliver a China in Europe’s image, while continuing in a smart and where necessary discreet way with the support for reforms so that China eventually becomes a constructive global citizen. The strategic dialogues have been key innovations with potential to do that. This calls less for a fundamental shift in approach than a more pragmatic management of expectations and strategic objectives, rather than dreaming China’s dream in Europe.

Chapter 3

EU Institutions and the Making of EU Foreign Policy

Introduction EU–China relations need to be understood in the light of the EU’s institutional structure and its foreign policy apparatus. The EU does maintain foreign relations with most states and international organizations, but – given its nature – this foreign policy differs substantially from those of nation-states. The EU’s foreign policy has particular qualities and certain limitations that deeply affect the way in which the Union relates to third countries such as China. There are, for example, a number of deeply engrained principles that the EU seeks to follow in its external relations: the linkage between values and interests; the support for ‘effective multilateralism’ and a rule-based international order; the tendency to rely on formal agreements and strategic partnerships (Keukeleire and Delreux, 2014). Some of these p ­ rinciples reflect the nature of the EU, itself a polity based on legal agreements among states, espousing a number of fundamental values. There is also the tendency for a large bureaucracy seeking to establish formal arrangements and administrative routines as a way of managing external relations, and the path-dependency of these, once set up, to evolve and proliferate. Another defining characteristic of EU foreign policy-making is the need for consensus among member states. Even though there are, as will be explained, important common institutions involved in the management of the EU’s external relations, these depend, by and large, on agreement among all member states. This means that responding decisively and quickly to international events tends to be difficult for the EU, even if communications among national foreign ministries and the Union institutions have improved over time (Bicchi and Carta, 2011). While on some issues there simply is no consensus on what the EU’s position should be, on others the process of formulating a common position, including meetings among officials, diplomats, ministers and possibly heads of governments, requires time, involves compromises between different national preferences and therefore leads to carefully worded statements and calibrated activities. While the requirement for consensus and the search for compromise make for a relatively slow and cumbersome foreign policy-making process, this also ensures that once the EU has arrived at a formal position, it tends to be fairly solid and immovable (as a similarly difficult process would be required to 29

30  The European Union and China change it). As a consequence, the EU may not be well-positioned to respond to crises, compared with the hierarchical decision-making structures within states, yet it has particular qualities when it comes to its involvement in longterm negotiations. Here the solidity of the EU’s agreed position can be a strength, because it is somewhat insulated from the fluctuations of domestic politics and public opinion. It can also be a weakness, as the EU is not flexible in adjusting its positions in negotiations with third parties. Institutionally, the making of EU foreign policy relies on the intricate interaction among a variety of actors on both the EU and the national level. As already indicated, the EU’s foreign policy process involves the activity of common institutions as well as the search for consensus among the member states. As such, the institutional foundation is very much a hybrid structure reflecting two distinct logics that are inherent in the nature of the EU: intergovernmentalism and supranationalism (Best and Christiansen, 2015). For the comprehension of how the EU behaves in global politics, it will be useful to briefly explain what these logics imply, and develop a sense of the tensions that arise from their interaction. Intergovernmentalism describes the aspects of the EU which are dominated by the member states, be it particular institutions, policy domains or decision-making procedures. Analysts who emphasize this logic of the EU will look to the preferences of the member states and focus on the institutions or aspects of the EU that are governed by these. The European Council, bringing together the heads of national governments, and the Council, where foreign ministers deliberate on foreign policy matters, are key institutions in this regard, as is unanimity as a decision mode in these meetings. With unanimity comes the ability of each and every individual member state to block decisions – the ‘national veto’ – and hence the tendency for decisions to be limited to what has been called the ‘lowest common denominator’ among the various national positions or the result of prolonged bargaining where different priorities are bound together in a package deal. In practice, there may well be limits to the extent to which (especially smaller) member states can make use of their formal veto power on a regular basis, in particular in instances when the more powerful states push for a particular outcome. That is why the relative power of the member states, and the intensity of their preferences on a particular issue, is a key aspect of the intergovernmentalist perspective on EU politics, alongside the formal arrangements under which they take decisions (Moravcsik, 1993). However, while recognizing the importance of intergovernmental ­decision-making, especially when it comes to foreign policy-making, the EU cannot be understood without the recognition that there is a second logic at work in the organization, namely supranationalism. The supranational dimension describes those institutions and aspects of the EU that operate ‘above’ the level of the member states and are therefore somewhat independent of them (Stone Sweet and Sandholtz, 1997). The EU’s supranational institutions, such as the European Commission and the European Parliament, are bound to uphold the common interest of the whole of the Union,

EU Institutions and the Making of EU Foreign Policy  31 rather than the more narrow aggregate of the various national interests. Their capacity to act independently from the instructions of national governments is based on the EU founding treaties that set the limits but also provide the resources – legal authority, political legitimacy and financial means – to pursue policies in the common interest of the European Union. The distinction between intergovernmental and supranational aspects of the European Union is relevant in the context of relations with China because it cuts across – and has the potential to create tensions between – key external policies of the EU: while EU foreign, security and defence policies follow intergovernmentalist lines, other important policies including trade, foreign development assistance, humanitarian aid and climate change are being governed according to such supranationalist principles. This means that foreign and security policy on the one hand and trade and economic policy on the other hand are not only run by different institutional actors within the EU, but are also decided on according to very different decision-making procedures. This two-pronged EU institutional architecture dates back to the origin of the organization, when the focus was exclusively on economic integration. The creation of a common market and a customs union among the original six member states in the 1960s necessitated a common commercial policy: with a common external tariff, negotiations about trade agreements with the rest of the world needed to be conducted centrally, namely by the European Commission. Foreign and security policy arrived much later, first only in terms of informal arrangements outside the EU treaty structure. However, with the 1992 Maastricht Treaty, a ‘Common Foreign and Security Policy’ (CFSP) was incorporated formally into the European Union. This was done in what has come to be known as a ‘pillar structure’, with distinct decision-making procedures for traditional areas of community decision-making on the one hand and for the newly added CFSP on the other. This pillar structure was the institutional recognition of the intergovernmental/supranational divide within the EU – a balancing act between the needs of effective policy-making and respect for national autonomy in the area of foreign policy. The 2009 Lisbon Treaty advanced this arrangement significantly by abolishing the pillar structure and creating a more integrated foreign policy machinery, at least in theory. The creation of a European External Action Service (EEAS) brought together Commission and Council officials working on external relations as well as diplomats from the member states in a single, new institution, headed by a High Representative for Foreign Policy who is also one of the Vice-Presidents of the European Commission (an HR/VP). Since trade and other external policies remained within the ambit of the European Commission, thereby continuing the institutional divide between the ‘political’ and the ‘economic’ aspects of EU external relations, the HR/VP holding both of these offices is meant to bridge this gap which is, however, still reflecting the different decision-making procedures in these areas (Christiansen, 2011). As a result of these underlying tensions, the institutional structure of EU foreign policy-making is not only unique, but also increasingly complex. In this chapter the most important EU institutions and their role in the EU

32  The European Union and China external relations will be outlined. First we look at the more intergovernmental aspects of the EU, namely the way in which the member states influence EU policy. The European Council and the Council of the European Union are the key institutions here and will be discussed in more detail. Subsequently, we turn to the EU institutions pursuing the common European interest: the European Commission which initiates and implements EU policies; the European Parliament which shares the role of legislator with the Council; and the Court of Justice of the European Union which adjudicates in disputes and interprets EU law.

The Role of Member States in EU Foreign Policy National Foreign Policies and Domestic Institutions A significant tension in EU external relations is that between, on the one hand, preferences in favour of free trade and, on the other hand, latent tendencies towards a more protectionist stance. The positions of various member states regarding free trade are different and often show distinctive national patterns (Christiansen and Rasmusson, 2016). Some, like France, tend to be more protectionist while others like the Netherlands tend to be stronger free traders. As trade agreements have to be ratified by the Council, interest contestation can endanger a negotiated agreement. There are different attitudes of EU member states towards China. This not only influences EU policy, but also leads to member states having their own parallel policies towards China. In particular, the EU ‘big three’, that is, the UK, Germany and France, have important bilateral policies towards China while France and the UK are also permanent members of the United Nations Security Council, like China. More broadly, Fox and Godement (2009) identify four groups of member states when it comes to attitudes visà-vis China. The first are assertive industrialists who are critical of China on political matters and tend to adopt a tough stance on economic matters, too, in the attempt to achieve fair treatment for EU businesses on the Chinese market and to prevent dumping from China. The second group are ideological free-traders who are critical of China on political matters, but do not try to challenge China on economic matters, as they see a one-sided free trade approach most suited to their economic interests. Accommodating mercantilists, the third group, are tough towards China on economic matters in order to ensure fairness in EU–China economic relations, but they are relatively forgiving on political matters such as human rights. The fourth group, the European followers, do not have a strong foreign policy interest in China and are therefore reluctant to be too active in EU–China policy. Figure 3.1 illustrates the existence of different clusters of member states when it comes to their attitudes towards China. In the face of such divergent attitudes among the member states, and the tendency of the larger member states to follow their own policies towards China, the conduct of a common policy towards China is inherently difficult.

EU Institutions and the Making of EU Foreign Policy  33 Figure 3.1  Member states’ attitudes towards China

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Source: Fox and Godement (2009).

Clearly, EU relations with China are not a single policy, but need to coexist alongside a multitude of national policies. The fact that China confronts Europe with contradictory signals – illiberal domestic policies, assertiveness in its regional security policies paired with a desire for deepening economic ties and growing interdependence – has further strained the capacity of the EU to speak with one voice. Beyond the recognition of particular subsets of member state positions on China, as identified above, it must be recognized that Germany plays a particular role in EU–China relations. Germany is by far the largest trading partner of China in the EU, and the greatest source of FDI to China from Europe. When it comes to Chinese investment in Europe, Germany ranks second only to the UK, and thus will also be the leading member state in this regard after Brexit (see below in this section). Crucially, Germany is one of only two member states (the other one being Luxembourg) to have a consistent trade surplus with China. With regard to economic relations with China, Germany is thus in a league of its own among EU member states. EU trade policy thus has an extraordinary impact on the German economy, which in turn also makes Germany the member state with most at stake in this respect. As in other policy areas, this means that there is a recognition in the EU that Germany must be listened to when it comes to relations with China. Even if Germany cannot, on its own, determine policy vis-à-vis China, this special status gives it great influence in the shaping and direction of such policy decisions. In the same vein, while all member states have bilateral relations with China, and the larger ones especially regularly visit Beijing with sizeable business delegations in tow, Germany is the only country to have instituted

34  The European Union and China regular joint cabinet meetings with the Chinese government. This symbolizes not only the strategic partnership between the two countries, but also the closeness and special status that each side holds for the other. Indeed, the fact that Germany – like China – is running a large, structural trade surplus with the rest of the world and – like China – is seen by US politicians and some economists as benefiting in its export trade from an undervalued currency (in the German case due to the weakness of other Eurozone currencies) sets it apart from the other member states, thus creating a potential fault line in the EU. One sign of that has been the criticism that both China and Germany have faced in the G20, including from other EU countries. To a lesser degree, the UK has also developed a special status in its relations with China. Here in particular the focus has been on attracting Chinese capital to Britain – a successful effort which has led to the UK becoming the prime destination for Chinese FDI to the EU (see Chapter  6) – a development which led the British government to declare in 2015 that Britain was China’s ‘best partner in the world’ (BBC, 2015). However, Britain’s attraction as China’s ‘gateway to Europe’ has turned into something of a liability with the prospect of Brexit. Investing in Britain was valuable for China not only because of the favourable business climate there, but also – and essentially – because of the access it provided to the EU’s vast Single Market. With the UK outside this market, Chinese investors are likely to rethink their strategies, and a diversion of some, if not most, of this capital to other member states may follow. Beyond the economic impact of Brexit on the UK, we can also expect wider reverberations on EU decision-making after the UK withdrawal. With the prospect of the UK, a traditional supporter of free trade and of transatlantic relations, exiting from the EU in 2019, EU–China relations may well experience changes, possibly giving greater weight to more protectionist countries in the EU. It might also mean that commercial interests will in the future carry a greater weight than security considerations, as the UK has usually been the conduit of US concerns in this regard. The UK’s future role in Europe, in transatlantic relations and for the EU’s relations with China remains to be seen. Frequently, China is accused of following a ‘divide and rule’ tactic in relation to Europe, dealing with individual member states or groups of states according to their specific interests. However, the counterargument to this charge is the observation that as long as individual states are willing to engage with China bilaterally, China is simply making use of the diplomatic opportunities that a divided European Union offers it. A good example of this conundrum is the 16+1 initiative which China launched in 2012 and which is dedicated to cooperation between China and 16 countries in Central and Eastern Europe (CEE), including 11 EU member states and 5 ­non-member states from the western Balkans (Stanzel et al., 2016). There are regular summit meetings, usually coinciding with announcements of major Chinese investments in CEE countries, and a secretariat has been set up under the Chinese Ministry of Foreign Affairs. For policy-makers

EU Institutions and the Making of EU Foreign Policy  35 in Brussels, such a special arrangement with a subgroup of member states is seen as problematic, especially when it comes to economic matters which fall under the competence of the EU, but the EU cannot veto such arrangements. As the EU is a creation of its member states, they strive to keep political primacy in it. This shows in the prominent role of the European Council in the designing of long-term political objectives and in the importance of the Council in EU decision-making. Moreover, the CFSP and CSDP are largely an intergovernmental matter where member states’ interests trump the influence of the Commission and the EP. Moreover, in recent years there has been a strengthening of national parliaments in the governance of the EU. An example is the EU–Canada Comprehensive Economic and Trade Agreement (CETA). Although trade is dealt with through the Common Commercial Policy and such trade deals therefore are negotiated by the EU, member states applied pressure and achieved the assurance that approval from national parliaments has to be secured for those international agreement which contain elements that do not fall under the EU’s exclusive competence. Belgium, following its own constitutional arrangements, then extended this right further to its regional parliaments, giving the Wallonian parliament an opportunity to extract further concessions before the signing of the agreement. The case of CETA was a sign of things to come: the growing complexity of such trade agreements, dealing not only with tariffs but also with a whole host of technical standards, consumer safety provisions, and other potential non-tariff barriers mean that future EU trade agreements with third countries are likely to be either ‘mixed agreements’, requiring approval at both the EU level (Council and Parliament) and within each member state, or may in fact be negotiated as separate deals. Whatever the negotiation strategy, the EU’s commercial policy needs public support more than before in a political climate where the number of anti-­ globalization voices are growing in many EU countries. This strengthening of national parliaments might also influence EU–China relations in the future, most likely making it more difficult to come to agreements on trade and investments, given the growing scepticism in many European countries towards further trade liberalization. The direct involvement of national parliaments in EU legislation is rather ex post, which means that they only get a say on such mixed agreements after they have been negotiated. The national executives – ministers and prime ministers – are in a much stronger position. They have a range of opportunities to influence decisions in the area of external relations, but the most important of these are the two institutions that are the dedicated channels for the representation of member state interests inside the EU: the European Council and the Council of the European Union. The following sections will briefly summarize the way in which these institutions function, before the remainder of the chapter turns to the institutions dedicated to formulating and safeguarding the common European interest.

36  The European Union and China

The European Council The European Council – also known as EuCo – brings together, on a regular basis, the heads of state or government of the EU member states. Its meetings are chaired by the president of the European Council who is appointed for a renewable term of two and a half years and charged with coordinating the work of the European Council. The European Council president is tasked with setting the long-term political goals and direction of the EU (Wessels, 2015). European Council meetings are also attended by the president of the European Commission and the HR/VP, and on occasion other senior office holders such as the president of the European Parliament or the president of the European Central Bank. However, only heads of state or government have a vote. Heads of state or government have always been the most important figures in European integration, convening at important junctures such as the 1969 Hague European Council to relaunch the then EC and preparing for enlargement to the UK, Denmark and Ireland, or the European Council in Copenhagen in 1973 to deal with the world economic and oil crisis. However, the European Council only started meeting regularly from 1975, and only became a formal EU institution with the Single European Act – the first major revision of the original EU treaties – in 1987. This ‘late’ arrival of the heads of state or government in the institutional architecture means that the European Council was initially rather marginal to the routine business of the then Community, meeting only twice a year. However, over time, the European Council has become the pivotal institution of the EU, increasingly taking over the leadership in directing the integration process (Wessels, 2015). It now meets at least four times a year, but in fact additional meetings, sometimes labelled ‘informal’, are often convened in periods of crisis or urgency. Since 2010, in the wake of the Eurozone crisis, the European Council has become involved in much more detailed policy decisions, not least concerning the conditions under which several member states were bailed out to prevent them defaulting on their sovereign debt and for which large national funds were necessary given the small EU budget. In dealing with policy decisions in great detail, the European Council somewhat superseded the Eurogroup of finance ministers, the usual forum for such matters. As changes to the EU treaties – a procedure that would require not only unanimity but also ratification by every member state – was considered politically impossible in this period, the European Council stepped in to look for alternative solutions to manage the crisis (Puetter, 2012). This included an involvement in the search for legislative reforms, something that is ordinarily the domain of the European Commission, the European Parliament and the Council of the Union, and in negotiating new intergovernmental agreements outside the existing treaty structure. As a consequence of these developments, the European Council has become something of a government of the European Union, displacing the European Commission from its traditional role as the motor of integration (Bickerton, Hodson, and Puetter, 2015). The need for additional European

EU Institutions and the Making of EU Foreign Policy  37 Council meetings in the context of the 2015 refugee and migration crisis, and in the negotiations with the UK both before and after the Brexit referendum in June 2016, has further bolstered the significance of the European Council. Clearly, in the post-crisis European Union the European Council is no longer an occasional meeting of state leaders giving guidance to the other institutions, but a regular and essential part of the EU’s decision-making apparatus. This also extends to foreign affairs which have always been high on the European Council’s agenda. Formally, the European Council sets out the policy guidelines which are then considered by the Foreign Affairs Council (see the following section) in making detailed policy decisions and which in turn are implemented by the HR, by the External Action Service and/or by the European Commission, as appropriate. However, on major issues such as the war in eastern Ukraine or the civil war in Syria, heads of state or government themselves have been formulating policy. The European Council, through its president, represents the European Union, together with the president of the European Commission, at summit meetings with leaders of third countries or the G20.

The Council of the European Union The Council of the European Union, or the Council for short, is one of two legislative institutions of the EU. It consists of the ministers of the member states and meets in various compositions, according to the topic at hand. Sessions are supported by the Council’s administration, the Secretariat-General, and the decisions of the ministers are prepared by a large number of preparatory committees and working parties, at the top of which is the Committee of Permanent Representatives (COREPER) comprised of the member states’ ambassadors to the EU (Christiansen, 2006). Most ministerial Councils are chaired by the representative of the member state holding the rotating presidency, with an important exception being the Foreign Affairs Council (FAC), which is comprised of the national foreign affairs ministers and chaired by the HR/VP (when meeting in the composition of trade ministers to discuss matters relating to the Union’s Common Commercial Policy). The FAC meets at least once a month and decides, by unanimity, on a range of EU foreign policy instruments: common positions and joint actions, mandates for the European Commission when negotiating international agreements, and decisions on trade defence measures and sanctions vis-à-vis third countries. Within the Council structure, there are several bodies that are important in the making of foreign and security policy, starting with the Political and Security Committee (PSC) which serves as the main body through which the member states prepare and take important CFSP decisions and scrutinize the everyday conduct of the CFSP by the EEAS. Meeting twice a week, the PSC consists of diplomats representing the member states and is chaired by a representative of the EEAS. The PSC advises the ministers in the FAC, coordinates the work of various working groups and committees, and analyses the

38  The European Union and China security context of the EU. It is also involved in the drafting of policies, statements and official declarations, and monitors their implementation (Duke, 2005). Other important preparatory bodies include the EU Military ­Committee (EUMC), which advises the FAC and the HR/VP on military missions, and its civilian equivalent, the Committee for Civilian Crisis Management (CivCom). Both are chaired by EEAS officials, while the body dealing with legal and financial aspects (the RELEX working group) is chaired by the member state holding the rotating presidency. Whereas the European Council and the FAC now have semi-permanent chairs, much of the remaining Council machinery of ministerial meetings, working groups and standing committees still relies on the rotating presidency – with a single member state taking the lead in managing Council business for a period of six months (Missiroli, 2010). During this period, representatives of the country holding the presidency are in charge of setting meeting agendas, chairing meetings at all levels and making sure of the required follow-up. It remains a significant responsibility, both administratively and politically, given the thousands of meetings that are being convened in the course of a presidency. However, in foreign affairs, this role is much reduced since the Lisbon Treaty created the position of the High Representative, who represents the EU at the ministerial level (indeed, the post was called ‘Union Minister for Foreign Affairs’ in the originally planned treaty revision) and who also chairs the FAC. As a consequence, national foreign ministries have sometime been seen as the losers of the Lisbon Treaty. However, in the realm of external economic relations, the role of the presidency, and hence of national ministers, remains. Yet this is also an area in which the European Commission, rather than national administrations, is in the driving seat.

Supranational Institutions and EU External Relations The European Commission The Commission serves as the main executive and the centre of the EU administration. From the very beginning the Commission was conceived as a supranational body independent of member states, although during its history member states have tried to keep it in check. Apart from its administrative functions, the Commission plays an important role in the legislative process by having the exclusive right of initiating legislation (Christiansen, 1996; Kassim et  al., 2013) and being the guardian of the EU Treaty and law. At the political apex of the Commission are 28 Commissioners, each nominated by an EU member state. This ‘college’ of Commissioners takes decisions collectively, and their meetings are chaired by the president of the European Commission who is also the head of the institution. Even though the Commissioners and the president are appointed by the European Council, their appointment requires the consent of the European Parliament – a requirement that has contributed to the gradual politicization of the European Commission (Hobolt, 2014; Christiansen, 2016).

EU Institutions and the Making of EU Foreign Policy  39 Each Commissioner has a particular portfolio and oversees the work that is done within this domain, while any decision by the Commission is taken by the college as a whole. President Juncker, upon taking up his post as Commission President in 2014, introduced a number of thematic ‘project teams’, each headed by one of the seven Vice-Presidents. The one devoted to external relations is led by the HR/VP and brings together the Commissioners for the European Neighbourhood Policy and Enlargement Negotiations; Trade; International Cooperation and Development; Humanitarian Aid and Crisis Management; Transport; Climate Action and Energy; as well as Migration, Home Affairs and Citizenship. The Commission’s administration is organized through some 30 ­Directorate-Generals (DGs), with each DG responsible for policy initiatives or management in a particular field. The most important part of external policy is the Common Commercial Policy, that is, the conclusion of trade agreements and WTO negotiations. Here, the Commission has the exclusive competence to negotiate based on a mandate decided by the Council through qualified majority, while it is for the Council and the Parliament, and, in some cases, also for national parliaments, to formally ratify these, as discussed above. International trade is a very important part of what the European Union does, and therefore the Trade Commissioner is a key portfolio within the Commission. DG Trade is a large department within the Commission’s administration and in particular in relations with China – which are in themselves dominated by concerns about trade – and often sets the tone in bilateral communications. Other DGs, as indicated above, also have a strong external relations dimension, be it migration, humanitarian assistance (e.g., European Civil Protection and Humanitarian Aid Operations, ECHO), development policy (EuropeAid) or climate change. Given that on each of these the EU may want to pursue distinct, if not contradictory, aims, the elaborate procedures for internal coordination which the Commission has developed are important in order to avoid sending mixed messages (Christiansen, 1997). DG Trade, for example, may well want to push China to allow greater market access for European car manufacturers, while DG Climate might be calling on China to reduce its CO2 emissions – the purpose of internal ‘inter-service consultation’ among the various DGs is to reconcile inconsistent policies where possible. ‘Political’ external relations, however, have, since the coming into force of the Lisbon Treaty in 2009, been moved to the newly established European External Action Service (EEAS; see the following section). This has reduced the foreign policy clout of the European Commission somewhat, while creating the need for inter-institutional cooperation between the relevant departments in the Commission and in the EEAS. That is where the dual role of the HR/VP, ‘double-hatted’ as Vice-President of the Commission and head of the EEAS, comes in: by unifying these key foreign policy responsibilities of two different institutions in one appointment, the expectation is that a greater degree of coherence can be achieved across the political and economic dimensions of EU foreign policy (Duke, 2012).

40  The European Union and China

The European External Action Service As a diplomatic service of the EU, the EEAS assists the HR/VP. When it was first set up in 2010, their staff was recruited in equal parts from the diplomatic services of the member states, from the European Commission and from the Council Secretariat (Duke, 2009). Its headquarters are in Brussels, across the road from the main buildings of both Commission and Council, yet it also comprises the network of some 140 ‘delegations’ – the EU’s quasi-embassies – around the world (Austermann, 2015). Among these, the EU delegation in Beijing has grown to be one of the largest foreign representations. The EEAS was built up under Baroness Catherine Ashton, the first HR/VP who served from 2009 to 2014, at which point Federica Mogherini, the former Italian foreign minister, took over. Functioning as a quasi-foreign ministry of the EU, the EEAS helps the EU and its member states to maintain relations with third countries, international institutions and other regional organizations, all within the competences set out by the Lisbon Treaty. In doing so, it works with diplomats from the members states (who remain in charge of representing their own countries abroad), seeking to coordinate foreign policies when possible. This involves a constant exchange between the EEAS headquarters in Brussels and the national foreign ministries as well as cooperation ‘in the field’, for example by convening regular meetings of ambassadors of EU member states in foreign capitals. The EEAS is also in charge of conducting civil and military crisis management missions abroad (EEAS, 2016). The EEAS is organized largely along the lines of geographical responsibilities. There are Managing Directors for each of the major global regions, as well as others for key horizontal issues such as human rights, security policy, crisis management and intelligence analysis. The EEAS also comprises the EU Military Staff which houses the planning, communication and intelligence capabilities to support EU military missions. Besides, there are a number of decentralized EU agencies: The European Defence Agency which is based in Brussels and charged with improving defence capabilities of the member states (Bátora, 2009); the EU Satellite Centre in Torrejón, Spain, which supports EU foreign policy-making by providing access to, and analysis of, satellite imagery and other data derived from the exploitation of space-based resources; and the European Union Institute of Security Studies in Paris, which functions as an in-house think tank conducting research and analysis of foreign, security and defence policy issues. Finally, in addition to the staff of the EEAS headquarters, the delegations and the agencies, the HR/VP can also call on the services of the special envoys and representatives that have been appointed to coordinate EU policies on specific issues (e.g. non-proliferation or space policy) and certain (crisis) regions (e.g. the Horn of Africa, the Sahel or the South Caucasus).

The European Parliament Together with the Council, the European Parliament (EP) is the co-legislator of the EU. It is also the only EU body that is – since 1979 – directly elected by EU citizens (Corbett, Jacobs, and Neville, 2016). Initially only an advisory

EU Institutions and the Making of EU Foreign Policy  41 body, the EP’s competences have been expanded with every revision of the treaties, so that it now has practically equal legislative powers to the Council. The EP also has significant powers over the adoption of the annual budget and the multiannual financial framework, needs to give its consent to r­ atify international agreements and approves the appointment of Commission President and Commissioners (and hence also the HR/VP) (Moury, 2007). However, unlike most national members of parliament, Members of the European Parliament (MEPs) cannot initiate legislation (this right lies with the European Commission). While the EP is often divided on socio-economic issues, it takes a traditionally strong line on issues such as human rights, the rule of law and democracy promotion. By insisting on the protection of these principles in the external agreements the EU enters into, the EP makes a distinct contribution to the idea of a values-based foreign policy for the European Union. Indeed, often it is the driver in promoting such norms, making economic benefits that third countries derive from development programmes or access to the Single Market conditional upon their compliance with these norms. The 750 MEPs are elected within the member states, yet once in the EP they sit – and generally vote – not along national lines, but within the eight political groups (Hix, Noury, and Roland, 2006). While some of these are based on pan-European parties that consist of national parties, others are only based upon a multitude of national parties. The European People’s Party (Christian Democrats in most member states), the Socialists (S&D) and the Liberals (ALDE) are traditionally the largest three groups and have usually formed something like an informal ‘grand coalition’ supporting a ­pro-integrationist agenda. Nevertheless, the EU’s political system is not the kind of parliamentary democracy familiar in the national experience, where an elected government has the stable support of a parliamentary majority (Fabbrini, 2015). Instead, legislative majorities in both Council and EP need to be found on each occasion that legislative acts are being proposed – a process of co-decision that is cumbersome and time-consuming. The EP meets every month in plenary session in Strasbourg, yet most of the work of the EP is done in standing committees meeting in Brussels (Bowler and Farrell, 1995). The key committees dealing with the EU’s external relations are the Foreign Affairs Committee (with subcommittees on Human Rights and on Security and Defence), as well as the International Trade Committee and the Development Committee. After decisions have been prepared in the committees, they are formally adopted in plenary. Even though there is comparatively little legislation in the area of foreign policy, the EP has an important power in having to consent to international agreements the EU enters into. This gives the EP an indirect influence on the substance of such agreements, and hence opportunities to ensure that distinctly parliamentary concerns enter into the texts. A further dimension of the EP’s work beyond political groups and parliamentary committees is the EP’s ‘delegations’ – groups of MEPs who represent the EP towards third countries or regional organizations. While these delegations have no direct decision-making power, the views of their members

42  The European Union and China have significant influence on the attitudes of the EP as a whole towards particular countries or issues. The EP delegation for relations with the People’s Republic of China has had, during the EP’s 8th legislative term, a total of 39 members and an equal number of substitutes, making it the second-largest EP delegation to a third country (Buchwald, 2016). Chaired during this term by Jo Leinen (Socialists and Democrats), with co-chairs from the European People’s Party (EPP) and the Greens, the delegation has taken a strong line on issues of human rights in China, has opposed the lifting of the EU’s arms embargo and has been more open to maintaining relations with Taiwan than either the Commission or the Council – positions which add up to a relatively critical attitude towards China, and somewhat at odds with the strong focus on trade promotion preferred by the European Commission and the member states. In a similar vein, the EP has sought to promote human rights through the annual award of the Sakharov Prize which is given to ‘to individuals who have made an exceptional contribution to the fight for human rights across the globe’. Since 1988, the work of many individuals from many different countries has been recognized, most notably that of Nelson Mandala who was the first recipient. On two occasions the prize was awarded to dissidents and human rights activists – Wei Jingsheng in 1996 and Hu Jia in 2008 – in China, decisions that were met with hostility by the Chinese authorities who considered these acts as undue interference in the country’s domestic affairs. Another foreign policy role of the EP is that of parliamentary diplomacy – maintaining institutional relations with foreign parliaments and other regional parliamentary bodies. There are a multitude of these, be it bilaterally with individual countries (such as with the US Congress through the ‘Transatlantic Legislators’ Dialogue’) or multilaterally with the parliamentary assemblies of other regional organizations (such as the Parliament of the African Union). Of particular relevance here is the Asia–Europe Parliamentary Partnership (ASEP) which brings together parliamentarians from all member states of the Asia–Europe Meeting (ASEM) to deliberate matters of mutual concern. Even if these meetings are fairly rare – ASEP only meets every two years – they do provide a channel for exchanges of ideas, information and practices, and hence also an additional opportunity for norm diffusion by the European Parliament (Tsui, 2016).

The Court of Justice of the European Union Given that one of the hallmarks of the European Union is its ambition to facilitate ‘integration through law’ and to promote the rule of law internationally, the existence of an independent, supranational court to interpret European Union law and adjudicate disputes among the member states, and between these and the Union institutions, is an essential part of its institutional architecture. The Court of Justice has its seat in Luxembourg and is currently composed of 28 judges, including the President and the Vice-President of the Court. Judges are appointed for a renewable term of six years by common accord of the member

EU Institutions and the Making of EU Foreign Policy  43 states. Effectively, every member state nominates one judge, and these choices are then approved by the member states collectively. However, once appointed, judges are working entirely independently of national governments – their independence must be beyond doubt, and they may not receive instructions from the member states (Kennedy, 2006). The judges rarely rule jointly, but normally split up into chambers of three, five or – in exceptional cases – a Grand Chamber of fifteen judges. The judges are supported by eight advocates-general who prepare judgments by conducting the necessary research and providing the legal opinion concerning pending cases. The Court also has considerable administrative support, including a large number of legal researchers, lawyer-linguists and translators, in order to enable it to function in the complexity of a multilingual European Union. The role of the Court is pivotal in the areas in which the Union acts through binding legal instruments. This means that the Court has had a major role with regard to the development of the Single Market and other aspects of economic integration, and in this respect had greatly shaped the development of a European polity through landmark judgments establishing fundamental principles such as the primacy of EU law and the direct effect of EU legislation. As with the EP, the role of the Court is somewhat diminished in the areas of diplomacy and security policy which traditionally are less bound by formal rules. The Court is a much more powerful actor with regard to internal EU policies. However, there have also been a number of important cases relating to the EU’s external relations, and often such cases have touched on questions about the dividing lines between internal and external policies, as the case concerning the Economic Community of West African States (ECOWAS) did in 2008 (Court of Justice, 2008). More recently, the Court ruled in 2015 that the European Commission’s original ‘privacy shield’ agreement with the United States was incompatible with EU law, requiring a renegotiation (Court of Justice, 2015). And the Court’s 2017 judgment on the EU’s free trade agreement with Singapore, identifying this as a mixed agreement which requires ratification within each of the member states (Court of Justice, 2017), might have a huge impact on the EU’s capacity to conclude additional agreements in the future, including major projects such as the Transatlantic Trade and Investment Partnership with the United States and the Bilateral Investment Agreement with China.

Other Institutions So far we have discussed the main institutional actors which have a bearing on EU foreign policy; it is by no means the whole story. The EU’s institutional architecture is vast and comprises many more institutions, agencies and bodies that cannot all be discussed here in detail. These include: • the Court of Auditors, based in Luxembourg, which is tasked with scrutinizing the expenditures of the Union, including money spent abroad – and

44  The European Union and China thus also has a controlling function redundant vis-à-vis the significant spending programmes the EU maintains in third countries (Laffan, 1999) • the European Investment Bank, also based in Luxembourg which has been set up by the EU member states to provide loans and loan guarantees in support of EU policies such as regional development and environmental sustainability, both inside the EU and in partner countries abroad (Robinson, 2009) • the European Central Bank, based in Frankfurt, which is responsible for the monetary policy – setting interest rates and managing the money supply – of the European single currency, the Euro (Hodson, 2013) • several EU agencies dealing with matters that have a direct relationship to the EU’s external environment –  such as FRONTEX, the emerging European Border and Coast Guard (Leonard, 2009) or EASO, the European Asylum Support Office. (Comte, 2010) When these and other institutions have an impact on particular aspects of EU– China relations, we will elaborate further on their role. The financial institutions, the ECB and the EIB, in particular have been relevant in the EU’s economic relations with China, not least since the 2010 Eurozone crisis, and we will return to their involvement in Chapter 6 where these issues are discussed further.

The Nature of European Foreign Policy The overview of the intricate institutional architecture of EU foreign ­policymaking provides a useful foundation for the more substantive question of the kind of foreign policy the European Union tends to develop on this basis. While EU foreign policy is inevitably subject to change – in response to both external shocks and changing preferences internally – there is a great deal of continuity in the way in which the EU projects itself towards the outside. The EU may not be as steadfast and strategic in its foreign policy as the PRC is, but precisely because EU foreign policy and external relations – and hence also its attitude to relations with China – are the result of a search for consensus and a reflex for coordination on numerous levels, it tends to be less prone to sudden changes.

The European Union’s Structural Foreign Policy Indeed, more than being just the refection of certain institutional mechanisms, much of EU foreign policy is governed by formal agreements and institutionalized arrangements that provide a degree of long-term stability to external relations. The European Union, itself the product of ‘integration through law’, conducts much of its external relations also through legal agreements with third countries. The EU’s approach to its own neighbourhood, for example, has been to rely on detailed and far-reaching partnership, association or pre-accession agreements which structure these relationships – unless, of course, the contingency of internal turmoil or international conflict disrupts such arrangements.

EU Institutions and the Making of EU Foreign Policy  45 Beyond its immediate neighbourhood, the EU has sought to develop strategic partnerships with key countries around the world – including, as was mentioned at the outset of this book, with China. A large part of such a strategic partnership is the setting up of multiple levels of joint bodies – committees, ministerial meetings, leaders’ summits – which creates a regularity of meetings and exchanges. While the development of such strategic partnerships with major powers around the globe is a more recent phenomenon, the EU has long sought to relate to countries collectively, developing strong group-to-group relations where possible. An example is the long-standing and deeply entrenched cooperation the EU has with the so-called ACP group of countries – mainly former colonies of the EU member states from Africa, the Caribbean and the Pacific with which the EU signed a series of agreements, enshrining privileged market access, development assistance and political cooperation – most recently the 2000 Cotonou Agreement (Chapter 9). Looking for like-minded entities around the world, the EU supports regional organizations in other global regions, providing support for, and cooperation with such organizations that takes a variety of forms, starting with financial and ‘technical’ assistance, for example contributing a significant share of the budget to the secretariat of the Association of Southeast Asian Nations (ASEAN). Beyond such assistance, more substantive forms of cooperation include attempts to negotiate free trade agreements (FTAs) with regional organizations such as the Southern Common Market, generally known as MERCOSUR. Structured relations with organizations like ASEAN and MERCOSUR are in fact instances of a wider effort to establish inter-regionalism as an important feature in international relations – initiatives that are aimed at cooperation of states and regional organizations across global regions (Telò, Fawcett and Ponjaert, 2015). The most comprehensive of such inter-regional formats is the Asia–Europe Meeting (ASEM) comprising (in 2017) 51 members in Europe, Asia and the Pacific. At its heart are summit meetings among the state leaders held every two years, but continuous dialogue takes place on various levels and across the three pillars of political, economic and ‘­people-to-people’ exchanges. Interesting here is the fact that among the members, there are not only states, but also the European Union itself as well as the ASEAN Secretariat. All this – strategic partnerships, inter-regional cooperation, formal cooperation agreements – amounts to what Keukeleire (2014) has called the structural foreign policy of the European Union – a manner of conducting external relations that relies to a large extent on formal agreements, regularized meetings, permanent structures and institutionalized dialogues. Such reliance on institutional structures is one of the hallmarks of EU foreign policy, and in part also explains the EU’s long-standing support for global governance regimes, multilateral institutions and international law. Indeed, the search for ‘effective multilateralism’ has long been the main plank of EU foreign policy, encapsulating both global and regional initiatives in this regard. Support for multilateralism is a policy that reflects the EU’s philosophy of strengthening cooperation among states and the establishment

46  The European Union and China of meaningful global governance regimes. A prime example here is the leadership that the EU demonstrated in the process leading up to the Paris Agreement on climate change, but beyond this recent example is a long history of constructive engagement with the United Nations, the WTO and other international institutions as well as a consistent push for the strengthening of international law. The EU’s conduct of its foreign policy in such a structured manner, with a strong emphasis on the rule of law and the importance of multilateral institutions, also informs its bilateral relations with powers such as China. EU–China relations are therefore encapsulated not only in the dialogue architecture that has been established in the context of the strategic partnership, but also in the wider network relations with partners in the Asia-Pacific region.

Values and Interests in EU Foreign Policy If the above discussion was essentially about the manner in which the EU tends to conduct its foreign policy, some consideration of the substance of EU foreign policy is also important. In this regard, the EU has long sought to distinguish itself from the ‘normal’ foreign policy of states by emphasizing its promotion of a particular set of norms and values. While states’ foreign policy is guided by their ‘national interests’, the EU’s interaction with the outside world is based on shared values – values which are spelled out in the Treaty as a foundation for the Union itself, and which are therefore also an essential part of its identity vis-à-vis third countries. The EU’s declared aim to conduct a values-based foreign policy has given rise to the notion that it can be seen as a normative power. ‘Normative Power Europe’ has become an important, if contested, concept in the study of EU foreign policy since it was advanced early in the 2000s (Manners, 2002). The  concept relies on the recognition of several normative principles that underpin EU foreign policy, leading to related actions and identifying the impact that such actions have on the outside world. The values that are said to be promoted externally by the EU are those that are also at the heart of its own foundation. Specifically, the Treaty refers to peace, human rights, freedom, democracy, equality and the rule of law. These values have defined the nature of European integration, and the way in which the EU’s member states relate to one another, and to their societies. Consequently, the expectation on EU foreign policy is to be ‘guided by the principles which have inspired its own creation’. In other words, the EU’s values-based foreign policy is meant to be a mirror image of its internal experience. The above-mentioned reliance on the rule of law, and the tendency to search for binding agreements and institutionalized arrangements in global governance, is therefore not only a question of method for the European Union; it is also a substantive, normative concern in its own right. Two other such normative concerns that are prominent in EU foreign policy deserve to be mentioned in this context: peace and human rights.

EU Institutions and the Making of EU Foreign Policy  47 The origins of the European integration project are those of a peace process, of a mechanism that would essentially help to overcome the divisions and hostility between France and Germany after 1945 and later those from the Cold War. For Jean Monnet, one of the founding fathers of the original European Economic Community, the focus on market integration was a means towards a much wider political end, namely the creation of conditions that would make the reoccurrence of war between France and Germany impossible. Over the subsequent six decades of European integration that original goal has been so thoroughly achieved that it has tended to fade from view, and the economic gains of market integration tend to be seen as the main benefit of an integrated Europe. Against this pattern of the EU being a ‘victim of its own success’, the award of the Nobel Peace Prize to the European Union in 2012 served as a reminder of the original intent and continuing relevance of the project. From its own experience of the integration process as an elaborate and extensive (and successful) exercise in entrenching peaceful relations among states, EU foreign policy has consistently emphasized the importance of non-violent conduct of international relations, of the primacy of diplomacy and rule of law over military confrontation, and the inherent benefits of cooperation over conflict. This applies to both its own relations with third countries as well as to the efforts the EU or its representatives make in the context of potential conflict elsewhere. This emphasis on diplomatic solutions to disagreements among states has led observers to label the EU as a ‘civilian power’ – a non-state actor on the international scene that stands out by not countenancing the use of force as a tool in foreign policy. The notion of the EU as a civilian power has been much debated since it was first advanced in the 1970s (Duchêne, 1972), and despite the limitations and the vagueness of the concept has had much resonance in the study of EU foreign policy (Burckhardt, 2004; Orbie, 2006). This was especially the case at times during which the EU was confronted with the more belligerent foreign policy of the United States, such as during the time of the 2003 invasion of Iraq, resulting in sharp divisions between EU member states supporting the US and those opposed to the war. Of course, the identification of the EU as ‘civilian’ dates back to a historical period in which the EU had neither the ambition nor the capability to conduct military operations. This changed when subsequent treaty changes gave the EU certain competences to coordinate matters of security and defence policy, an EU Military Staff and a European Defence Agency were set up, and the EU financed the African Peace Facility from 2007 enabling the African Union to conduct a peace enforcing mission in Somalia. In 2017 ‘Permanent Structured Cooperation’ in security and defence matters was launched to allow European countries to better work together on upgrading defence capabilities and equipment (Fiott, Missiroli and Tardy, 2017). Having conducted some 40 military missions in the western Balkans, in Africa and in other parts of the world, the EU is now far from being a purely civilian power. However, it should be noted that military deployments by the EU are

48  The European Union and China conducted only with the approval of the states concerned and/or if sanctioned by a UN Security Council resolution. A second normative concern that is deeply entrenched in EU foreign policy is the promotion of human rights. Again, it reflects the normative origins of the European project that arose not only from the ruins of World War II, but also from the horrors of the Holocaust. Respect for human dignity and the defence of civil rights have been central to the European idea since its inception and have been a precondition for joining the EU. The European Parliament, which – as described – has become a more important actor in the making of EU foreign policy, has always been a staunch defender of these principles, and insistent that HR promotion remains an essential part of the EU’s relations with third countries and international organizations. As a consequence, trade or association agreements that the EU enters into with other partners contain also ‘political’ provisions concerning human rights and other values. In the same vein, EU development assistance is subject to the recipient country accepting certain conditions with regard to norms such as the respect for human rights and the rule of law. Even more directly, the EU’s normative power has been evident in the pre-accession phase during which candidate countries had to amend their constitutional and legal systems in response to the EU’s demands for a high level of HR protection – the abolition of the death penalty being a prominent example in this regard. While the advocates of ‘Normative Power Europe’ have provided much evidence for the existence of a values-based EU foreign policy, critics have pointed to numerous instances in which other concerns, notably economic interests, have taken precedence over normative concerns leading to accusations of ‘double standards’. The EU as the world’s second largest economy has significant commercial interests vested in access to global markets and favourable conditions for doing business with third countries. This situation has led to the argument that the EU is a ‘market power’ rather than a ‘normative power’, with the size of its economy giving the EU significant leverage over other countries (Damro, 2012). In this view, it is less the promotion of norms and values per se, but rather the external effects of the EU’s regulatory frameworks and economic policies that influence international affairs. A more far-reaching critique of the EU questions more fundamentally the degree to which the EU actually pursues a values-based foreign policy, pointing to instances in which commercial interests have trumped normative concerns. Critics argue that the EU maintains and indeed promotes economic and political ties with states that systematically violate human rights as long as these have significant markets or constitute important sources of natural resources. Thus lesser developed countries are subject to the conditionality that is contained in development aid programmes, whereas in the case of larger and more powerful countries – the People’s Republic of China being a case in point – the EU is largely focused on the deepening of economic relations. At the official level, there has been a recognition that EU foreign policy is both about the promotion of norms and values and about the defence

EU Institutions and the Making of EU Foreign Policy  49 of common European interests. The 2016 EU Global Strategy (EUGS), for example, makes frequent references to ‘shared interests’, ‘common interests’ and ‘citizens’ interests’ alongside the more traditional mentioning of values, principles and the support for a rules-based international order. Crucially, this document, which is meant to guide EU foreign policy with principled pragmatism, makes a strong case that ‘interest and values go hand in hand’, thereby disputing the often advanced argument of a conflict between these when it comes to making foreign policy.

Conclusion This chapter has outlined the roles of the main EU institutions and indicated the balance that they need to strike between the promotion of enshrined principles, shared values, the defence of the common European interest and the recognition of the particular interests of the member states. The notion of an ‘institutional balance’ is a common reference among scholars of EU institutions, but equally frequent are references to the tensions that occur within and between EU institutions (Christiansen, 2011). Quite purposefully, the EU’s institutional architecture requires reconciliation between state interests and supranational institutions, and the consequences are long-winded decision-making processes, complex package deals and often vague declarations. This limits the EU’s capacity to respond quickly and decisively to crises, whether these are internal or global, but has certain advantages in the more long-term negotiations conducted in multilateral institutions or global governance regimes. Great efforts are being devoted to the coordination of the many constituencies that have a stake in EU policy, from currently 28 member states in the Council via eight political groups in the EP to the tens of thousands of organized interests and civil society groups lobbying in Brussels. What is, on the one hand, a costly arrangement in terms of speed and clarity, is, on the other hand, a very inclusive process producing outcomes on a solid institutional foundation and in a fairly transparent manner. Given time, the EU tends to be able to develop coherent and durable policies, and in maintaining strategic partnerships and supporting multilateral institutions it finds the time to play a significant role in such fora. The complexity of EU institutions and their arcane decision-making procedures are often baffling to outsiders (as indeed they are to EU citizens). Yet these peculiar institutional arrangements are the result of more than 60 years of historical evolution in which member states have constantly sought to derive benefits from working through common institutions, while at the same time trying to limit their encroachment on their own power. This is particularly true in the area of foreign policy, where executive responsibilities remain divided between the European Commission, the EEAS and the member states, where some legislative authority is shared between the Council and the Parliament, but the conduct of the CSDP has been insulated from the EP and the ECJ, and where external representation involves the HR/VP, other European Commissioners and the President of the European Council.

50  The European Union and China Whether by accident or by design, the EU often remains hamstrung in foreign affairs, with member states maintaining their own policies in the absence of, or in addition to, or even dividing, the EU’s common foreign and security policy (Pomorska and Vanhoonacker, 2015). The background to these institutional politics of the EU is the development of a culture of compromise; without the willingness of every actor in the EU to give in on certain issues, the system would grind to a halt – which it clearly hasn’t, despite a series of existential crises over the past decade. In the Council, member states often operate under the shadow of majority voting, realizing they will need to adapt their initial position in order to be part of the winning coalition. And beyond the inter-state bargaining in the Council or the European Council, state leaders and ministers know that they will sooner or later need support from other leaders and ministers for their own priorities and accept that they will also have to contend with the independent views of the European Commission, the self-confident attitude of the European Parliament, and frequently also with potentially inconvenient judgments from the Court of Justice. This culture of compromise – the acceptance by each member state that it may not have the last word on a particular issue – contributes to making the EU a particular actor in global politics: less concerned about traditional issues of state security such as territorial integrity or ­non-interference in the domestic affairs, and more focused on institution-building and norm-diffusion (Christiansen, 2017). In this chapter we have only touched on the influence that member states, both individually and collectively, as well as institutional factors, may have on EU relations with China. The main purpose here was to introduce the various institutions, indicate the manner in which EU institutions and member states cooperate in foreign policy-making, and identify in broad terms the nature of the EU foreign policy resulting from these arrangements. An awareness of these arrangements is important in order to understand how and why the EU relates to China in the way it does – as is knowledge of the corresponding institutions and principles underpinning foreign policy-making in the People’s Republic of China which are explained in the next chapter.

Chapter 4

Chinese Institutions and Foreign Policy

Introduction: China’s Rise and Its Foreign Policy This chapter will explain China’s foreign policy (FP) –  its principles, its making and how and why China’s FP differs from European (or US) ones. Awareness of the larger context of China’s world view and foreign policy helps us to understand EU–China relations. It can be said that China’s rise has left no country in the world unaffected, but that the speed and scale of that rise have surprised most. China is now an almost ‘indispensable’ nation (Wang, 2014: 1) in the international community because China plays an increasing role in the world economy, in global affairs and in multilateral governance for better or for worse depending on different interests and viewpoints. China’s role is therefore at the centre of global and also EU debates on human rights, trade, climate policy, development and global governance in many areas (Chapters 8–11). While China itself sticks to its deeply engrained defensive foreign policy principles it is increasingly confident in its global role. Hence it is important from the outset of this book to explain how China’s distinctive foreign policy is made, what its underlying objectives and ideas are, and how they fit with those of China’s partners, especially the EU. This is not easy, as China’s foreign policy has a unique and rather opaque institutional and political structure. We have noted in Chapter  3 that for different reasons EU policy is unique, but in its specific institutional context divisions between member states and EU institutions tend to play out in the open, while in China the policy process is almost a black box into which we try and shed some light in this chapter. How China’s foreign policy is interpreted by its Western counterparts is another focus of this chapter reflecting on the narrative of and response to China’s rise. Bringing in historic and ideational dimensions is important to understand ‘where China is coming from’ in its relations with Europe and on its dramatic modernization path. We will analyse these main themes that define China’s multiple roles in the world (which are further elaborated on in other chapters). Contrary to what most people think, Chinese foreign policy has a very short history due to foreign occupation and war in the twentieth century and the internal convulsions, especially the Cultural Revolution (1966–1976, a period during which China basically closed in upon itself and even shut most of its embassies abroad). The People’s Republic of China only entered the 51

52  The European Union and China United Nations in 1971 (before then Taiwan represented China) and most of its international agreements and even important diplomatic relations – including those with the EU – have only been entered into since then. So in a way China is – like the EU – a relatively new international actor still finding its feet in some areas and it remains an often unknown quantity to many partners. Many of China’s international politics have until recently therefore been pragmatic learning by doing and often reactive to events or policies by others, belying the often-heard thesis of China’s grand strategy. Chinese foreign policy is built on general principles defined by the Communist Party rather than shifting and elaborated doctrines, which make contemporary foreign policy sometimes a delicate balancing act between pragmatism and principles. In  institutional terms FP is decided in the party apparatus and implemented through various government ministries such as the Ministry of Foreign Affairs (MOFA), Ministry of Commerce (MOFCOM), the National Development and Reform Commission (NDRC) or the military. FP decisions are therefore much less attributable to individual politicians than in ­Western political systems and are more consistent over time, albeit often reactive, formulaic and lacking specifics. Nevertheless, China’s foreign policy has become more skilful and far-reaching and more transparent and outspoken in recent years as China has become more experienced, more self-confident and, in some cases, more assertive. Concurrently, China had to adapt to more and more complex challenges and demands regionally and globally as its involvement and physical presence in more and more countries have grown massively. After its opening up and reform decisions in the 1980s the country has been obliged to navigate a complex environment in which its relations with the EU are but one subset. China’s recent ‘assertiveness’ has become a focus in the Asia region and in US–China relations (French, 2017; Green, 2017). In its relations with the EU in recent years another type of assertiveness has been felt through dismissive attitudes regarding EU human rights demands, in trade and economic bargaining and in opposition to the EU’s international climate policy and perceived competition in Africa (see Chapters 5, 6, 9 and 10). Examining this ‘assertiveness’ of a rising China tells us a lot about China’s foreign policy today and how it is perceived by others. Therefore, it is a suitable topic for some introductory investigation before we turn to exploring China’s FP more generally.

China’s New Assertiveness: Change or No Change of Foreign Policy? He and Feng (2012) ‘suggest that it is normal for China – a rising power – to change its policy to a confident or even assertive direction because of its transformed national interests’. They date this new assertiveness to 2007, when China launched an anti-satellite test. Like others, they cite further evidence such as China’s subdued reaction to North Korea’s nuclear tests. Added

Chinese Institutions and Foreign Policy   53 to that are the measures China has taken to pursue its territorial interests in the South China Sea and vis-à-vis Japan and its sustained increase in military power (ICG, 2013, 2014). The episodes since 2010 (conflict with Japan in the East China Sea and some ASEAN countries in the South China Sea, China’s complacency after North Korea sank a South Korean warship and shelled a South Korean island in 2010) have shown how China’s earlier successful engagement diplomacy in the region was shattered in a matter of months angering most of its neighbours and contributing to the US pivot to Asia (Christensen, 2012; Green, 2017: 518–540). The results have been counterproductive to China’s interests and may not have been the result of deliberate foreign policy strategy, but of key problems in China’s foreign policy: the lack of overall coordination between military and other agencies, the lack of toplevel priority attention and expertise on foreign policy and a ­self-defeating nationalist ideology which is unfit for an age of interdependence or for navigating the increasing complexity in China’s international relations. These issues are not unique to China, but due to China’s rise, external demands on Chinese foreign policy are rising and pressing, straining the foreign policy traditions and norms in many ways that an apparatus made in another epoch has difficulties coming to terms with. One can identify three views regarding this alleged assertiveness: the first, realist, view explains China’s new assertiveness through the theory of power transition (Allison, 2015). The second view argues that domestic dynamics such as rising nationalism and economic uncertainty as well as dysfunctions in the system have caused this assertiveness (Liao, 2016). The third view argues that there is in fact little ‘new’ and not so much ‘assertiveness’ as often alleged and that the whole new assertiveness story is overblown and merely a perception or deliberate political spin not borne out by facts (Johnston, 2013; Jerdén, 2014). We will look at these dynamics in this chapter as they have important implications on how China’s FP is made. This chapter will show that in any case China’s FP is more consistent and predictable than claims about a new assertiveness support. In general, many realist analysts tend to frame China as a threat: as a revisionist challenger threatening the world order and US national security and economic interests (Allison, 2015; Green, 2017). An assertive China is cast by a number of liberal analysts in the challenger role to the liberal international order or at best as a free-rider (Lieber, 2014; Transatlantic Academy, 2014). In the first view foreign policy tends to be seen in terms of absolute and relative power relations (rise and fall of great powers) and power balancing or containment of adversaries (Transatlantic Academy, 2014; Green, 2017). China’s rise is often likened by ‘realist’ analysts to that of Germany and Japan at the end of the nineteenth century, associated with aggressive expansion. These comparisons seem exaggerated as China is not pursuing any aggressive or militarist policy the way Wilhelminian Germany and Imperial Japan did. In the liberal view, US and EU leaders have called repeatedly on China to become a ‘responsible stakeholder’ in the international community. In a European Liberal Institutional prism, which is naturally less tainted by ideas

54  The European Union and China about global leadership and great power rivalry in the Far East, China’s FP is analysed as a dynamic between shared interests, economic competition and different values rather than power. Nevertheless, more acrimonious economic relations have replaced a period of cooperation fostering China’s integration into the world economy (WTO accession in 2001; see Chapter 6), prompting also more concern in Europe over a more assertive China and its allegedly unfair trade and investment policies (Niquet, 2018; see Chapters 2 and 6). From China’s perspective, as far as one can infer that, the world looks very different. China’s material interests are at variance in many respects from those of the US and Europe simply because China’s neighbourhood and ­geopolitical position are very different: China has fourteen land neighbours and another five at sea not counting Taiwan. With many of those there have been armed conflicts in the twentieth century (India, Vietnam, Korea, Japan, Russia), some are unstable (Afghanistan, Central Asia, etc.) and in several cases boundaries still need to be settled. Unification with Taiwan remains a core part of the Chinese dream. Therefore, and for historical reasons, China has a distinctive and surprisingly consistent set of defensive foreign policy principles and interests that speak to its belief that China has to survive and regain strength in a fundamentally hostile world. The US (and sometimes Europe) is frequently seen as not respecting and even undermining China’s interests although China has made them very clear (for instance when foreign leaders meet the Dalai Lama or sell arms to Taiwan; He and Feng, 2012: 640). China no longer accepts US leadership and policy, especially in C ­ hina’s neighbourhood, when it constrains China’s own interests. China’s turn towards maritime power projection since its 2008 ‘Near Sea Doctrine’ thus directly conflicts with US maritime strategy which has long been built on control of the Western Pacific island chain adjacent to the South China Sea and the East China Sea (Green, 2017: 528–532). Thus China asserts its interests more vocally, but also selectively. He and Feng (2012: 635) explain this assertiveness as a negotiation process: China is negotiating its new status in the system with the US and other countries which are expected to adjust to China’s new role and interests. This new role is a central one in the world in line with ancient beliefs and historic realities expressed by China’s ­Foreign Minister (since 2018 also State Councillor) Wang Yi: ‘China has become an indispensable player in international and regional affairs. As such, many people believe that today’s China is perhaps closest to the center of the world – fast approaching its goal of national rejuvenation’ (Y. Wang, 2014). Clearly, China is more adamant in defining its responsibilities for itself rather than having others define them for it. Where US leadership is in China’s interest China is accommodating, but overall China’s foreign policy has been steeped in realist thinking with relatively little attention to the intrinsic value of the liberal international order which has perhaps until recently been perceived as an instrument of US dominance. That perspective is changing as that order is now eroding not least from within through US nationalist policy. Whether China is (newly) assertive or not – how is China’s FP made? What does it want to achieve? How does it work? What does it mean for the EU? These are the questions this chapter seeks to answer.

Chinese Institutions and Foreign Policy   55

Identity Issues: Respect, Recognition, Reciprocity In order to understand China’s foreign policy principles and interests focusing on sovereignty, peaceful coexistence, non-interference and autonomous development, it is necessary to look at its history and collective memory (and how it is shaped by the Communist Party) perhaps more than international relations analysts typically do because there is a large gap between the Chinese and the outside world over the historical narrative that informs ­China’s policy (Z. Wang, 2014). China’s world view is shaped by the historical experience of previous interactions with the imperialist West and ­imperialist Japan since the nineteenth century and then the Cold War (1947–1991). Moreover, China’s different political system is constantly challenged by the US and Europe in terms of democratic legitimacy. This challenge presents an ‘ontological’ security threat to China: China has seen other socialist countries collapse – notably the Soviet Union – or descend into civil disorder sponsored by the West (in China’s view) and is therefore keen to avoid such worst-case scenarios (e.g. the Tiananmen crackdown in 1989) and to preserve its domestic autonomy. Historical narratives about foreign bullying and invasion have been instrumental in securing the Communist Party’s domestic legitimacy after the collapse of socialism and have nourished scepticism about the Western liberal order. After several centuries when China was at the top of an autonomous state system in Asia (the investiture and tribute system) based on civilizational, political and economic hierarchy (Kang, 2010) China lost its position at the apex of the East Asian world at the end of the nineteenth century. From a top spot in the world economy at the time (Morris, 2011) China was relegated by European powers and later Japan to developing country status in the twentieth century. China’s trauma was its dismemberment at the hands of imperialists and its invasion by Japan (1931–1945). China couldn’t enjoy the fruits of her victory over Japan in World War II because the Communist takeover in 1949 after four years of civil war prompted the US to ally with the former common foe Japan during the Cold War and to consider the Nationalist Government in Taiwan (where it had fled in 1949 as a result of the civil war) as the legitimate representative of China. Taiwan thus held a seat in the UNSC until 1971. The island’s status is still ambiguous, but most countries have followed Beijing’s ‘One China’ policy. China’s contribution to the Allied victory in World War II is largely forgotten in the West, downplayed in Japan, but re-enacted daily on Chinese TV (Mitter, 2014). China did not share the triumphalism of liberal democracy after the Cold War either – instead it had to fear for its existence after the USSR collapsed. China’s long history of the near-destruction of its centuries-old civilization’s superiority, and the challenges to its territorial integrity by Western nations and imperial Japan since the Opium Wars (1839–1842 and ­1856–1860) up to the end of World War II, is called the century of humiliation in China. China’s late modernization, the subsequent invasion by Asia’s early modernizer Japan (1931–1945), the civil war (1945–1949) and the Cultural Revolution (1966–1976) have caused internal convulsions which effectively

56  The European Union and China kept China out of the mainstream international relations until the 1970s and nourished a deep sense of victimhood and of being constrained by a hostile environment. China had to learn to come to terms with contemporary international relations that were very different from its traditional relations with its neighbours. This short synopsis of more than 150 years shows that China’s engagement with the wider world really has taken off only for about three decades and is informed by a deep sense of victimization that cannot be brushed aside by analysts and policy-makers alike. From this weak position and lack of international experience other than that of its own region at the end of the twentieth century, China had to adapt to the overwhelming influence of US structural power. It had to integrate international society constituted as it was largely without China’s input and is only now tentatively exploring its own nascent structural power to influence the institutions and rules of international society. China is doing that through economic clout, diplomacy, discursive tools, UNSC veto power and enhanced formal representation, for example in the Bretton Woods Institutions and more recently by setting up alternative structures such as the Shanghai Cooperation Organisation (SCO), the New Development Bank set up by the emerging powers known as the BRICS (Brazil, Russia, India, China and South Africa) and the Asia Infrastructure Investment Bank (AIIB). We will see in subsequent chapters how this background informs China’s global role. Since taking its seat in the United Nations in 1971, replacing Taiwan, China has been a permanent and veto-wielding member of the UN Security Council, assuming responsibility for world peace and global affairs under the UN Charter. It is among the countries that contribute troops to peacekeeping operations abroad in the UN framework, including in 2014 in Mali with combat troops (see Chapter 8). Its role in the UNSC and its economic clout give China global influence and allow it to exercise a certain amount of protection over countries such as North Korea or Syria at odds with Western priorities. But China has also backed the UNSC Resolutions that uphold the nuclear non-proliferation regime (against North Korea) and played an active role in the multilateral negotiations on Iran’s nuclear programme. China also supported the ‘responsibility to protect’ (UN, 2006), although insisting that each case be submitted to the UNSC. This shows some flexibility in how the key principles of peaceful coexistence are applied on a case-by-case basis, but more importantly the emphasis China puts concurrently on its international responsibility, ostensibly in the UN framework. The protection of China’s sovereignty is so privileged that little room is left for genuine multilateralism (Rozman, 2012: 13). China has been pursuing a policy of ‘multipolarity’ first to oppose the bipolar order of the Cold War and then the ‘unipolarity’ of the post-Cold War decade (Womack, 2004). This is one reason why China has long supported European integration (and established diplomatic relations with the EU long before other socialist countries did). This is a product of the principled opposition to ‘hegemony’ of the Great Powers against which China mobilized the ‘Third World’ with the Afro-Asian conference of Bandung in 1955 around China’s (and India’s) five principles of peaceful coexistence, which remain the core of China’s FP mantra.

Chinese Institutions and Foreign Policy   57 However, today, China is increasingly seen and tempted to see itself as a great power, which leads to sensitive diplomatic balancing acts, in particular given Deng’s earlier definitions of China’s identity and power status in the world (see Box 4.1). From a Chinese point of view, globalization looks like a very different narrative from the Western one. Globalization for China is a source of national development to regain wealth and power to restore its lost ­central status in the world, not a call to exercise global ‘responsibility’ on a par with developed countries. This may explain why Chinese policy-makers often reject the Western exhortation to become a ‘responsible’ member or stakeholder of the international community as that implies they are seen as ‘irresponsible’ if they don’t support Western policy. China wishes to define the content of its responsibility itself (Chapter 2). Interestingly, China’s Foreign Minister, Wang Yi (2014: 5), emphasizes very strongly his disagreement with the West’s realist and liberal view of globalization: ‘Under no circumstances will China follow the West and admire the law of the jungle.’ Instead, China advocates peaceful development, fairness, justice, common prosperity and a world that it sees ‘gradually evolving into one community of common destiny’ (Y. Wang, 2014: 3). This ‘cosmopolitan’ view is rooted in Confucian political thought but also in the development path and narrative of cyclical fall and restoration/ rise. Chinese companies are more attuned to the competitive jungle of globalization. China’s history has been (re)written in ways that are intended to nurture patriotism, that stress national sovereignty, that blame foreigners for the century of humiliation (Lovell, 2011; Z. Wang, 2014). Chinese leaders have stressed since the founding of the PRC that the Chinese people have stood up to overcome these humiliations (Mao, 1949) and dream of regaining their ‘rightful place’ in the world. This nationalist leitmotif makes it very difficult for leaders to accept foreign criticism or demands, or to rebuke nationalist bloggers and activists in spite of China’s often demonstrated capabilities to control public opinion. Nevertheless, the idea advanced by some journalists that China is intent on re-establishing the former tribute system in a contemporary bid to dominate Asia (French, 2017), while being far-fetched, still helps to understand China’s perception of its ‘rightful place’ in the world.

Box 4.1   The Five Principles of Peaceful Coexistence • • • • •

Mutual respect for each other’s territorial integrity and sovereignty To abide by mutual non-aggression Non-interference in each other’s internal affairs Respect for mutual equality and to work for mutual benefit Peaceful co-existence

58  The European Union and China

Chinese Foreign Policy Principles and Priorities As a result of this history, the major interests and grand axes of China’s foreign policy are as follows. nonFirst, peaceful, independent and sovereign development and ­ interference into China’s domestic affairs (Taiwan, Tibet, Xinjiang, human rights, NGOs, etc.). All this is a function of China’s core interests: territorial integrity and full exercise of its national sovereignty that includes the legitimacy of the Communist Party to rule this territory. China has followed for sixty years its five principles of peaceful co-existence (proclaimed in 1954) but with significant variations on their implementation (see Box 4.1). In a speech to the UN General Assembly in 1974, Deng Xiaoping emphasized the five principles and characterized China’s policy: Socialist China will never change her colour and will always stand by the oppressed peoples and oppressed nations. If one day China should change her colour and turn into a superpower, if she too should play the tyrant in the world, and everywhere subject others to her bullying, aggression and exploitation, the people of the world should identify her as ­social-imperialism, expose it, oppose it and work together with the Chinese people to overthrow it. (Deng, 1974) The most recent work report of the Communist Party in 2017 confirms this stance: ‘China’s development does not pose a threat to any other country. No matter what stage of development it reaches, China will never seek hegemony or engage in expansion’ (Xi, 2017). Essentially, China wants to secure the conditions for its peaceful socio-economic development which is its national priority. Second, stability is an overriding concern, in particular in its neighbourhood: China’s White Paper on Military Strategy of 2015 describes a somewhat hostile environment and expresses concern at the US military rebalancing, Japan’s militarization and countries’ meddling into South China Sea affairs and violating China’s sovereignty. It also lists security interests in parts of the world that are strategically important for China’s development (e.g. energy supplies, sea lanes of communication and protection of its nationals overseas) (The State Council, 2015; see also Chapter 9). Third, and equally significant for China’s foreign policy (albeit much less for domestic consumption), is that China’s Marxist-inspired identity as a developing country calls for a new world order based on the assumption that the current one is biased towards Western powers and against the Third World and socialism. China advocates ‘anti-hegemonism’ or a ‘democratization of international relations’ that essentially means reducing the alleged or real Western dominance in global affairs at the expense of developing countries including China itself. At the same time, China is accepting that it must make contributions to international society. However, it wants a seat at the rule-making table, more influence and more respect in global governance while the US and the EU have long considered China as a rule-taker (see Chapters 2 and 10).

Chinese Institutions and Foreign Policy   59 China’s foreign policy remains largely unchanged in its advocacy of these basic principles of peaceful coexistence and respect for sovereignty, which it is ready to defend militarily. China has pursued what it calls an independent and self-reliant policy of peace and consistently defended its principles of non-interference in domestic affairs and upholding sovereignty and territorial integrity. However, during the Cold War period it has been involved in several ‘hot’ wars – with South Korea and the US in the Korean War 1950–1953, with India in 1962, in Indochina (indirectly) and with Vietnam in 1979. The Five Principles of Peaceful Coexistence were proclaimed by China in cooperation with India and Myanmar in 1954 and form the basis of South–South cooperation (see Chapter  9). This initiative came shortly after the Korean War to signal that ‘Red China’ was not a threat to its neighbours or to world peace, but ready to cooperate. This theme would occur again and again in different slogans to counter perceptions of an aggressive China. China also backed a number of liberation movements in Africa during independence struggles. Here non-interference was cast in the anti-imperialist struggle rhetoric (domestic legitimacy was seen as lying with the rebels; Deng Xiaoping’s speech at the UNGA in 1974 is a good example; see Box 4.1). Since the beginning of the reform and opening-up policy in the early 1980s China has refrained from direct involvement in armed conflicts while continuing to emphasize the importance of the five principles and its own peaceful development path. Interestingly, in that period China initiated many border negotiations with a large number of neighbours in which the Chinese have frequently not put forward maximum claims, but settled for compromises, as stability and good neighbourly relations were the chief aims (Taylor Favel, 2008). This balance between safeguarding a territorial interest and good neighbourly relations to enhance stability for the sake of development is also visible in the context of territorial disputes in the South China Sea: on the one hand China is aiming at asserting its territorial claims and on the other at pursuing stability and regional cooperation and promoting itself as a responsible great power – a dilemma worsened by an increasingly nationalist and vocal (internet) public and in the Chinese government’s view ‘by hostile forces abroad’ which makes compromises like those in the past more difficult. Since the major reform juncture in the early 1980s China has put economic development as a top priority. This implied a de-ideologization and a low profile in foreign policy, with the chief aim being to secure a peaceful and stable international context by striking good relations with all its neighbours, with developing countries and with the great powers (especially the US). This policy orientation was based on China’s late paramount leader Deng Xiaoping’s strategy of lying low and biding its time to pursue modernization. That is still valid, but the focus has somewhat shifted towards a more vocal stance in world affairs under President Xi, who regularly emphasizes China’s great power status, sovereignty, territorial integrity and core national interests while reassuring the world that China does not present a threat to other countries.

60  The European Union and China Despite its non-aligned posture and traditional suspicions of multilateral endeavours, in the 1990s China embarked on a new neighbourhood policy, engaging for the first time in multilateral forums such as ASEAN (which were previously considered as anti-Chinese alliances). This was also an attempt to break out of diplomatic isolation after the crackdown on student and worker protesters in June 1989 (known as the Tiananmen incident). Another reason was the collapse of the Soviet Union in 1991 which created a sense of imminent crisis for China’s Communist Party. During the Asian financial crisis (1997/8) China played a stabilizing role and earned itself a central role in the Asia region, while the US (and the Bretton Woods Institutions) were widely blamed by crisis-hit Asian countries for a lack of solidarity or worse, and stagnating Japan proved unable to help (Park, 2013). Since the turn of the millennium that saw China’s epoch-making entry into the WTO, Chinese leaders have coined a series of slogans to describe their country’s more prominent international role. These slogans are reminiscent of the ancient Imperial Reign mottos that described each emperor’s period in office. In reality slogans such as ‘China’s peaceful rise’, ‘China’s peaceful development’, ‘harmonious world’, ‘new type of great power relations’, ‘Chinese dream’ are basically variations on the same theme and principle of peaceful coexistence and are intended to reassure China’s international partners about its benign intentions and its focus on development while reclaiming a voice in international relations. Of course, it is important to analyse the nuances which indicate policy changes, but those remain evolutionary rather than shifting radically (Johnston, 2013). Since the early 2000s China’s role has become increasingly global, with expanding and more complex interests than just economic development (maritime, energy, climate, public diplomacy and culture). China also began to focus on many countries and issues outside its region, with Africa, the Middle East and Latin America for instance. Somewhat similar to the EU, China has held group summits with each region. Much of that was driven by resources or market-seeking investment of major Chinese corporations under the so-called ‘going out strategy’. At the same time China invested considerable resources in negotiating free trade and other agreements in the Asia region and it even created its own multilateral organization, the Shanghai Cooperation Organization (SCO), which is intended to stabilize the Central and Western Asian neighbourhood, and open a new ‘silk road’. The SCO includes Russia so as to avoid conflict between the two big players in the Central Asia region. A maritime silk road has recently been added via Southeast Asia, including a naval base in Djibouti with dual civil–military use. The term ‘silk road’ invokes historical connections and China’s central role, as well as shared prosperity (Y. Wang, 2014: 5). The two initiatives – Xi Jinping’s signature foreign policy – were combined into the Belt and Road Initiative, BRI (European Council on Foreign Relations, 2015). In the last few years China has ostensibly pushed ‘multilateralism with Chinese characteristics’ in the form of the SCO, the BRICS New Development Bank and the Asia Infrastructure Investment Bank (AIIB), emphasizing South– South cooperation to complement (or undermine) North–South cooperation.

Chinese Institutions and Foreign Policy   61 As a result China’s place in the international liberal order, underpinned by multilateral organizations such as the UN, the IMF and the WTO, has become the main foreign policy issue from a Western perspective, but also for China, which has added its own institutions and initiatives to the international order (rather than undermining it). In general terms China believes (like most of its neighbours) that in order to develop it is important to have a stable neighbourhood and to avoid conflicts and crises where possible. After the Asian financial crisis and the global financial crisis this basic attitude was expanded to include the importance of common prosperity in the neighbourhood and now globally with China a member of the G20 playing a bigger role in global economic governance (Chapter 11). The world is now increasingly seen as a community of destiny with peace and development as the hallmarks of our era not as a hostile environment legitimizing political struggle. Economic interdependence has become an important factor and China’s stakes in the rules-based international order are high. In his keynote speech to the World Economic Forum (WEF) in 2017 China’s President Xi endorsed economic globalization, free trade and the Paris Agreement on climate change in what can be seen as a rebuke of the Trump administration’s protectionist stance and a promise of Chinese co-leadership of the current global order (WEF, 2017). In short, from being an international outcast between 1949 and 1971, and a leading sceptic of the international liberal order, China has gradually taken a somewhat ambiguous leadership position that from a Western point of view is tainted by its illiberal domestic system. The current Chinese leadership is inscribing itself into this foreign policy evolution, but has come up with a new slogan ‘realizing the Chinese dream’ and – referring to the US – a ‘new type of great power relations’ avoiding conflict or confrontation. The formula is intended to express a peaceful and constructive relation based on mutual respect and win-win cooperation rather than a power contest (Y. Wang, 2014: 6). It perhaps stresses more the claim for respect as an equal by other great powers (notably the US) and China’s right to shape the rules and relations of international society in the t­wenty-first century. This leads to normative debates about world order where China and the EU can sometimes be found at rather opposing ends of the spectrum of ideas and principles on some issues (Kaya, 2014). Nevertheless, Europe’s policy-making via multilateralism and international institutions as well as economic relations rather than power games makes it an attractive partner for China (although not necessarily a model to emulate) rather than a rival, which is how US–China relations can be conceived. For example, Europe’s economic diplomacy in Asia (EU–Korea FTA, EU–Japan Economic Partnership) is not seen in Beijing as a strategic containment or power contest with China, but as economic competition. Similar trade agreements that the US was pursuing (Korea–US FTA, Trans-Pacific Partnership) by contrast conjured up fears of containment and rivalry in Beijing. This overview should allow China’s ‘new assertiveness’ to be put into perspective. The context of China’s foreign policy is – like in many countries – anchored in domestic priorities, historic continuity and established institutions and evolves with global challenges and opportunities.

62  The European Union and China

China’s Domestic Agenda and Foreign Policy The overwhelming perception from Europe and the US is that China defines itself as a rising power. China’s ‘peaceful rise’ was indeed trumpeted at the 2003 Bo’Au Forum by President Hu Jintao’s advisor Zheng Bijian. The ensuing controversy led China to water down the slogan to China’s ‘peaceful development’. But the milk had been spilt and China was no longer able to rein in the international debate about whether it was a status quo or a rising revisionist power which is the prevalent ‘realist’ analysis of China in IR (see Chapters 5 and 8). However, in reality China’s leaders are preoccupied with domestic issues of overwhelming importance and complexity which is also reflected in key policy documents such as the work report of the 19th Communist Party Congress in 2017 which devotes very little space to foreign policy (section XII) but mentions the UN, the G20, BRICS, the SCO and BRI as important forums for global governance issues. Despite the impression abroad, which is fed by China’s rise and its omnipresence in the world, foreign policy is a low priority domestically and the Foreign Ministry (MOFA) is comparatively weak, remote from the party decision-making structures and in competition with other ministries that carry more clout. Like in the EU, the duality between political and economic relations runs deep. The Ministry of Commerce (MOFCOM) for example has a twin role regulating both domestic and foreign trade and until 2018 controlling foreign aid. In a major government reorganization in 2018 a new agency to manage China’s foreign aid and the BRI programmes was set up. MOFCOM is also involved in managing incoming and outgoing investment in cooperation with the Ministry of Finance, SASAC, the National Development and Reform Commission, and state banks (such as China EXIM and China Development Bank). MOFA has little room for policy-making, with its small budgets and limited policy space for negotiations, as it is constrained by principles and overriding domestic priorities that are decided by the Communist Party, which also has its own department for international affairs. While many domestic policy issues increasingly affect the rest of the world, external considerations hardly enter into China’s domestic policy-making process and domestic priorities – a source of frustration for foreign countries who often do not understand the (opaque) policy process in China. China, it needs to be stressed, is not the monolithic actor that many policy-makers and analysts assume it is. Chinese provinces and domestic agencies, including state-owned enterprises are powerful interest groups that influence foreign economic policy. There is a proliferation of Chinese companies, especially SOEs, across the globe. The active involvement of these companies, banks and provincial-level authorities in economic activities and partnerships abroad has contributed to an array of Chinese actors that are operating beyond the control of the Chinese government let alone MOFA. This multiplication of actors complicates Chinese foreign policy including in times of crisis (consular protection, evacuations). The problem is compounded by the widespread tendency abroad to conflate all these actors under the label ‘China’ while in reality these are

Chinese Institutions and Foreign Policy   63 actors with very diverse interests and agendas, not necessarily in line with official foreign policy. This can also cause major problems when local authorities, specific agencies or big companies take decisions that are by outsiders assumed to reflect China’s policy but may not have been consulted with the central government (Jakobson, 2013). This problem is particularly acute in China’s relations with developing countries where business interests play a major role and are sometimes taking place in high-risk environments (see Chapter 9). The protection of Chinese citizens abroad only recently became an issue for the MOFA after kidnappings, assassinations and civil wars shocked domestic opinion and showed the need for consular protection or evacuation of Chinese citizens (for example, in Libya in 2011 and Iraq in 2014; Duchâtel, Bräuner and Zhou, 2014). These diverse aspects make China’s foreign relations opaque, defensive – sometimes aggressively so – and difficult to negotiate. China’s main focus is certainly on its economic and social development and the challenges that have been piling up. However, even domestic economic decisions taken in Beijing tend to have important implications for the rest of the world due to China’s economic size and footprint in the world. China’s leadership faces a long list of challenges, issues and opportunities as a consequence of 30 years of opening up and reforms. Godement (2012) speaks of a success trap, others of a middle-income trap (World Bank, 2013). Moreover, events of all kinds pop up by the dozen on a daily basis and even the most trivial are reported globally. An old German proverb meaning ‘who cares?’ goes: ‘This is as important as a bag of rice falling from a shelf in China.’ Today the toppled bags of rice in China are reported in the media all over the world, from traffic accidents and provincial sex scandals to protests in remote villages. Such news gives us a glimpse of what China’s policy makers have on their political menu before they can turn to foreign affairs. In 2001 China became a member of the WTO, one of its most important foreign policy decisions in modern history. But in many ways this foreign policy decision was an instrument to engage in deep domestic transformation from a socialist, state-run economy to a market-based one (the ‘socialist market economy’). The national foreign policy priority of acceding to the WTO was used by a reformist leadership to overcome domestic resistance and vested interests to market reforms with probably less thought given to international legal implications of membership and binding dispute settlement procedures down the road which do not square well with sovereignty and non-interference. Foreign issues are mainly analysed from that angle: Are they challenges to or opportunities for China’s development? If the answer is yes, the issues are dealt with. If not they will not attract much attention. One example is the quest for access to natural resources and energy security that has given rise to an active economic diplomacy (‘going-out strategy’) across the globe. The goingout strategy initially ignored potential difficulties including possible hostile reactions in foreign countries. Expertise on foreign countries outside ­China’s neighbourhood is limited and often relies on government-to-government

64  The European Union and China interaction (in line with the principle of non-interference in domestic affairs) which leads to the neglect of analysis of domestic dynamics, civil society and opposition movements in foreign countries (Wissenbach and Wang, 2017). The same can be said of most ‘new’ partner countries that had either little knowledge about China or a ‘romanticized’ image of China as a champion of the Third World’s independence struggle for which the 1974 speech by Deng Xiaoping on natural resources at the UNGA quoted earlier in the chapter is emblematic. Representative of this is Nigeria’s former Central Bank Governor, Sanusi, who wrote in an op-ed for the Financial Times: ‘A romantic view of China is quite common among African imaginations – including mine’ (Sanusi, 2013). What trumps and may sometimes enter into conflict with the priority China attributes to socio-economic development is the safeguarding of core interests such as national sovereignty and territorial integrity (including Taiwan) that are non-negotiable. These are very sensitive issues for any Chinese leader and even more so as nationalist elites and netizens are ready to whip up patriotic emotions at any occasion. On such matters leaders cannot show weakness (and any compromise is by definition seen as weakness) even if they are weighing other considerations. The prolonged row with Japan over the minuscule and uninhabited Diaoyu/Senkaku Islands in the East China Sea between 2010 and 2012 is a recent example where economic development interests have been sacrificed – by both sides – on the altar of nationalism and subordinated under the defence of national sovereignty (Jakobson, 2013: 10). According to a report in the Financial Times (2012) shipments were down by 14 per cent in September 2012 compared to a year earlier, and ‘exports of consumer goods such as cars and motorcycles collapsed, dropping 42 percent and 31 percent respectively’. Flights were cancelled as angry Chinese didn’t want to travel to Japan anymore (or be criticized by friends for doing so) and Japanese feared for their safety in China after violent boycotts and riots against Japanese companies or owners of Japanese cars in China that – according to Katz (2013: 19) – had cost Japanese companies $120 million in property damage and a fall in sales by approximately 40–50 per cent. It didn’t help that the two governments have no ‘hotlines’ for direct emergency communication or backroom channels which could have contributed to better understanding each other’s positions (Mochizuki, 2007; ICG, 2013). In general terms, however, foreign policy is unlikely to be high on the top leaders’ agenda. The Politburo is likely to discuss at some occasions fundamental strategic directions to deal with the US, Japan, the vexed North Korea problem, the South China Sea and perhaps Southeast Asia, the global economy, energy security and the like. The Foreign Minister is not a member of that leading body. Leaders will make decisions on foreign policy on the basis of party and government briefings, anonymized expert papers and of course their own convictions and experiences with foreign leaders. They are unlikely to read academic papers whether written in China or abroad or discuss their ideas in ‘town hall meetings’ or personal blogs. Afterwards the party and government apparatus will be busy implementing the resulting unpublished guidelines. We will now examine how this opaque system works in practice.

Chinese Institutions and Foreign Policy   65

Chinese Foreign Policy Actors: A Glimpse Behind the Bamboo Curtain As a reaction to the abuses of decades of one-man rule in the PRC under Mao Zedong, the principle of collective leadership was anchored in China’s Communist Party in the 3rd plenary of the 11th Party Congress in 1978. While this acts as a system of checks and balances it also slows down and complicates decision-making in particular, as during the three decades of economic and political reform the power of vested interests (including huge corruption) and their interdependence with party officials have increased. This was notably the case in the decade of Hu Jintao (2002–2012). The collective leadership arrangement, the stove-piped bureaucracy with little coordination and oversight, may explain systemic weaknesses such as a lack of clarity and guidelines (or strategy) on foreign policy beyond broad principles and slogans that can be interpreted in different ways in concrete cases; slow reaction to events because of the need for consensus-building; rivalry between agencies; lack of flexibility in negotiations and creativity in finding solutions to international problems as no one can take the risk of doing something that the top leaders may not like; disparate policies at different levels; and interference by military officials in diplomatic affairs. This line of argument has been advanced to explain the ‘assertive’ but counterproductive regional diplomacy since 2010 (feeding the domestic instability theory; Jakobson, 2013). Since 2013 Party Secretary General Xi Jinping has reasserted and recentralized leadership in a drive to push back against these problems, vested interests and corruption that endanger the legitimacy of the Chinese Communist Party as the Party is steering the country through a new phase of socio-economic transformation. His posture as ‘core leader’ without term limits is seen as a challenge to the collective leadership principle, but also as a guarantee that corrupt officials cannot just ‘wait him out’. That internal development is being carefully observed. Despite China’s opening up and reforms the system has remained secretive and very little is published that allows the tracing of how certain decisions were made (Liao, 2016). Officials’ contacts with foreigners and travel abroad are also screened by public security organs. The Communist Party controls both the state and the military directly but separately. The Secretary General of the Party is in a recent tradition also the (civilian) Chairman of the Central Military Commission (10 other military members). That Commission is China’s real power centre, independent of the government, guiding and controlling the military forces, whereas the Defence Ministry plays only a subordinate role, to a large extent for protocol to interact with other countries. This separation between government and the military (which outranks the ministerial bureaucracy) has nourished a culture of autonomy (but also corruption) in the army with little to no coordination with the MOFA, sometimes creating the impression that the MOFA didn’t know what China was doing abroad. At the pinnacle of the Party’s collective leadership is the Standing Committee of the Politburo (currently 7 members most of whom individually carry chief responsibility for a particular policy

66  The European Union and China portfolio), then the Politburo (25 members), then the Central Committee (204 full and 172 alternate members). Below these leading bodies the Party has an apparatus of officials which more or less mirrors government departments. This creates a dual structure of policy-making although the daily tasks are not necessarily duplicated (they are carried out by the government bureaucracy). Every government department also has a party secretary who outranks the Minister. Conversely, often top government officials are also members of such party organs and the higher they are the more influence they carry on policy-making behind the bamboo curtain of party deliberations, and the more important they are in the government pecking order. Neither the Foreign Minister, nor the Minister for Foreign Trade are currently members of the Politburo, but former State Councillor for Foreign Affairs Yang Jiechi entered the 19th Politburo in 2017. The Chinese bureaucratic system (both party and government and in between the two) is extremely hierarchical and vertical reporting lines make horizontal coordination between different agencies or even departments within one Ministry very difficult. In Chinese embassies abroad, for instance, there is an economic counsellor who reports to MOFCOM while the ambassador and his political staff report to MOFA. The top government organ is the State Council, presided by the Premier of the State Council, Li Keqiang, and composed of 35 members, five of whom are State Councillors, which are ranking above the ministers (and are often the promoted former ministers in their area of competence), the rest are ministers and heads of commissions and agencies of ministerial rank. In the Chinese system so-called leading small groups were set up to coordinate specific issues and advise the Politburo. One such group exists for foreign affairs and is chaired by Xi Jinping. It is almost identical with the National Security Leading Small Group set up after the US bombing of the Chinese Embassy in Belgrade in 1999, one of the first major national security crises China had to face. How effective they are depends on each group (some meet often, some rarely) and is generally speaking not easy to assess. Yet they are generally more influential than ministries and agencies (which send representatives of ministerial rank to the meetings when requested) and ensure top leadership control. In terms of foreign policy actors this shows the ministries’ status not as policy makers but as policy advisors and managers, if not policy propagandists. The leading small group system also shows that there is a need for consensus-building across bureaucracies (which might be almost as complex as consensus-building in the EU). Xi Jinping (CCP Secretary General since March 2013) has been centralizing power not only for himself, but in other governance structures, for instance through reforming the various agencies dealing with maritime issues (which in the context of the South China Sea and the row with Japan is highly significant for foreign policy; ICG, 2014). In the Chinese system until 2013 there was no central coordination institution such as the US National Security Council; but there is now: since November  2013 a new National Security Commission chaired by Secretary General Xi with the Premier and Chief Legislator as deputies (so not the Foreign Affairs leaders, although full

Chinese Institutions and Foreign Policy   67 membership has so far not been disclosed). It seems, however, that the new body defines national security in broad terms beyond external threats and focuses on domestic stability and coordination of security agencies and crisis management rather than just acting as a new body for foreign policy strategy. It may in fact work out policy and legal reforms to combat terrorism, extremism and separatism; policies related to sovereignty; territorial disputes and maritime interests; and policies related to information and cyberspace and maritime security for which China currently lacks legal frameworks and institutions. It remains to be seen how the NSC will complement or whether it will replace the existing leading small groups on foreign affairs, and whether it will succeed in enhancing strategic coordination and oversight, if not control it, especially across the entrenched civil/military divide. An example for that need was the evacuation of Chinese citizens from Libya in 2011 with the help of China’s army, air force and navy which required a senior Politburo member to coordinate as the Foreign Minister was unable to do so (Duchâtel, Bräuner and Zhou, 2014). So where does expertise on foreign affairs in this top-heavy and insulated system come from? One source is of course the professional staff of the foreign ministry and the trade ministry. Both agencies have seen a professionalization over the years, including in terms of recruitment which in the past tended to be dominated by foreign-language graduates and fell short of legal, international relations or economic expertise – a trend which has been gradually reversed. They also have advisory groups often staffed by retired officials. Most sector ministries also have international affairs departments. Other sources are foreign policy think tanks that are affiliated to different departments in the party, government or the military (and thus not independent). In some cases they are staffed by retired ambassadors who have been steeped in the official line and have little incentive to come up with new ideas and even less criticism of official decisions. These think tanks provide usually anonymized expert papers through the bureaucracy, including the Party’s central committee foreign affairs department, often upon request, sometimes at their own initiative. In rarer cases experts are invited to brief top leaders in person. In most cases the Foreign Affairs Office (sometimes the General Office) of the Central Committee whose director is the de facto National Security Advisor will be the clearing house for analysis and briefings going to the Politburo Standing Committee members. Some Chinese embassies, such as the Mission to the EU, have ‘scholars in residence’ who advise the ambassador and support public diplomacy efforts. Yet another layer is the increasing numbers of university professors and scholars, most of whom have no institutionalized access to top leaders (while some may have personal connections) but who have in recent years become opinion shapers as they are often invited on to TV talk shows or as commentators in different media. While this has broadened expertise in line with China’s increasing requirements, the plurality of ideas continues to be hampered by the lack of ‘out of the box’ thinking and the lack of independence (both institutional and often intellectual) of most of

68  The European Union and China these experts (or indeed the media platforms they can use). In general terms, one can assume that any information is filtered through different layers of bureaucracy before it reaches decision-makers. Foreign observers who do not read Chinese can easily be frustrated by the seemingly uniform stance officials and academics take towards outsiders, while in the Chinese-language conferences, journals and blogs the debate is far livelier and more controversial. Thus some experts with little influence, institutionally speaking, can gain indirect influence through TV shows or the blogosphere, but this may reward populist or nationalist experts more than diplomatic ones.

Chinese Foreign Policy and the EU The EU is unlikely to feature on the agenda of the Politburo. Relations with the EU tend to be coordinated at government level by the Premier and Deputy Premier. Therefore, it was rather significant that in March 2014 for the first time the highest Chinese leader, President Xi Jinping, paid the first official visit to the EU in Brussels calling on both the President of the European Council and the President of the European Commission. It is significant that the visit happened at that level, but it is also remarkable in that it took so long to have it, ten years after then Commission President Romano Prodi’s state visit to China. China’s relations with the EU are less exposed to conflicts over sovereignty and territorial integrity than China’s relations with many of its neighbours. However, they do come up in the contexts of Tibet and Taiwan and have been specifically notified to the EU through China’s 2003 foreign policy document on China–EU relations and reiterated in 2014 (MOFA, 2014) (see Chapters 2 and 5). But in general terms, China’s relations with the EU (or Europe more generally) have certainly been of high importance for China’s socio-economic development and even some of its domestic reforms (see also Chapter  2), but much less for its foreign policy. The EU is China’s biggest trading partner and one of its key foreign investors. Investment in China and a market for China’s goods, technology and know-how transfer have been sources for China’s socio-economic policy-making (Song, 2010) and also objectives of EU cooperation programmes, with China underlining the importance of domestic priorities in its relations with the EU. The EU is also less restrictive than the US regarding technology transfer and applies fewer national security restrictions to Chinese investment and trade although this may be changing (Godement, Parello-Plesner and Richard, 2011; Niquet, 2018). However, these issues are not dealt with primarily by the foreign policy apparatus but by MOFCOM and by the domestic ministries and agencies which are responsible for many of the sectoral issues and dialogue groups or cooperation programmes with the EU. These ministries have dedicated EU desks. Since 2008 there has been a separate Chinese mission to the EU with its own ambassador (a function previously held by China’s ambassador to Belgium). The economic counsellor posted in this mission to the EU reports to MOFCOM and deals with the trade issues.

Chinese Institutions and Foreign Policy   69 Where Europe has traditionally been of strategic foreign policy relevance for China is in China’s preference for a multipolar world order in which Europe is seen as a counterweight to the US (and Russia). In 2003, when the then new Chinese leaders developed their somewhat more visible international policy (China’s peaceful rise or development), China also for the first time issued a policy paper on its relations with a foreign partner and chose the EU for this premiere (see Chapter 2). This initiative seems to have been due to a shift in the analysis of the strategic context – balancing US unipolarity (e.g. the Iraq war) and a reassessment of regional and foreign policy after the Asian financial crisis. China had also started to take the EU more seriously after the latter had shown remarkable unity and sense of purpose in its relations with China and especially in the negotiations on China’s WTO accession conducted by the European Commission on behalf of the Union, with member states granting it great flexibility and enormous confidence (Zimmermann, 2012: 96–97). The EU, in a nowadays rare show of strength and unity, held out for a more advantageous deal than the Chinese had concluded with the Americans. This brought home to China’s leaders that the EU was a power to be reckoned with to achieve a national priority interest and could not be assumed to just follow the US lead.

Conclusion China’s foreign policy is deeply steeped in history, notably the defining narrative of a century of humiliation, although its modern foreign policy institutions are actually relatively recent. China’s FP has developed in a context of rapid changes and challenges both domestically and in the global context. Today, there is a less stable and benign domestic, regional and global environment, fewer partners that are willing to accommodate China’s rise on China’s terms, and more demands on China (including in the developing world). New challenges from increased Chinese presence in many crisis-prone countries as well as the need for resources and markets for China’s growth have arisen. The  internal contradictions from contending interest groups, from the increasingly vocal and often hyper-nationalist netizens, and more ­generally from a more and more diverse middle class and civil society, academic debate and public sphere have affected foreign policy. This is the background to the ‘assertive China’ narrative and factors that help explain the re-establishment of party control under Xi Jinping. China’s FP is heavy on principles but light on initiatives. Leaders, tied up with domestic preoccupations, have to focus on the most pressing issues and on ‘low hanging fruit’. The current foreign policy is a compromise between the (so far very successful) basic FP principles and the ‘lying low’ pragmatism and a greater assertiveness on core interests. There is a need for a tighter grip by the helmsman to steer the heavily loaded state-ship through turbulent domestic and international waters and to improve inter-agency coordination. The new slogans of ‘the rejuvenation of the great Chinese nation’ and ‘new type of great power relations’ hint at that mixture of pride and pragmatism

70  The European Union and China and essentially continue the long-standing pursuit of peaceful coexistence to enable continued modernization and development, but with a higher degree of self-confidence and centralization. It is no coincidence that the economic reforms decided at the 3rd plenum in November 2013 were accompanied by the creation of the NSC to bolster domestic and external security. China’s foreign policy serves the party, the regime’s stability and must help create external stability to ensure leaders can concentrate on what really matters – domestic stability and economic development. This chapter has provided a general background of China’s foreign policy to situate EU–China relations in an institutional context. We showed that while China’s decision-making is fairly opaque, it is also a fairly predictable player with known principles and red lines. Foreign policy, despite China’s opening up, reform and ever growing influence in the world, remains tightly controlled by the Communist Party and subordinated to domestic priorities. While the EU has been an important partner for China in its geopolitical focus on multipolarity and in supplying know-how for domestic reform, it is clear from this chapter that China is not receptive to EU attempts to influence China’s domestic and international politics. China’s foreign policy of independence in principle supports stability and the current international order, but increasingly seems intent on shaping it, while in areas related to China’s sovereignty and territorial integrity China has taken a more assertive stance in recent years. Foreign policy, and its apparatus, is not the main plank supporting the EU–China relationship; rather it is the Ministry of Commerce and other economic agencies that control the main levers in China’s engagement with the EU. The following chapters will examine the various dimensions of EU–China relations against this background.

Chapter 5

The Political Dimension of EU–China Relations

Introduction Ever since the start of EU–China relations in the 1970s, the economic factor has dominated the relationship and is likely to continue to do so for the immediate future. Political aspects only started to develop as a distinct profile in EU–China relations in the mid to late 1990s. They have progressed rapidly since, especially after the establishment of the strategic partnership in 2003. It is the aim of this chapter to explore the effectiveness of the EU in its political relations with China. To put it differently, to what extent are EU–China relations converging or diverging in the area of political relations? While in practice it is not easy to separate the political from the security aspect, for analytical reasons a distinction will be made, as far as possible, in this chapter along those lines. In other words, the emphasis in this chapter will be on the political dimension of EU–China relations, while a more specific examination of the security aspects will follow in Chapter 8. Among the political aspects covered will be EU concerns over Chinese barriers to democracy, freedom of expression, adherence to the rule of law, respect for human rights, the extensive use of the death penalty, and the use of torture. The focus will be on bilateral political EU–China relations rather than on the stand both take with regard to global governance, which will be the subject of Chapter 10. Particular emphasis will be given to the 2003 EU–China strategic partnership and developments thereof, as these represent the main epoch of EU–China political relations, together with a review of the role of the High-Level EU–China Strategic Dialogue. The main references of the chapter will be drawn from key official EU and Chinese documents and statements. In what follows, attention will first turn to the nature of the EU–China partnership. The chapter proceeds with a treatment of the political dialogue between the EU and China, reviewing the content, history and drivers of that dialogue, and subsequently examines human rights disputes, dealing with the different perspectives and values/norms of the two partners on this subject. In the latter part of the chapter key issues surrounding human rights in Tibet and self-determination in Taiwan, and EU policies towards Hong Kong and Macau will be examined, followed by a summary of the main findings of the chapter.

71

72  The European Union and China

Nature of Strategic Partnership EU–China diplomatic relations have existed for 40 years, over which period there have been both setbacks, such as the 1989 Tiananmen Square crackdown on demonstrations, and high points such as the 2003 strategic partnership. As the latter partnership, especially in the period 2003–2007, marks the zenith in EU–China political relations and the adoption of far-reaching aims, it is important to assess the nature of what that partnership entails, both in its own right and by comparison with other similar EU partnerships. Several key elements embody the nature of EU strategic partnerships, such as motives, objectives, commitment and content. This also holds true for the strategic partnership between the EU and China. A brief look at those characteristics will help to clarify its significant features and implications and how it compares with similar EU partnerships. Some of those characteristics will be more fully developed in subsequent sections of the chapter. The agreement to upgrade the existing partnership between the EU and China in 2003 to a strategic one was motivated, if not fostered, by a ‘similar understanding of the post-Cold War international system and of both partners’ place within it’ (Casarini, 2012: 23). Among the important issues that facilitated this understanding were similar outlooks about the forces of globalization, the fallout of 9/11, especially with regard to transnational terrorist threats, the growing economic interdependence between the two partners, and the desire by each partner to play a more active role in global affairs according to their specific interests and value orientation, as well as on the basis of mutual respect and mutual benefits. However, it is one thing to find common cause on regional and global issues, but quite another for the two partners to match their specific interests or to overcome tensions between specific (economic) interests and values (­ Chapter 3). The strategic partnership between the EU and China is of course not a unique occurrence, as the EU has nine similar arrangements with other states, and China has around 30, including with a number of EU member states. But the partnership marked ‘the first time that the EU had attempted to act strategically with regard to China and tried to go beyond its traditional role as a junior partner of the US’­ (Casarini, 2012: 24). A declared common objective of the EU–China partnership is to conduct relations in a spirit of equality, reciprocity and mutual benefit. However, a certain amount of caution is required in taking the declared common objective at face value. Both partners start from different histories, economic and political development, geopolitical positions, and interests. China’s 5,000-year history has no parallel in Europe. Europe’s economic, and political development based on capitalism and democracy has no direct counterpart in China. Both Europe and China find themselves surrounded by different geographic and security challenges. In part these contextual differences have implications for the commitment that both the EU and China bring to the partnership.

The Political Dimension of EU–China Relations  73 Common objectives, to the extent to which they prevail in the EU–China partnership, do not necessarily coincide with common commitment. There are a host of factors that influence the commitment of the EU–China partnership. Some of these relate to different value orientations. Relations between the EU and China have often encountered disagreements over human rights, religious freedom, security and democratization. For example, when the Chinese talk about democratization, their focus is on responsibility, responsiveness and accountability of government authorities; for Europeans it is all about empowering civil society, the rule of law and respect for human rights (Geeraerts, 2013: 498). Equally, both partners also have diverging attitudes to issues such as international law, territorial integrity and non-interference in domestic affairs. The EU, by its very nature, has a more flexible understanding of the principle of sovereignty and is widely seen as a normative or ‘civilian’ power, whereas, for China, sovereignty and the pursuit of national interest remain an absolutist concept. Internal factors, which impede commitment on the EU side, involve the maintenance of national preferences in foreign policy (Kaya, 2014). This affects coordination between the EU and the member states and the extent to which the EU can speak with a single voice in its relations with China and/or is able to leverage the Chinese partner for greater commitment to the partnership (Fox and Godement, 2009: 2). The leverage is further undermined by the fact that China has individual partnerships with a number of EU countries. As a consequence some observers see the EU as suffering from internal divisions, being less in political terms than the sum of its parts and lacking strategic vision; all of which limit its global weight­ (Stumbaum, 2007; Grevi, 2010: 8; Renard, 2011: 32; Song, 2013: 476). A further external factor that affects the commitment of the EU–China partnership is EU–US relations on the one hand and Sino-American relations on the other. (This is an aspect that will be more fully addressed in Chapter 8) Besides the aspects of motivation, objectives and commitment, the content (scope, scale and institutional base) is another important attribute of the strategic partnership. The agreed 2003 strategic partnership represents the central plank in the EU–China political relationship and is distinctive in at least two ways. First, it is the most mature of the new-generation ‘strategic partnerships’ (Smith and Xie, 2010: 4). Second, it has one of the most extensive institutional bases of EU strategic partnerships (see Table 5.1), and includes the bilateral level, the inter-regional contexts and the level of global multilateral organizations such as the UN and the WTO. In addition, the partnership has been expanded (at least on the EU side) to encompass ‘third-party’ issues such as the mutual engagement of the EU and China in Africa (see Chapter 9), and to explore the possibilities of cooperation and/or dialogue at the local or regional level in that continent (Smith and Xie, 2010: 16). Apart from that with the US, the EU–China strategic partnership has had the longest and most extensive history of institutionalization. The various elements and forms of interaction of the EU political dialogues will be further examined in the following section.

74  The European Union and China Table 5.1  Overview of EU Dialogues with the ten Strategic Partners (as of June 2013) Summit

Ministerial Dialogues

Sectorial Dialogues

Other Platforms

Total

Brazil

1

1

 1

2

35

Canada

1

1

38

2

42

China

1

8

51

3

63

India

1

1

27

3

32

Japan

1

1

34

3

39

Mexico

0.5 (biennial)

1

9

2

12.5

Russia

2 (biannual)

1

35

2

41

South Africa

1

1

18

1

21

South Korea

–

–

–

1

1

USA

1

7

56

3

67

Source: Adapted from the European Strategic Partnership Observatory, http://strategic ­partnerships.eu/dialgues.

Political Dialogues Historical Development Although diplomatic relations between the EU and China began in 1975, they were ‘explicitly economic, though implicitly (especially for China) strategic’ (Scott, 2007: 222). This changed slightly with the EU–China Trade and Cooperation Agreement of 1985, which provides the fundamental legal agreement between the two sides to date (Shen, 2013: 167) and also established an EU–China Joint Committee to manage the relationship. Further efforts were made in 1994 with the establishment of a new bilateral political dialogue, and greater recognition of political aspects found their way into the 1995 Long Term Policy for China–Europe Relations, which sought to identify the EU’s relationship with China with the spirit of the ‘new Asia strategy’ (European Commission, 1995: 3) and stressed shared global and regional security interests between the EU and China. This document reflected the development of the EU’s broader foreign and security policy structures during the early and mid-1990s, together with the EU’s aim to seek a greater international role. However, as Smith and Xie point out, this policy document contained a number of actual or potential contradictions, especially since the EU was more generally concerned to position itself as a ‘normative power’ with a particular emphasis on human rights and connected issues – issues that were less comfortably dealt with in the EU–China context (Smith and Xie, 2010: 10).

The Political Dimension of EU–China Relations  75 This positioning as a ‘normative power’ was partially strengthened by the introduction respectively of the Bilateral Political Dialogue in 1994, and the EU–China Human Rights Dialogue in 1995. Yet Chinese pressures for a policy change, as well as improvements on its human rights record, and internal dissensions within the EU led by Germany and France, resulted in a change in the way the EU dealt with Chinese human rights violations.­ Up until 1994 the EU’s political relations with China were based on the practice  of EU countries tabling or sponsoring resolutions critical of China at the annual meetings of the United Nations Human Rights Council (UNHRC) ­ (Baker, 2002), By 1994/95, China had become increasingly annoyed with this method of snub and retaliated by issuing an embargo against Denmark, which had  sponsored such a resolution (the EU as a whole is not a member  of the UNHRC). Without Denmark receiving sufficient support from other ­member  states, China was able effectively to split the EU. In return for its action on Denmark, China agreed to the establishment of a biannual EU Human Rights Dialogue, which it had previously refused because of the European denouncement in the UNHRC. In line with these developments, in March 1998 the European Commission proposed a ‘renewed’ and ‘upgraded’ political approach, entitled ‘Building a Comprehensive Partnership with China’ (European Commission, 1998: 5). This Communication included aspects of human rights and the rule of law, and sought to strengthen the contacts at the bilateral, regional and multilateral level. To complement, and in part to implement the 1998 Communication, the European Commission introduced a Communication on EU Strategy towards China in 2001 (European Commission, 2001: 3). Of particular note in the evolution of EU–China relations is the 2003 agreement on ‘A Maturing Partnership – Shared Interests and Challenges in EU–China Relations’. This European Commission Communication is notable not only for an upgrading of the bilateral EU–China relationship to a ‘strategic ­partnership’ and for extending the range of issues covered by it, but also for enhancing the ‘European’ focus. As Fox and Godement argue, it represented an effort to ‘mark a shift from traditional state-to-state relations up to the European level’ (Fox and Godement, 2009: 33). The 2003 Communication was later paralleled (but not mirrored) by China’s first official ­‘communication’ on this subject, the 2003 EU Policy Paper (MOFA, 2003), which echoed the ­perception of the partnership as strategic in nature (Smith and Xie, 2010: 13). A further European Commission Communication was issued in 2006, entitled ‘EU–China: Closer Partners, Growing Responsibilities’, containing specific references to human rights and democracy promotion (European Commission, 2006: 4). In 2010 the EU and China launched a High-Level Strategic Dialogue together with the High-Level People-to-People Dialogue, and in 2014 the two partners introduced the China–EU 2020 Strategic Agenda for Cooperation. In July 2016 the Council adopted the EU strategy on China for the coming years (European Commission, 2016a) (for further details on the evolution of EU–China relations since the mid-1970s, see Chapter 2).

76  The European Union and China Accompanying the various European Commission Communications on China are a number of meetings at various levels. At the higher level they involve the annual EU–China summit, the EU–China Dialogue on Regional Cooperation, and the EU–China High-Level Strategic Dialogue. Official gatherings at a lower level are annual meetings of EU and Chinese Political Directors; annual meetings between the EU Director for Asia Pacific Affairs and his or her Chinese counterpart on Asian and Pacific issues; meetings between the EU’s HR and the Chinese Foreign Affairs Minister; and the EU–China Human Rights Dialogue (see also Chapter 2 on EU–China institutional links). Moreover, after Lisbon, China has decided, with EU prompting, to upgrade the EU–China Strategic Dialogue to the same level as that of the China–US Strategic Dialogue. Despite these strengthened relations, the long-running talks between Beijing and Brussels over a new Partnership and Cooperation Agreement (PCA) have stalled, partly because of China’s reluctance to open its markets (Grant, 2013), partly because of the EU’s reluctance to comply with Chinese wishes for lifting of the arms embargo (Weske, 2007: 4), and partly because of China’s reluctance to comply with EU stipulations for greater democratic and human rights reforms. In any case, as pointed out by several authors (Zaborowski, 2006; Crossick and Reuter, 2007; Kerr and Fei, 2007; Balme, 2008; Grant and Barysch, 2008; Fox and Godement, 2009) there have been fluctuations in the evolution of the EU–China strategic partnership, mainly due to growing misconceptions and differences on issues such as trade, technology and human rights (Casarini, 2012: 23). However, despite fluctuations in EU–China relations, if not deep-seated differences over such values as human rights principles, there are driving forces that have cultivated and will continue to further develop the partnership. It is to these forces that we will turn next.

Drivers of the Political Relationship While the main drivers of EU–China relations have undoubtedly been of an economic kind, meaning primarily concerns with trade, investment, monetary and intellectual property issues, the political dimension of the ­relationship has steadily increased since the mid-1990s. The reasons for this can be found in three interrelated factors. First, due to the end of the Cold War and the forces of globalization new political and security challenges have arrived, such as transnational terrorism, nuclear proliferation, environmental degradation and organized crime, which need to be met in the form of political c­ ooperative measures both at the bilateral and multilateral level in order to protect the immense benefits of EU–China trade and investment. Second, as China grapples with domestic political developments and China’s One ­Country, Two Systems policy (with regard to Hong Kong, Macau and indirectly Taiwan), and as it seeks to play a supportive role in efforts of international peace and stability, China has found it opportune to engage with the EU in a political dialogue. In part this desire stems from admiration for the EU because of its success in overcoming strife and in integrating a huge number of countries peacefully, but also for the contribution the EU makes to peace

The Political Dimension of EU–China Relations  77 and stability in the world and to multilateralism. The EU is also not seen as a military threat but rather as a respected and reliable political partner. Third, the EU has had a long-standing desire, going back to its initial engagement with China in the mid-1970s, to extend its liberal values and democratic norms to China: ‘Europeans hope that a China with open markets and a firm rule of law will be more likely to respect human rights and allow democratic freedom’ (Barisch, Grant and Leonard, 2005: 1). Whether and how that ‘hope’ has been translated into actual deeds is the subject of the subsequent section, which deals with issues of human rights.

Human Rights Disputes Perspectives The EU has put considerable emphasis on its normative agenda in relations with China, portraying itself as a ‘force for good’, whereas China has insisted on every country’s own development path and sovereign decisions. Whether the EU will be successful in extending its brand of universal human rights values to China and whether China will be receptive to that will depend largely on the weight both put on the economic factor. The growing economic and financial ties between the EU and China might on the one hand dilute EU human rights aims in dealing with China, and on the other motivate the Chinese increasingly to adopt EU or universal human rights principles. A further factor will be whether the EU will be able to speak sufficiently with one voice, or is marred by internal inconsistencies and different member state strategies on human rights issues. In the following, brief treatment will be given to how the EU and China have approached the subject of human rights in their relations, and whether the two sides have narrowed their differences in dealing with this issue. Until the early 1990s, the EU had lacked a distinct human rights approach in its external relations; human rights issues were almost entirely handled by individual member states in their relations with China. It is only with the establishment of the Treaty on European Union in 1992 that the EU has begun to pay particular attention to human rights as a policy focus (Shen, 2013: 167). A further factor which affected the way in which the EU approached the subject of human rights in its relations with China was the 1989 Tiananmen Square incident, which provoked severe criticism from both the member states and the EU for what was perceived as the ‘brutal repression of the people of Beijing’ (European Council, 1989) and resulted in the arms embargo sanctions against China, which EU countries and the US jointly introduced and which is still in force today. In human rights terms, the EU used the Tiananmen Square incident to harden its stance on ­China’s human rights record by annually criticizing it at the United Nations­ Commission on Human Rights (UNCHR) in Geneva. Hence during ­1989–1997 the EU’s human rights policy towards China was characterized by a strategy of pressure and criticism in multilateral fora such as the UN, in a context of limited but growing bilateral exchange and cooperation (Shen, 2013: 168).

78  The European Union and China A significant change in the EU’s human rights policy towards China occurred in February  1998, when the EU General Affairs Council decided to abstain from sponsoring a resolution at the UNCHR, and instead opted to present a human rights report each year to establish a dialogue on human rights with China. These decisions represented a shift from a policy of coercion to a policy of persuasion and argumentation on the EU side. It was brought about by the perennial problem of how to square human rights principles with economic interests, with the latter winning out as the decisive factor. As Shen argues, ‘given the temptation of China’s huge market … the EU member states were eventually unable to reach an agreement regarding co-sponsoring a draft resolution against China at the UNCHR in 1997’ (Shen, 2013: 169). The Commission’s 1998 Communication lists the aim of establishing a constructive dialogue with China on the issues of human rights and the rule of law. The general intention was to work towards a situation in which China would be a ‘strong, stable and open partner’ (European Commission, 1998: 11), but not to increase the pressure on Beijing in sensitive areas of domestic policy (Smith and Xie, 2010: 12). The exception to this intention has been the European Parliament (EP), which has on many occasions adopted a very critical stance, much to the annoyance of China. Examples include giving the Sakharov Prize to Hu Jia (a proclaimed PCR dissident) the resolution on Tibet in 2009 and the meeting with the Dalai Lama despite protests from China. On the Chinese side there has been a willingness to accommodate and/or engage on common issues of human rights and its rigid defence of national identity and integrity. However, China made its red lines clear when it postponed a planned summit with the EU in 2008 after French President Sarkozy (then EU Chair) met with the Dalai Lama. In its first ever policy paper on the EU in 2003, China stated that it appreciated the EU’s persistent position for dialogue and against confrontation and ‘stands ready to continue dialogue, exchange and cooperation on human rights with the EU on the basis of equality and mutual respect so as to share information, enhance mutual understanding and deepen cooperation in protecting, inter alia, citizens’ social and cultural rights and the rights of the disadvantaged’ (Chinese Government, 2003: 3). Both sides have agreed that the main vehicle for EU–China human rights cooperation should be the so-called EU–China Human Rights Dialogue. The extent to which the annual dialogue promotes EU–China cooperation on human rights values and norms will be investigated in the next section.

Values and Norms To assess whether the EU–China Human Rights Dialogue will have beneficial results requires a closer look at the values and norms that separate the two sides on human rights issues. While the EU puts stress on personal freedom and the rights of individual citizens in a universal context (e.g. in the UN), China favours the community over the autonomy of the individual and emphasizes the notion of equality among citizens. In 1998 it signed the UN Covenant on

The Political Dimension of EU–China Relations  79 Economic, Social and Cultural Rights (ICESCR) and ratified it in 2001. China has also signed (1998) but not ratified the International Covenant on Civil and Political Rights (ICCPR). Dai and Renn have researched empirically China’s embeddedness in the international institutional order (they define it as adherence to non-economic UN Conventions and protocols). Their ­analysis shows for China’s case a general reluctance to embrace UN C ­ onventions and additional protocols, in particular in normative fields such as human rights, while in the environment field China’s acceptance of the UN acquis is considerably higher and even higher than the US (Dai and Renn, 2016: 15–16). As Harris points out ‘China argues that in China’s circumstances, social and economic rights are more important, and that China’s performance in raising much of the Chinese population hunger and poverty should be i­nternationally recognized as a major human rights achievement’ (Harris, 2014: 67). Whereas the EU stresses the rule of law and democracy, China relies on its strong sense of historical identity and the authority of the state. In contrast to the EU, China does not favour the exporting of a values-laden approach; it rather adopts a defensive approach based on a minimalist and positivist interpretation of international law by, for instance, reiterating the inviolability of sovereign nations at an international level to safeguard their internal affairs. This emphasis on sovereignty is partly shaped by a domestic insecurity lingering from the ‘century of humiliation’ alongside a view that domestic decision-making is ‘culture-specific’. The concept of ‘individual rights’ in China is wrapped up in one’s ‘collective responsibilities’ to the family unit or society (societal responsibility), largely along Confucian lines. It explains why successive Chinese governments have insisted on reuniting territories such as Hong Kong, Macau and Taiwan to bring them back into the fold and repressing autonomy movements such as in Tibet and Xinjiang. The values of the Chinese human rights principles and the extent to which engagement with Western values is possible are expressed in a speech that Premier Li Peng delivered in December 1992: The concept of human rights involves traditions and moral and philosophical values. These are different in China than in the West. We believe that the Chinese people should have more democratic rights and play a more important role in domestic politics. But they should be done in a way acceptable to the Chinese people. … We can have discussions and without compromising our principles, we can take flexible measures. But we cannot reach a full agreement with the West. It would shake the basis of our society. (Quoted in Kissinger, 2011: 464–465) In its dealing with China, the EU has consistently and persistently advocated the development of civil society based on the rule of law, together with efforts to raise human rights issues, the freedom of expression, the abolition of the death penalty and the prevention of torture in China. In contrast, China has usually resorted to norms such as racial equality and justice (Wan, 2001: 68) in its dealings with the EU on human rights, and has stressed law-based

80  The European Union and China governance (rule by law) as a counterpart to rule of law conceptions. It has also raised criticisms over how the EU deals with the Sami and Roma minorities and over the EU debate on multiculturalism. Given these different perceptions on human rights values and norms between the EU and China, what, if any, achievements towards converging views and actions have the EU and China made? The answer to this question requires a closer look at the EU–China Human Rights Dialogue, which was established in 1995. It was held twice yearly before the Lisbon Treaty as it was held under each presidency. After Lisbon China tried to scale back to once yearly, arguing that there was now a permanent EU presidency, but the issue has remained contentious. At these meetings issues such as the death penalty, re-education through labour, ethnic minorities’ rights, and civil and political freedoms are discussed. The practice in the EU–China Human Rights Dialogue is to exchange views on human rights, with each side preparing a list of complaint cases to which the other side should respond at the next meeting. The EU also issues démarches when alleged Chinese violations of human rights occur. General démarches are being used in cases where the Chinese legal and judicial proceedings are considered closed for public and international scrutiny and the death penalty may have been abused. Specific démarches are carried out in individual cases when UN minimum standards are violated, based on the sources provided by EU missions, delegations and international and local NGOs (Council of the European Union, 2008: 1–2). According to Shen, in the period 1998–2009 China was among the top recipients of EU démarches every year – both on individual cases and on the death penalty (Shen, 2012: 13) But, as Shen also points out, démarches merely serve as signals of concern rather than a push for Chinese concessions; China is not under any international legal obligation to comment on its death penalty practice, and various EU calls for the publication of statistics on this practice have been to no avail (Shen, 2012: 13). The European Commission has supplemented the EU–China Human Rights Dialogue with Human Rights Seminars for European and Chinese experts on such subjects as the EU–China Legal and Judicial Co-operation Programme, the EU–China Village Governance Programme and the Programme of Governance for Equitable Development, with the aim of strengthening the rule of law, local democracy structures and civil society in China. Since 2005 there have also been meetings of the EU–China Civil Society Round Table. So far the various dialogues and meetings, together with pressure from other international partners, have contributed to some concrete results in China, such as visits to China by the UN Commissioner for Human Rights, the signing and ratifying of the ICESCR, the release of prisoners, and the setting up of European Commission cooperation projects. Despite these progressive developments, serious shortcomings in China’s human rights remain, resulting in EU complaints that the EU–China Human Rights Dialogue is not producing tangible results, and that expectations are increasingly not being met (e.g., European Commission, 2006: 4–5; Council of the European Union, 2009; EU–China Human Rights Dialogue, 2011, 2012). The shortcomings

The Political Dimension of EU–China Relations  81 are in such areas as the suppression of freedoms among certain ethnic minorities and political dissidents, the use of forced labour (the practice of re-education through labour persists), a still underdeveloped system of rule of law, and the extensive use of the death penalty. Freedom of expression, religion and association are still not guaranteed in Tibet and Xinjiang, and while NGOs and think tanks have grown (for further details see Chapter 7), they still face important hurdles in realizing their full potential (European Commission, 2003: 12), and repeated EU calls for ratification of the ICCPR have not been met. Moreover, in its 2016 China strategy paper, the Commission expressed its disquiet about China’s crackdown on defence lawyers, labour rights advocates, publishers, journalists and others for the peaceful exercise of their rights, and for China’s adoption of a number of restrictive national security laws (European Commission, 2016a: 4). Those inadequacies on the Chinese side lead Fox and Godement to suggest that China has dealt with EU pressure on human rights issues ‘by accepting formal dialogues’, and then ‘turning them into inconclusive talking shops’ (Fox and Godement, 2009: 8). In response to the lack of achievements, the EU has tried to make the Human Rights Dialogue more effective and results-oriented (European Commission, 2006: 4). On the other hand Chinese representatives have criticized the EU for failing to adequately address racism, discrimination, asylum seekers, and ethnic minority and refugee issues. Rather than putting all the blame on China, some observers see faults with the EU in its inability to muster an effective single voice in its human rights demands with China (Cameron, 2013: 40), and therefore being unable to deal collectively with Chinese retaliations against those member states that receive the Dalai Lama, talk too loudly about human rights or award the Peace Prize to a jailed dissident. As Sandschneider suggests, the ‘inability to co-ordinate more closely the EU foreign policy towards China gives Chinese reactions much leeway and renders European countries an easy catch – easy to read, easy to manipulate and difficult to take seriously in the long run’ (Sandschneider, 2002: 44). This issue surfaced again in 2017 when Greece, which is eager to obtain Chinese investments, vetoed a European Union condemnation of China’s human rights record at the UN, which clearly undermined the EU’s position as a defender of human rights (The Guardian, 2017). Cynically, one might go as far as to say that there is a deliberate attempt by member states to play the ‘good cop’ and assign the ‘bad cop’ role to either the European Commission or the European Parliament. Underlying the problems of EU coordination are the inherent tensions within the EU between human rights principles and economic interests, which, at crucial points in the relationship with China, such as during the WTO negotiations, tended to be dominated by the latter (Balducci, 2008). On the other hand there are also claims that the EU has effectively insisted on human rights improvements before lifting the arms embargo during 2004–2007 (Laursen, 2011: 19). The tensions between economic interests and human rights principles, together with the existing inadequate coordination between the European Commission and member states’ strategies (European Commission, 2006: 5), can be further

82  The European Union and China illustrated through an examination of EU policy towards civil and political rights with regard to Tibet and Taiwan. This will be done in the following section together with a brief treatment of EU–Hong Kong and EU–Macau relations.

Other Contentious Issues in EU–China Relations Tibet The preservation and promotion of the rights of minorities has been a long-standing concern of EU external relations. As stated in the 1998 European Commission Communication, the EU ‘attaches great importance to the respect for cultural, linguistic and religious identity of ethnic minorities’ on issues relating to Tibet (European Commission, 1998: 10). Similar EU concerns have been raised on the minorities living in the Xinjiang region and the North Korean refugees who live in China (European Commission, 2003: 13). At the same time the EU has tried to strike a balance between promoting minority rights and respecting Chinese wishes for national integrity and for Tibet as an autonomous region of China. The EU has also supported rural development, education and health in Tibet through a project partly managed by European NGOs in Pan Am County (2000–2005) that was highly appreciated by the Tibetan population and authorities. The EU therefore encouraged ‘China and the Dalai Lama to further strengthen ongoing direct contacts with a view to finding a mutually acceptable solution to the question of Tibet in the context of ensuring a genuine autonomy for this region’ (European Commission, 2003: 10). The Chinese government paper of 2003 put the question of balance more starkly: [China] encourages EU citizens to visit Tibet and welcomes the support of the EU and its members to Tibet’s economic, cultural, educational and societal development and their cooperation with the autonomous region subject to full respect of China’s law and regulations. The Chinese side requests the EU side not to have any contact with the Tibetan government in exile or provide facilities to the separatist activities of the Dalai clique. (MOFA, 2003: 3) However, there have been times when the issue of balance has come under stress. When the Tibetan protest turned violent on 14 March 2008 the EU issued a statement urging China to show restraint towards demonstrations in Tibet, without however threatening a boycott of the Beijing Olympic Games on human rights grounds (European Commission, 2008). An even stronger resolution was passed by the EP in March 2009, in which the Chinese Government was urged ‘to consider the Memorandum for Genuine Autonomy for the Tibetan People of November 2008 as a basis for substantive discussion leading towards positive, meaningful change in Tibet’ (European Parliament, 2009) and on the issue of self-immolation in Tibet (European Parliament,

The Political Dimension of EU–China Relations  83 2013). Anti-China and pro-Tibet protests in Western Europe disrupted the Olympic torch rallies, for instance, in Paris in 2008. On the Chinese side the backlash against China’s policy in Tibet generated anti-Western demonstrations in China and boycotts of the French retailer Carrefour (Shen, 2012: 19).

Taiwan Unlike the issue with Tibet, Taiwan involves security considerations and the EU has declared a significant stake in the maintenance of cross-straits peace and stability and to make its views known to both the Chinese and the Taiwanese sides (European Commission, 2001: 9; European Commission, 2006: 11). This is particularly crucial as the PRC law of 2003 does not exclude the use of force should Taiwan declare independence. At the same time EU policy on Taiwan is constrained by China’s insistence on the One Country, Two Systems policy, which represents one of the cornerstones of EU–China relations (MOFA, 2003: 3). This policy forbids the EU to have visits with Taiwanese political figures, to support Taiwan’s accession to or participation in any international organization whose membership requires statehood, and to sell to Taiwan any weapon, equipment, goods, materials or technology that can be used for military purposes (MOFA, 2003: 3). Despite these constraints, the EU has found ways, as the following brief account will show, to establish direct links with Taiwan, albeit mostly of a non-political nature. As a consequence of the One Country, Two Systems policy, EU relations with Taiwan were conducted unofficially starting in the 1980s and dealing mostly with trade issues. They also resulted in a few institutional links. For example, Taiwan established liaison offices in European capitals, and in 1991 the Association of Taiwan’s Friends was created in the EP, which later turned into a de facto inter-parliamentary delegation of European parliamentarians to Taiwan (Shu, 2013: 540). The EU–Taiwan relationship was upgraded between 1987 and 1994 by renaming the Taiwanese missions in European capitals as Taipei Economic and Cultural Offices and by involving more ­high-ranking officials on both sides in the annual conference on trade and investment (Shu, 2013: 540). The EU opened a European Economic and Trade Office in Taiwan in 2003, and in 2009 the EU established the European Union Centre in Taiwan. Since 2011 Taiwanese citizens enjoy visa-waiver entry into the Schengen space for 90 days per year. Also in 2011 Taiwan set up representative offices in 18 member states of the EU, while 16 member states and the EU had established representative offices in Taipei (Shu, 2013: 542). Going beyond institutional links, the EU has on occasion taken up the issue of peace in the Taiwan Straits with China. A clear example of this occurred in the spring of 2005 when the EU criticized China for passing the secession law, threatening to attack Taiwan if it declared independence; though in doing so it reiterated its attachment to the One Country, Two Systems policy and to the peaceful resolution of disputes (Council of the European Union, 2005).

84  The European Union and China While institutional links and EU efforts to ensure stability in the Taiwan Straits have brought certain benefits to Taiwan, they have not altered the PRC obstructions to Taiwanese membership in international organizations that require statehood, and that includes such instances as a seat in the UN Framework Convention on Climate Change (UNFCCC) and the International Civil Aviation Organization (ICAO). In instances not requiring statehood, the EU has supported Taiwan’s membership to the WTO in 2003, partly because the WTO allows for membership of customs territories, and in the case of the World Organization for Animal Health (WOAH) in 2009. On the occasion of the latter, and in view of promoting Taiwan’s participation in the WOAH to facilitate combating pandemics for instance, the Council of the EU also declared that it supports Taiwan’s meaningful participation in international organizations (Council of the European Union, 2009). Nonetheless, Laursen takes issue with the EU’s failure to support Taiwan’s claim for membership in UN agencies and concludes that the EU does not want to upset China and puts commercial interests and stability principles over norms of democracy (Laursen, 2011: 17). Despite these constraints, as Shu suggests, ‘EU–Taiwan relations are supported by their commercial interests, inter-parliamentary linkages, shared values such as democracy and protection of human rights, and even the détente across the Strait’ (Shu, 2013: 542). However, the EU has continually condemned Taiwan’s execution of criminals and works hard with NGOs in Taiwan to promote the abolition of the death penalty (Shu, 2013: 544).

Hong Kong and Macau The EU has also official links and representation with Hong Kong and Macau. The EU’s policy towards the Hong Kong Special Administrative Region (SAR) was first set out in a Communication by the European Commission in 1997, issued in the context of the handover to Chinese sovereignty (European Commission, 1997). It underlined the importance of the smooth implementation of the One Country, Two Systems policy. A similar arrangement took place with regard to Macau in the 1999 EU Communication (European ­Commission 1999). These two communications were followed by the 2006 European Commission communication (EUR-Lex, 2006) which suggested cooperation in seven key areas: trade and customs, finance, people-to-people links (including academia), transport, environment, health, food, and safety. Since 2006 an annual EU–Hong Kong (HKSARG) Structured Dialogue has been taking place on issues of common interest. There are also annual European Union–Macau Joint Committee meetings going back to 1992 when the Trade and Cooperation Agreement was introduced. The EU issues annual reports on developments in the Hong Kong SAR and the Macau SAR. For the EU, Hong Kong is important not only in trade terms (the EU’s 20th largest trading partner) but also as a defender/promoter of the rule of law in Asia. The EU has noted therefore with concern the public demonstrations in the summer of 2014 with regard to the introduction of universal suffrage

The Political Dimension of EU–China Relations  85 for the election of the Chief Executive of Hong Kong in 2017 – the so-called start of a five-step process. A statement by the Spokesman of the European External Action Service on 2  October  2014 expressed concern about the developments, urged restraint by both sides and called for a constructive solution within the framework of the Basic Law and the principle of One Country, Two Systems which allows a high degree of political participation by the people of Hong Kong (EEAS, 2014). The statement also complained against the abduction of critical editors, some of whom had citizenship of EU countries.

Conclusion Over a 40-year period in EU–China political relations there have been fluctuations but also consolidation. The latter is particularly evident in the agreement on the Strategic Relationship, signed in 2003, which was, in part, enhanced by the fallout of the Iraq invasion. The 2003 partnership agreement demonstrates that both partners were willing to engage in a high degree of political cooperation, resulting in one of the most extensive institutional bases of EU strategic partnerships – all that despite the effects in the partnership of different histories, state traditions, values and norms orientations, as well as different geopolitical interests. Growing economic interdependence between the EU and China has been an important cementing factor in EU–China political relations, together with the increasing regional and global challenges both sides face. However, the strength of the economic benefits tends to override concerns with human rights in the EU–China relationship. Yet while recognizing the beneficial factors of economic ties and common outlooks about global problems, it is also important to appreciate the remaining deep-seated differences, which not only affect different value projection but also mutual understanding and trust. One such key difference concerns the concept of sovereignty. In Europe the notion of state and sovereignty is undergoing fundamental changes, with some observers characterizing it as a post-Westphalian phenomenon (Caporaso, 1996; Pentland, 2000; Kirchner and Sperling, 2007). China, by contrast, is still very much steeped in exclusive state sovereignty traditions, because of historical and developmental factors. The return to the motherland of Hong Kong and Macau, and sensitivities about Taiwanese independence or foreign interference in Tibet represent therefore important cornerstones of those state traditions. They also reflect ongoing efforts of state and nation building. For the EU, Tibet and Taiwan raise important issues with regard to what the EU can do to promote the rights of minorities and support for democracy and the principle of self-determination. Human rights also represent an integral part of EU external policy, promoted in treaty objectives and, after Lisbon, imbued with legal obligations. The question is therefore not only whether the EU will be able to achieve its goal with regard to China but, if it fails, what repercussions this will have on its global standing as a normative actor. While since the mid-1990s EU–China relations have moved from

86  The European Union and China what can be considered a confrontational stance on EU–China human rights issues to a more cooperative context, EU efforts to promote the rights of minorities, both in Tibet and in Xinjiang, have been limited as in 2008 when it urged China to show restraint towards demonstrations of Tibetan protestors. On the whole the EU has had to accommodate Chinese demands not to challenge its fundamental concern over sovereignty and domestic stability, which has meant that ‘instead of shaping China’s discourse, the EU’s discourse on Tibet ended up being shaped by China’s non-negotiable position’ (Shen, 2012: 15). EU policy on Taiwan is constrained by China’s insistence on the One Country, Two Systems policy, which represents one of the cornerstones of EU–China relations. While institutional links with Taiwan and EU efforts to ensure stability in the Taiwan Straits (for instance, in 2005 when the EU criticized China for passing the anti-secession law) have brought certain benefits to Taiwan, they have not altered the PRC obstructions to Taiwanese membership in international organizations that require statehood. Hence EU efforts have been modest and as such reflect concerns with the stability in the Taiwan Straits and economic interests with the PRC more than issues of Taiwanese self-determination. Divergence rather than convergence is therefore still an important trademark of EU–China political relations; on some issues, such as the shift in the EU–China Human Rights Dialogue from two meetings to one per year, or the harsh Chinese reaction to the democracy demonstrations in Hong Kong, there has even been a deterioration in the relationship. Part of the reason why the EU has not been more successful is due to internal coordination problems and an uneasy coexistence between normative concerns and material interests. While the EU–China partnership, agreed in 2003, enhanced the European focus, competing strategies within the EU, particularly between the European Commission/European Parliament, and with/ between member states on relations with China have continued. Some also see the Framework and Economic agreement between China and the 16+1 Central and Eastern European states as undermining EU collective identity (Gillet, 2013). In a sense a dual approach exists in relations with China: an EU policy (with a strong emphasis on human rights issues) and a number of traditional state-to-state relations, where the focus is predominantly on economic matters. This affects coordination between the EU and the member states and with it the extent to which the EU can speak with a single voice in its relations with China and/or is able to leverage the Chinese partner for greater commitment to the partnership (Fox and Godement, 2009: 2). It also affects the consistency of the EU’s policy on China and standing in the field of human rights (Shen, 2013: 169; Grant, 2013). Hence, for the EU to be more effective in its political relations with China, it needs to ‘deepen the political cohesion of the Union’ (Grevi, 2012: 163). These apparent drawbacks lead to views that the EU–China ‘strategic partnership’ is at best a partial rather than a comprehensive one, understood in different ways at different times among the key stakeholders (Smith and Xie, 2010: 6). They have also exposed the fact that the EU lacks a grand strategy to identify its interests and have given rise to questions as to whether the EU

The Political Dimension of EU–China Relations  87 strategic partnerships are only strategic in name and do not deliver strategic results (Renard, 2011: 35–36; Keukeleire and Bruyninckx, 2011: 389). Looking to the future, limited progress in EU–China political relations, such as accompanied by successes in the EU–China People-to-People Dialogue, seems to be in the offing. There is even a possibility that a waning interest by the US Trump administration for democratic reforms in China is likely to undermine renewed EU efforts in this field, and that a more hostile trading environment – to be expected if a trade war between the US, China and Europe gathers pace – will also make effective political relations more difficult.

Chapter 6

The Economic Dimension of EU–China Relations

Introduction Economic relations, and above all trade between the two sides, have long been central to EU–China relations. Trade liberalization is of course at the heart of the EU’s own integration process, and the competence to manage trade relations with third countries is a powerful, and exclusive, competence of the European Union. Ever since China’s opening to the global economy from the 1980s onwards, trade between Europe and China has grown massively, and China’s joining of the World Trade Organization (WTO) in 2001 – a move that was strongly supported by the EU – has further accelerated this process. By the beginning of the twenty-first century, this trading relationship had become not only a dominant feature in bilateral relations between the EU and China, but indeed a critical aspect of the global economy as a whole. As discussed in Chapter 2, from a liberal perspective the rapid growth of trade is considered an important and beneficial underpinning of bilateral relations. An intensification of trade engenders economic interdependence and expands communications from diplomats and government officials to the private sector and civil society more generally. Such developments in turn enhance prospects for peaceful cooperation and this limits the scope for conflict – an expectation certainly borne out by the wide-ranging and deepening engagement that the EU and China have experienced in the past three decades. Despite their fundamentally different political systems and contrary attitudes to key principles such as sovereignty and non-interference, the EU and China have become strategic partners cooperating on a wide range of issues. However, while the growth of, and the mutual dependence on, bilateral trade has generally been a boon to relations between the EU and China, it has not been without problems. For a start, a consistent and growing imbalance in bilateral trade has developed, with China consistently exporting more to Europe than it imports in return. Furthermore, as the Chinese economy has developed, the traditional pattern of China importing high value added goods from Europe and exporting low value added goods in return has been replaced by more complex arrangements. Increasingly, Europe and China are producing similar kinds of goods, and end up in competitive situations in their own markets as well as in third countries. This trend, combined with European suspicions about below-cost pricing of Chinese exports, has meant that trade disputes have become a more regular occurrence. 88

The Economic Dimension of EU–China Relations  89 Economic relations have also expanded from trade into other areas such as foreign direct investments, monetary policy cooperation and joint development of infrastructure projects. European firms have a longer tradition of investing in China, building up production facilities that benefit from lower wage costs, less stringent environmental regulations and access to a vast market. More recently, in particular since the 2008 economic and financial crisis, Chinese firms have also begun to invest more heavily in Europe. While the inflow of Chinese capital has generally been welcome in Europe – even sought after in many cases – there has also been a rising concern in Europe about China’s acquisition of critical know-how through ownership of high-tech firms, a development that is seen by some as a strategic threat to Europe’s position in the global market place. Economic relations between the EU and China have thus become more complex in recent years, and in any case have not been immune to perturbations from difficulties in other aspects of the bilateral relationship, and indeed from the changing circumstances of the global context in which the EU and China relate to one another. The relationship has become strained (with the 18th and 19th summits concluding without the usual joint statements) and the balance between cooperation and competition is tilting towards the latter, with the EU prioritizing the levelling of the playing field, unfair business practices and Chinese reciprocity for the EU’s openness (Godement and Vasselier, 2017: 16). This chapter will discuss these issues in more detail, starting with the all-important issue of trade before then focusing on investments, intellectual property rights, monetary policy issues and cooperation on infrastructure projects. (The issue of international development aid is discussed in Chapter 9.)

Trade While there is a centuries-old trading history between Europe and China, there was precious little of that left in the immediate post-World War II period. Relations between the nascent European Economic Community and the People’s Republic of China were overshadowed by the Cold War, and earlier domestic turmoil in China during the 1950s and 1960s also meant that the Chinese economy offered practically no opportunities for Western exporters or investors. The picture only changed following the economic reforms under Deng Xiaoping, starting in the late 1970s. Deng’s reforms, allowing a greater degree of private ownership and opening of the Chinese economy to foreign investment, led to a rapid and eventual exponential rise of China’s gross domestic product. There was a huge amount of pent-up demand in the world’s most populous country, and with rising income levels there has been growing demand for foreign goods (Brandt and Rawski, 2012). Western firms, including from Europe, were quick to exploit these new opportunities, laying the foundations for an explosion in bilateral trade (Gill and Murphy, 2008). Trade has become the defining element of EU–China relations. Before focusing on the figures from China, it is pertinent to first have an overview of the global trade (exports and imports) in order to understand the remarkable rate at which China has risen to become a leading trade nation. Tables 6.1 and 6.2 provide an overview of world merchandise imports and

Commonwealth of Independent States (CIS)b

 United Kingdom

–

11.3

1.8

 Italy

–

9.0

1.8

4.8

3.4

 Germanya  France

1.3 39.4 5.3

2.8

1.8

9.7

0.7

5.2

18.8

24.8

100.0

84

1953

35.1 1.4

 Argentina

Europe

2.0

 Brazil

11.3

0.9

South and Central America

5.5

 Mexico

21.7

  United States

 Canada

28.1

100.0

World

North America

59

World

1948

–

7.8

3.2

5.2

47.8 9.3

0.9

0.9

6.4

0.6

4.3

14.9

19.9

100.0

157

1963

–

5.1

3.8

6.3

50.9 11.7

0.6

1.1

4.3

0.4

4.6

12.3

17.3

100.0

579

1973

1838

–

5.0

4.0

5.2

43.5 9.2

0.4

1.2

4.5

1.4

4.2

11.2

16.8

100.0

Share

Value

1983

1.5

4.9

4.6

6.0

45.3 10.3

0.4

1.0

3.0

1.4

3.9

12.6

18.0

100.0

3684

1993

2.6

4.1

4.1

5.3

45.9 10.2

0.4

1.0

3.0

2.2

3.7

9.8

15.8

100.0

7380

2003

4.3

3.0

2.8

3.2

36.3 7.9

0.4

1.3

4.0

2.1

2.5

8.6

13.2

100.0

18031

2013

Table 6.1  World merchandise exports by region and selected economy, 1948, 1953, 1963, 1973, 1983, 1993, 2003 and 2013 in $ billions and percentage

→

2.0

2.2

3.7

3.4

 India

 Australia and New Zealand

  Six East Asian Traders

3.5 69.6

2.2

63.4

_

_

3.0

3.2

75.0

4.6

24.5

2.5

2.4

1.0

3.5

1.3

12.5

3.2

1.5

5.7

1963

84.1

3.7

37.0

3.6

2.1

0.5

6.4

1.0

14.9

4.1

1.0

4.8

1973

77.0

5.0

31.3

5.8

1.4

0.5

8.0

1.2

19.1

6.7

1.0

4.5

1983

89.0

Source: Adapted from WTO https://www.wto.org/english/res_e/statis_e/its2014_e/section1_e/i06.xls.

_

37.3

9.6

1.4

0.6

9.8

2.5

26.0

3.5

0.7

2.5

1993

a Figures refer to the Fed. Rep. of Germany from 1948 through 1983. bF  igures are significantly affected by including the mutual trade flows of the Baltic States and the CIS between 1993 and 2003. c Beginning with 1998, figures refer to South Africa only and no longer to the Southern African Customs Union. dF  igures refer to the EEC(6) in 1963, EC(9) in 1973, EC(10) in 1983, EU(12) in 1993, EU(25) in 2003 and EU(28) in 2013. e Membership as of the year stated. Note: Between 1973 and 1983 and between 1993 and 2003 export shares were significantly influenced by oil price developments.

  GATT/WTO Memberse

 EUd   USSR, Former

Memorandum item:

1.5

0.4 1.3

1.2

0.9

 Japan

13.4

2.7

1.6

6.5

1953

 China

14.0

Middle East

Asia

7.3

2.0

  South Africac

1948

Africa

→

94.3

_

42.4

9.6

1.2

0.8

6.4

5.9

26.1

4.1

0.5

2.4

2003

97.1

_

33.2

9.6

1.6

1.7

3.9

12.1

31.5

7.4

0.5

3.3

2013

2.5

 Italy

13.4

5.5

 France

  United Kingdom

2.2

11.0

2.8

4.9

4.5

43.7

45.3

 Germanya

Europe

0.9

2.5

 Argentina

1.6

1.8

8.3

0.9

5.5

13.9

20.5

100.0

85

1953

 Brazil

10.4

1.0

 Mexico

South and Central America

4.4

13.0

  United States

 Canada

18.5

100.0

World

North America

62

World

1948

8.5

4.6

5.3

8.0

52.0

0.6

0.9

6.0

0.8

3.9

11.4

16.1

100.0

164

1963

6.5

4.7

6.4

9.2

53.3

0.4

1.2

4.4

0.6

4.2

12.3

17.2

100.0

594

1973 1883

5.3

4.2

5.6

8.1

44.1

0.2

0.9

3.9

0.7

3.4

14.3

18.5

100.0

Share

Value

1983

5.5

3.9

5.7

9.0

44.4

0.4

0.7

3.3

1.8

3.7

15.9

21.3

100.0

3800

1993

5.2

3.9

5.2

7.9

45.0

0.2

0.7

2.5

2.3

3.2

16.9

22.4

100.0

7696

2003

Table 6.2  World merchandise imports by region and selected economy, 1948, 1953, 1963, 1973, 1983, 1993, 2003 and 2013 in $ billions and percentage

3.6

2.6

3.7

6.5

35.8

0.4

1.4

4.2

2.1

2.6

12.7

17.4

100.0

18409

2013

→

3.5

  Six East Asian Traders

58.6

1.9 66.9

3.3

–

3.7

2.3

75.3

4.3

25.5

3.2

2.2

1.5

4.1

0.9

14.1

2.3

1.1

5.2

–

1963

85.5

3.6

37.1

3.9

1.6

0.5

6.5

0.9

14.9

2.7

0.9

3.9

–

1973

79.7

4.3

31.4

6.1

1.4

0.7

6.7

1.1

18.5

6.2

0.8

4.6

–

1983

Figures refer to the Fed. Rep. of Germany from 1948 through 1983. b Figures are significantly affected by including the mutual trade flows of the Baltic States and the CIS between 1993 and 2003. c Beginning with 1998, figures refer to South Africa only and no longer to the Southern African Customs Union. d Figures refer to the EEC(6) in 1963, EC(9) in 1973, EC(10) in 1983, EU(12) in 1993, EU(25) in 2003 and EU(28) in 2013. e Membership as of the year stated. Note: Between 1973 and 1983 and between 1993 and 2003 export shares were significantly influenced by oil price developments.

a

  GATT/WTO

Memberse

  USSR, Former

 EUd

–

2.9

  Australia and New Zealand

Memorandum item:

2.3

 India 1.4

1.6 2.8

0.6

1.1

 China

15.1

2.1

1.5

7.0

–

13.9

1.8

2.5

8.1

–

1953

 Japan

Asia

Middle East

 

South Africac

Africa

Commonwealth of Independent States (CIS)b

1948

Source: Adapted from WTO https://www.wto.org/english/res_e/statis_e/its2014_e/section1_e/i06.xls.

→

89.3

–

36.2

10.3

1.5

0.6

6.4

2.7

23.6

3.3

0.5

2.6

1.2

1993

96.0

–

41.3

8.6

1.4

0.9

5.0

5.4

23.5

2.8

0.5

2.2

1.7

2003

97.5

–

32.6

9.5

1.5

2.5

4.5

10.6

31.8

4.2

0.7

3.4

3.1

2013

94  The European Union and China exports, with figures produced by the World Trade Organization (WTO) to illustrate the different rates of development of global trade between 1948 and 2013 across the seven continents. As of 2013 China is the world’s leading trading nation. China’s rise as a global trader goes hand in hand with the size of its economy, which (adjusted for purchasing power parity) is now the largest in the world. The Chinese economy grew by more than 10 per cent on average in the decades between 1980 and 2010, and even though this has slowed to around 6 per cent by the mid-2010s, Chinese growth constitutes by far the lion’s share of global economic growth since the onset of the 2008–2009 crisis (see Figure 6.1). In 2013, for example, 37.3 per cent of all global growth was due to the Chinese economy, whereas the US only contributed 11.8 per cent, and the EU a meagre 0.4 per cent (European Commission, 2016c). There is a strong relationship between Chinese growth and exports – the Chinese economic model that has developed since the early 1980s is that of a strongly export-led economy; broadly speaking, it is the income from the export of goods that facilitates domestic growth (Freeman, 2017). As a result, Figure 6.1  Share of global GDP growth (PPP) between 1991–2013

40.0

1991−2000 2007−2013 2012−2013

Mean

30.0

20.0

10.0

0.0

−10.0

European Union

United States

Japan

Countries

China

The Economic Dimension of EU–China Relations  95 the Chinese economy has to a large extent become dependent on foreign trade. Exports, which in 1980 constituted only 12.5 per cent of Chinese GDP, amounted to a massive 65 per cent of GDP in 2006. Export-led growth has been a very successful strategy for China in an era when global trade as a whole has been expanding, but also one that exposes it to risks when its trading partners experience economic problems, as has happened in the aftermath of the 2008–2009 global financial crisis. The decline in exports in the years following the crisis, in particular as demand from Europe slowed, has been a major factor in the falling growth rate that China has experienced since (Grevi and Renard, 2012). Trade with the EU has had a large part in the rise of China as a global economic power; in 2005 China became the EU’s largest source of imports, overtaking the United States. The trend has further accelerated since, with some 18 per cent of EU imports originating from China in 2014, whereas imports from the US had declined to just over 12 per cent in the same period. In terms of EU exports, the US remains the top destination, taking a share of 19 per cent of extra-EU exports, but China’s demand has been rising continuously and from 2014 it has taken second place (10 per cent). Behind EU–US trade, the EU–China trading relationship is now the ­second-largest in the world. The huge volume of trade between the two sides – China and Europe now trade well over €1 billion a day – has been beneficial to both sides. We already mentioned the importance of exports for the Chinese economy, but also the European economy has become, albeit to a lesser extent, dependent on trade with China. This mutual dependency became most apparent in the aftermath of the global financial crisis when exports to Chinese provided a respite for European producers faced with a slump in domestic demand. However, the positive image of greater economic interdependence between the EU and China is dampened by a number of problems. First of all, there is a large and growing imbalance in EU–Chinese trade. While historically the EU had a positive trade balance with China, exporting more than it imported, this situation has been reversed since the mid2000s. Notwithstanding a brief decline following the crisis, from 2010 the Chinese trade surplus has been growing further, amounting to almost €200 billion in 2015. Coinciding with a generally more sceptical attitude in Europe about the benefits of open trade, this increasing and structural trade deficit with China creates resistance among governments and economic actors to advocate further trade liberalization. There has been a rising number of trade disputes, often centring on alleged unfair practices of the Chinese side. High-profile cases include the solar panel dispute in 2013, when the European Commission imposed punitive tariffs on imports of Chinese solar panels which it alleged were being sold into the EU at dumping prices (European Voice, 2013). After China threatened to retaliate and investigated the pricing of imports of European wine and cars, the two sides negotiated an agreement that involved a Chinese commitment to agreed minimum prices. While being presented as a compromise, this outcome was nevertheless seen by many as a

96  The European Union and China climbdown by the EU, demonstrating the fact that Chinese economic power had become overwhelming. Another confrontation developed in 2016 about the pricing of Chinese steel. In the face of global overcapacity, and with many European producers already struggling to remain in the market, Chinese steel sold at low prices was regarded as yet another case of dumping, leading to special duties of more than 22 per cent being imposed by the Commission (European Commission, 2016b). The crucial role that steel production plays in the economy of some EU member states, and in particular regions, meant that this dispute has become politicized, going beyond the usual lobbying of particular sectors in defence of their special interests. The spectre of the closure of steel mills with the loss of thousands, even tens of thousands, of jobs has mobilized ­popular opinion and led governments to demand action from the European Commission – all in the context of a climate of growing popular disenchantment with globalization and trade liberalization. Against this background, prospects for even a start of negotiations about a possible Free Trade Agreement (FTA) between the EU and China seemed distant in the mid-2010s, even though the idea has been talked about for some time. China has been pushing for such an agreement (Hang, 2014) and also on the European side there have been feasibility studies (Pelkmans et al., 2016). However, in an era in which trade agreements with the United States and even with Canada were proving highly controversial, there was little appetite in the EU to remove further trade barriers with a country such as China with which there is already a persistent trade deficit and whose state-driven economic system poses fundamental problems for open market economies. In fact even without negotiations about future agreements a serious problem has arisen in the shape of Chinese demands to be accorded market economy status (MES) in the context of its WTO membership (Ewert and Pölter, 2016). The origins of this dispute relate to the terms under which China originally joined the WTO in 2001, involving a review of its status after 15 years. This period came to an end in December 2016, and the EU’s unwillingness to agree according this title to China triggered protests and threats of retaliation from China who regard this change as being automatic rather than a matter of debate. MES status would mean that it would be more difficult for China’s trading partners to impose anti-dumping tariffs on its exports, thus weakening the EU’s capacity for trade defence measures. In  2016 the European Commission conducted an impact assessment and also launched a public consultation, seeking stakeholder views on three possible options: maintaining the status quo, accepting China’s MES status, or a middle way of changing the assessment methodology for potential cases of dumping. In the face of divisions within the EU, with member states as well as sectors having different interests regarding the various options, the EU delayed its decision. European industry – which is well organized through the European Chamber of Commerce in China – has lobbied in favour of not granting China MES status (AEGIS Europe, 2016), while academic

The Economic Dimension of EU–China Relations  97 observers have pointed out that ‘the indecisiveness of the EU Institutions might have grave consequences for the outcome of the decision. Making use of existing cleavages, China’s lobbying of individual member states is much more effective if there is no clear position from Brussels’ (Ewert and Pöter, 2016). A further source of complexity is the fact that there is significant variation among EU member states in terms of their trade balance with China (Freeman, 2017). Specifically, there is a huge gulf between Germany – the largest economy in the EU – and the other member states. Germany alone accounts for the vast majority of exports to China – in 2014 its share of EU trade with China was 45 per cent. Other EU member states are far behind: in the same year, the UK’s share was 12 per cent, France’s was 10 per cent and Italy’s 6 per cent. In other words, EU trade with China is dominated by Germany which exports almost as much to China as the other 27 member states combined. This pattern was exacerbated after the financial crisis, when German exports to China spiked, as German firms sought other outlets for sales in the face of declining sales in Europe. More significant than volume, perhaps, is the fact that Germany is alone (with the occasional exception of Finland) in having a positive trade balance with China. Whereas all the other trading partners have persistent trade deficits with China, Germany has, since about 2010, sold more to China than it imported, even though this pattern was reversed earlier, and the surplus has narrowed again as Chinese growth has slowed. Trade policy is an exclusive competence of the European Union, but this marked internal differentiation among member states does have an impact on the way in which it handles its trade diplomacy, and indeed its relations with China more generally. In the context of a Union that is, in any case, often divided between proponents of greater liberalization and advocates of greater protection for domestic industry, this creates a situation in which the German attitude to trading with China tends to dominate the discussion, and potentially determines the outcome (Christiansen and Rasmusson, 2016). Thus, in the above-mentioned case of the solar panel dispute, observers have pointed out that it was the lack of German support for a firmer policy against Chinese dumping that forced the Commission’s hand in searching for a compromise. The German government, defending the interests of its manufacturing industry maintaining access to the Chinese market, was keen to avoid an escalating trade war with China and thus pushed for a quick end to the dispute (BBC News Online, 2013). While much of the attention in EU–China trade relations is on b ­ ilateral trade, it is worth noting that trade with third countries also matters here. The  markets in East Asia and Southeast Asia are of particular relevance here. It is in this region, comprising Japan, South Korea, Taiwan and the members of the Association of South East Asian Nations (ASEAN), that China is now the dominant economic force, having replaced over time the EU or the US as the number-one trade partner with practically all the countries in the region.

98  The European Union and China While the American response has been the push for a regional trade agreement in the shape of the Trans-Pacific Partnership (TPP), the EU has pursued a strategy of signing bilateral trade agreements with individual countries in the region, once an inter-institutional FTA with ASEAN proved impossible to agree. So far, the EU has agreed FTAs with South Korea, Vietnam, the Philippines, Japan and finalizing with Singapore. Given that the US-led TPP does not involve China, and the EU is also not willing to negotiate an FTA with China, this expansion of ‘Western’ free trade agreements in the Asia-­Pacific is seen by China with some hostility, and might be the source of future disputes (Ye, 2015). Despite these complications and occasional disagreements, trade relations remain of great importance for both the EU and China. In a way, bilateral trade has become ‘too big to fail’, to borrow a phrase from the domestic economy, and mutual dependence on the continuing success of this trading relationship has been the foundation for strong cooperation between the EU and China across a range of issues. However, the last few years have seen a marked shift. In the face of a growing deficit the EU has been pushing for reciprocity in opening public markets and investment in China and making its trade policy more robust, reforming its trade defence instruments – which apply to all partners, not just China (Council of the European Union, 2016)  –  while China has contributed to the souring atmosphere by holding summit declarations hostage over the MES dispute (Godement and Vasselier, 2017: 13–14). Besides trade, foreign direct investment has become a controversial issue in EU–China relations which is discussed in the next section.

Foreign Direct Investment The issue of foreign direct investment (FDI) became a topical – and political – issue in the 2010s, with a growing number of Chinese investments in Europe being questioned. However, before reflecting on the controversies surrounding these more recent developments, it is worth noting that, historically, FDI flows between the EU and China have been minuscule compared to the huge volume of bilateral trade, but also to FDI flows with other third countries. As mentioned above, the opening of its economy to foreign investment was an important part of the Chinese economic reforms in the 1980s. After a slow start, FDI into China took off rapidly from the early 1990s onwards, and that included many European firms seeking to benefit from the opportunities that economic liberalization afforded foreign investors who were attracted to China because of both its large market and its initially low-cost production base. Car manufacturers such as Volkswagen were among the first to establish production facilities in China already in the 1980s, and more recently, in 2008, the European aircraft manufacturer Airbus set up a final assembly line in Tianjin. European investment thus has something of a tradition, albeit at a comparatively low level. Throughout the 2000s EU Overseas Direct Investment (ODI) in China was dwarfed by the massive increase in trade, and also by

The Economic Dimension of EU–China Relations  99 ODI to other countries. As of 2013 the flows of EU ODI to China, as well as the flow of Chinese FDI into the EU, have been roughly the same as those of Mexico, lagging far behind those of the United States, Switzerland, Brazil, Canada and Russia. When looking at the stock of FDI – the investments accumulated over time – the picture is even starker due to the longer legacy of investment relationship the EU has with other economies. Looking in more detail at the stock of European ODI in China, a somewhat similar picture to that of trade emerges in terms of the distribution across member states. Again, Germany is in a league of its own here, even if its share of total EU ODI stocks in China is ‘only’ 36 per cent (2012), followed by France (16 per cent), Italy (10 per cent) and Luxembourg (8 per cent). The latter may appear to be somewhat surprising, considering the size of Luxembourg’s economy, but this is explained by the presence of many financial holdings resident in Luxembourg with significant investments in China. While there has been a rapid rise in EU FDI in China – the stock of EU investments went up from €20 billion in 2004 to €130 billion in 2013 – indicating the growing importance that China has as an investment destination for European firms, this development has not been without difficulties. Two issues have frequently been a matter of debate between the two sides: the regulatory conditions under which EU firms can invest in China (for details see the European Chamber of Commerce in China Position Papers published annually), and the problems with the protection of intellectual property rights (IPRs) that investors have encountered in China. With regard to the former, there remain severe restrictions on the range of sectors in which investments may take place, with certain industries from which foreign investors are excluded. Furthermore, there are often provisions in place requiring the creation of joint ventures with Chinese firms, the transfer of technology or of source codes, and the storage of data on servers in China. Finally, China has made it more difficult to repatriate profits. As a result EU FDI in China has fallen steeply in 2016 (despite the EU’s GDP growth picking up). This obligation to involve Chinese firms in joint manufacturing ventures also relates to the second issue of IPR protection – given the weak regime in place in China, European firms have often complained that they risk losing their know-how to local firms, who may ultimately produce goods on their own, at lower prices, and in violation of IPR agreements. In fact China is seen as the major source of counterfeit products. In 2016 two-thirds of all counterfeit goods found in the EU originated from China. Since joining the WTO and recognizing the importance of adhering to a rule-bound global economy, the Chinese authorities have made some efforts to counter these problems and achieve better compliance with international agreements, but problems persist. In particular, President Xi Jinping in his speech at the WEF in Davos in January 2017 stated that China would expand market access for foreign investors and ‘strengthen protection of property rights, and level the playing field to make China’s market more transparent and better regulated’ (China Global Television Network, 2017) and promised a wide open door. The speech was followed by the release of the State

100  The European Union and China Council’s Notice on Several Measures on Promoting Further Openness and Active Utilisation of Foreign Investment which outlines 20 measures to put Xi’s announcements into practice. The proposals are supported by the European Chamber of Commerce, but implementation seems to be far off (European Chamber of Commerce in China, 2017). The regulatory environment for FDI and the protection of IPRs are also subjects of close cooperation between the EU and China, not least in the various dialogues that are part of the strategic partnership and earlier through concrete projects advising China on IPR legislation. One particular area of cooperation in which both sides have a strong interest is that of product and food safety, and in particular the prevention of counterfeit or fraudulent food items being circulated. A Chinese law passed to that effect in 2015 also benefited from technical advice received by the EU. Chinese outward investments have long lagged behind the FDI flow into China, but from about 2005 onwards there has been a sudden and steep rise in Chinese outward investment. As of 2014 annual outward investment from China was almost matching the inward investment it receives, making a reversal of the situation in coming years likely. Chinese FDI into Europe has gone through a number of shifts. Initial targets of Chinese investments were aimed at the distribution, assembly and sales of goods from China, and thus included investments in infrastructure, storage facilities and logistics. The 2008 crisis also had an effect here, in that the need for capital in many of the weaker economies created new opportunities for foreign investments. The sale of Greece’s largest harbour in Piraeus to the Chinese firm COSCO was one such landmark deal that received a lot of attention, but several other ports in Italy for instance were also sold. In a similar vein, several regional airports across Europe – such as in Toulouse, Ljubljana and Schwerin – have been the object of Chinese investments. However, where Chinese investments are actually loans to build infrastructure rather than greenfield investments of Chinese money, they have failed to get much traction (Godement and Vasselier, 2017). Chinese investments into key infrastructure projects continue, with agreement in 2016 on the Chinese participation in the consortium with the French EDF to build and run the Hinkley Point nuclear power station in the UK, a flagship deal. Yet the Hinkley Point deal is also symptomatic of a significant shift in the Chinese FDI strategy in Europe. Rather than merely facilitating exports of goods to Europe, this new strategy is about the acquisition of technological expertise and strategic assets. Such investments are part of an industrial policy in China that aims at enhancing technological and management know-how, speeding up the capacity for innovation and upgrading production processes. Purchasing high-tech firms in Europe, often market leaders in specific niche sectors, is part of this larger strategy. The effects of the 2008 crisis have made that easier, partly because the depreciation of the Euro has made investment targets more affordable and partly because countries and firms have been more open about, and in some cases positively keen on, Chinese investments. Figure 6.2 illustrates Chinese FDI to the then 28 EU member states between 2000 and 2016.

The Economic Dimension of EU–China Relations  101 Figure 6.2  China’s FDI to EU member states in millions (Euros) 2000–2016 25,000

Mean FDI in million €

20,000

15,000

10,000

5,000

0 Latvia Croatia Slovenia Estonia Lithuania Cyprus Malta Slovakia Denmark Bulgaria Luxemburg Austria Czech Republic Greece Romania Poland Belgium Sweden Hungary Ireland Spain Netherlands Portugal Finland France Italy Germany UK Countries

Europe in general has been a target for such investments from China because, contrary to the US, there has been less apprehension about the industrial policy or security implications of such investments. Whereas the US has regularly blocked attempts by Chinese firms to acquire key assets such as the Port of Los Angeles or take part in the construction of mobile telephone infrastructure, European states have initially been more relaxed, and indeed welcoming, about such overtures from China. At the EU level, so far, there is no systematic data collection on inward FDI, so that data on Chinese FDI into Europe are not very reliable. More recently, however, as the extent and strategic direction of the new Chinese investment strategy have become apparent, concern has also risen in Europe, and some governments have sought to prevent the sale of companies considered to be especially valuable in terms of the technological know-how that may be transferred to China, and thus lead to Europe selling its competitive edge to Chinese competitors. Examples of this Chinese high-tech ‘spending spree’ include the German firms Aixtron, a company producing chemical components for semiconductors, and Kuka, a leading manufacturer of industrial robots. Both were acquired by Chinese firms in 2016 – in the case of Kuka despite attempts by the German government to find a domestic ‘white knight’ that might prevent the sale to China.

102  The European Union and China In the 2010s Chinese investments have thus not only skyrocketed, but also followed a strategy that is targeted and systematic (Defraigne, 2017). While some of that is due to the choices made by individual firms, following their specific business interests, it is also apparent that the Chinese government pursues a long-term strategy that guides much of the investments made in Europe. By contrast, Europe, beholden to its open market approach, appears not to have an industrial policy strategy that could match China’s. One aspect of this has been, for example, the systematic engagement that China has sought with 16 countries of Central and Eastern Europe (eleven of which are EU members) through the 16+1 initiative (Stanzel et al., 2016). The 16+1 initiative has been viewed with some scepticism in Brussels, given that it seems to detract from a common approach and fits into a pattern of ­Chinese economic diplomacy that is conscious and careful about when to deal with the EU’s common institutions, and when to relate to individual member states, or, as in this case, a group of member and non-member states which seem to provide a less competitive access to the EU Single Market than Western European countries. The multilevel nature of EU policy-making, and the continuing tendency of states to seek their own arrangement with Beijing, makes it easy for China to play off one level (or even one state) against the other (Meunier, 2014). The Chinese investment ‘offensive’ in Europe, as it has been called by some observers (Le Corre and Sepulchre, 2016), is raising attention and questions are increasingly being asked about the long-term direction and effects that this will have. In the mid-2010s European attitudes had not (yet) reached the degree of concern that accompanies Chinese purchasing forays into the United States, but the climate in the EU is becoming more critical as a result of this intensification of strategic asset acquisition. The European Commission has proposed a new instrument that – if adopted – would allow it screening of incoming FDI (including but not exclusively from China) on grounds of public security and order where the FDI could affect EU projects or interests (Godement and Vasselier, 2017: 54–57). Since 2014 the EU and China have been in negotiations aimed at the conclusion of a Bilateral Investment Agreement (BIA) that would clarify the wider regulatory environment in which investments can take place. This initiative follows major reforms on both sides: China under Xi Jinping has a strategic goal of increasing the competitiveness and innovative potential of its economy, and with this goal in mind decided to enhance opportunities for, and conditions of, foreign investments. In line with these aims the 13th five-year plan included specific targets to reduce exemptions and allow a greater inflow of FDI. On the EU side, a significant legal change occurred in 2009, with the coming into force of the Lisbon Treaty, which transferred the authority for concluding investment agreements from the member states to the EU. It is on this basis that the Commission has since engaged in the effort to negotiate investment agreements with the US and with China (BIA). Since 2010, the flow of investments between the EU and China has become an important feature in the relationship, and the search for a formal agreement comes at a critical time. Both sides are seeking greater legal certainty for their

The Economic Dimension of EU–China Relations  103 FDI, while at the same time intending to safeguard their control over strategic sectors of their economy which is characterized by a growing asymmetry with the EU far more open to FDI than China. The benefits of the two-way flow of investment capital is well recognized, but increasingly so are the perceived risks that come with foreign control over key parts of the economy.

Monetary Policy and the International Financial System In an era of fluctuating currency exchange rates, monetary policy is an area that has significant repercussions on international trade and bilateral relations. This is especially true for the EU and China, give the massive size of their bilateral trade and the different stages at which their economies are. Changes in exchange rates have direct effects on the prices of goods and services sold to, and purchased from, abroad and hence on overall competitiveness. A weakening exchange rate means that a country’s (or market’s) exports are cheaper for foreign buyers, whereas imports become more expensive. This basic arrangement is, however, complicated by the fact that much of international trade is conducted through US dollars, and can also be offset by firms ‘hedging’ against such fluctuations (buying foreign currency early to control for subsequent exchange rate movements). Nevertheless, monetary policy has an impact on trade, and hence also on EU–China relations. On the EU side, monetary policy is made by the European Central Bank (ECB) for the members of the Eurozone. Non-members such as, for example, the UK, Sweden and Poland, maintain their own monetary policies, even though even here there is close cooperation with the ECB through the European Monetary System. The ECB is bound by the EU treaties to pursue a policy of price stability, and takes decisions on interest rates, money supply and foreign currency transactions. Under the terms of the treaty, the ECB pursues these aims independently and is not subject to any instructions from either national governments or EU institutions (Hodson, 2012). This issue of central bank independence was a major point of contention in the period prior to the Maastricht Treaty, the reform that introduced the single currency and set up the ECB, with Germany and France on opposite sides of this debate. However, since the ECB’s establishment, this principle of independence of the central bank is firmly enshrined in the foundations of EU monetary policy. The situation in China is different, where the Chinese central bank is part of the government’s decision-making apparatus and under Communist Party guidance, and serves China’s wider interests as defined by the Chinese leadership. In the context of China’s dependence on foreign trade, this implies also a political focus on the impact that exchange rates have on the costs of imports and exports and thus on China’s economic and social development. There have been many complaints in recent years, especially from the United States (which, like the EU, runs a significant trade deficit with China), that the Chinese Renminbi is undervalued. The US has been accusing China of deliberately maintaining an artificially low exchange rate for its currency in

104  The European Union and China order to gain an advantage when selling its goods abroad, and that its large trade surpluses with its major trading partner are partially explained by such currency manipulations. The EU has been markedly less critical on this issue than the US, not least as the US levelled similar accusations at Germany. The EU’s stance may be a reflection of a generally more favourable – or less negative – attitude in Europe regarding Chinese trade. However, it may also be the result of the more limited impact that Renminbi devaluations have had for the European economy, since the Euro itself has witnessed a significant decline in its value against major currencies in the wake of the Eurozone crisis. In other words, both the Renminbi and the Euro have been falling in parallel vis-à-vis the US dollar, thus creating a differentiated effect on either side of the Atlantic. Beyond bilateral relations, both China and the EU trade in a global environment in which the US dollar remains the dominant currency, and which is still supported by global financial institutions set up by the United States after 1945. In the post-war era, these institutions became cornerstones of the liberal world order, with Europe and the US sharing the responsibilities and benefits of the structural power that came with their influence over them. Under an informal arrangement, the World Bank President has always been American, while the managing director of the International Monetary Fund (IMF) has invariably been European. Policies of both institutions have broadly followed Western, neo-liberal approaches to economic development. The US and Europe have long played a pivotal role in the IMF. This is demonstrated not only through such informal agreements, but also reflected in the quotas which are allocated to member states on the basis of their ‘special drawing rights’ (SDRs), which in turn represent the various currencies’ weight in the global economy. However, these quotas themselves are also a historical legacy, and in the eyes of many observers – and since 2010 even the G20 itself – do not reflect the changes that have occurred in the global economy in recent decades. In particular, China, together with other emerging countries, has pushed for a reform of the IMF, considering the existing arrangements as fundamentally flawed. China’s aim, only partially achieved in the course of the IMF reform that was agreed in 2010 and eventually came into force in 2016, was to increase its weight in the institution. As a consequence, China’s voting share rose by more than 2 per cent to over 6 per cent, making the People’s Republic the fund’s third-largest shareholder. While this reform was a recognition of the rise of China’s economy, and came at the expense of the quotas of European states, it still fell significantly short of a reflection of China’s actual share of the global economy – which was 13.3 per cent in 2015 (Bershidsky, 2015). Some EU member states had been supportive of this reform – France, for example, used its role of chairing the G20 in 2011 to promote a more multilateral monetary system and greater monetary cooperation between the EU and China (but others resisted reducing their shares or board memberships). The EU as a whole, however, has remained divided on the issue of further reforms of the international monetary system. The UK and Germany have

The Economic Dimension of EU–China Relations  105 sided with the United States in resisting greater influence of China, and supporting the status quo of a US-led system. The fact that in the course of the Eurozone crisis the IMF played a crucial role in assisting the repeated bailouts of Greece also meant that the EU needed the IMF, and had little interest in further changes. For China, these changes over time and the divisions among member states have been a cause for doubts about whether the EU can actually be a reliable partner in its efforts to reform the system. Having invested much effort into a reform of the system and achieving only limited results, in the early 2010s China began to lay the foundations for what many observers consider an alternative financial system, one that is centred on Beijing rather than Washington. This included the founding of the Asian Infrastructure Investment Bank (AIIB), the BRICS New Development Bank and other financial institutions that support economic development and large infrastructure projects that are in line with China’s vision of economic exchange, and that are not bound by Western notions of good governance and political conditionality (see Chapters 9 and 10). The BRICS Bank is a multilateral venture of five emerging economies that have been dubbed the BRICS: Brazil, Russia, India, China and South Africa. Meeting at regular summit meetings, the leaders of these states have coordinated their efforts to reform the international financial system while also developing alternative institutions (Keukeleire and Hooijmaaijers, 2014). The AIIB started as a more regional affair, setting up a rival to the ­Western-oriented and Japanese-dominated Asian Development Bank (ADB), headquartered in Manila. The creation of the AIIB is perhaps the strongest signal yet that China is willing to take the lead in building new multilateral institutions (Renard, 2015). The AIIB’s focus on funding large-scale infrastructure projects ties in well with the Chinese agenda for new maritime and continental ‘silk roads’, but is also inclusive of a wider membership within Asia and beyond. Crucially, in the context of the focus here, most of the EU member states have chosen to join the new institution, defying US opposition to the new bank as an unnecessary rival to the World Bank and the Asian Development Bank. Even if the direction and impact of this new venture remain unclear, this development is a strong demonstration of the Chinese strategy to invest diplomatic and financial resources in multilateral ­institution-building. It is also an intriguing sign of things to come that the Europeans are now willing to join a Chinese-led initiative, and that the ability of the United States and Western Europe to define the framework of international finance is on the wane (Crook, 2015). This is not to say, however, that there is a zero-sum game in which the rise of China equals the decline of Europe. As long as the US dollar remains the dominant global reserve and trading currency, both China and the EU share an interest in a more multilateral system in which a wider range of currencies has reserve status. This is also why China has made efforts in recent years to ‘internationalize’ the Renminbi, to conduct more of its trade in its own currency and are seeking to make it more convertible internationally, and

106  The European Union and China it is also a reason why China has been supportive of the Eurozone when it was vulnerable in the years after the 2009–2010 global financial crisis – as is discussed further in the next section.

The Impact of the Eurozone Crisis on EU–China Relations Given the importance that the economy has for EU–China relations, it was inevitable that the economic and financial crisis that hit Europe in 2009–2010 would also have major repercussions for this relationship. There are, broadly speaking, four ways in which the crisis has impacted on bilateral relations between the two sides, and we will briefly touch on each of these here. First, the economic slump that occurred in Europe had a direct impact on bilateral trade. Domestic consumption in Europe fell drastically as the available finance dried up, launching a cycle of lower capital investments, a rise in unemployment and less disposable income. This recession occurring in Europe, China’s largest export market, therefore also meant less demand for goods from China. This in turn also reduced China’s growth rate, raising questions about the sustainability of the Chinese development model that relied to a large extent on exports and leading to process of readjustment towards greater emphasis on domestic consumption. In other words, the Eurozone crisis served as a wake-up call for Chinese decision-makers about their dependency on the economic well-being of Europe, and the self-interest that China has in supporting economic growth there. On the European side, there was a recognition that, with falling demand, exports, in particular to China, could be a way out of the crisis, and in fact since 2009 most of the GDP growth in the Eurozone resulted from a growing trade surplus. As Chinese imports decreased (temporarily), EU exports to China have doubled since the start of the crisis, rising from €82.4 billion in 2009 to €164.7 billion in 2014 – representing 13.5 per cent of the growth in EU exports to countries outside the EU over the same period. The crisis thus had the effect of demonstrating to both the EU and China how important bilateral trade is to either side, and how they have a mutual interest in each other’s economic growth, rather than one gaining from the other’s decline (Grevi and Renard, 2012). Second, partially in response to these economic considerations, but also with wider geopolitical considerations, China supported the single European currency in the financial markets. Throughout the crisis, China reiterated its support and belief in the Euro, seeing its support of the single currency as a strategic move to strengthen its partnership with Europe. Between the start of the crisis and the autumn of 2011 it is believed that China stepped in multiple times and propped up the Euro by buying debt from financially stressed countries, as confirmed by the head of China’s State Administration of Foreign Exchange (SAFE), Yi Gang, in 2012. The then Chinese Premier himself stated in 2011 that ‘China is a long-term investor in Europe’s sovereign debt market. In recent years we have increased by a quite big margin our holdings of euro bonds’ (Reuters, 2011). While no public figures are available, one

The Economic Dimension of EU–China Relations  107 estimate puts Chinese Euro holdings in 2014 at a value of over $1 trillion corresponding to roughly 30 per cent of the total Chinese foreign currency reserves. The Euro benefited not only directly from this financial support, but also from the confidence that a major economic power expressed in the future prospects of the currency. Third, the Eurozone crisis created new opportunities for Chinese investments in Europe. Indeed, one could argue that the crisis caused a sea change in FDI trends, as already discussed earlier in the chapter. In the aftermath of the crisis there was a dire need for capital inflow in Europe, and China with its significant currency reserves provided some of that capital. Consequently, there has been a significant increase in Chinese FDI into Europe since the start of the Eurozone crisis. Chinese FDI into Europe, which had been negligible until 2009, increased to more than €7 billion in 2011, and reached a new peak in 2014 with annual spending of €14 billion (Freeman, 2017). This development was helped by the relatively lower prices in the Eurozone after the devaluation of the Euro, and the fact that several countries now needed to divest some of their state-owned properties in order to comply with the requirements of their lenders. In fact, the crisis directly contributed to lower the reluctance of EU member states to accept Chinese investments (Meunier, 2014a). EU member states started competing for potential Chinese investments. This has been the result of the promotion of investment, the simplification of investment processes and the use of incentives. However, Chinese investors, being aware of the risks associated with some of the ‘bargain’ investments available in bailout countries, have been cautious in this regard, and actually focused increasingly on high-tech industries and other strategic sectors. Fourth, the crisis also had a less tangible impact on the reputation of the European Union around the world. Inevitably, considering the widespread impression that the EU’s public image abroad has suffered as a result of seemingly endless reporting about repeated bailouts, recriminations among European leaders and mass protests, perceptions in China have also been effected. Traditionally, the EU had been viewed comparatively positively in China (Chaban and Magdalena, 2012), but this changed after the crisis. For one, the Eurozone crisis helped to re-establish an earlier image of European integration as an economic agenda, replacing the previous impression of Europe seeking to become a political and security actor (Lai and Zhang, 2013). In one survey the ECB rather than the European Commission was considered as the key institution in the EU, but more broadly there has been a recognition that individual member states rather than the EU as a whole matter more. There is of course also a sense in China that the EU’s preoccupation with the internal economic crisis has been a distraction, and has limited its capacity to shape events externally. The EU’s apparent ineffectiveness in dealing with the growing instability in its neighbourhood adds to this general impression. In China this is seen as a sign that there are serious flaws in the ‘European model’, and that it has lost its attractiveness, both internally and around the world.

108  The European Union and China This is seen as providing China with greater opportunities to establish an alternative model, be it within its own region or elsewhere around the globe. The inroads that China has made through investments and development projects in Africa – a traditionally European-oriented continent – are a manifestation of this trend (Keeulers, 2015; see also Chapter 9). However, as the EU’s economic recovery picks up, and with the EU showing a renewed cohesion in dealing with issues such as Brexit, as well as trade deals with Canada and Japan and populist parties largely failing to gain traction, the EU might turn out to be more resilient and cohesive than Chinese policy-makers seem to think.

Conclusion Bilateral trade between China and the EU is at the heart of their relations, despite the turmoil in the European economy after the global financial crisis, and the slowdown of China’s own growth. In fact the crisis and its repercussions have actually further deepened economic relations between the two sides: it demonstrated the mutual benefit, even their dependence on, bilateral trade; it led to a massive increase in Chinese investments in Europe; and it created the context for a more equal partnership in which the EU’s normative agenda took something of a back seat (Crookes, 2013). The economic relations between China and the EU are still dominated by trade, but they have become more complex in an era in which China is increasingly moving into the production and export of higher valued goods where it competes with European manufacturers. The number of trade disputes has been rising, with frequent European complaints about Chinese overproduction leading to the dumping of its goods at below-cost prices. These concerns are behind the EU’s prevarication on the issue of the market economy status demanded by China in the WTO, and this has further soured the mood. With regard to investments, the picture is equally nuanced: ­European firms have invested heavily in China over decades, yet there have also been persistent complaints about the lack of protection for intellectual property rights and other restrictions, prompting growing EU pressure on China to allow a level playing field and make good on its market reform and globalization champion promises. More recently, Chinese investors have come to Europe in significant numbers, and while this inflow of Chinese capital has been generally welcomed, even sought after in some member states, there are rising concerns in Europe about the impact that strategic Chinese investments in key sectors are having on the European knowledge base (Niquet, 2018). Despite these issues, the economic relations between the two sides have shown themselves to be durable. Decades of growth in trade and in foreign direct investment have created a strong sense of interdependence, and on the foundations of flourishing economic exchange other aspects of the relationship – political, security, societal – have also been expanded (Chen, 2016). Negotiations towards a Bilateral Investment Agreement have been ongoing

The Economic Dimension of EU–China Relations  109 for some time, promising greater certainty in this aspect of economic relations. The question for the future is whether, in a rapidly changing global climate where trade liberalization is seen increasingly critically, and the nationalist politics of President Trump might herald a new era of protectionism, the economic relations between China and the EU will be able to weather the coming storm and in particular reduce the asymmetry in openness to each other and rediscover the virtues of cooperation.

Chapter 7

The Societal Dimension of EU–China Relations

Introduction For economic and political cooperation between two or more countries to flourish, an understanding, if not appreciation, of their respective societal characteristics and cultures is important. Society and culture are particularly relevant in EU–Chinese relations, as the latter has the remarkable record of 5,000 years of uninterrupted history, while the former draws its inspiration in part from the ‘cultural, religious and humanist inheritance of Europe’ (Lisbon Treaty preamble). As studies on national security culture demonstrate (Kirchner and Sperling, 2010), historical factors affect foreign policy behaviour and have a direct impact on the type and extent of interactions between countries at the international level. Citizen diplomacy can be considered an alternative problem-solving strategy, underpinning the role that non-state actors may play in mitigating difficult interstate relations and helping to resolve deep-rooted conflicts that political leaders and the private sector cannot solve alone (Fulda, 2013: 2). Formally speaking, societal relations can also be seen as another aspect in the strategic relationship between the EU and China since ‘people-to-people relations’ constitute a third pillar in the dialogue structure of the strategic partners, and thereby have developed into an essential aspect of public diplomacy between the two sides (Burnay et al., 2014). Beyond this officially sanctioned interaction, societal relations more generally can be considered a channel for normative encounters between people from Europe and China, and as such constitute an arena for ‘soft power’ in EU–China relations. This chapter examines the different aspects of societal and cultural relations between the EU and China. Devoting most attention to the study of the content, form and extent of societal interactions or people-to-people exchanges between the two sides, it seeks to show that there is a considerable amount of interaction between the populations of the two sides which goes far beyond official diplomacy or the purely commercial interaction between economic players. Among the specific aspects to be examined in EU–China societal relations will be the role of the Chinese diaspora in Europe, illegal migration/human trafficking, education and sport. As individual EU member states have ongoing cultural exchanges with China, we will look at their 110

The Societal Dimension of EU–China Relations  111 efforts in addition to the EU activities in this field. A further aim will be to explore the salience of societal programmes for EU–China relations generally.

Education and Research Collaboration in EU–China Relations Exchanges in the education sector, especially at the higher educational level, are an important component of EU–China relations. While individual European countries have a long history of education programmes with China, EU educational exchange activities only began in the 1990s and had as their major focus higher education. Among the early EU developments are the establishment of European Documentation Centres in six Chinese universities and the Chinese Academy of Social Sciences in the early 1990s. These were complemented with the establishment of the EU–China Higher Education Programme (1997–2001) and the EU–China European Studies Centres Programme (ESCP) (2003–2008), which in turn helped promote European Studies programmes at a large number of Chinese universities. Through the financial assistance of the EU’s Lifelong Learning Programme, particularly its Jean Monnet Action programme, and of the Chinese Government, many of these Chinese European Studies programmes and centres have strengthened and expanded in terms of teaching and research activities  – for example, through the establishment of Jean Monnet chairs and centres. They have also led to a variety of student and staff exchanges and joint research projects with their European counterparts. Also here the argument can be made that such education cooperation constitutes an important part of the EU’s public diplomacy, and is therefore an element of Europe’s soft power (Yang, 2015). Contacts among Chinese and European academics are also enhanced through Chinese participation in the European Commission’s Research Framework Programme, a host of regular joint conferences, and the EU–China Academic Network (ECAN). The rapid development of European Studies in China is, according to Song, due not only to the funding from the European Commission and the Chinese government, but also to the interests of Chinese in learning from European experiences (Song, 2010: 774). The development of European Studies as a discipline in China was further helped by the intellectual presence in China of prominent academic and cultural institutions from Germany, France and the UK (Meissner, 2002). EU–China academic collaboration therefore has roots in the member states’ history of interaction with China, in the EU’s China-related policy papers and in China’s interest in tapping EU knowledge (Wiessala, 2013: 218). There have also been positive spin-offs for the European Studies programmes in China from complementary measures of such schemes as the Europe China Research and Advice Network, the Asia-Link Programme, and the Asia Urbs Programme. Besides the existence of a ­ considerable number of Sinologist Institutes in Europe, there is now also a distinct ­ Chair in EU–China Relations at the College of Europe in Bruges, Belgium. On his visit to Europe in March  2014, President Xi Jinping spoke at the ­latter and opened a China library, which is similar in form to the European

112  The European Union and China Documentation Centres. The first major EU initiative to bring European professionals to China was through the EU–China Junior Managers Training programme starting in 1999. Another very successful earlier exchange programme was the creation of the China Europe International Business School in Shanghai. Further benefits of the EU–China educational exchange programme can be expected from the EU–China High-Level People-to-People Dialogue (HPPD) on Education, Culture, Youth and Research, which was established in 2012. The call to expand people-to-people exchanges together with suggestions for common curricula development and knowledge-based cooperation was set out in the European Commission’s 2006 document entitled ‘EU–China: Closer Partners, Growing Responsibilities’ (European Commission, 2006: 9). The document particularly encouraged the use of the Erasmus Mundus programme and the establishment of a European Law School in China. At the first round of the biannual HPPD in April  2012 in Brussels a host of objectives were outlined: first, to establish the EU–China Higher Education Platform for Cooperation and Exchange, which may explore inter alia avenues to streamline and reinforce efforts to support and promote the activities of the existing China Europe International Business School (CEIBS – itself created as an EU project) in Shanghai Jiaotong University, the ­China-EU School of Law (CESL) in China University of Political Science and Law, and China-EU Institute for Clean and Renewable Energy (ICARE) at Huazhong University of Science and Technology. The second objective was to increase the number of student and scholar exchanges, whereby the Chinese side would provide 30,000 scholarships, of which 20,000 were to support Chinese students and scholars to study in all EU countries and 10,000 to support EU students and scholars to study in China. The number of ‘Chinese Government Scholarships – EU Window’ would increase from 100 to 200. Third, the European ­Commission would strengthen its action to promote EU–China learning exchanges, with a view to supporting the mobility of 5,000 Chinese students and ­academics to the EU and 2,000 EU students and academics to China through its ­mobility programmes. Fourth, both the EU and China would enhance language cooperation and further promote multilingualism. Fifth, the European Commission would encourage Chinese participation in the Marie Curie Actions (People Programme, FP7) – and their successor in the Horizon 2020 programme – for both researchers and research organizations, and support the Science and Technology Fellowship programme – and its potential successor under the People-to-People component of the Instrument for Cooperation with Industrialised Countries – for exchanges. At the first meeting of the EU–China Higher Education Platform for Cooperation and Exchange (HEPCE) in the framework of the EU–China HPPD in April  2013, a number of participants from Chinese and EU u ­ niversities discussed models for EU–China higher education schools and i­nstitutions, China–EU cooperation in degree programmes, and opportunities for China–EU cooperation in the field of European studies and Chinese studies (EU–China HPPD, 2013).

The Societal Dimension of EU–China Relations  113 From 2000 to 2010, the number of Chinese students in Europe increased tenfold. Similarly, the number of EU students in China has also increased substantially. Expectations are that by 2020 some 500,000 European s­tudents will study in China (see Figure 7.1). The EU educational programmes, especially at the higher educational level, introduced primarily since the late 1990s, together with the efforts of EU member states in this field, are making progress to ‘bridge minds’ and to change attitudes in EU–China relations, but their long-term sustainability, and progressive impact on EU-China relations, is not yet entirely assured (Wiessela, 2013: 221). Therefore, the idea that education can serve the EU’s more ‘normative’ aims of ‘universality and indivisibility’ of human rights (Wiessala, 2103: 216) is as yet still an open question. Moreover, as pointed out by Wiessala, ‘the number of [educational] initiatives which leave a significant, permanent, intellectual “footprint” on the inter-civilisational dialogue is relatively small’ (Wiessala, 2013: 219). Figure 7.1  European countries attitudes on China: 2000–2011 140,000

120,000

120,000

no. of students

100,000

80,000

60,000 47,271 40,000 22,600

20,000

20,000

11,700 0 2000

2005

2009 years

Chinese students in EU

2010

2011

EU students in China

Source: GHK Consulting and Renmin University (2011). EU-China student and academic staff mobility: present situation and future developments. Zhou Zhong (2013). China’s View on the European Higher Education. Presentation held at Lithuanian Presidency of the Council of the European Union 2013. International Conference “European Higher Education in the World. Vilnius, 5-6 September 2013 in Language teaching – mobility enhances professional skills and cultural understanding. A cooperation initiative between China and the EU. © European Union, 2013.

114  The European Union and China

The Role of Think Tanks, NGOs and Civil Society Besides calls for greater cooperation in the sector of EU–China higher education, the 2006 Commission Communication also encouraged links among social organizations, stipulating that civil society and institutional links should provide direct support and impetus for political and trade relation, and encouraging Chinese NGOs to participate in international conferences open to civil society. The July  2010 China–EU Civil Society Round Table provided further impetus for joint cooperation. More direct steps in this field were taken at the first round of the HPPD in April 2012 in Brussels when it was decided to substantially increase sustainable partnerships and networks between Chinese and European youth organizations. However, while fostering education can be deemed as mutually reinforcing EU–China political and trade relations, the role of NGOs and Civil Society Organizations (CSOs) is less straightforward and can even have detrimental implications. It is less straightforward because often NGOs and CSOs on each side (EU and China) are single issue based and lack knowledge (and to a large extent interest) about the EU–China political and trade relationships. Moreover, Chinese CSOs perceive the EU more as a donor than as a strong political body; the latter only comes into play when environmental CSOs have to discuss some new regulation issues by the EU Commission (Sausmikat, 2010: 88). Conversely, many EU NGOs are not comfortable with recognizing Chinese counterparts as truly non-governmental. China has also introduced restrictions on foreign and domestic NGOs, which makes such exchanges more difficult. There is a wider debate also in the academic literature about the nature of Chinese NGOs and think tanks, in particular about the role that such organizations play in the relationship between party/state, society and the outside world – a debate that has intensified, also in China itself, when President Xi launched a review and eventually a new policy on think tanks after assuming office in 2012 (Menegazzi, 2016). In the era of Xi Jinping, think tanks and NGOs ‘with Chinese characteristics’ clearly serve the interests of the governing elites in China (European Council on Foreign Relations, 2016), yet this does not mean that these are blunt instruments merely executing the will of the Communist Party. As Menegazzi and others have shown, a more nuanced picture emerges where Chinese think tanks also have the function of feeding new ideas into the policy process, while at the same time working as an element of Chinese soft power by publishing and communicating a distinctive (and officially sanctioned) Chinese perspective towards the outside world (Menegazzi, 2018). With regard to the potential detrimental impact of CSOs’ involvement in EU–China relations, Sausmikat (2010: 89) suggests that Chinese CSOs are constantly being confronted with the fact that their Western partners follow their political agenda of system change, and are unable to accurately judge the circumstances in their country, which places the Chinese CSOs under enormous pressure. For the European CSO, the challenge when dealing with their Chinese counterparts is to tread a delicate balance between CSOs and

The Societal Dimension of EU–China Relations  115 NGOs which are officially recognized or sanctioned by the Chinese Government and those which are tacitly tolerated at the grass-root level. Moreover, in dealing with their Chinese counterparts, EU CSOs and NGOs want to be seen as pursuing, as far as possible, a reform-oriented agenda rather than one which is simply seen as supporting the regime. Sausmikat (2010) identifies four main topic-specific areas in which ­European NGOs deal with China: • Human rights (Amnesty International, Reporters without Borders, Tibet sympathizers and so on) • Labour (trade unions or organizations which concentrate on labour rights issues, for example the Clean Clothes Campaign) • Environmental protection and climate change • Education (critical advanced training, organizations which arrange informational and educational exchanges on informal levels about and with China) According to Fulda (2013) three initial EU–China civil society dialogue initiatives merit a closer look, as precursors of an institutionalized EU–China People-to-People Dialogue. These initiatives, implemented by different organizations (foundations) and transnational networks, have actively supported people-to-people exchanges between Europe and China since 2005: the China–Europe Forum (2005–2010), which held three biennial meetings; the EU–China Civil Society Forum (2008–2010), which organized three symposia; and the EU–China Civil Society Dialogue on Participatory Public Policy (2011–2013), which arranged eight civil society dialogues and two international conferences. It included target groups from all walks of life. Building on the July 2010 China–EU Civil Society Round Table, the role of Chinese CSOs and the link between Chinese and European CSOs have been strengthened with the establishment of the HPPD. At the first round of the HPPD in April 2012 in Brussels it was decided to substantially increase sustainable partnerships and networks between Chinese and European youth organizations. With the support of the Youth in Action programme and the EU–China Youth Partnership for Friendship programmes, it was expected that, by 2013, a total of 500 youth organizations from China and Europe would be involved in such cooperation projects. Part of this is promoted by the China–Europe Symposia on Youth Work Development, which is jointly organized by the All-China Youth Federation and the European Youth Forum on an annual basis. Other areas of cooperation have taken place in law and jurisprudence. Under a programme sponsored by the EU between 2000 and 2005 and aimed at the promotion of the rule of law, study trips and visits were undertaken by lawyers, judges, prosecutors and other legal professionals from both sides (European Commission, 2000). Scholarships and funding for cooperation are also available in the area of governance and civil society, some of which have been led by associations such as the British Council (Shen, 2013: 174).

116  The European Union and China The EU–China 2020 Strategic Agenda for Cooperation makes a number of suggestions for improving links at local and regional level between the two partners. These involve a further strengthening of the EU–China U ­ rbanisation Partnership Forum, the EU–China City Expo and the EU–China Mayors’ Forum, and the development of numerous relevant city pairings. These initiatives probably have a more pronounced impact on EU–China political and trade relations than many of the existing NGO and CSO links between the EU and China. Lack of interest and information by these organizations in wider EU–China relations can be seen as one of the main reasons for this. However, they nonetheless act as useful transnational advocacy n ­ etworks and their contribution of spreading information helps pave the way to counteract the development of negative images (Feindbilder) and therefore work for mutual understanding (Sausmikat, 2010: 96).

The Role of Culture in the Relations Between the EU and China Cultural links between individual EU member states and China, facilitated by cultural organizations such as the Alliance Française, the British Council, the German Goethe Institute, the Spanish Cervantes Institute, the Italian Dante Alighieri Society and the Portuguese Camões Institute, have been ­long-standing. More recently, China has established some 700 Confucius Institutes and classrooms around the world, teaching the Mandarin ­language, providing information about China, and showcasing Chinese arts and culture. While much of this is uncontroversial, the rapid rise in the number of Confucius Institutes around the world, and the resources that China has made available to the ‘CI project’, has raised questions and comments about this aspect of Chinese soft power. However, while there certainly is now a governmental strategy to disseminate knowledge about the Chinese language and culture globally, research has also shown the fundamental difficulties that are associated with any attempt to use such an initiative as a form of changing ‘hearts and minds’ (Pan, 2013; Lo and Pan, 2016). On the European side, there is an element of soft power projection also in some of the cultural programmes, particularly those linked with democracy development programmes and/or carried out by German political foundations such as the Konrad Adenauer Foundation, the Friedrich Ebert Foundation, the Heinrich Böll Stiftung and the Hanns Seidel Foundation. The creation of the European Union National Institutes of Culture (EUNIC), in 2006, was an attempt to harness the work of the national institutes and governmental ministries of culture more coherently and effectively and to give it a more distinct EU-wide flavour abroad. EU-wide engagement with China at the cultural level is more recent, but has been promoted by the educational and civil society organizational efforts which have been in place, particularly since 2000, and which have been outlined above. A strengthening of these efforts occurred in 2008 with the establishment of the annual Cultural Dialogue China/EUNIC, which brings together intellectuals, cultural practitioners and

The Societal Dimension of EU–China Relations  117 cultural policy-makers from Europe and China to strengthen cultural cooperation within creative industries and develop people-to-people relations. A further important step in EU–China cultural cooperation took place in 2012 with the introduction of the HPPD and the EU–China Year of Intercultural Dialogue. This was crowned with the EU–China High Level Culture Forum that was held back to back with the closing ceremony of the EU–China Year in November  2012. In that year also the EU and China adopted a Joint Declaration on EU–China Cultural Cooperation, with the wish to deepen cooperation in the field of culture. As noted in that Declaration, creating a mutually conducive environment for increased cooperation and exchanges between the EU and China in the field of culture will require a deepening of the dialogue between respective authorities and will need to include the involvement of regional and local stakeholders, as regions and cities constitute major actors for the development of cultural and creative sectors (European Commission, 2012). In surveys conducted in China, most Chinese give relatively high marks to Sino-EU relations and are fairly optimistic towards the future of the bilateral relations (Chinese Academy of Social Sciences, 2008). China has fared poorly in similar public opinion surveys in Europe. As shown in data of a number of large EU member states (Table 7.1), there is, with one exception (Poland), a downturn of favourable views towards China since the mid-2000s. The low German percentage figure is particularly surprising, given Germany is by far the largest European trading partner of China. A poll by the ­German Marshall Fund undertaken in mid-2013 shows a similar but somewhat more diversified degree of favourable and unfavourable opinion towards China in EU member states. On average in 12 EU member states, less than half the respondents (47 per cent) had a favourable opinion of China, and a roughly similar proportion of respondents saw China as an economic threat Table 7.1  European countries’ opinion of China: percentage responding favourably, 2005–2013* Country

2005

2007

2009

2011

2013

France

58

47

41

51

42

Germany

46

34

29

34

28

Poland

37

39

43

51

43

Spain

57

39

40

55

48

United Kingdom

65

49

52

59

48

* The questions asked: ‘Please tell me if you have a very favourable, somewhat favourable, somewhat unfavourable or very unfavourable opinion of China. ‘Favourable’ combines ‘very favourable’ and ‘somewhat favourable’ responses.

Source: Pew Research Global Attitudes & Trends (Opinion on China), available at http://www. pewglobal.org/database/indicator/24/group/3/, accessed 11 July 2018.

118  The European Union and China (41 per cent) versus an economic opportunity (46 per cent) (German ­Marshall Fund of the United States, 2013). These European perceptions of China point to a need for more socialization in order to bring greater trust and confidence between European and Chinese cultures and peoples. As suggested by Gillespie (2013), Europe and China suffer from mutual knowledge and comprehension deficits, ­reinforced by uneven and selective media coverage of each other. This assumes, of course, that both Europe and China can genuinely be described as having some kind of cultural or political identity capable of bringing their peoples together aside from their geographical one.

Sport in EU–China Relations Sport is an important factor in EU–China relations, with the EU and China being important partners for each other. Given the way in which professional sports have developed, it also provides for an interesting linkage between, on the one hand, societal and cultural contacts, and, on the other hand, opportunities for increasingly important commercial exchange between the two sides. China uses sports to increase its international reputation as a key part in its strategy to increase its soft power. China does this in part through hosting large international sporting events, for example the 2008 Summer Olympics, the 2015 World Championship in Athletics and the 2022 Winter Olympics. As of 2004 a newly constructed track in Shanghai has been hosting the Grand Prix of China, one round of the FIA Formula One Championship. Part of this ambition is the desire to achieve national success in international competitions. For example, in 2008 at the Beijing Olympics China for the first time headed the medals table (Zhun, 2015). These developments indicate a desire by, and indeed the success of, China to play a leading role in sports that for a long time had been dominated by Western (as well as Soviet/Russian) athletes and clubs. The sport that arguably constitutes the strongest link between Europe and China is football. Broadcasting of European football matches attracts the largest television audience of any sport in China (The Economist, Economist Intelligence Unit, 2009), although basketball is arguably more popular. The popularity of football is remarkable given the lack of a successful national team, domestic club, or any notable players from China. Instead, there is a sizeable fan-base in China following European ­ football. For example, in 2015 European football clubs had around 70 million ­ followers on Chinese social media (Elsden, 2015). One research report found that China is the largest fan base for the English Premier League with around 170 million followers. The commercial dimension of this growing popularity of European football in China is evident in the fact that ads in Chinese are becoming more visible on shirts and billboards in European top leagues. Furthermore, from 2010 onwards Chinese capital has started to find its way into the stocks of various football clubs in Europe. For example, Chinese investors have taken

The Societal Dimension of EU–China Relations  119 a 13 per cent stake in Manchester City, a 56 per cent stake in Espanyol and a 20 per cent stake in Atlético Madrid. The expectation in China is that its increasingly close ties with European football will help to boost the sporting and commercial success of football in China itself. Likewise, European clubs are looking to increase their footprint in a largely untapped, large and fast-growing sports market through exhibition matches, partnership programmes, merchandising and Chinese language websites. In 2014 the Chinese government revealed a 50-point plan that seeks to turn the country into a football powerhouse. Football has become a mandatory part of the Chinese school curriculum. The long-term goal is to host – and even win – a World Cup.

Migration and Migrants Migration from China to Europe is an important aspect of societal relations between the EU and China. Chinese immigration into Europe can be traced back to the mid-1800s. A large wave of Chinese immigration – mostly from Hong Kong to Britain and Western Europe – followed the end of World War II. Many of these migrants opened restaurants and takeaway businesses. The  migration of Chinese people to Europe continued through the 1960s, 1970s and 1980s. Among the migrants were thousands of ethnic Chinese who fled Vietnam, Cambodia and Laos. Mainland China had largely closed its border following Mao’s rise to power. With Deng Xiaoping’s reforms in the late 1970s, the border was opened again, allowing Chinese immigration to noticeably pick up in the late 1980s and following the fall of Communism in Europe. It has continued at a steady pace since then. Finally, Europe has seen a significant influx of Chinese students who study at European universities. The UK, France, the Netherlands, Italy, Spain, Germany, Belgium and Portugal were the primary recipients of Chinese immigration until the end of the Cold War when Central and Eastern Europe received a significant influx of Chinese immigrants. Since then Chinese immigrants have settled across the EU. In 1998, 900,000 Chinese immigrants lived in Europe. By 2011, that number had increased to 2,307,000. The largest communities today can be found in the UK (630,000), France (540,000), Italy (330,000), Spain (170,000), Germany (170,000) and the Netherlands (170,000). As Chinese immigrants have tended to stay in their ethnic communities, a number of Chinatowns have formed across Europe. Moreover, the Chinese community is very transnational and often willing to move across Europe, in particular within the Schengen zone. The largest and most important economic sector for the Chinese community in Europe is the catering business. Chinese restaurants are arguably the most visible mark of Chinese immigration in Europe. According to the European Federation of Chinese Organizations there were 45,000 Chinese restaurants across all of Europe in 2008. Chinese immigrants have also flocked to the retail and commerce sector. This includes supermarkets, wholesalers and stall keepers. This has grown in prominence since the late 1990s

120  The European Union and China with the rise of the Chinese economy and the influx of cheap Chinese goods. In particular they have set up a number of import–export companies, goods wholesalers, retailers and trading centres across Europe that respond to the increased European demand for Chinese-made goods. Most recently the rise of Chinese tourism to Europe has opened up this industry to the Chinese community. Chinese entrepreneurs have moved into the tourism sector to meet the demand for Chinese speaking services. Chinese migrants have greatly benefited from the economic rise of China. They remain connected to both China and their adopted country and seek to contribute to both. Second-generation Chinese migrants generally differ in some important regards from their parents. They are more likely to speak the local language as well as or even instead of Chinese, have friends outside the Chinese community and less likely to feel at home in China. They learn rather than live the Chinese culture, show greater willingness to marry non-Chinese people and are more interested in pursuing a career outside the usual options favoured within the Chinese community. The dark side of migration between Europe and China is constituted by human trafficking, which remains a problematic aspect of EU–China societal contacts. China is the second largest extra-EU country of origin of human trafficking victims. Two-thirds of human trafficking victims in the EU, however, come from EU member states. Chinese organized crime groups are heavily involved in human trafficking. Victims are primarily exploited for labour in restaurants and textile sweatshops; (European Parliamentary Research Service, 2014). Employers take advantage of the victims who are often in debt bondage (forced to use their labour to pay off the loans they took out to reach Europe). Furthermore, they are made even more vulnerable by the fact that they often don’t speak the language and are afraid of being deported (Gao, 2004). Joint EU action against the human trafficking of Chinese is undertaken across Europe (Europol, 2015). The EU engages in a number of projects with China that among other things aim to deal with the issue of human trafficking. These include the Capacity Building For Migration Management in China Project (CBMMChina) and the EU–China Dialogue on Migration and Mobility Support Project (International Labor Organization, n.d.).

Tourism Tourism is an important but often overlooked part of the EU ­economy. It is also an increasingly significant part of EU–China relations that has great potential for societal relations. In 2010, for example, some 2.3 million visitors travelled from China to Europe. If one includes those Chinese visitors who travelled from outside mainland China this ­figure rises to 3.8 million Chinese. The fast growth of this aspect of the relationship is

The Societal Dimension of EU–China Relations  121 demonstrated by the fact that, by 2013, the number of Chinese tourists in Europe had risen to 8 million. Tourism provides opportunities for encounters between members of different cultures, even though this may well be limited in this case as the majority of tourism from China takes place in the form of organized package tours, which implies that Chinese visitors travel in self-contained groups and are accompanied by their own guides. This trend is changing towards more individual and family travel. Chinese tourists are increasingly willing to spend significant sums while visiting Europe. Chinese tourists account for 40 per cent of all luxury sales in France, 35 per cent in Italy, and 25 per cent in the UK (Frank, 2015). Several EU governments, including the UK and Italy, have announced that they aim to simplify the visa procedures for people from China, in large part in order to foster further growth in tourism (EU SME Centre, 2015). China is also a leading investor in the tourism industry, with more and more large Chinese firms striking partnerships with or buying into European firms.

Conclusion This chapter has identified several ways through which people in Europe and China interact. There are clearly a number of arenas which provide ‘meeting places’ for societal interaction. It is an aspect of EU–China relations that for a long time was hampered by the European crimes committed during the era of imperialism (Chapter 4), by the closed nature of the People’s Republic of China, and also by the physical distances between the two sides. In recent years, however, following greater liberalization of China domestically and the growing commercial connections between Europe and China, societal contacts have grown exponentially. In the absence of dedicated research, it is difficult to gauge the wider impact that such societal interaction has had on EU–China relations. What is evident, in any case, is that even when contacts are predominantly of a cultural or social nature, the political and economic dimension of such interaction is never far removed.

Chapter 8

The Security Dimension of EU–China Relations

Introduction In security terms EU–China relations are usually described as a one-sided affair, implying that the EU is an inferior partner because of an apparent lack of actorness and/or manifest military capabilities. While there is some truth in this perception, it hides two important countervailing factors. One relates to the fact that this view all too often compares or equates EU actorness and capabilities with that of other states, such as the United States; hence it unduly raises the bar too high when assessing the EU as a security actor. The other factor relates to the habit of viewing security strictly in military terms and neglecting the non-military EU capabilities. The nature of security, its understanding by political actors, the means of delivering security and respective policy implications have all significantly changed (Bourne, 2013). A series of potential new security challenges have emerged, hastened by the arrival of the post-Cold War era, the spread of globalization and growing economic interdependence. Among these challenges are climate change, energy insufficiencies, food and water scarcity, environmental disasters, cyber-crime, cyber-terrorism, clandestine immigration and arms proliferation. Both the EU and China recognize the need to incorporate non-traditional aspects of security into the wider framework of security and to adopt a broadened or expanded definition of security. However, they differ on the importance to be attributed to it with respect to traditional security, and/or the extent to which non-traditional aspects can be self-standing as tools of statecraft or need to be backed up by military means. Different approaches exist between the EU and China with regard to such issues as conflicts (conflict prevention, conflict management, post-conflict reconstruction), human security, peace enforcement and power projection. The EU has a more comprehensive understanding of security than China and disposes of a broader variety of response tools especially in the field of civilian crisis management (Geeraerts, 2013: 498). These differences apart, there has been a great deal of security cooperation between the EU and China, especially since 2003, driven by a common understanding of the changing nature of security threats that require joint action or responses at both the regional and global level. To facilitate security cooperation between the EU and China, specific dialogues and mechanisms have been established. An important pillar 122

The Security Dimension of EU–China Relations  123 of these connections is the strategic partnership of 2003, which was upgraded in 2010 to include foreign affairs, security matters and global challenges such as climate change and global economic governance. Further mechanisms of EU–China security cooperation are located in the political dialogue and the annual EU–China Summit (postponed twice in 2008 and 2011). Moreover, the summit of September 2012 encouraged regular contacts between special representatives and special envoys, as well as the holding of a regular dialogue on defence and security policy, increasing training exchanges and organizing a High-Level Seminar on Defence and Security in 2013. The EU–China Highlevel Strategic Dialogue is an additional channel for security cooperation; it held its fifth meeting in Beijing in May 2015. This makes China the fourth country with which the EU has established a dialogue on defence and security issues. Overall, the security dialogue is facilitated by the fact that neither the EU nor China considers each other as either a potential enemy or a military threat – though the non-democratic nature of the Chinese regime continues to be viewed with suspicion by EU policy-makers and in public opinion (Casarini, 2012: 4). It will be the task of this chapter to explore EU–China security cooperation in the wider sense of the definition of security and to pay particular attention to the growing scope of the non-military EU–China security cooperation. It will proceed by first dealing with the issue of the EU as a (non-)actor in Asian security. The emphasis here will be on exploring the EU foreign and security policy objectives towards Asia, the Chinese stand on regional Asian security, and the degree of convergence or divergence between the two policy approaches on Asia. Following on from this, the chapter will then chart and assess the scope and degree of EU–China cooperation across a number of security dimensions such as military security, non-proliferation of Weapons of Mass Destruction (WMD), environmental security, energy security, terrorism and organized crime, and civil protection. It will conclude with an assessment of the factors that either promote or impede EU–China security cooperation, and provide a brief outlook on the direction of this cooperation.

The EU as (Non-)Actor in Asian Security A number of different perspectives can be applied when assessing whether or not the EU is an effective actor in Asian security, an issue which has risen in prominence in recent years in connection with the tensions in the South China Sea and the North Korean nuclear programme. One is through the way the EU perceives and conducts its security policy in Asia, that is, whether it prefers non-traditional means over traditional (military) ones. The second perspective relates to how China perceives both the means and the impact of the EU’s security involvement in Asia, that is, are they seen as compatible with their own aims? A related perspective is whether China perceives EU security policy as complementary, if not reinforcing, to US security policy in Asia, or as different from it. A fourth perspective is how the majority of Asian countries, other than China, perceive EU security measures in their region

124  The European Union and China and whether they are conceived of as offering attractive alternatives to those introduced by either the China or the US in the region? In the following these different perspectives will be examined more fully.

EU Security Policy Towards Asia In several important EU documents (e.g., the European Security Strategy (ESS), European Council, 2003; Council of the EU, 2007, 2012; European Union Global Strategy, 2016) the EU has declared the security of Asia as inseparably connected with its own security; stressing interests not only in trade, finance and energy but also in politics, human rights and security. The EU, under its Development Cooperation Instrument, had earmarked €5187 million for the Asian region for the 2007–2013 period, and in 2012, European humanitarian assistance (from the EU and its member states) amounted to almost €3 billion (EEAS, 2013a). By 2017 a number of Partnership and Cooperation Agreements (PCAs) had been signed with Asian countries, such as Indonesia, Malaysia, Mongolia, the Philippines, Singapore, Thailand and Vietnam. With the Republic of Korea, the EU has a Framework Agreement and a Free Trade Agreement, which both have been ratified. Although considerably less developed and coherent, EU security policy towards Asia reflects the basic aims and methods of the EU’s neighbourhood policy, a policy geared to fostering regional stability and to linking EU economic, financial, technical and even civil–military operations with the need for democratic reforms or peacebuilding efforts (conditionality principles). In this context the EU has helped (and is helping) to stabilize and develop the economies of a large number of neighbouring countries by granting EU enlargement (with ten Central and Eastern European countries in 2004 and the two Mediterranean countries, Cyprus and Malta, in 2007); by paving EU membership via the Stability and Association process with six Western Balkan countries, one of which (Croatia) joined the EU in 2013; and by engaging in a distinct (stability-oriented) neighbourhood policy with Mediterranean and Eastern European/Caucasus states. The Guidelines of the EU’s Foreign and Security Policy in East Asia of 2012 stress that the EU should rely on its economic presence in the East Asia region and project influence through its ‘unique experience of post-war reconciliation and political and economic integration’, that is, the European model (Council of the European Union, 2012: 8). The EU has coupled its considerable economic presence in the Asian region with an extensive aid and development programme, in which the conditions for democratic reforms (respect for human rights and the rule of law) are strongly anchored. As such, it has assisted in the establishment of democratic governments in Cambodia and East Timor; ensured the implementation of the peace agreement between Indonesia and the Free Aceh Movement; and contributed to the solution of the conflict between the Muslim population in Mindanao and the Manila-based central authorities in the Philippines. The Union is also the largest provider of development aid and humanitarian assistance in the region (Casarini, 2013: 2).

The Security Dimension of EU–China Relations  125 It shares with ASEAN the ‘commitment to regional integration – as a means of fostering stability and prosperity – and to multilateralism – as a way to constrain unilateral and hegemonic attitudes’ (Casarini, 2012: 4). While these efforts are primarily of a ‘soft power’ kind, the EU has also sought to engage in more high-profile security issues in the Asia region, such as the nuclear programme of the Democratic People’s Republic of Korea (DPRK) and the attendant risks of proliferation, and the dispute across the Taiwan Straits or the South China Sea. Although the EU is not involved in the Six Party Talks on North Korea, it is a sought-after ally of the Republic of Korea (ROK) to enhance the legitimacy of ROK policy with respect to the DPRK (Wissenbach, 2013: 522). With regard to the dispute over the Taiwan Straits, the EU encourages measures aimed to deepen economic and ­people-to-people contacts between Taiwan and the mainland. It has mostly acted as an ‘interested observer’ on the conflict of the Taiwan Straits, raising occasional critical voices when China introduces a more heavy-handed approach towards Taiwan, but not challenging the PRC’s insistence on the principle of the One Country, Two Systems policy (see also Chapter 5). On the South China Sea (ICG, 2013, 2014), the EU has issued statements supporting the Hague Court and peaceful resolutions of the conflict, and has supported ASEAN endeavours to reach agreement on a code of conduct on the South China Sea. The EU has also upgraded its economic and political relations with China’s rival claimants such as Vietnam and the Philippines. Lacking the necessary capabilities, as well as the political unity for military engagement in Asia (Berkofsky, 2013: 75; Lentz, 2013: 68; Song, 2013: 471; van der Putten, 2013: 57), the EU’s focus has been on soft power issues, including energy security, climate change and organized crime, and on promoting interdependence and institutional integration with the Asian countries. As a consequence, the EU plays either a minimal or an observer role in the conflicts of the Taiwan Straits, the Korean peninsula, the East and South China Sea, and between India and Pakistan. However, some EU members had been participating in NATO’s mission in Afghanistan and some have retained a certain level of military involvement in the area. For example, the UK is still a member of the Five-Power Defence Arrangements (FPDA), a military consultation agreement with Australia, Malaysia, New Zealand and Singapore; and France has an operational military presence in the Indian Ocean and the South Pacific, whereby troops could be deployed in Asia at relatively short notice (Casarini, 2013: 2). Several EU member states are also selling arms and dual-use equipment to countries in the region. The EU and Asia engage in military dialogues, exchanges, joint exercises and arms sales. These activities are supported through an institutional network such as the Association of Southeast Asian Nations – Regional Forum (ARF – in which the EU is a member but not any EU member state) and the multilateral security activities of the Council for Security Cooperation in Asia-Pacific. The EU became a signatory to the ASEAN Treaty of Amity and Cooperation (TAC) in 2012, but has so far failed to become a member

126  The European Union and China of the East Asia Summit (EAS) and of the ASEAN Defence Ministers Meeting. With the establishment of the Asia-Europe Meeting (ASEM) in 1996, a ‘track-two’ has been initiated which includes a multilateral security dialogue on various levels between the EU and East Asia. A further link is through the Galileo programme (the EU-led global navigation satellite system) with China, India and South Korea. Furthermore, the EU has strategic partnership arrangements with four Asian countries: China, India, Japan and South Korea. Of course, it should be noted that relations between these countries themselves are far from harmonious, which limits the strategic value of these partnerships for the EU. However, for the EU, Asia in general does not rank very high, at least politically. There are few non-economic interests at stake or conflicts that threaten Europe’s interests like those in the Middle East and North Africa, the Balkans, the Caucasus or areas where Europe feels a moral or historical responsibility to show the flag like in sub-Saharan Africa (Wissenbach, 2014: 141). While Asian countries recognize the contributions the EU is making in aid, democratization, regional integration and inter-regionalism, they also perceive it as lacking actorness and capabilities and an overall coherent security policy for the region. The EU is taken for granted and not seen as threatening. The EU is simply not a big player that could make a difference in Asia where China’s interests are focused. And where it is concerned (Korean peninsula, South China Sea) the EU tends to side with the US (Wissenbach, 2014: 141). Some Asian countries also perceive the EU’s engagement in the region as ‘too China-centric’. Does this then mean that the EU contributions to regional security are seen as less attractive than those introduced by either China or the US, or, at best, can the EU only make complementary contributions to those of the other two actors? Before dealing with these questions the regional activities of both China and the US will need to be considered. This will be done in the following by starting with how China pursues its security interests in Asia and how it perceives the EU’s security role in that region.

Chinese Focus on Regional Security China is a large country and surrounded by a huge number of independent and assertive countries, most of them different from it both ethnically and ideologically, and with some China has had armed conflicts in the twentieth century (India, Vietnam, ROK, Japan, former USSR) and border issues. Its regional relationships have therefore been marked by mutual suspicion (Nathan and Ross, 1997: 8). China’s security approach to the Asia region is marked by at least three characteristics, which diverge in their objectives. One is the principle of non-interference that China seeks to uphold in its relations with other Asian countries. The second is the efforts China has made, especially since 2003, to develop a neighbourhood policy with countries in the region, and to settle border disputes with several Asian countries (Fravel,

The Security Dimension of EU–China Relations  127 2008). For example, in October 2013 the standing committee of the Chinese Communist Party Politburo held a conference on the diplomatic work on neighbouring countries, the first conference to address foreign policy towards neighbouring countries (Wang and Song, 2016: 3). The third relates to the rise of China as an economic, political and military power and the attendant assertive role as a regional (and tentatively global) power, especially with regard to issues over the seas around China and trade routes in the Indian Ocean  – for example, the anti-piracy naval exercise in the Gulf of Aden, which is jointly undertaken with the EU’s Naval Force Atalanta. The following will provide a brief treatment of those three characteristics.

Chinese Practice of the Principle of Non-Interference The principle of non-interference is well enshrined in Chinese foreign p ­ olicy and was reiterated in the document entitled ‘China’s Position Paper on the New Security Concept in July 2002’ (MOFA, 2002), which also ­emphasized the issues of mutual trust, mutual benefit, equality and coordination as Chinese foreign policy aims. For example, these principles are applied in China’s policy towards North Korea. Chinese concern for non-interference is visible not only in the context of its relations with its immediate neighbours, specifically in the way territorial disputes in the South and East China Seas are handled, but also in its attitude towards global regimes (see Chapter 10).

Chinese Regional Cooperative Approach Despite adopting a non-aligned policy in 1982, China has had an alliance treaty with North Korea since 1961. It became a member of the Asia Pacific Economic Cooperation (APEC) in 1991 and the ASEAN Regional Forum (ARF) in 1994. It also changed its policy towards ASEAN in 1997, and in 2010 initiated the China–ASEAN free trade agreement. However, a more distinct break with the non-aligned policy occurred in October 2003, when Wen Jiabao, the then Chinese Premier, put forward a new concept of China’s neighbourhood policy, that is, ‘to build an amicable, tranquil and prosperous neighbourhood in the region’ (Wen, 2003). As a consequence of this shift, China has taken a number of steps in order to build up mutual trust and cooperation with its neighbours. First, it has sought to promote the economic interdependence with countries of the region, including raising investments to Myanmar; developing an overwhelming partnership with Cambodia, which received ten times more in foreign investment from China than from the US in 2011 (Hille, 2012); and providing huge aid funding to Sri Lanka. Second, China has intensified attempts to strengthen security in the region via bilateral and multilateral channels. Bilateral attempts include closer ties with Pakistan (Hille, 2012). They also involve cooperation with Malaysia, Singapore, Myanmar and Central Asia countries, partly motivated by efforts to seek secure supply routes of oil and gas and partly inspired by trade interests, such as in the attempt to establish a Belt and Road Initiative (BRI) connecting

128  The European Union and China China with Europe via Central Asia (the land belt) and ASEAN countries (the maritime road). The establishment of the Asian Infrastructure and ­Investment Bank (AIIB) in 2015 is tangible evidence of this attempt to promote a China-friendly neighbourhood. In addition, China has announced the c­ reation of an investment fund worth $3 billion to ease access to funding for projects in Central and Eastern Europe (Ekman, 2015: 4). Multilateral ties are pursued via the ARF, the Shanghai Cooperation Organisation (SCO), ASEAN Plus One, the ASEAN Framework on Regional Comprehensive Economic Partnership (RCEP), the East Asia Summit, and the China–Japan–South Korea Trilateral Cooperation. In particular, the SCO is seen by China as a way to combat the Islamic fundamentalist threat arising from Afghanistan, P ­ akistan and Central Asia and linked with the separatist movement and terrorist actions in north-west China (the Xinjiang region). Under the SCO auspices, China has signed the 2003 Shanghai Convention on Combating Terrorism, Separatism and Extremism, which established the Regional Counter-­Terrorism Agency. It further signed the 2004 SCO agreement on cooperation against the illegal transportation of narcotic drugs, m ­ ind-altering drugs and their component materials, and has engaged in a three weeks long anti-terrorist ­exercise in 2010 (Xia, 2009: 57). Despite fears of an Islamist spillover, China has contributed only a minimum to multilateral assistance efforts in stabilizing Afghanistan. However, it has provided economic assistance and taken steps to include Afghanistan in the SCO, according observer status to Kabul at the 2012 summit in China (Small, 2014). Third, China has successfully resolved 17  border land disputes with its neighbours (Fravel, 2008) but p ­roblems remain with maritime disputes. However, whereas ‘neighbourhood’ for the EU is a laboratory for institutionalized multilateral functional governance, China’s neighbourhoods have been the testing grounds for a geographic and sovereignty-preserving approach to multilateralism (Bardaro and Ponjaert, 2010: 35).

Chinese Assertiveness in the Region Yet as China is encouraging economic interdependence and attempting to promote security via bilateral and multilateral, mostly economic means, its growing economic, political and military power (in particular its naval and air capacities), together with the ongoing territorial disputes China has in the East and South China Sea region, is causing concern not only in Asia but also elsewhere. In recent years China has made significant strides in modernizing its military and, by some estimates, China now spends more than any other country with the exception of the US on defence (Kastner and Saunders, 2012: 163). China’s unwillingness to offer its neighbours security guarantees, together with its more strident defence of claims to disputed territories in the East and South China seas, raises the spectre of competitive nationalism in Asia and a shift in the strategic balance in the region. The number of disputes in these seas has risen from 4 in 1980 to 28 between 2010 and 2012 (Wright, 2012). The tension gained further momentum with China’s declaration in

The Security Dimension of EU–China Relations  129 November  2013 of an exclusive air defence identification zone in the East China Sea, the expansion of islets and reefs in the SCS including airfields, and the moving of an oil rig near Chinese-controlled islands claimed by Vietnam (IGC, 2013, 2014). Despite growing regional economic interdependence, the uncertainties generated by such geopolitical changes, combined with unresolved historical and territorial disputes and rising energy demands, have the potential to create tensions (Song, 2013: 477). It is those developments which led to renewed US efforts in 2012 to strengthen its presence and to expand its security guarantees to its allies in Asia (Clinton, 2011). The US policy changes announced in 2012 include rotational deployments of US Marines to Australia and the planned stationing of the first four Littoral Combat Ships in Singapore. These pledges would not be at the expense of US capabilities in the Asia-Pacific region (Pollack, 2012). The US is also strengthening its pact with Japan by envisaging enhanced cooperation in ballistic missile defence, arms development and sales, intelligence sharing, space and cyber warfare, and in joint military training and exercises, as well as the introduction of advanced radar and drones (McCurry, Branigan, and Lewis, 2013). Part of this so-called US ‘pivot to Asia’ was the proposed Trans-Pacific Partnership (TPP), which was seen by the Obama administration as the US’s rebalancing of its foreign and security priorities to Asia, and which would have excluded China (Harris, 2014: 184). As one of his first official acts, President Trump has revoked US commitment to the TPP. However, the growing economic and military influence of China in East Asia and the US’s vigorous re-engagement in the Asian region – notably Trump’s vocal threats towards the North Korean regime – have raised the spectre, for some observers, of a Sino-US conflict (Kissinger, 2011; White, 2011, 2012, Kaplan, 2014; Holslag, 2015; Shambough, 2016 ). Where does this leave EU policy in Asia? Will it bring the EU closer to one or the other protagonists, or will it encourage the EU to pursue a more independent and at the same time more pronounced security policy in the region? Will a more engaged US in the Asia-Pacific region be detrimental to the transatlantic relationship? It is these triangulated aspects that will be examined next.

US Military Presence in Asia and China-US, EU–US and EU-China relations Different views prevail both in China and in Europe with regard to US developments in Asia. China considers the expansion of the US-constructed network of bilateral alliances and associated military presence, known as the ‘hub-and-spokes’ approach, in which their treaties with Japan and South Korea after World War II were the centrepieces, a sign of enhanced encirclement. To counteract this perceived encirclement, China has the choice of either increasing its own capabilities (weighing up the cost of doing so and the competitive escalation this may cause with the US) or engaging in a more cooperative arrangement with the US. Jones and colleagues (2013) claim that

130  The European Union and China China is increasingly balancing against the US in Asia; and that, on the other hand, ‘key regional states are increasingly aligning with the US to balance against China’ (Jones, Khoo and Smith, 2013: 5). However, this view is not universally shared, with scholars like Kang (2007) qualifying the degree of fear China’s rise is provoking among Asian countries. Alternatively, it can attempt a better relationship with ASEAN and the ARF in order to improve China-US relations, as well as China–EU relations, which in turn would be beneficial for regional stability and prosperity (Zhu, 2012: 3). It is too early to say precisely which choice China will pursue in coming years. Currently, it seems that China (like many of its neighbours) is pursuing a two-pronged approach, combining some of the above-stated options. The EU’s position on the presumed rise of Sino–American tensions, and on the growing national competitiveness in the Asia region, can be viewed from two perspectives. One is for the EU to lend support to either US or ­Chinese aims and actions. The other is to pursue a more neutral or independent line in its security policy in Asia. A third option would be for the EU to be a mediator or honest broker, precisely because it is not a threat to any player in the region. EU support for the US is derived from or linked to a number of f­ actors. Among these are the existing strong transatlantic ties (most EU members are members of NATO), similar value orientations (e.g., democratic principles and liberal internationalism), the continued need of US involvement in Europe (e.g., the Ukrainian conflict and the Middle East) and the pursuance of similar, though not identical, interests in Asia (Renard, 2012: 6). Other reasons relate to the EU’s lack of hard power projection in the Asian region and the need to compensate for this by supporting the US military presence in the region (Holslag, 2012; Keohane, 2012). The latter view is explicitly advocated in the June 2012 EU Guidelines on Foreign and Security Policy in East Asia, which states that the EU should ‘remain sensitive’ to the US role in East Asian security, and that ‘the credibility of US defence guarantees in the region is essential for the region’ (Council of the European Union, 2012: 15). It also chimes with the joint EU–US statement at the ARF meeting in July 2012 on security and other issues in the Asia-Pacific region (European Union, 2012b). In any case, there is an ongoing EU–US Dialogue on Asia-Pacific, which also deals with European concerns that American preoccupation with the rise of China may have supplanted traditional US policy interests in Europe (Pollack, 2012). Such sentiments underscore perceptions in both China and Europe that the EU is failing to evolve into a truly independent force in world affairs, sufficiently detached from US strategic imperatives (Adornino, 2011: 187) and unable to shed its image as an economic and military ally of the US (Zhu, 2012: 2–3). In support of this view, Chinese cite the failure to lift the arms embargo, in existence since 1989. Attempts by the German and French government in the mid-2000s to lift the arms embargo, which had been imposed on China as a consequence of its handling of the Tiananmen Square incident in 1989, were heavily resisted by the US and Japan, with the effect that it still stands. This non-lifting is a source of constant irritation for China that affects EU–China relations generally and security cooperation specifically.

The Security Dimension of EU–China Relations  131 However, despite the close relations the EU has with the US there are also differences between the two, not only over trade relations with the Asian region, but also with regard to security objectives. The US takes a different and more assertive line than the EU on a number of US–China issues (for example, Taiwan and Tibet). This difference also surfaced in the ruling by the Arbitrational Tribunal of the United Nations Convention on the Law of the Sea that had been submitted by the Philippines against China with regard to territorial disputes in the South China Sea. The declaration on the Award by the High Representative on behalf of the EU merely stated that the European Union and its member states, as contracting parties to the United Nations Convention on the Law of the Sea (UNCLOS), acknowledge the Award rendered by the Arbitrational Tribunal, being committed to maintaining a legal order of the seas and oceans based upon the principles of international law, UNCLOS, and to the peaceful settlement of disputes. The EU does not take a position on sovereignty aspects relating to claims. It expresses the need for the parties to the dispute to resolve it through peaceful means, to clarify their claims and pursue them in respect and in accordance with international law, including the work in the framework of UNCLOS (EEAS, 2016c). In contrast to the EU, the US approach towards China includes elements of containment. For the US, the Western Pacific is a traditional and crucial sphere of influence and strategic interests including stationed troops, whereas for the EU it is not the case. Moreover, there are fears that closer alignment with US strategic initiatives relating to China could draw the EU into regional conflicts or security hotspots in East Asia; complicate EU–China relations; affect its ability to act as a more or less neutral player in Asia-Pacific affairs (Casarini, 2012; Grant 2013; van der Putten, 2013: 59); prevent it from having an active voice for reconciliation in Asia (Murray, 2013); undermine its ability to pursue its own political relationships with governments in the region, especially with its formal strategic partners: China, India, Japan and South Korea (Keohane, 2012: 48); and lose credibility in the region (Pawlak, 2012). There are also fears that close EU–US cooperation might be dominated by America’s national interests, a fear that gained more credence through President Trump’s proposed America First policy. While the Chinese are wary about the extent to which the EU can or will adopt an independent line to that of the US, they appreciate the ­benefits of EU non-traditional security activities in East Asia in areas such as energy security, climate change, organized crime and anti-piracy (Song, 2013: 479). Moreover, they solicit EU support for a more multipolar-oriented world, in order to counterbalance the US. Such aspirations appeared particularly promising in the period 2003–2005, with the occurrence of a split between the US and several European states over the Iraq invasion (see also Chapter  10). Yet, in the final analysis, the Chinese assessment of the EU’s capacity or willingness to provide security in Asia is affected by the perceptions or treatment of the EU as lacking cohesion and consistency. In terms of its treatment, as Fox and Godement (2009) suggest, the Chinese are well aware of the divisions within the EU about a range of sensitive issues, and thus tend to pursue divide and rule policies

132  The European Union and China where they can, while their relationship to the US is far more demanding and concentrated. In particular, the closer the relationship gets to issues of ‘hard security’, the more the Chinese see a non-cohesive EU position; rather they can see a ‘strategic gap’ (Wissenbach, 2007; Smith and Xie, 2010: 17). The importance of so-called third or outside actors in EU–China security relations is also evident with regard to Central Asia and the wider Eurasian region. Already certain dynamics in terms of geopolitics can be observed in this respect. To secure its interest in the wider Eurasia region, as well as to counteract Western pressures and economic sanctions (introduced after the Russian annexation of the Crimea and the Russian role in the conflict in eastern Ukraine), Russia has introduced a number of initiatives, such as the establishment of a Eurasian Economic Union (EEU), the agreement to supply large quantities of natural gas to China, the willingness to give up a small tract of land in its Far East claimed by China, and to woo China as an ally. Yet Russia is also keen to preserve its influence in Central Asia and to minimize Chinese efforts to gain access to resources from the region and/or to establish a political presence there. This has direct implications for China’s intention to introduce the BRI that would traverse Central Asia, and to expand its interest in that region. For it to succeed, it would require some sort of coordination with the EU. Whether such coordination can be achieved or will lead to a tactical or strategic Sino-Russian alliance will depend on how respectively they will deal with ongoing economic slowdowns and their determination of standing up to the West (e.g., Russia with regard to the hybrid war in eastern Ukraine and China with regard to the maritime tensions in the South China Sea). Robert Kaplan draws a rather gloomy scenario on future prospects by arguing that ‘as conditions worsen at home, China and Russia are likely to increasingly export their troubles in the hope that nationalism will distract their disgruntled citizens and mobilize their populations’ (Kaplan, 2016: 3). Where does that leave the EU and EU–China cooperation on Eurasia? The EU sees synergies between the Chinese New Silk Road plans and particularly via the established Asian Infrastructure and Investment Bank (AIIB), in which several EU member states are shareholders, and its own investment programme (the Juncker Plan with €315 billion over three years). To capture the synergies between the two initiatives, in June  2015 the EU established a ‘EU–China Connectivity Platform’ (EU–China Summit, 2015). Potentially, economic cooperation between the EU and China on the BRI projects could have benefits for both – for example opening markets and energy access to Central Asia and reducing transit times for goods and agricultural products between the EU and China. It might also open up collaboration between China and the EU on controlling terrorist activities in Central Asia and on providing stability to Afghanistan or possibly Pakistan. Further synergies could also be developed in the China–Central and Eastern European Countries (CEEC) Economic and Trade Forum, which links 16 Central and Eastern European states with China. With regard to the latter, China established a $10 billion China–CEE Investment Cooperation Fund, and added $3 billion in 2014. By pursuing similar strategic aims, the EU and China might be able to overcome Russian attempts to exclude outsiders from Central Asia.

The Security Dimension of EU–China Relations  133 However, it should be remembered that China and the EU pursue different policies in the development of Central Asian countries and are competitors over Central Asian energy resources. In addition, while the BRI is mostly associated with economic benefits for Central Asia, it also possible that this initiative will result in political instability, involving the change of authoritarian regimes and manifesting similar occurrences as witnessed in the so-called Arab Spring. If such a scenario were to happen, it would introduce new dynamics in EU–China, EU–Russia and China–Russia relations. Having examined the way in which both the EU and China engage in Asian security and the way US security operations in Asia affect EU–China security cooperation, it is now time to consider in more detail the bilateral aspect of EU–China cooperation.

Issues for EU–China Security Cooperation What, then, are the security areas in which the EU seeks cooperation with China? In the June 2012 EU Guidelines on Foreign and Security Policy in East Asia the stipulated policy aims include the issues of non-proliferation, counterterrorism, counterpiracy, conflict prevention and peacekeeping. Both the European External and Internal Security Strategies of the EU single out non-­proliferation of arms, counterterrorism, organized crime and c­ yber-attacks as the main threats confronting the EU. The following presents these stipulated aims within the wider framework of EU–China security cooperation, emphasizing bilateral rather than multilateral (i.e., joint actions pursued in global institutions) efforts. The latter will be dealt with in Chapter  10. A start will be made with an examination of the traditional aspects (military) before turning to a select number of nontraditional ones.

Traditional Security Aside from the maritime sector, the EU has very limited military cooperation with China. However, individual EU member states engage in such cooperation. Some of it is conducted via the UNSC, and some involves the exchange of military personnel and naval ships. For example, in 2007 there were 84 naval ship visits and visits of high-level military delegations from China to foreign countries and 84 foreign visits to China. In 2008 there were 84 and 73 respectively, of which, 22 were military visits from China to EU member states and 14 from EU member states to China (mainly from Germany, France, the Netherlands and the UK) (Bo, 2011: 45–46). There have also been small-scale, two-week-long military officer seminars between the major EU member states and China to provide medium- and high-level officers with platforms to exchange ideas on the key issues in their bilateral and regional security issues (Bo, 2011: 46). But, constrained by the arms embargo, EU members are not allowed to train Chinese military officers and there have been no China–EU joint military exercises so far (Bo, 2011: 46–47). The EU has agreed to continue to work towards the lifting of the arms embargo and,

134  The European Union and China as part of that, to seek a consensus among its member states to this effect. The differences derive from the fact that, at the time of the introduction of the embargo in 1989, the EU had no common position on what was covered under the expression ‘arms embargo’. Therefore, it was up to individual member states to interpret the embargo in the context of their national laws, regulations and decision-making processes, or to circumscribe the debate on dual-use of technology (Stumbaum, 2009). According to these interpretations, member states issue export licences. For example, the United Kingdom exported components for Chinese military aero engines as well as technology (including the Searchwater radar), software and related systems for weapons platforms. An Italian joint venture company was involved in the manufacture of vehicles reportedly used as mobile execution chambers in China. In addition, the German Deutz AG diesel engines were incorporated into armoured personnel carriers that were transferred to China, and France has exported AS-365X Dauphine-2 helicopters to China (Grimmett and Papademetriou, 2005; SIPRI, 2012). Member state licences to export weapons were worth almost €3 billion between 2001 and 2011 (Lague, 2013: 3). Cynics claim that ‘if the People’s Liberation Army went to war tomorrow, it would field an arsenal bristling with hardware from Germany, France and Britain’ (Lague, 2013: 1). With regard to maritime security, the EU and China have a common strategic interest in keeping the connecting sea lanes safe and open. As pointed out by Reiterer it is for this reason that ‘China cooperates with the EU through the International Contact Group on Piracy off the Coast of Somalia (operation EU NAVFOR – Atalanta) and is keen to assist in defusing political tensions in strategically important hotspots such as the Straits of Hormuz or Malacca’ (Reiterer, 2013: 80). These hotspots represent some of the most travelled sea routes in the world that affect both EU and China trade interests. Joint efforts in this area are promoted via the EU–China Dialogue on defence and security. Engagement with China on defence matters has been made possible by the unique ‘double hatting’ of the High Representative of the European Union for Foreign Affairs and Security Policy/Vice-President of the European Commission (HR/VP), chairing, as she does, both the meetings of the EU member state Foreign Ministers and Defence Ministers. Given the severe limitations on the part of the EU in terms of jurisdiction, if not capabilities, and given that China perceives the EU as a weak actor in military terms, it is therefore unsurprising that EU–China cooperation on traditional security matters has been at a very low level. Those shortcomings are, to some extent, compensated by EU–China cooperation in the ­non-traditional area of security, to which attention is turned next.

WMD and Non-Proliferation As far back as 1998 the EU proposed a dialogue with China on n ­onproliferation and to cooperate on reinforcing related export controls (EU Commission, 1998: 8). As repeated in the European Union Communication of 2006, ‘Non-proliferation represents a key area for the strategic partnership. International and bilateral cooperation is based on UNSCR 1540 and

The Security Dimension of EU–China Relations  135 the Joint Declaration of the EU and China on Non-Proliferation and Arms Control agreed at the 2004 EU-China Summit’ (European Commission, 2006: 11–12). The declaration identified as priority areas for bilateral cooperation such multilateral issues as the International Atomic Energy Agency’s Comprehensive Safeguard Agreements, the Comprehensive Test Ban Treaty (CTBT), the Fissile Material Cut-off Treaty, and the Convention on the Physical Protection of Nuclear Material (Yoon and Suh, 2013: 415). The  2006 Communication also supported China’s central role in the work on the Korean peninsula. The Iranian nuclear issue had divided the EU and China over the use of UN sanctions against Iran, but was successfully resolved in the agreement between the P5+1 (the five permanent members of the UNSC plus Germany) and Iran (this aspect will be dealt with more fully in Chapter 10). The 2006 Communication further proposed working with Chinese officials to encourage China to comply with all non-proliferation and disarmament treaties and international instruments, and promoting compliance with them regionally and internationally. It also sought to strengthen export controls of WMD-related materials, equipment and technologies as well as of conventional weapons and small arms and light weapons. The EU Outreach programme in Export Control of Dual-Use Items is a long-term project aiming at  cooperatively enhancing international export controls of dual-use items and reducing the risk of proliferation. The German Federal Office of Economics and Export Control (BAFA) is mandated by the European Union to implement projects in the realm of export control of dual-use items (German Federal Office, 2014). Through the EU Outreach Projects, the EU and China have organized three seminars for over 200 Chinese researchers, customs officials and industry managers, as part of awareness-raising and capacity-building programmes on equipment, technologies and export controls (Bo, 2011: 45). The 2012 EU Guidelines restate EU support for peace and stability on a nuclear-free Korean peninsula, and to that end maintain its insistence on the complete, verifiable and irreversible abandonment of the DPRK’s nuclear weapons and ballistic missile programmes, and encourage the resumption of the International Atomic Energy Agency (IAEA) inspections; to return to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), and to sign and ratify the Comprehensive Test Ban Treaty (CTBT) and the Chemical Weapons Convention (CWC) (Council of the European Union, 2012: 24). China supports the establishment of a nuclear-free zone in the Korean peninsula and considers the risk of nuclear proliferation and the risks of nuclear accidents a major threat to regional security. It has therefore backed UN sanctions against North Korea (Song, 2012: 2). It is also keen to solve the issue through the Six Party Talks, which it initiated, but of which the EU is not a part. However, neither the Six Party Talks nor EU and international pressures have prevented the DPRK regime from escalating its nuclear development programme or from flying a number of missile tests over Japanese territory in 2017. Overall, while both the EU and China have prioritized non-proliferation as a main security threat and while both have indicated in many joint declarations the need for cooperation on the issue, only limited

136  The European Union and China success, such as on resolving the Iranian nuclear issue, has occurred in this field, especially at the bilateral level.

Environmental Security: Energy and Climate Change In the domain of energy and climate security, the EU and China regard each other as core partners (Bo, 2011: 47). While competing on energy resources, the EU and China have common concerns in securing energy supply routes, energy-saving devices, managing the impact of climate change and promoting renewable energy sources. In 2012 China and the EU together accounted for around 36 per cent of global energy consumption and 28 per cent of ­energy-related CO2 emissions (Lee, 2012: 23), with China topping the list of CO2 emitting countries. The EU consumes the same amount of energy as China, but it is more dependent on foreign energy than China. According to the Commission’s Green Paper of 2000 on energy supply, if no action is taken the EU’s energy dependency will climb from 50 per cent in 2000 to 70 per cent in 2030 (European Commission, 2000). EU–China energy and environment cooperation started in the 1990s in the form of a joint conference and was further elevated through the launch of the co-financed (€45 million) Energy and Environment Programme in 2003 (European Commission, 2003: annex 3: 31) and through ongoing science and technology cooperation in the field of environment and energy. In 2004 China and the Commission jointly unveiled the five-year Energy Environment Programme (EEP), which paved the way for a great number of workshops and conferences since. Additional institutional links were established in 2005 with the bilateral Partnership on Climate Change, which aims at cooperation on concrete action, such as the progress and development of clean energy technology, and which includes a regular review of progress in the context of annual EU–China summits (MOFA, 2006). In 2010 a Europe–China Clean Energy Centre was established in China to which the EU contributed €12 million. The bilateral Partnership on Climate Change was further upgraded at the time of the 2009 EU–China Summit (Council of the European Union, 2009). Since the introduction of the Partnership on Climate Change, the EU and China have deepened their energy dialogue and conducted concrete cooperation in the field of renewable energy, clean coal, bio-fuel and energy efficiency (Bo and Chen, 2013: 460). The institutional links were further strengthened with the first High-Level Meeting on Energy in 2012, covering energy security and electricity markets. The cooperation has been facilitated by substantial EU funds and loan arrangements, such as on a climate change framework available between the Chinese government and the European Investment Bank, involving two instalments of €500 million each in 2007 and 2010 (Lee, 2012: 24). Altogether ‘project grants covering a wide range of issues in the domain of energy and environment from EU Member States and the Commission amounted to some €292 million in 2008’ (Lee, 2012: 27). EU–China cooperation on climate change not only brings China money and technology to aid its economic development but also improves its image as a responsible state in the international community (Bo, 2011: 54). However, as will be shown in Chapter 10, despite

The Security Dimension of EU–China Relations  137 the fact that the EU and China have become not only signatories of the Paris Climate Change Accord of 2015, but also defenders of this Agreement with respect to President Trump, who is refusing to accept it, EU–China cooperation on this topic at the multilateral level has been slow and cumbersome.

Terrorism, Organized Crime and Civil Protection Both the EU and China condemn terrorism and have overtly stated they will support each other in efforts to reduce terrorist activities. There are, however, disagreements between the two partners on: (1) how to define a terrorist; and (2) how to deal with terrorism and/or introduce counterterrorist measures. While the EU takes a more proactive interventionist approach, China is less inclined to do so. According to Xia, the Chinese position on combating terrorism includes a comprehensive approach to address both the symptoms and the causes of terrorism, enhanced capacity-building of developing countries against terrorism, and rejection of double standards and the simplistic practice of linking terrorism with specific countries, ethnicities and religions (Xia, 2009: 57). However, Chinese attempts to associate ethnic separatists, mainly the Uighurs, with global Islamic terrorism, have not generally been accepted by EU countries. At the 10th China–EU Summit, the leaders recognized that any measures undertaken to prevent and combat terrorism must comply with obligations under international law, in particular international human rights law, refugee law and humanitarian law. They stated that effective counterterrorism measures and the protection of human rights are not conflicting but complementary and mutually reinforcing goals (China–EU Summit, 2013). Yet, in spite of summit declarations, no concrete bilateral agreements on organized crime have occurred or have found their way into strategic partnership documents, except for measures against human trafficking. As noted by Bossong, ‘cooperation on terrorism between EU and China is arguably the most limited in comparison to other strategic partners of the EU, such as India’ (Bossong, 2016: 89). C ­ hina’s cooperation on anti-terrorist activities is much stronger in its relationship with the SCO than with the EU. Even though the annual EU–China sectoral dialogues cover a large gamut of different topics, there is no specified dialogue concentrating exclusively on counterterrorism. The topic thus falls within the broader political dialogue on security and defence. From an EU perspective, it will be interesting to see whether China intends to play an active role in the stability of Afghanistan after the withdrawal of NATO troops and/or whether this will result in renewed EU–China anti-terrorist cooperation.

Organized Crime, Cyber-Security and Civil Protection The range of potential criminal activities that concern both Europe and China is vast, ranging from drug, arms and human trafficking to other (more subtle but nonetheless highly damaging) forms of economic crime, such as VAT fraud, money laundering, match fixing, product piracy and counterfeiting, and the smuggling of cigarettes and endangered species animal products (Bossong and Holmes, 2016). There is EU–China cooperation in the field

138  The European Union and China of counterfeiting and cigarettes smuggling, facilitated by a European AntiFraud Office (OLAF) liaison officer deployed in Beijing since 2008 (Renard, 2014). However, China has been less forceful in combating organized crime activity than the EU, for example on the smuggling of illegal animal parts and products, and the production and export of fake goods (Holmes: 2016). Differences over data protection and the death penalty have been among the factors which have affected EU–China cooperation on organized crime. In a joint summit statement in June 2015, both sides welcomed the recent contacts between Europol and China’s Ministry of Public Security as a step towards reinforcing EU-China cooperation in combating transnational crime (EU–China Summit, 2015). In addition, links have been developed between the Chinese law enforcement agencies and their counterparts in individual member states, such as Germany and the UK, especially in the fight against transnational organized crime (Bossong and Holmes, 2016). In the related field of cyber-crime or cyber-attacks, a first meeting of the EU–China Cyber Task Force took place in September 2012. Following on from this start, a broad consensus is emerging between China and the EU on some of the general principles and norms governing cyber-security such as confidence-building. This is particularly evident in the EU–China 2020 Strategic Agenda for Cooperation, which aims at a ‘peaceful, secure, resilient and open cyber space’ and to ‘promote mutual trust and cooperation through such platforms as the EU-China Cyber Taskforce’ (EEAS, 2013b). But the Agenda, as has been the case with previous discussions, avoids the more controversial issues of content and information control; the prospects for deeper cooperation between the EU–China remain at the level of discourse rather than practice at this moment (Christou, 2016). Moreover, unlike China, where there is a primary emphasis on a national security (threat) logic and therefore deterrence and militarization as the central strategy (hard power), the EU takes a fundamentally different approach to cyber-security which is focused on building resilience to ensure rapid recovery from cyber-attacks, building the necessary capacities to resist cyber-attacks and fighting cybercrime (Christou, 2016). China and the EU also differ on international law in this area, with China arguing for new legislation while the EU contends that existing international law – including human rights law – should be applied to this domain, fearing that new cyber legislation pioneered by China and Russia in the UN framework would roll back civil liberties.

Civil Protection and Disaster Management Moreover, in the area of civil protection, the EU and China signed a €6 million Financing Agreement in November 2010 to establish the EU–China Disaster Risk Management project, each sharing the costs. This project provides for workshops on good practices in emergency and disaster situations together with an EU–China Institute for Emergency Management. The EU and China have also agreed to intensify their cooperation with a view to promoting and facilitating the delivery of humanitarian aid solely based on the needs of people affected by disasters or crisis, and in accordance with humanitarian principles.

The Security Dimension of EU–China Relations  139 While there is a lack of specific plans or institutionalized cooperation between the two sides on civil protection matters, there is some non-institutionalized cooperation, such as the European Commission providing funding (€25.8 ­million) between 1995 and 2010 in response to the floods, snow storms, health issues (bird flu), droughts and earthquakes which hit China (Dorussen et al., 2016). Moreover, there is also some bilateral cooperation between China and EU member states such as France, Germany and the UK.

Conclusion EU–China security cooperation has progressed since 2003. Both partners recognize that there is a strong need to work together to enhance security, to guarantee that their policies benefit lasting stability and development, to invest in the safety of their energy supplies, to limit the impact of environmental hazards, to support effective governance, to tackle non-traditional security threats, and to enhance maritime security. They have established a number of highly institutional dialogues on security, but rhetoric has outstripped practice. Actual security cooperation has tended to be selective, covering mostly non-traditional aspects of security such as non-proliferation, energy and climate change and the fight against international terrorism. Several factors are responsible for this. First, with few exceptions (e.g., climate change) the EU lacks coherence in its security policy approach with China in that it is unable to effectively coordinate security policy among the various national strands and parallel attempts of member states to conduct their own policies with China. The EU is still in the process of institution-building and finding a single common voice, particularly on military matters. As a consequence, China is often able to play a ‘divide and rule’ counter strategy. Second, the EU lacks a sufficiently distinct security profile with respect to the US. It can therefore be too easily discredited by China as lacking independence, relevance and trust. A case in point is the non-lifting of the arms embargo, as already mentioned. Third, by relying on non-traditional means of security, the EU is unable to effectively contribute to the resolution of the conflict in the Taiwan Strait, the East and South China Sea maritime disputes, and the confrontation with North Korea over its nuclear programme. Fourth, by pointing to the links between human rights issues and security the EU is not an easy partner for security cooperation with China. Different approaches to governance and international law have become particularly apparent in areas such as counterterrorism, organized crime and cyber-security. This also exacerbates cultural misunderstandings and mutual distrust between the two partners. An additional factor to note in EU–China security cooperation is that while concepts of non-traditional security have penetrated Chinese thinking, ‘they remain secondary, are less developed, and are given far less weight than in European thinking’ (Wong, 2015: 5). Given these limitations, doubts remain as to whether the upgraded partnership of 2010 has promoted a clear mutual understanding of the common strategic interests between the EU and China (Song, 2013: 476). At best, the relationship between the strategic partnership and security remains tenuous.

Chapter 9

International Development Policy and EU–China Relations

Introduction Contributing to global sustainable development is a declared common objective of both the EU and China, for example in the shared UN Framework of the Sustainable Development Goals (United Nations, 2015b). Their means to achieve this common objective differ in many ways, which this chapter will examine together with the historical, ideological and geopolitical reasons. The chapter will also review EU–China attempts to identify common ground bilaterally and within the framework of global development institutions. Geographically, this chapter will look more closely at the EU’s and China’s policies on Africa (mainly sub-Saharan Africa) because this vast continent has the largest number of least developed countries and is the focus of most of Europe’s development aid and also most of Chinese assistance and investment in developing countries outside its Asian neighbourhood. Africa, through the African Union (AU), also has continental partnerships with both the EU and China. Finally, Africa’s relations with China have been among the most heated political and academic debates in international relations. China and the EU of course also have important relations with developing countries in Asia and Latin America (LA). In the EU they are handled through separate and much smaller development funds than those reserved for the African, Caribbean and Pacific countries (ACP) for important historical reasons. Compared to Africa, Latin America’s relations with Europe are less affected by a post-colonial complex (Mayall, 2005: 303) and more focused on trade and investment whereas China’s relations with LA have been relatively recent and also largely economic (Faust and Mols, 2005; Dosch and Goodman, 2012). China has become one of the top foreign investors in LA and Africa and growth has been very steep from only very low levels until the early 2000s. As with African countries, LA faces the challenges of trade imbalances between exports consisting largely of commodities to China and manufactured imports from there (Dosch and Goodman, 2012: 9–10).

The EU’s and China’s Approaches to Development Differences between the EU and China on development can be found in their respective motivations, instruments and the nature of their relations with developing countries and their respective stance on the global governance of 140

International Development Policy and EU–China Relations  141 development. The differences in the definition, nature and quantity of development assistance will be addressed later in this chapter. Development for the EU has traditionally been an agenda associated with often complex Official Development Assistance (ODA, see Box 9.1), trade preferences and – since the end of the Cold War – a number of development policy prescriptions laid down in EU policy documents such as the European Consensus and reflected in agreements with developing countries such as the Cotonou Agreement with 79 countries in Africa, the Caribbean and the Pacific. The Cotonou Agreement aims to reduce and eventually eradicate poverty and contribute to the gradual integration of the ACP countries into the world economy. It is based on three pillars: 1. development cooperation 2. economic and trade cooperation 3. political dialogue. While the EU works with partner governments on the basis of such comprehensive bilateral or multilateral Partnership and Cooperation Agreements (PCA), European and international NGOs, independent of government policy, raise important funds for their own humanitarian and development work, sometimes more than ODA. The EU also works with NGOs and local authorities besides governments to deliver aid, and consults a broad array of stakeholders on strategy documents and during implementation. In some cases assistance is exclusively channelled through NGOs when governments are not in place, lack capacity or are politically unacceptable for the EU. Individual member states of the EU pursue their own development policies, but broadly speaking their policies are similarly devised and implemented. All member states subscribe to the European Consensus for Development first launched in 2005 and updated by the Council in 2017 (European Commission, 2017b), but most have their own strategy papers guiding national development priorities. Twenty EU member states and the EU itself are also members of and bound by the Organization for Economic Cooperation and Development OECD’s 30-member Development Assistance Committee (DAC) rules and undergo regular peer reviews on each other. Individually and through the DAC, ODA statistics are published on a regular basis and in a comparable framework. The relations with many developing countries, notably in Africa, are aid-driven and under the responsibility of the European Commissioner for Development (or national development Ministers rather than Foreign Ministers). EU delegations and many European countries’ embassies in these countries are largely staffed with aid administrators. China is not a member of the OECD DAC and does not undergo its peer reviews. It does not consider itself as a donor, but as a developing country. Nevertheless, China has become a major player in overseas development over the last two decades. China’s development policy has long been associated with economic growth, infrastructure and technology transfer and purported win-win approaches combined with a hands-off approach to problems in partner countries (principle of non-interference in domestic affairs). China

142  The European Union and China

Box 9.1  Development Assistance Committee definition of ODA The DAC defines ODA as those flows to countries and territories on the DAC List of ODA Recipients and to multilateral institutions which are 1. provided by official agencies, including state and local governments, or by their executive agencies; and 2. each transaction of which: (a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; and (b) is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent) (OECD DAC Statistical Reporting Directives DCD/DAC(2010)40/REV1). Source: Official development assistance – definition and coverage, OECD Development Assistance Committee (DAC) http://www.oecd.org/dac/stats/officialdevelopmentassistancedefinitionandcoverage.htm

has a long tradition of giving assistance to other developing countries, but has only in 2011 and 2014 laid out its policy in White Papers on China’s Foreign Aid (The State Council, 2014). China’s identity as a developing country makes a crucial difference to the EU, as does its own contribution to achieving global development objectives (such as the Millennium Development Goals) through its own domestic development. According to the World Bank China ‘has lifted more than 800 million people out of poverty. China reached all the Millennium Development Goals (MDGs) by 2015 and made a major contribution to the achievement of the MDGs globally’ (World Bank, 2017). China makes few prescriptions regarding a partner country’s ­development path and tolerates any political regime as long as it respects the One China policy, while the EU is more intrusive (patronizing), promotes political norms (democracy, human rights) and requires other preconditions laid out in the partnership and cooperation agreements (Quirk, 2014; Kaya, 2014). China’s policy rarely tries to address issues behind the borders and rarely works through NGOs, although there is a multitude of subnational (provincial) and business actors engaged semi-independently in business and investment relations with African countries (Gu et al., 2016). China stresses its identity as a developing country in South–South cooperation, ‘providing assistance to the best of its ability to other developing countries’ (The State Council, 2014), while the EU emphasizes its historical and moral responsibility towards former colonies and its global objectives of poverty reduction and sustainable development. Developing countries are sceptical of both professions of altruism, not least as both China and the EU (and notably

International Development Policy and EU–China Relations  143 some of its member states and former colonial powers such as France, the UK and Belgium) are seen as powerful, more or less capitalist and self-interested players with their own agendas. However, South–South cooperation remains an important common reference point for developing countries, just as China and the G77 group are pursuing diplomatic objectives in the UN framework. Overall, China’s relations with developing countries in all regions tend to be economy-driven rather than focusing on a global aid agenda or advocating a ‘Chinese model’ of development (which would contradict its foreign ­ hapter  4). policy principle of non-interference in domestic affairs; see C While there is a central government policy and financial framework for development and for relations with Africa, the increasing interactions with African and other developing countries in recent years have been pragmatic, opportunistic, fragmented and manifold (Gu et al., 2016) but fairly high-profile. With China’s rise and global economic engagement a large number of developing countries now have a new partner and a development approach beyond the ‘traditional donors’ whose diversity had been limited through the OECD-DAC guidelines and the ‘Washington Consensus’ of the International Monetary Fund (IMF) and the World Bank (without these guidelines making aid necessarily more effective; Chandy and Kharas, 2011). In fact China’s own economic development provides a large part of the attractiveness of China for other developing countries (Faust and Mols, 2005; Liu, 2014). For many people, China’s model (whatever that is; Dosch and Goodman, 2012: 12–13) has worked, lifting hundreds of millions out of poverty, and building top-notch infrastructure and modern mega-cities inhabited by lavishly spending people that are role models for aspiring middle classes elsewhere. China’s development from a country poorer than most African countries at independence to a powerful, modern industrialized country is there for everyone to see. The attractiveness of China’s ‘rags to riches’ story – like Korea’s – includes a focus on economic growth or enablers of growth, such as infrastructure, industrial projects, export promotion and pragmatism, as opposed to the elaborate and complex, often bureaucratic sector-wide development approaches and ‘capacity-building’ that characterizes EU development policy. China also used approaches in distinctive ways that have not been successful elsewhere, for example special economic zones (SEZ), which China has used to propel itself from poverty to economic powerhouse in a generation. Many developing countries’ policy-makers assume that China’s success can be emulated. However, what has worked in China doesn’t necessarily work elsewhere for various reasons. These include different natural and economic conditions (small markets, low infrastructure density in Africa), different state capacity and governance structures or widespread corruption as well as different labour laws and business practices (Wissenbach and Wang, 2017). Both the EU and China also offer trade preferences to developing countries. Trade preferences under international trade law are laid out in the enabling clause of the General Agreement on Tariffs and Trade (GATT), known as the Generalized System of Preferences (GSP). This allows developed countries to apply different tariffs to different categories of trading partners (developing

144  The European Union and China and least developed countries, or LDCs) without violating Article 1 of the GATT which requires non-discriminatory and equal (most favoured nations, or MFNs) treatment of trading partners. The EU’s GSP has three principal elements. One is the standard GSP through which the EU offers certain foreign goods non-reciprocal preferential access to the EU market in the form of reduced or zero tariffs. The second element (GSP+) is a specific incentive arrangement offering tariff reductions to vulnerable countries that have ratified and implemented international conventions relating to human and labour rights, the environment and good governance. The third component is the Everything But Arms (EBA) initiative which guarantees duty-free and quota-free access to the EU for all products except arms and ammunition for 49 least-developed countries.1,2 China does not have such a GSP system, but offers unilateral and selective trade preferences for LDCs; however, few details are available. African countries regularly pressure China for more generous market access for their goods. The China–Africa Research Initiative has compiled data on China– Africa trade which has been steadily increasing since 2000, punctuated by a slight slump and quick recovery from the 2009 financial crisis. However, weak commodity prices since 2014 have greatly impacted the value of African exports to China, even while Chinese exports to Africa remained steady.3 The differences between the EU and China on the global development agenda need to be explained before taking a closer look at their development assistance and the implications for relations with Africa and EU–China relations.

Development Policy or Geopolitics? One possible explanation for the differences on development policy between the EU and China is that they are driven by geopolitical and geo-economic agendas. Many analysts see the EU and China as competitors for resources or markets and rivals for influence in the developing world (Quirk, 2014: 47; Fox and Godement, 2009). Mohan and Power (2008) framed the issue as an international competition for energy resources or a new ‘scramble for Africa’ and emphasized the differences between Western perceptions of Africa as a moral cause and Chinese visions of Africa as a business opportunity.4 China is usually assumed to pursue a realist foreign policy as opposed to the EU’s normative foreign policy (Crookes, 2013), but such views ignore the strongly normative coloration of China’s South–South cooperation policy. China has 1 Regulation

(EU) no 978/2012 of the european parliament and of the council of 25 October 2012 applying a scheme of generalized tariff preferences and repealing Council Regulation (EC) No 732/2008 Official Journal of the European Union L 303/1. 2 Detailed trade data for EU-ACP can be found on the European Commission’s Trade Directorate’s website at: http://trade.ec.europa.eu/doclib/docs/2006/september/ tradoc_113340.pdf (here for 2016 but regularly updated). 3  http://www.sais-cari.org/data-china-africa-trade/ 4 On the original scramble, which already had moral overtones alongside business opportunities with its focus on the three ‘C’s – Christianity, commerce and civilization – and humanitarian intervention against the slave trade, see Pakenham (1991).

International Development Policy and EU–China Relations  145 no colonial past in Africa and emphasizes its shared destiny as a victim of imperialism that feeds its anti-hegemonic (and hence anti-Western) discourse. Initially, when China emerged in the mid-2000s as a major player in Africa, the apparent competition over influence in Africa impacted negatively on EU–China relations. China’s rise was perceived as both a power and a normative threat: China’s foray into Africa and its popularity among African leaders were seen as a challenge to Western political and economic dominance in Africa but also to the objectives of EU development policy and more particularly to the aid effectiveness agenda. Some observers even suspected China of deliberately undermining Western development concepts to build a ‘Beijing Consensus’ (Cooper Ramo, 2009). This narrative of a ‘new scramble’ can be qualified by building on research in recent years. First, it is important to note that the mere scale of the economic dynamics unleashed by China’s reform process in itself has changed the nature of global opportunities and challenges for all countries, including the EU itself (Godement, Parello-Plesner and Richard, 2011). China’s growth has reversed earlier trends of low prices for raw materials and high prices for manufactured goods (Kaplinsky and Morris, 2009). Changes in terms of trade affect African countries unevenly depending on whether they export raw materials needed for China’s huge manufacturing industries or not (Broadman, 2007). However, all countries – developed or developing – are importing cheaper manufactured goods from China while China itself is expanding and moving up global value chains. Depending on each country’s context this represents various domestic opportunities and challenges for developing countries’ own strategies to industrialize. Policy-makers and analysts in Africa, LA and elsewhere are ­ worried that China’s competitive industrial production undermines nascent ­African industrialization attempts (Kaplinsky and Morris, 2009), while European companies complain about unfair competition from China’s state-owned enterprises (SOEs) for lucrative markets in Africa and elsewhere. But, in more recent years, as labour costs in China have increased so has Chinese outsourcing of manufacturing to developing countries in Asia and to some African countries (such as Ethiopia and Rwanda). Under pressure from African governments worried about an increase in Chinese imports of manufactured goods, China has proposed cooperation on industrialization, technology transfer, industry parks and other accompanying measures (Gu et al., 2016). China’s proportion of concessional loans to Africa has increased significantly as has the China-Africa Development Fund (CADF) assisting Chinese companies in more than 70 projects across Africa (Gu et al., 2016; Infrastructure Consortium for Africa, 2017). These may be indications that the government is trying to leverage public finance more to achieve those objectives, as also emphasized in the Chinese White Paper (The State Council, 2014): ‘concessional loan is mainly used to help recipient countries undertake manufacturing projects and large and medium-sized infrastructure projects with economic and social benefits.’ Some African countries use their own leverage and regulate investment: the Chinese shoe factory in an industry park in Ethiopia showcased during the Chinese Premier’s visit in 2014 is as much due to Ethiopian legislation barring foreign business from retail

146  The European Union and China activities unless they produce in the country as to Chinese business interests in outsourcing production for African markets to low labour cost countries. The chief motivation of Chinese companies investing in Africa, nevertheless, remains profit and market expansion. SOEs can rely on government and state-owned banks’ support to get contracts for projects overseas, which they actively seek (often in competition with other Chinese companies). This, however, indicates that such investments are not a consequence of a single-minded geopolitical strategy by the government, but rather a result of business agency within a broad political framework that encourages and supports Chinese companies to seek markets abroad as part of the industrial restructuring in China (Gu et al., 2016). Fourie (2014) compares Ethiopia and Kenya learning from East Asian models of development, with one (China’s) more state-led, top-down model adopted by Ethiopia and one (Korea’s or Malaysia’s) more market-driven adopted by Kenya. Both African countries pursued ‘models of modernist developmentalism that are a far cry from the grassroots, participatory and institutionalist agendas that traditional donors often promote in Africa’. Fourie’s key point is that African policy-makers have the agency to ‘seek out and domesticate policies that are seen to have “worked” abroad, particularly in an era in which they have a greater choice in development partners’ (Fourie, 2014: 20). In short, China’s contribution to development cannot be reduced to a scramble for resources. Yet it is also very different from the European focus on development as a global public good promoted by ODA funding aimed chiefly at poverty reduction. A more helpful analysis is that the Chinese government believes, based on its own (and Asia’s) experience of the development state pursuing industrial policies geared to enhance GDP growth, that this is the best recipe for other developing countries (Wissenbach and Kim, 2013). This belief is widely shared by developing countries. Furthermore, China’s own development needs, priorities of industrial restructuring and fostering of its own ‘global champions’ are important interests pursued through investment and fostering development abroad through an active policy to promote mutually profitable economic ventures in developing countries (ODI and trade). Rising tensions about development policy towards Africa prompted the European Commission to reach out to China and propose a dialogue in 2006 aimed at avoiding a war of words and competition about development which was thus correctly seen by the EU as an opportunity rather than a geopolitical competition. The dialogue was intended to help close an increasing gap between a donor-driven aid effectiveness agenda and the reluctance of non-Western countries to conform to Western models of development policy. Since then, and influenced by African pressure, EU development policy has moved somewhat closer to the Chinese approach of offering credits such as the European External Investment Plan proposed at the 2017 EU–AU summit. Beyond development and economic competition for markets, security interests in Africa have in recent years become an important (and contested) strategic concern for Europe (Tempest, 2017), related to migration and

International Development Policy and EU–China Relations  147 terrorism as well as transnational crime and piracy (Ero, 2017). On combating piracy in the Horn of Africa there has even been convergence of security interests (freedom of navigation) and intense dialogue and cooperation between the EU and China (Barton, 2013). Such dialogue and cooperation has in recent years been practised also in relation to international crisis management efforts such as South Sudan’s civil war. Another example is the problem of small arms and light weapons (SALW) that in huge numbers have fallen to non-state actors from pastoralists to organized gangs, rebel groups and terrorists. SALW are sold by Russia, China and many Western countries. China – in a government-centric way – follows the legal process of selling arms only to governments, and trusts that the recipient governments are then able to keep these safe and out of criminals’ or rebels’ hands (which is often not the case). The EU by contrast tries to also build the capacity of recipient governments to control and keep such weapons safe. Since 2012 an EU–China–Africa expert group has been discussing EU–China–Africa cooperation on these issues (Council of the European Union, 2012b). However, dialogues on development, African security issues or envisaged EU–China cooperation in this area have not been easy because of suspicion from developing countries about the purpose of EU–China dialogue and cooperation regarding them. Different approaches and funding from the EU and China provide developing countries with alternatives that allow them reduced dependence on former colonial masters or powerful Western countries and companies. Therefore, many developing countries prefer to play off external partners for their own interests, in particular those countries that are fortunate enough to have coveted resources (natural, economic or diplomatic). Countries under pressure or sanctions from Europe (like Sudan, Burundi or Zimbabwe) can find help from China. This makes China’s engagement with the EU and other Western development partners understandably rather difficult and leads to EU frustration when African leaders treat China better, despite much larger EU financial contributions (Ero, 2017). Conversely, cultivating good relations with African countries, with 55 votes in the UN, and other international organizations is an important diplomatic asset. The PRC owes its re-entry to the UN in 1971 to African votes and is adamant to maintain its diplomatic allies in order to defend its interests (Chapter 4). The EU has until recently not really leveraged its vast development expenditure for diplomatic gain (Ero, 2017). It even failed in its first attempt in 2010 to get support for the EU’s full speaking rights in the UN General Assembly (De Baere and Paasivirta, 2013) from countries receiving millions of Euros in aid. In the UNFCCC climate change negotiations the EU at last managed to forge a global climate change alliance (partly against China’s position) to back its agenda. In short, a first key to explaining some of the differences between the EU and China on development and on Africa is the diverging political, economic and diplomatic interests, but these do not support the narrative of a new scramble for Africa.

148  The European Union and China

The EU, China and Developing Countries: A History of Competition and Cooperation A second key is to look at different perspectives on global governance (see also Chapter 10). China’s engagement with developing countries has brought into question a number of European assumptions about global governance; in particular its liberal approach to multilateral and rules-based global governance is coming under pressure from countries privileging sovereign national approaches to issues such as climate change, development and even trade and investment. An alternative view promoted by many developing countries and China itself is to adapt the current order to the new realities and make room for divergent ideas and players, making the international order more diverse, universal and legitimate. In international fora China tends to take the role of champion of developing countries’ interests, whether specifically mandated or not. Through involvement in ‘club governance’ such as the G20, China is almost forced to take such a role to deflect criticism from non-G20 countries for breaking developing country solidarity (the G77 and China bloc) (Fues and Wolff, 2010: 1). It regularly calls on OECD donors to respect their financial commitments (0.7 per cent of GDP for ODA; Li, 2014). The Chinese government insists that China is still a developing country and points to its domestic development challenges and weaknesses (World Bank, 2013; Li, 2014) in order to refute perceptions that it is a strong power. China wants to reduce the expectations of international responsibility that come with the great power status. For some observers this is a genuine balancing act (Wissenbach, 2011); for others merely free-riding behaviour (Lieber, 2014) or hard-nosed self-interest (Sanusi, 2013). These issues touch on very sensitive issues of history and ideology which are another key explanation for some of the tensions and difficulties for EU– China cooperation in the field of development or vis-à-vis Africa (and other former European colonies).

History Matters Differences in perceptions and self-perceptions can explain many differences in the EU’s and China’s approaches in particular towards Africa. All actors are in fact in a process of redefining their identities and roles in a changing world, most obviously China as the long discussions about its ‘rise’ or ‘peaceful development’ show (Buzan, 2010; Zhang, 2012). Africa’s identity and role in the world have also evolved tremendously: African independence happened during the Cold War and hence new countries were wooed by both superpowers (and China). After the Cold War their strategic value dropped close to zero and Africa’s development was almost exclusively framed in humanitarian terms as a European moral cause while China concentrated on its domestic reform process and relations with its Asian neighbours. The US only occasionally paid attention to Africa, even under its first ­Afro-American

International Development Policy and EU–China Relations  149 president. The first ever summit between the US and African leaders was convened only in 2014 ostensibly to catch up with China’s influence in Africa. However, the economic changes of the global environment (plus the concerns about terrorism) since about the turn of the millennium have had a major impact on the renewed strategic importance of African countries for outsiders and on African agency in world politics. Europe’s identity and global appeal continue to evolve with the process of EU integration. The financial crisis has dented Europe’s material situation and created a strong perception of Europe’s decline (even though the EU remains China’s and Africa’s most important trading partner and collectively the largest economy in the world despite the crisis). The consequences of the UK leaving the EU will further limit the EU’s influence in many Commonwealth countries, and also reduce the EU’s ODA funds, as for instance the European Development Fund (EDF) is likely to lose the UK’s 14  per  cent contribution. The future EU trade policies are also unclear, with the renegotiation of the Cotonou Agreement (which expires in 20205) likely to review the largely failed European Partnership Agreements and also being conducted in parallel to the Brexit negotiations . This has an impact on outside perceptions of Europe’s hard and soft power and also impacts how Europeans see their role in the world (Youngs, 2013). Beyond current changes in Europe’s and China’s power and influence, the identity of actors in development policy is in no small part built on historical narratives and memory, notably regarding colonialism and the North/South divide. It is generally little-known how important the issue of colonies’ independence and the EC’s customs union was in the early stages of European integration. African countries were mostly still European colonies when the European Community came into being and the trade preferences of these colonies (and in the case of Algeria ‘membership’ as it was then considered an integral part of France) were an important topic in the negotiations of the Rome Treaty in 1955–1957. At the same time Asian and African nations came together in Bandung to join hands in anti-colonial strategy and proclaimed the Five Principles of Peaceful Coexistence (see Chapter  4, Box 4.1). Many European policymakers (notably from France and Belgium) spoke about ‘Eurafrique’ and were adamant that Europe’s role between the superpowers was bolstered by their (already crumbling) overseas empires; others such as those from the Netherlands and Germany were more reluctant as decolonization and financial costs were considered (Hansen and Jonsson, 2012). A major issue in the negotiations of the Rome Treaty was the creation of the European Customs Union which challenged the preferential and protectionist trade arrangements (notably for the import of raw materials) between some of the six EC founding members and their colonies (Mayall, 2005: 296, 303). France, Belgium and Italy insisted on continued subsidies of colonial exports, while Germany and the Netherlands were reluctant to co-finance these preferential trade arrangements. In the 5  http://www.consilium.europa.eu/en/policies/cotonou-agreement/

150  The European Union and China end, preferential trade arrangements were agreed through association and a special fund (the EDF) in the Yaoundé Conventions with the (former) colonies that put them at the top of the EC’s ‘pyramid of preferences’ (Mayall, 2005: 298–299). This led to tensions with other developing countries (essentially the British colonies) which termed these arrangements neo-colonial, but ended up joining the association agreements through the Lomé Conventions, creating the group of ACP states as it became known in the 1970s after the UK joined the European Community and customs union in 1973. Ironically, this issue has returned with the UK’s Brexit negotiations, with the UK’s future trade relationship with the EU and with developing countries a major concern. The preferential arrangements – most famously for bananas – were later successfully challenged by LA countries, and the EU and Africa had to negotiate new types of WTO compatible trade arrangements (Economic Partnership Agreements, or EPAs) under the Cotonou Agreement. The ACP are no longer at the top of the EU’s pyramid of preferences, but rather in the lower tier behind the European neighbourhood, bilateral FTAs and the least developed countries (Mayall, 2005: 302). The various association agreements ‘in the shadow of Empire’ (Mayall, 2005) are thus at the origin of the EU’s development policy, of the EDF and to some extent even of European external action, as the EU aid offices in the former colonies formed the embryo of the EU’s network of Delegations around the world (Dimier, 2006). This of course leads to continuity, at least in the eyes of the partner countries, of a relationship based on colonial links and a strong sensitivity over European interference or patronizing attitudes. For similar reasons, the European aid narrative is still strongly influenced by a perception of moral obligation (guilt) and charity which still resonates strongly with European public opinion. NGO and celebrity advocacy for poor people in Africa builds on this. However, since the turn of the millennium and under the impulse of the Nordic countries, Germany and other members with no or a limited colonial past, the dominance of the former colonial links in both policy and bureaucracy (Dimier, 2006) has increasingly given way to a global EU development policy, although the ACP structure has resisted attempts to integrate the EDF into the EU budget. However, the ACP structure, which during the Cold War very much respected the sensitivities about sovereignty, has given way to a more normative, conditional approach by the EU to development policy, reflected in the 2005 ‘European Consensus on Development’,6 which tried to turn the page on the post-colonial relationship, but also on the controversial structural adjustment policies of the IMF-led ‘Washington Consensus’ of the 1990s.

China and Developing Countries During the period of decolonization and the Cold War, China became a player in Africa with limited means, but high-profile support to the ­anti-colonial struggle such as the famous Tanzania–Zambia railway or direct military 6

­https://ec.europa.eu/europeaid/sites/devco/files/publication-the-european-consensus-o n-development-200606_en.pdf

International Development Policy and EU–China Relations  151 support to various liberation movements. Many of China’s traditional friendship ties go back to this solidarity with the colonized against their European masters, so that this narrative still speaks to African and Chinese audiences. Developing countries became an arena of the Cold War between the US, the Soviet Union and China. The US, after being one of the driving forces behind the dismantling of Europe’s empires, put the interests of decolonization behind the priorities of the Cold War for fear of Communist expansion. In the early 1960s President Kennedy redefined US development assistance as a strategic interest to combat Communist influence. Foreign aid was always unpopular with the US Congress and in 1963 the Clay report recommended a Western burden-sharing in which Africa was to be a European responsibility (Mayall, 2005: 299). Development aid is still largely considered to be of little importance in US strategy. Washington’s influence on development policy was mainly channelled through the IMF and the World Bank which forced neo-liberal structural adjustment policies on developing countries across the globe, fostering widespread resentment at the social and political cost of this ‘Washington Consensus’. The embracing of alternatives to these recipes explains to some extent the popularity of China and other emerging countries in Africa and Latin America. A dramatic change in China’s Africa policy came when it adopted its opendoor policies and the Cold War ended with the collapse of the Soviet Union. That change led to a period of decline in relations with African and other developing countries as politics and ideology mattered less and China’s economic relations focused on its Asian neighbourhood and the industrialized countries of Europe and the US (Li, 2007). Only since the turn of the millennium, with China’s global liberalization (WTO accession in 2001) and double-digit economic growth, has Africa re-emerged as a priority for China especially in terms of trade and investment. The growth in trade, investment and diplomatic relations since then has been spectacular. China launched the Forum on China Africa Cooperation in 2000 and convened its first summit meeting in Beijing in 2006. Between summits, every three years since then the FOCAC meets at ministerial level alternately in Africa and China. The secretariat is in Beijing. It provides a framework for coordinating China–Africa relations, but does not have a common funding framework or a breakdown of the bilateral funding and relationships, which is intentional on China’s part to avoid ‘competition’ for funds. The ideology of South–South Cooperation (SSC) – stemming from the Cold War – has endured and is still being used today to cast China’s economic relations with developing countries in terms of solidarity while North–South relations are portrayed in exploitative (neo-colonial) or unequal power terms. Politically, SSC allows treating developing countries as China’s equals despite big differences in size and resources, whereas developing countries’ relations with European countries are traditionally perceived as unequal even though trade relations may in fact be more balanced in EU–Africa trade than in China–Africa trade and the EU preferences being more generous than China’s. China tends to cast its power in very different terms from those of

152  The European Union and China the Western countries (Hellendorff, 2013), for instance through advocating ‘no strings attached’ aid and non-interference in domestic affairs based on the principles of SSC. This explains why China reacts angrily to accusations of neo-colonialism occasionally levelled at China even by Africans. For instance, Nigeria’s then Governor of the Central Bank, Sanusi, wrote in the Financial Times on 11 March 2013: ‘So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism. The British went to Africa and India to secure raw materials and markets. Africa is now willingly opening itself up to a new form of imperialism’ (Sanusi, 2013). K. S. Amanor defines South–South cooperation in an optimistic take as challenging the inequalities of conditionality imposed by Western aid on Africa: ‘Instead of making investment conditional on infrastructure development and institutional reform as under Western economic restructuring, South-South cooperation advocates the development of investment to promote change and enhanced economic and institutional management’ (Amanor, 2014: 3). However, since Chinese companies are at the forefront of the development drive in Africa, they do assess the hard (physical) and soft (human resources, business environment) infrastructure for their investments in Africa. However, the promise of SSC can also be an illusion: China’s economic strategies first and foremost serve Chinese economic interests. And the downside of China’s lack of colonial past is that it doesn’t have the ‘charitable or moral impulse’ of European donors that African recipients have gotten used to in negotiations with foreigners. Solidarity is not what business deals are about despite abundant political rhetoric. But SSC does provide avenues for building a more pluralistic economic order in terms of numbers of actors, different sources of funding and development models. Business relationships have been added to old donor-recipient or political client relationships. Owing in part to this ideological affinity and political rhetoric, many ­African countries have no clear strategy towards China (Hellendorff, 2013: 3) or base their strategies on assumptions about the country that are not always well researched. A major pitfall can be the negotiation capacity of developing countries when dealing with more powerful/resourceful partners (be that foreign governments or foreign investors). It is not simply because a foreign investor is from a developing country (Chinese company) rather than from a former colonial power (European company) that a developing country gets a better deal. Ultimately, the alternative that China provides to developing countries is an enhanced responsibility to make the ‘right’ decision in the ‘national’ interest (Wissenbach, 2007; Wissenbach and Wang, 2017).

The EU’s and China’s Approaches to Development Assistance: Commonalities and Differences The EU and its member states collectively are the largest donors of aid (€31 billion between 2014 and 2020). Like China, the EU channels most aid to Africa through bilateral programmes under the Cotonou Agreement and

International Development Policy and EU–China Relations  153 the European Development Fund (EDF). The EDF, with a volume of €31.5 billion for the period 2014–2020, is outside the EU budget and financed through member states’ contributions, but managed by the European Commission with European Parliament and EU member states’ committee oversight and accompanied by ACP institutions: Joint Councils of Ministers, Committees of Ambassadors and a Joint Parliamentary Assembly. Based on the Cotonou Agreement, on the African side the National Authorising Officer has a strong say in programming, although the EU side tends to do the technical work. China’s official assistance is exclusively channelled through partner governments or official institutions. China’s ‘White Paper on China’s Foreign Aid’ provides no clear definition of aid or assistance, nor does it give figures that are easily comparable with those of OECD DAC members. According to the White Paper by China’s State Council (2014), China’s aid amounted to about $5 billion annually for the period 2010–2012, about 0.07 per cent of China’s GDP. There are limited data on the grants Beijing provided; the 2011 White Paper (The State Council, 2011) lists that, from the 1950s to 2009, China provided a total of 256.29 billion yuan ($32 billion) in aid to foreign countries (Figure 9.1). The 2014 White Paper covers the period 2010–2012 and indicates a total volume of assistance over these three years of CNY89.34 billion ($14.41 ­billion). Figure 9.2 illustrates the distribution of their investments in $ billion. Yet some of this Chinese traditional aid is project-based, with SOEs being the key players (construction of schools, stadiums or official buildings for instance). The White Paper describes Chinese assistance as follows: ‘From 2010 to 2012, China provided foreign assistance mainly in the following Figure 9.1  Chinese foreign aid investment in $ billions between 1950 and 2009

73.55

Grants 106.2

Interest-free loans Concessional loans

76.54

Source: Constructed with data sourced from: https://www.unicef.org/eapro/China_White_ Paper_on_Foreign_Aid.full_text.pdf.

154  The European Union and China Figure 9.2  Chinese foreign aid investment in $ billions, 2010–2012

5.21

Grants Interest-free loans

8.03

Concessional loans

1.17

forms: undertaking complete projects, providing goods and materials, conducting technical cooperation and human resources development cooperation, dispatching medical teams and volunteers, offering emergency humanitarian aid, and reducing or exempting the debts of the recipient countries’ (The State Council, 2014). However, the majority of Chinese infrastructure projects in developing countries, for instance, are not development assistance, but business projects that are intended to provide development benefits. The details about the financing of these projects are rarely disclosed. Both assistance and economic projects are locally coordinated by the economic counsellors of Chinese embassies and centrally managed through the Ministry of Commerce (MOFCOM), the EXIM Bank of China or other line ministries. One of the reasons why China doesn’t give much grant aid and doesn’t publish much about it is that ‘giving money to foreigners’ would be unpopular at home, with persisting problems of poverty in large parts of China. When comparing EU and Chinese development assistance it is ­important to understand that most EU aid comes in the form of grants financed by taxpayers’ money while most of China’s assistance are loans from its ­policy banks (one of those, EXIM Bank of China, has the mandate to promote ­Chinese exports; it lent $86.3 million to African countries from 2000 to 2014 according to SAIS-CARI data). More than half of all Chinese loans to Africa went to just five countries: Angola, Ethiopia, Sudan, Kenya and the DRC (Hwang, Brautigam and Eom, 2016). Officials and analysts desperately try to classify China and its ‘aid’, sometimes with awkward labels such as ‘non-DAC donor’, ‘non-traditional’ or ‘emerging’ donor and the like (Stahl, 2018: 3, 6). But China itself feels such classification is not necessary as China has its own principles for its foreign and aid policies anchored in the Bandung principles (see Chapter 4).

International Development Policy and EU–China Relations  155 Actually ‘aid’ is only a minor part of China’s engagement with developing countries. It is part of a broad spectrum of international relations in an interconnected world where the boundaries between development, economic and foreign policy are fast disappearing. That change is in line with many developing countries’ desire to become less dependent on ODA from former colonial powers and a widespread (if not necessarily accurate) perception that ‘aid doesn’t work’. However, China’s policy towards developing countries may appear at times more ‘coherent’ than those of ‘traditional donors’ who struggle to align their various policies in a consistent way when ‘development’ is at stake (Chandy and Kharas, 2011: 742). Moreover, European countries have little control over private sector investment, trade and aid, only over the government budget. Public aid is also mostly untied and hence open for contractors from other countries. China’s government by comparison often uses aid, trade and investment in a coherent framework for external relations (Lum et al., 2009; Bräutigam, 2011; Qi, 2014; Quirk, 2014) and projects financed by China are usually implemented by Chinese contractors, especially state-owned enterprises (SOEs). Kaplinsky and Morris emphasize: ‘with respect to the strategic integration of aid, trade and investment, Chinese SOE FDI in sub-Saharan Africa is distinctive. Over the past decades, despite some differences between different nationalities of Northern investors, in general there has been an unbundling of Northern investment from aid and trade’ (Kaplinsky and Morris, 2009: 562). Hence, the Chinese ‘bundled’ cooperation packages differ from EU ODA-focused approaches (and make it difficult to quantify aid). In fact, where people focus on China’s ‘aid’ they often refer to what really are commercial relations or investments which are indeed characterized by China and the African countries as helping development. So we often end up comparing an infrastructure project by a Chinese company, which is a business operation financed by a credit from the Export-Import Bank (EXIM Bank) of China (Foster et al., 2008), with an infrastructure project contracted from an EU development aid budget. It is clear that both projects will result in a road or bridge being built, but this is where the similarity stops.

A Tale of Two Roads The EU road is a ‘gift’ financed by European taxpayers’ money that benefits the recipient country and of course allows the contractor to also make a profit. In most cases it would be financed through grants, sometimes through concessional loans or blending (using grants to lower interest on loans). Accountability lies with the EU, which is why it tends to come with a lot of conditions and secondary objectives – the road is not just to be built to connect A with B, but to address poverty, gender, health, education, environment and other issues to contribute to a holistic view of sustainable development. This holistic view is anchored in a rights-based approach, including impact assessments and stakeholder consultations, with a focus on the elimination

156  The European Union and China of poverty and empowerment of the poor. Contractors are found through competitive bidding (but EDF funds are limited to contractors from EU and ACP countries, which tend to be European companies). The typical Chinese road built in Africa is not a ‘gift’ from Chinese taxpayers. Most infrastructure projects are based on loan arrangements and thus in fact paid for by the recipient country (although China has frequently forgiven such debts). The financial scheme of Chinese projects takes three forms: i­nterest-free loans (8.1  per  cent of assistance), concessional loans (55.7 per cent) and grant aid (36.2 per cent). Interest-free loans come from China’s state finances, while concessional loans are provided by the Export-­ Import (EXIM) Bank of China as designated by the Chinese government’s White Paper (The State Council, 2014). Not included under the assistance are more or less commercial loans and equity funds such as the China–Africa Development Fund (CADF). These loans are financed (and given collateral) in various ways, including rights to natural resources, or by the recipient government’s taxpayers through a Chinese credit line, possibly with some favourable conditions. The concessional loan programme from the EXIM Bank of China is contracted by Chinese state-owned enterprises (SOEs) and usually delivers infrastructure projects which need to have ‘good social benefits’. The concessional loans are ‘extended by the EXIM Bank of China at the request of the Chinese government, to the government of the borrowing country as official assistance’ – this parallels the definition of ODA (Bräutigam, 2011) without quite subscribing to it. The 2014 White Paper notes that the difference in interest between the People’s Bank of China benchmark interest and the lower loan interest is paid (to EXIM Bank) from the state budget. In any case, this is not aid, but ‘win-win’ cooperation. Hence, a road is being built mainly to connect A with B and any further development impact is not normally included in contract specifications, as neither government demands it. The governments assume that the road will contribute to economic growth or related objectives for which it has been conceived in the first place. But this then is a ‘behind the border’ issue: local community consultation, land expropriation and so on are for the recipient government to manage. However, the ‘Chinese’ often get the blame for badly managed deals (Hellendorff, 2013: 9; for a Chinese-built railroad in Kenya, see Wissenbach and Wang, 2017). Rosengren (2014) characterizes the differences as follows: ‘Despite the existence of converging drivers, the two […] approaches are both perceived and promoted as essentially different. While Europe tends to emphasise its soft power dimensions and value-driven approach promoting for example human rights, transparency and democracy, China tends to promote its efficiency, speed, flexibility and technical capacity building approach.’ China’s project financing has important implications: first, there is unquestionably more government ‘ownership’ because the recipient country is in the end paying for it (be that in cash to reimburse the credit or in resources in a sort of barter agreement); second, the contractor is almost always Chinese, selected by the Chinese government/bank. Where there is a government-to-government agreement between China and African partner

International Development Policy and EU–China Relations  157 countries, SOEs submit project proposals to the Ministry of Commerce who will select one or multiple qualified contractors. SOEs themselves actively search for projects and propose them for financing. Once a SOE is selected, it will draft a contract between the Chinese side and the recipient side that includes the responsibilities of each side, the price of the contract, the pooling of money and so on. The contract is submitted to the Ministry of Commerce of China to obtain approval; and then this company becomes the representative of the Chinese side to negotiate with the recipient government on the contractual details, usually with the presence of the economic counsellor from the Chinese embassy in that country. Third, the project specifications are crucial for the benefit and accountability of the project contractors to the recipient country, but are largely out of its control. Thus, while China’s development policy is state-centric, its main face is often commercial. Who benefits most from China–Africa cooperation is then the politically sensitive question of these ‘win-win’ arrangements. Sometimes this can depend on something China is not used to: electoral cycles and ensuing discontinuity of commitment. Hellendorff (2013: 6) cites the example of Nigerian politicians who thought that in exchange for oil they would get both infrastructure projects and cash from China, and when China forced them to choose they chose cash. Later China was forced to renegotiate contracts after a change of president. A Chinese analyst sums it up as follows: ‘The China Model also requires suitable and evolving institutions, as well as the maintenance of long-term stability of the political system. This is in direct contrast to the instability of many African political systems and societies … and their lack of viable administrative and ­bureaucratic systems’ (­ Liu, 2014: 3–4).

Differences in Traditional Aid China also provides traditional aid through grants or in kind (scholarships, medical teams, equipment, agricultural aid). This form of aid is mainly used to help recipient countries build hospitals, schools and low-cost houses, and support well-digging or water-supply projects, farming and other medium and small projects for social welfare, as well as projects in the fields of human resources development cooperation, technical cooperation, assistance in kind and emergency humanitarian aid (The State Council, 2014). These forms of aid tend to go through government channels only. While the EU and most member states have specialized agencies or departments for aid, often with impressive staff numbers supported by contracted consultants and NGOs, in China the Ministry of Finance (credits) and the Ministry of Commerce (grants, ODI contracts) are the major players and coordinators of aid projects as well as of trade and investment policy and economic cooperation. MOFCOM relies on a small number of officials in the foreign aid department including economic counsellors in Chinese embassies and specialized implementing agencies under its supervision. Other ministries, such as Agriculture, Education, and Health, also initiate and manage aid projects. Examples are

158  The European Union and China the Special Agricultural Technology Demonstration Centres established in 14 countries in Africa using a public–private model to help improve food security and livelihoods (Xu et al., 2016), scholarships for African students to attend Chinese universities and Chinese medical teams to support African partners. In recent years Chinese provinces have also stepped up their efforts to strengthen their presence in Africa. These provinces directly import from and export to African countries, conduct projects and investment through SOEs at the provincial or local level, and deliver aid in the form of sending medical teams, building projects, sponsoring training programmes and so on (Chen and Jian, 2009). The EU’s and most member states’ grant aid tends to be embedded in elaborate thematic frameworks and country strategy papers, which are continuously revised and fed with ‘good practice’ and ‘lessons learnt’. There is a whole industry of consultants, development research and NGO advocacy in Europe that is providing advice, monitoring and services to reach development objectives and predefine conditions for projects to succeed – mostly financed from the ODA budgets (a fact that is often fiercely criticized by recipient countries). There is very little such academic, NGO or consultancy research or advocacy in development in China. Aid is planned ad hoc, upon request and on a case-by-case basis within a framework of established procedures and principles as previously described. The government tasks experienced domestic institutions – such as the China Development Bank (CDB) – to finance projects abroad based on their successful experience in the poor regions of China and sends advisors abroad. The CDB manages the CADF which has offices in Ethiopia, Ghana, South Africa, Kenya and Zambia. The fund actually provides mainly equity finance rather than ODA. The government organizes or encourages universities or companies to arrange study tours or training courses in China. Some, for instance, are organized by the Poverty Alleviation Bureau in China which has overseen the domestic development policy in China’s poorer regions and is leading the International Poverty Reduction Centre of China, which is also China’s main interlocutor for the OECD-DAC. However, despite differences there are also similarities between the EU’s and China’s partnerships with Africa which both go beyond aid.

Similarities or Convergence? Important commonalities between the EU and China can be found in shared international commitments to development such as the Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs) which, since 2000, have framed the global development challenge as a shared problem, borne by all humanity (Chandy and Kharas, 2011: 741). Even the effectiveness of aid can safely be assumed to be a concern that all providers of development assistance share, although not all countries agree on the specific ways aid effectiveness principles have been formulated and interpreted by the OECD-DAC (Chandy and Kharas, 2011: 743). In 2010 the G20 – in which

International Development Policy and EU–China Relations  159 the EU and China are members – started to include a development agenda under the impulse of Korea (Fues and Wolff, 2010; Wissenbach, 2010), and the global aid forum hosted by Korea in Busan in December 2011 was the first to formulate a more global development effectiveness agenda beyond the OECD’s previous, narrower aid effectiveness agenda. China (and India) reluctantly participated in this OECD-driven forum, but introduced a general reserve that makes clear that they do not see South–South cooperation as aid and themselves as bound in any way by Western ODA principles: The nature, modalities and responsibilities that apply to South-South co-operation differ from those that apply to North-South co-operation. At the same time, we recognise that we are all part of a development agenda in which we participate on the basis of common goals and shared principles. In this context, we encourage increased efforts to support effective co-operation based on our specific country situations. The principles, commitments and actions agreed in the outcome document in Busan shall be the reference for South-South partners on a voluntary basis. (High Level Forum for Aid Effectiveness, 2011: paragraph 2) Thus in Busan the EU actively sought compromise with China to secure its buy-in to a globally supported outcome document. China has become more engaged in these new processes and also successfully pushed for stronger representation in the Bretton Woods Institutions – which play a crucial role in international development policy and finance. China also began to channel more funds through multilateral bodies such as the UN, the AfDB and the World Bank while also pursuing alternative multilateral development finance frameworks such as the ‘New Development Bank’ or ‘BRICS’ bank or the Asian Infrastructure Investment Bank in which it has much more say (Chapter 10). China has also become more active in engaging with political problems in Africa as mediation efforts in the Darfur or South Sudan crises through Special Envoys show (ICG, 2017). On the EU side, a certain convergence with priorities China pursues, with its focus on economic growth, became clear at the 4th EU–Africa summit held in Brussels in April 2017. From its focus and statements it seems that the EU has acknowledged Africa’s transformation from a recipient of aid processed through a rigid bureaucracy to an economic and trade partner with ambitions to industrialize and with a political agenda (earlier summits had already singled out the security and political dimension of the partnership). In the 2017 EU–AU summit the EU proposed an External Economic Investment Plan with a capital of €4.1 billion, aiming at leveraging €44 billion EUR of private investments7.

7  https://ec.europa.eu/europeaid/sites/devco/files/au-eu-summit-factsheet-20171127_en.pdf

160  The European Union and China After the EU–Africa summit in Brussels on 3 April 2014, the President of the European Council diagnosed: ‘A fundamental shift from aid to trade and investment as agents of growth and poverty reduction is taking place’.8 While these converging trends may not be causally related, they show that Africa has been able to move away from aid-focused relationships, enhancing its agency, and that China and the EU increasingly speak the same language on a number of issues. The EU and China also have bilateral dialogues on Africa at the political and development levels. More recently, though, the EU’s Africa policy has again shifted on concerns that are only partly relevant for China – security and migration (http://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=JOIN:2017:17:FIN&from=EN)9.

Impact on EU–China Relations Initially, however, because of the many differences in approach outlined above and also economic competition, there was a highly controversial and often bitter and usually ill-informed debate when China’s activities in Africa increased sharply after 2000. Kaya (2014: 214) argues that ‘China’s rise is negatively affecting the European Union (EU)’s ability to act as a “normative” and “civilian” power in international relations’ and especially to pursue what Kaya (2014: 216) calls ‘new sovereignty’ (spreading human rights and good governance): ‘China is challenging the EU’s ability to spread new sovereignty by using its economic muscle in Africa to advance the traditional version of sovereignty.’ However, on the one hand African countries themselves have long opposed political conditionality, and China’s support and clout merely strengthens these positions. The EU itself has moved away from the normative focus Kaya builds his arguments on. On the other hand African countries, through the AU Constitutive Act have subscribed to a similar canon of democracy, rule of law and human rights as the EU and even the right to interfere should unconstitutional changes of government occur in an AU member state, nudging China to accept African positions at variance with Chinese foreign policy principles (see Chapter 4). This does not support a polarizing generalization such as Kaya’s. More broadly, China’s rise has not necessarily affected the EU in a zero-sum logic, as the increase in EU– Africa trade in parallel with the increase in China–Africa trade has shown (Kaya, 2014: 215). Kaya (2014: 227) takes African criticism of the European Partnership Agreements (EPA) being negotiated with several African regional communities as a sign that they pursue alternatives with China. This is not very plausible as most African countries are concerned about growing trade deficits with China. Moreover, LDCs get duty- and quota-free access to the EU while the concessionary rates China offers for typical African export products are substantial. The EPA problem predates China’s enhanced engagement in Africa and has much more to do with historical bilateral, regional and WTO 8  http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/fr/ec/142095.pdf

9  http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=JOIN:2017:17:FIN&from=EN

International Development Policy and EU–China Relations  161 issues than with China eroding the EU’s position in Africa. Where Kaya is right is that, in general terms, African choices enhance African political agency, but there is very little evidence that China’s political model is being emulated. The attractiveness of China is developmental, financial and only to a limited extent – the South–South comfort zone – normative. To prevent a negative impact on EU–China relations the European Commission proposed in 2007/8 to engage China and Africa in dialogue and possibly trilateral cooperation in selected areas of common concern such as peace and security, regional infrastructure, sustainable use of natural resources and agriculture, the latter topic having been suggested by China (European Commission, 2008b). This initiative only resulted in a few concrete initiatives (Council of the European Union, 2012b), mainly because the AU could not reach internal consensus and argued that Africa had not been sufficiently consulted. Some African countries lobbied Beijing not to engage in the initiative. This reluctance by some African countries has to do with the wish to enhance policy space, a tendency to play off external suitors against each other and wanting to avoid any collusion of donors (Chandy and Kharas, 2011: 748–749). As a result of the EU initiative the EU and China also conduct an annual dialogue on development and a political dialogue on Africa. The political dialogue addresses political and security issues, usually crisis spots in Africa, while the development dialogue promotes a better mutual understanding of development approaches and on discussions in the global arena while not necessarily leading to joint projects (due to lack of demand, but also very different administrative and budgetary set-ups). The constructive approach by the EU since 2007 has made it easier for China to engage with Europe even on sensitive issues such as the crises in Darfur (2008) or South Sudan (since 2013) or the fight against piracy off the Coast of Somalia where EU and Chinese navies operate side by side and informally coordinate at working levels and have even carried out a joint exercise (Barton, 2013; EEAS, 2014). Hence an initially divisive issue often described as ‘a new scramble for Africa’s resources’ has now become a normal feature of EU–China relations and part of important exchanges that lead to better mutual understanding and mutual learning as in so many other sector dialogues between the EU and China. This process has also accompanied and perhaps contributed to the evolution of the EU’s approach to development in Africa away from a focus on ODA towards a more economy-centred paradigm that incudes cooperation with non-traditional partners and the private sector. After some heated debates, the more sober reality that there is enough work to be done in achieving the SDG has led to mutual accommodation, helped by dialogue. There are enough roads, railways and airports to be built in Africa and enormous capital needs for the EU and China to work side by side. The exaggerated fear about China’s detrimental influence on African governance has given way to a more nuanced analysis that all outsiders exercise diverse influences and that all outsiders are themselves confronted with African governance problems in similar ways (Wissenbach and Wang, 2017).

162  The European Union and China On the Chinese side the confrontation with the EU on an ideological level rooted in a Cold War anti-imperialist discourse has slowly given way to a more sophisticated understanding of the complex challenges of EU policy and of development issues and the need for multilateral discussions, learning and possibly coordination. Both sides have kept their identities and distinct policies, but have enhanced mutual understanding and engaged actively in dialogue and some limited cooperation.

Conclusion In conclusion, Africa’s development is in the strategic interest of both the EU and China, albeit for distinct reasons. Defining potential common ground has been an important strategic initiative by the EU that keeps both sides engaged in mutually beneficial dialogue. The different approaches to development and interests in Africa between the EU and China remain important. Both approaches have their own merits and deficits, and in some respects there has been a convergence or rapprochement. Both sides have developed constructive approaches to a potentially highly divisive issue in line with the general pathway pursued in EU–China relations over the past two decades to build bridges and to focus on enlarging common ground and accommodating contradicting interests and competition through dialogue. Despite their differences both contribute to Africa’s development and engage in multilateral processes (High Level Forum on Aid Effectiveness, 2011) or with multilateral organizations (G20, AU, AfDB, World Bank) and international dialogues on the global public good ‘development’. Partner countries have their own development priorities outside global frameworks: ‘Developed, emerging and developing countries take common but differentiated responsibilities for the global good “sustainable development”. Yet development is not principally a global good, but remains essentially defined as something (wealth and power) a nation wants to achieve within its boundaries’ (Wissenbach, 2010). Countries turn to both the EU and China for assistance, albeit for different reasons. Thus, while the argument of a new scramble for Africa is overblown, there are different (geo)political and economic priorities and interests that shape European and Chinese policy towards developing countries, particularly in Africa. Sensitivities about identity and role-relationships also remain, and misunderstandings and perceptions frequently persist or are fuelled by rhetoric. However, the current situation of careful engagement in bi- and trilateral processes has shown the maturity of the EU–China strategic partnership while also benefiting each side’s relations with Africa as well as the African partners. The overall characteristics of EU–China relations of competition and cooperation as well as devising strategies to manage important normative differences bilaterally and in the global arena are reflected in EU and Chinese development policies. The dialogues fulfil an important function in promoting a better understanding of each other’s interests and values. This does not necessarily mean

International Development Policy and EU–China Relations  163 that China and the EU have become aligned on similar principles as strategic partners, but they have helped to identify common ground such as shared interests in managing security threats (piracy, pandemics, instability). Differences in approach will remain for several reasons: they are related to material capacity, foreign policy interests, value differences and are desired by the partner countries to enhance policy choices. Therefore, the search for complementarity and synergy as well as rules of the competitive game is an important objective while attempts at global consensus on development are bound to fail once one moves from the common objectives (SDGs) to the ways, means and principles to achieve those objectives. Those who advocate a consensus need to make a better case for why such a global consensus is necessary in the first place.

Chapter 10

China and the EU in the Global Context

Introduction Both the EU and China are relative newcomers to global governance and both are, to some extent, still looking for their rightful place in this sphere. Both have considerable economic strength to affect global governance. Whether their combined economic strength can be harnessed to promote mutual goals and strategies in the pursuance of prosperity, peace, security and stability at the global level and whether the effectiveness of existing international organizations can be assured remain complex questions that continue to divide the scholarly debate on the subject. For some observers, China ‘will use its growing influence to transform the international system and bring its rules and institutions more in line with the country’s identity and national interests’ (Geeraerts, 2013: 497). The counterargument is that ‘if Europe and China continue to believe that the world is becoming multipolar and that multilateralism is the way to deal with global issues, then it is likely that the two actors will play greater responsibility and increasing global roles’ (Van der Putten and Chu, 2011: 200). A similar view – and the one traditionally assumed by EU policy papers on China – is that, given China is one of the central driving forces of globalization, it will become increasingly entangled in international affairs and deeply reliant on its integration into the international economy, the openness of ­foreign markets, massive technology transfers, and unimpeded access to energy and raw materials (Berger, 2009: 4; de ­Vasconcelos, 2010a: 6–7; Ikenberry, 2011). Of course the question of whether the EU and China will cooperate at the global level presupposes that the EU would seek Chinese cooperation and vice versa. Van der Putten and Chu see two main motives for this: ‘One is to cooperate with China in order to increase stability in international affairs. The other is to make sure that China grows into a leading security actor within the existing institutional framework of global security governance’ (Van der Putten and Chu, 2011: 196). However, the validity of these motives is questioned by Gill and Small, citing reasons of contending strategic priorities, unmet expectations, negative perceptions and distrust between the EU and China (Gill and Small, 2012: 11). It will be the task of this chapter to revisit the existing debate over whether EU–China global governance efforts will converge or diverge by exploring 164

China and the EU in the Global Context  165 how the EU and China pursue their common interests at the global level. More specifically, it will examine the level of cooperation which China and the EU undertake on global issues, especially with regard to the future roles of international organizations such as the UN, the IMF, the World Bank and the G20, the form and practice of multilateralism, the prospects and direction of a multipolar/core world, and whether the two tend to be partners rather than competitors on such issues as climate change and energy policy. The chapter will first identify the normative differences between the EU and China in their approach to global issues. Then follows an examination of how the two partners approach the concepts of multilateralism and multipolarity. The chapter concludes by arguing that the ‘misunderstanding’ on principles between the EU and China is at odds with the growing economic interdependencies between the two sides and, beyond that, constitutes one of the key challenges of the emerging multipolar global order. The chapter will rely primarily on documentary evidence (e.g., communiqués on global or regional governance aspects, issued at EU–China summits or separately by each side).

European and Chinese Perspectives on Global Governance Even though China and Europe have economically become highly interdependent and therefore sensitive to each other’s policies and development, they have distinctive identities and define their value preferences differently. China and the EU not only have different interests with regard to global governance; they also differ with regard to their respective outlooks on ­ principles such as sovereignty and non-intervention. The EU, by its very nature, has a more flexible understanding of the principle of sovereignty and is widely seen as a normative or ‘civilian’ power whereas, for China, ­sovereignty and the pursuit of national interest remain an absolutist ­concept. For the EU, the inviolability of national sovereignty has long been replaced by the r­ecognition that effective cooperation and problem-solving at the regional level requires the pooling of sovereignty and the transfer of key competences of the state to supranational institutions. Indeed, the very nature of the E ­ uropean Union as an organization with law-making p ­ owers internally and legal personality externally is predicated on the general acceptance among states in Europe that a new kind of political organization needed to be created here. As a result of 60 years of integration, the nature of both international and domestic politics in Europe has been transformed, and now neither the individual states nor the European centre are in any meaningful sense ‘sovereign’. Instead, power has been distributed across different territorial levels, creating multiple centres and overlapping spheres of authority. ­Notwithstanding populist debates in some member states about the ‘protection of national sovereignty’, there has been much scholarly work pointing to a European departure towards a post-sovereign (or post-modern or post-Westphalian) arrangement (Caporaso, 1996; Kirchner and Sperling, 2007). The Eurozone crisis, and the deeper fissures this has revealed in the European construction, does not contradict this observation – indeed, the

166  The European Union and China nature of the crisis and the difficulty in resolving it have once again revealed the absence of a sovereign power in the EU, the pervasive presence of ­different sources of authority and the constant need for negotiated outcomes. A post-sovereign EU may be neither efficient nor popular, but it has nevertheless become part of the political landscape in Europe. Inevitably, this transformation of politics inside Europe is reflected in the EU’s external relations. The EU has long developed a policy of e­ ncouraging regional cooperation in other parts of the world, giving rise to the so-called group-to-group approach between itself and other regional blocs, while also providing consistent support for multilateral institutions globally. This entrenched multilateralism in EU external relations has been a reflection of the recognition that there is legitimate power, including the presence of independent law-making institutions beyond the nation-state, be it at the regional or global level. Both purposefully (as it benefits the EU institutions to deal with interlocutors, and indeed a wider world, that is more in its own image) and unintentionally (through the nature of a foreign policy that is the result of collective compromises and executed by non-state representatives of the Union), the EU engages with outside actors in a fundamentally different way from the foreign policies of other global powers that are states. China’s foreign policy, by contrast, not only reflects the much more ­traditional attributes of a state, but in fact can be called hyper-statist. Unlike Europe, China underwent a long and traumatic period of foreign invasion, colonial occupation and economic exploitation. Long decades of internal strife have only comparatively recently given way to economic growth and the political emancipation of the Chinese state that has come with it. The end of foreign rule in Hong Kong (1997) and Macao (1999) has been part of this process of re-establishing Chinese control over the whole of its territory, while sensitivities about Taiwanese independence or foreign ‘meddling’ in Tibet can be seen in the context of this long and continuing process of state-building. In this process, China sees itself as a state that, while still developing economically, is reasserting itself also in territorial terms including in the maritime domain. Achieving, maintaining and, if necessary, defending control over territory is seen as an essential aspect of this process, and in this context the principle of sovereignty is of utmost importance. This Chinese concern for, and defence of, sovereignty is visible not only in the context of its relations with its immediate neighbours, specifically in the way territorial disputes in the South and East China Seas are handled, but also in its attitude towards global regimes. Global governance from the Chinese perspective is seen to be in the service of the states, without ­violating their sovereignty, as had been demonstrated consistently in ­Chinese attitudes towards intervention in internal conflicts, be it in the f­ ormer Yugoslavia or, more recently, in Syria. In a different way, the Chinese position of n ­ on-interference in the domestic arrangements of other states is also reflected in its development cooperation with states in Africa, where it eschews the kind of conditionality that is part of the EU’s development policy (Chapter  9). But there are signs that China is becoming more flexible in

China and the EU in the Global Context  167 its stance on sovereignty. As suggested by Van der Putten and Chu, ‘while adhering to the same principles, the Chinese government seems increasingly prepared to decide its implementation on a case-by-case basis’ (Van der Putten and Chu, 2011: 199). One such case occurred in 2011 when China accepted intervention in the internal affairs of Libya for humanitarian reasons. In any case, Chinese policy has been to accept intervention if it is authorized by the UN or a regional organization. Thus China participates in a number of UN peacekeeping missions as well as in international negotiations to address various crises. Besides differences over the concepts of sovereignty and ­non-intervention, China and the EU also have different understandings on the issues of democratization and security. For example, when the Chinese talk about democratization, their focus is on responsibility, responsiveness and accountability of government authorities; for Europeans, it is all about empowering civil society, the rule of law and respect for human rights (Geeraerts, 2013: 498). Moreover, the EU has a more comprehensive understanding of security than China and disposes of a broader variety of response tools (especially in the field of civilian crisis management), among others through mediation. China is at pains to stress its democratic, egalitarian and peace-loving aims and to reject Western criticisms of its behaviour. For example, in 2009, while visiting Mexico, the then Vice-President Xi addressed common complaints about China expressed by the West: ‘First, China does not export revolution; second it does not export famine and poverty; and third, it doesn’t mess around with you’ (Moore, 2009). In addition to the above-cited differences, different identities also play a role in the relationship between the EU and China. As Geeraerts posits, China’s distinct identity (based on culture, history, economy, political system and stage of development) makes it rather unlikely that Beijing will easily accept the systemic responsibilities which Western key players associate with great power status (Geeraerts, 2013). Moreover, the pronounced adherence by China to the principle of peaceful coexistence is potentially at odds with national identity issues linked to the demands for the restoration of China’s so-called territorial claims in the South China Sea and border disputes with India (Odgaard, 2013: 24). It is with these different practices in mind that Kissinger maintains that ‘the direction of Chinese policy in the future would be a composite of ideology and national interest’ (Kissinger, 2011: 274).

Multilateralism/Multipolarity In a globalized world, good cooperation among main global partners is vital in coping with today’s challenges: the financial crisis and its economic, social and political consequences, climate change, competition over energy and natural resources, nuclear proliferation, the development stalemate, and the challenges of governance. This applies to two of the leading economies and trading partners, China and the EU. However, similar global implications do not necessarily mean similar responses or responsibilities. In this respect,

168  The European Union and China marked differences occur between the EU and China. The EU emphasizes the normative element in its global actions and seeks to set standards in world politics through such means as rule-based and ‘effective multilateralism’, and conformity with the rule of law in international relations. It identifies multilateralism with the pursuit of universal values, shared sovereignty and a normative foreign policy that encourages other countries to change their behaviour through suasion and conditionality (Grant, 2012: 91). Europeans hold on to a concept of multilateralism founded on rule-based management of economic interdependence and political integration, including the p ­ ooling of sovereignty in supranational organizations. This ‘post-modern’ view of sovereignty also makes Europeans believe that states have the responsibility to protect in case of serious breaches of human rights. In contrast, the Chinese conception, as well as practice, of m ­ ultilateralism is much broader, representing equality, mutual trust, cooperation and nonintervention in the internal affairs of other states. China has shifted from insularity to a greater flexibility in terms of multilateralism and is having to balance its increasing need for multilateralism (through economic growth, expanding national interests and global threats) against evolving self-image and cultural inheritance. Yet at the same time cultural contexts, historical legacies and developmental conditions influence China’s different approaches to existing global governance institutions and arrangements, and/or use ­multilateralism as a way of balancing power (de Vasconcelos, 2010b) and as a strategy for regional affairs rather than global affairs (Huang and Song, 2011: 9–12). Those apparent deviations have added to calls by the EU and the United States for China to act as a ‘responsible stakeholder’ in the international system, abiding by its norms and limits and shouldering additional responsibilities in line with its capabilities. Yet, despite the fact that China has become a member of over 100 intergovernmental organizations and signatory of some 300 international treaties (Terhalle, 2015), the Chinese have been wary of participation in traditional multilateral institutions in which they are uncertain of playing a formative and prominent role. Instead, they have created or sought involvement in new organizations such as the Shanghai Cooperation Organisation (SCO), the East Asian Summit or the G20 group (Gill and Small, 2012: 56). In part, it is for this reason that China also sets considerable store by the BRICS’ belief that their overall ­contribution to the production of international order entitles them to gain a more influential role in world affairs. It therefore supports efforts to strengthen mutual relations among the BRICS countries and to promote alternative or complementary international forums and linkages beyond the predominant Western-dominated organizations (Keukeleire and Bruyninckx, 2011: 385). This dominance is reflected in the fact that while the BRICS countries make up  42 per cent of the world’s population and 28 per cent of the global ­economy, they have only 11 per cent of the votes of the IMF (The Economist, 2014: 40). The establishment in July 2014 of the BRICS’ New Development Bank (NDB) is challenging for the first time the US post-war dominance of

China and the EU in the Global Context  169 multilateral lending institutions. The bank is based in Shanghai and India is its first Chair. It will begin with a subscribed capital of $50 billion divided equally between the five founders and is open to new members as long as the BRICS capital share doesn’t drop below 55 per cent. The Contingent Reserve Arrangements will be held in the reserves of each BRICS country, with China contributing $41 billion, Brazil, India and Russia $18 billion each and South Africa $5 billion. In case of need China could draw up to half of its contribution, South Africa double its share and the others the amount they paid in. This challenge is enhanced with China’s initiative to create the Asian Infrastructure Investment Bank (AIIB) in 2015, which is based in Beijing and has a capital base of $50 billion. Interestingly, Europe’s combined vote share of 22.09 per cent in this Bank is second only to China’s (26.06 per cent) and far ahead of India’s (7.51 per cent) and Russia’s (5.93 per cent). The NDB and AIIB will give China an additional international financial outlet to the existing Asian Development Bank. Working through such financial networks, China is less likely to be singled out by the West as the only country bent on changing the international order to its advantage. On the other hand working through these networks is also a reflection of Chinese concern that the US and Europe are trying to construct a post-Cold War international system based on Western values (Wei, 2008: 168). However, it should also be noted that the multilateralist strategy takes an inferior role to the bilateral relationship China has with major powers, as well as with the other four permanent members of the Security Council, where it has the power of veto (Huang and Song, 2011: 13). Besides efforts by China and the EU to pursue multilateralist strategies, both also favour the development of a multipolar governance architecture, but with different aims. While the EU sees such a development mostly in pluralistic terms and as part of an expanding international governance ­ structure, China sees it, at least in part, in competitive terms, to redress the perceived unipolar or dominant US position. This type of perception is also shared by other BRICS countries, which, like China, typically see themselves as actual or potential poles through which to promote their own influence, position and status as great powers (de Keersmaeker, 2015). However, geographic proximity factors may not necessarily capture the multipolar development, or in part raise the question of how cohesive the so-called poles are. For example, if China is considered as a pole, who are the respective geographic satellite states of that pole? It is conceivable that different groupings of diverse states and non-state actors, across ideological or political divides, could step up cooperation on a case-by-case basis to address some of the critical common problems facing the world today (CHINAwatch, 2013). These may include climate change, resource depletion, energy efficiency, water scarcity, ecological degradation, poverty alleviation, disease control, piracy and terrorism. Both China and the EU, either separately or jointly, may play influential roles in such a development. Subsequently, it may be more appropriate to speak of a multicore rather than a multipolar development.

170  The European Union and China In view of these differences, to what extent do the two partners cooperate at the global governance level on such issues as nuclear proliferation, climate change and international trade?

European and Chinese Attitudes to Global Regimes The EU and China ‘meet’ not only in various regions across the globe, but also in the context of international organizations and global governance regimes. Here, not only different interests, but also different approaches to global governance itself become evident. In the following we briefly look at the way in which the EU and China view the role of the UN, the G20, the IMF, the post-Kyoto climate dialogue and the WTO. The question that arises in this context, and which we will seek to answer below, is whether the EU, as the world’s largest economy and provider of more than half of the world’s overseas development assistance, will be able to maintain its strong influence over global governance regimes in the face of challenges from the emerging global power that is China.

United Nations Both China and the EU advocate an enhanced role for the UN. However, the UN is an arena for diplomatic agendas where the EU and China share similar outlooks in some areas but are often at odds in others. Besides differences in institutional terms (member states rather than the EU are the Chinese counterpart in the UNSC), it is primarily normative divergences and different coalition strategies that affect EU–China cooperation in this forum (Jian and Chen, 2016: 86). A closer look at different areas of concern will help to demonstrate the similarities and differences (Dai and Renn, 2016). Both the EU and China have signed the Non-Proliferation Treaty (NPT), but China has not yet ratified it, and the Comprehensive Test Ban Treaty (CTBT). However, China has not yet signed the UN Arms Trade Treaty (ATT) – being unwilling to be shackled by international rules on armaments (Grant, 2012), or to join the Hague Code of Conduct on Ballistic Missiles, or to adhere to the export control standards for arms and dual-use goods which apply under the relevant international export control regimes (European Commission, 2016: 12). As the EU is very much in favour of China signing this treaty, the absence by China to do so can be deemed as a policy failure in the bilateral relationship between the two partners. More encouraging has been the ­Chinese contribution to the successful outcome of the nuclear negotiations with Iran, in which, on behalf of the five permanent members of the UNSC plus Germany (P5+1), the High Representative of the EU played an important role in the negotiations, mediating between the P5+1 group and between that group and the Iranian regime (Casarini and Song, 2016). Both partners support the UN’s counterterrorism organizations and cooperate in Interpol. The UN has two generic conventions on terrorism, commonly known as the Terrorist Bombing Convention and the Terrorist

China and the EU in the Global Context  171 Financing Convention. China has not ratified the former, but acceded to it in November 2001. China signed the latter convention in November 2001 and ratified it in April 2006, so that it has the same relationship to the convention as most (25 out of 28) EU states (Holmes, 2015). While, conventions – as distinct from resolutions – are generally the work of UN commissions, not the Security Council, China has voted in favour of UNSC Resolution 1456, 1465 and 1561 on counterterrorism (Xia, 2009: 57). It is actively involved in support of UN resolutions calling on states, regional and international organizations to actively take part in the fight against piracy and armed robbery off the coast of Somalia (People’s Daily, 2013). Moreover, it was among the first states to both sign and ratify the UN’s Convention Against Transnational Organized Crime, effective since 2003. Although China refused to be bound by Article 35, paragraph 2, many other countries, including the US, have also opted out of this requirement (Holmes, 2015). Article 35 relates to arbitration procedures if two or more state parties cannot agree on the interpretation or application of the convention. Among the contested areas at the UN level is cyber-security. The EU approaches the global internet as a public or collective good that should be available to and accessible by all, while China favours an International Information Security system that emphasizes a primary role for national security and the primary role of the state in controlling information technology and managing risks and threats (Christou, 2015). China has established close cooperative partnerships with UN agencies in the field of disaster reduction and has actively participated in disaster reduction cooperation within the UN framework (Dorussen et al., 2016). Partly because of the sovereignty issues, China has historically been hesitant to send troops overseas, and when it has done so it has only participated in UNSC authorized missions, and until 2014 refrained from dispatching combat units. An exception could be seen with regard to China’s participation in the anti-piracy mission in the Gulf of Aden. Although, the Naval Operation Atalanta was initiated through UNSC Resolution 1816, it is an EU mission, and hence an indication that China is prepared to retreat from its strict adherence to the principle of participating in UN-led missions only (Mohan and Gippner, 2015). Moreover, China has substantially increased its participation in UN peacekeeping operations since 2001, which has meant that between 2002 and 2013 China has contributed to 16 UN missions, involving military observers and staff officers, engineers, medical and other non-combat personnel; doubling its previous (prior to 2001) held number of UN missions (Attina, 2015). On the other hand, when translating the number of missions into the amount of troops involved, a different picture emerges. For example, when taking UN Peacekeeping Operations statistics of June 2014 as a monthly reference, China contributed 2,133 troops whereas EU member states had a total of 4,392 (UN Peacekeeping, 2014). However, despite the smaller Chinese proportion, China has become the biggest UN Peacekeeping contributor among the permanent members of the UNSC with a share of 57 per cent, compared to France’s 28 per cent, the United Kingdom’s 8 per cent, the United States’ 4 per cent and Russia’s 2.5 per cent (Lecarte, 2013).

172  The European Union and China In addition, between 2012 and 2015, China has substantially increased its share of the UN peacekeeping budget, from 3.9 per cent to 6.6 per cent, as compared with the EU countries’ 37.22 per cent, United States’ 28.38 per cent and Japan’s 10.83 per cent (United Nations, 2015). These contributions enable China to demonstrate that it takes stakeholder responsibility in global governance (Suzuki, 2008). On the other hand, China receives annually around $46 billion foreign assistance from various UN programmes (­Sutter, 2013: 157). Moreover, the fact that China is the world’s second ­largest economy on aggregate, but not in the top-ten contributors to the UN annual budget, has led to accusations that China ‘continues essentially to “free ride” and contributes only as much to global governance as is necessary to deflect Western criticisms’ (Shambaugh, 2010: 23). In addition, whereas the EU seeks to associate the UN security role with a more normative bend, China adopts a more pragmatic line, especially with regard to the concept of humanitarian intervention. The voting behaviour of European countries and China in the UNSC is heavily affected by diverging interpretations of the concepts of sovereignty, peace and security (Wouters and Burnay, 2013). For example, with regard to the political upheavals in Libya in 2011, China did support sanctions despite its long-held foreign ­policy of non-interference in the sovereignty of states. A simple explanation for this deviation might lie in the fact that Beijing was concerned about the safety of roughly 30,000 of its citizens trapped in Libya. However, besides China’s own motivation to support these sanctions, it had also been asked by the Arab League for such action. Of course, it must also be noted that Europe was divided over the extension of military engagement or what was considered the extent to which civilians should be protected by military means. This involves considerations of the Responsibility to Protect principle which aims at the protection of all individuals, including the citizens of the state whose government – for reasons of incapacity, negligence or explicit lack of will – does not fulfil its obligations to protect all citizens. In such cases it is normally assumed for the UN, or its regional organizations, to act. As China is not accepting this principle in full, it abstained on the UN resolution on the protection of Libyan civilians. Moreover, Germany lined up with China in not supporting military actions, and NATO was split over the military intervention, with a number of NATO members abstaining from participating in the Libyan operation. In the Syrian conflict China returned to its hard-line approach on sovereignty and non-interference by blocking, together with Russia, various draft UNSC Resolutions on Syria, which were sponsored by European countries. These vetoes can also be partly explained by China’s strong condemnation through its public media of the European and American interpretation of Resolution 1973 authorizing the use of force in Libya (Tisdall, 2011). However, China has agreed to humanitarian intervention and to UN ceasefire monitors in Syria. Its navy is also involved in the escort of vessels transporting Syria’s chemical weapons for safe destruction under the UN framework. Thus, in general terms, China, while at times practising a certain amount of pragmatism, adheres more strongly than the EU to

China and the EU in the Global Context  173 the doctrine of non-intervention, which includes opposition to economic and political sanctions against countries and to the empowerment of the International Criminal Court. An even more narrow Chinese UN perspective is offered by Xu Guang-qiu with his suggestion that the major function of the UN is in limiting and controlling, instead of enabling, external intervention (Xu, 2011: 12). As a consequence, from an EU perspective, ensuring Chinese cooperation at the UNSC level entails unreliability as well as frictions.

G20 China, together with many other so-called emerging powers, has demanded a restructuring of international organizations and to put them on a more equal partnership level. Together with many of the emerging pivotal states, China sees the G20 as a first important response in this respect and point to G20 success in creating the Financial Stability Board (which replaced the Financial Stability Forum) and in coordinating the economic stimulus packages that followed the financial crisis. The Chinese have a particularly strong identification with the G20, and consider it as the only important international mechanism, apart from the UN, that is sustainable, because of its greater representativeness compared to more established international organizations. They are inclined to give it a greater role in the management of the global economy (Grant, 2012: 104). Such moves are not necessarily obstructed by the EU. On the contrary, as many European leaders believe that the Euro crisis and the international financial crisis are intertwined and need both European and international solutions, they see the G20 as a valuable forum for dealing with these issues. This view was reiterated in a joint letter of Presidents Tusk and Juncker with regard to the G20 summit in Hangzhou in 2016, which inter alia called on the G20 to continue playing a role in tackling the international refugee crisis, combating the financing of terrorism, implementing the Paris Agreement on climate change, and promoting global anti-corruption standards (European Council, 2016). The G20 is seen as having taken big steps towards instituting better global governance and a more aligned regulatory framework for financial markets (Lannoo, 2014) and as having the ‘potential to alter the international order almost by stealth’ (Shorr and Wright, 2010: 181). However, whether the G20 will live up to these expectations remains to be seen. In the more immediate future it will need to adopt a more institutionalized structure in order to avoid being seen as a mere ‘talk-shop’ or becoming subject to various coalition manoeuvres within the larger group. It has a voluntary rather than legal character and lacks formal enforcement mechanisms. In any case, whereas EU countries had considerable influence in the affairs of the G7 or G8, their influence is more diluted in the larger setting of the G20, where the EU has a seat together with the 19 states, represented by both the Commission’s and Union’s presidents. European countries have been criticized for being over-represented while Africa is under-represented, and that low-income countries or small countries have no representation at all.

174  The European Union and China

International Monetary Fund (IMF) IMF reforms are another demand by China, calling for a larger share of its votes in this forum. Under the reforms introduced in 2010, via the G20, which were finally ratified by the US Congress in December  2015, China obtained the third largest voting rights in the IMF (6.4 per cent), after that of Japan (6.5 per cent) and the United States (17.4 per cent) (IMF, 2010). European countries have 8 seats out of 24 on the IMF executive board. With a 17.4 per cent share, the US retains veto power over IMF decisions, which require 85 per cent support. Germany, the UK and France each have a larger voting share than China, as do the Netherlands and Belgium combined (Grevi and Renard, 2012). China is critical of the over-representation of European countries on the IMF executive board (EU member states hold 30.2 per cent). China has also expressed reservations over the election of former French Finance Minister Christine Lagarde as IMF director. However, as there was disagreement among the emerging powers themselves, including the BRICS, for an alternative candidate, it enabled Lagarde to be elected. The informal arrangements between the US and Europe about the sharing of the top positions at the World Bank and the IMF are seen in China and in other so-called emerging powers as increasingly illegitimate, given the evolution of the global economy. China, like India, is also determined to link financial support for the Eurozone with further IMF reforms. If successful, such attempts would further erode the EU’s IMF share, hence raising the spectre of an increasing ‘zero-sum’ trade-off between China and the EU. It should also be noted that while European countries have considerable strength in the IMF, the EU itself doesn’t even have observer status within the IMF, which is an anomaly, given the economic competence of the EU. With regard to the World Bank, China overtook large European nations in 2010, in a shift in voting power in the World Bank. China’s share of votes is second only to those of the US and Japan, while being above the shares of Germany, Britain and France, reflecting a shift in the distribution of global economic power (Wong, 2015).

The Post-Kyoto Climate Change Regime In the post-Kyoto debate on climate change, the EU and China have become two of the players that have most contributed to the development of the climate change regime (De Matteis, 2012: 14). An apparent shift in ­China’s position on climate change occurred at the United Nations summit in Cancun in 2010, where it accepted a compromise proposed by India on the verification of emissions under which countries would declare their emissions reductions targets and report on their progress towards meeting them, but there would be no international monitors or penalties for countries that failed to reach those targets. This compromise enabled the developed and developing countries to negotiate and take part in a new carbon emissions regime (to replace the Kyoto Protocol). They also agreed that it should come

China and the EU in the Global Context  175 into effect by 2020. The EU failed to persuade others to agree that the regime should be legally binding, but there was uniform ‘acceptance that it would be a protocol, another legal instrument or an agreed outcome with legal force’ (Grant, 2012: v). A further step on the converging trend of the EU’s and China’s responses to climate security occurred with the adoption of the Paris Agreement on 12  December  2015 – showing convergence in terms of mitigation and ­ambition level but also some divergence, for example, on the interpretation and application of the principle of Common but Differentiated Responsibilities and Capabilities (CBDR-RC) and specific rules of transparency. For the future the Paris Agreement has set out a remote goal of completely phasing out all greenhouse gas emissions, sometime between 2050 and 2100. Ratification by China and the US occurred in September 2016 and by the EU in October 2016. However, in May 2017 President Trump decided to pull out of the Agreement. In the aftermath of President Trump’s decision, both China and the EU indicated that they will continue to uphold the implementation of the Agreement. In general terms, China is reluctant to commit to binding international norms regarding regulation of environmental practices if they infringe on Chinese efforts to expand economic growth (Sutter, 2013: 165). On the other hand the EU has positioned itself as a moral, diplomatic, technological leader on climate issues (Stang, 2013: 2). However, the past EU preference for legally binding agreements with clear monitoring and compliance mechanisms has been difficult to sell to the 160 other partners (Stang, 2013: 1) Although China has relatively low energy import dependence, it is increasingly competing with Europe over scarce fossil fuel sources, such as oil from Africa and natural gas from Russia and Central Asia. The EU’s leverage that stems from its position as a leading market for Russian gas might be ­diminished by the agreement in May  2014 between Russia and China to build new gas pipelines from Russia to China. China also has different energy preferences (see Table  10.1). To limit China’s energy demand, the EU is seeking to persuade China to meet and continue to set higher domestic ­targets Table 10.1  Energy mix of EU and China in 2011 EU (%)

China (%)

Coal

17

70

Oil

35

19

Gas

24

4

Nuclear

14

1

Hydropower

0

6

Renewables

10

0

Source: Adapted from Dreyer and Stang (2014: 33–34, 50).

176  The European Union and China for energy, and to make use of economic tools such as pricing and trade/ investment incentives. The EU also expects China to prioritize the development of clean coal technologies, including carbon capture and storage (CCS), and to agree a global emission stabilization goal as well as commit to s­ pecific targets on greenhouse emissions in post-2012 climate negotiations, or, at least, to set some sectoral reductions targets (Bo, 2011: 52). While citing progress on EU–China cooperation on CCS, de Jong and Wouters regret ‘the lack of proper enforcement of regulations and follow-up on bilateral cooperation in China’ (de Jong and Wouters (2011: 39). Overall, the dilemma is that as the EU prioritizes the climate change threat at the top of the bilateral relations, expecting China to make a formal commitment to reduction, China puts development ahead of the climate change threat and insists on a voluntary reduction approach. Where China can combine both, such as producing solar panels or other renewable energy, it has made the biggest contribution to emissions reductions.

World Trade Organization While the EU is one of the founding members of the WTO, China gained access to the WTO only in 2001 after more than 15 years of intense negotiations, albeit not because of lack of EU support (Burnay and Wouters, 2016). Both the Europeans and the Chinese consider the WTO to be an important forum for regulating, monitoring and resolving trade matters and disputes. China has so far not tried to shape the organization and, as argued by Burnay and Wouters, ‘there is scant evidence that China has played the disruptive, blocking role that has been ascribed to it’ (Burnay and Wouters, 2016: 118). However, China has consistently asked for EU support in obtaining ­market economic status in the WTO. Fears that such a status would result in the dumping of Chinese products into the EU, together with reservations expressed by the EP about China’s human rights record, have prevented the EU from granting this support. The major problem for the EU is that the WTO system cannot influence the specific regulatory framework of the Chinese economy (behind the border) which is characterized by Communist Party control of firms, state ownership of major companies across sectors, and the various types of state subsidies and restrictions to foreign investment that contrast with the largely open market of the EU. Hence, the European frustration about the lack of a level playing field. China has started to use the ‘dispute settlement system’ in the WTO in a more mature manner and has become one of the most active initiators (filers) of complaint cases (Shambaugh, 2013: 136). However, European and Chinese interests do not necessarily coincide. This was particularly visible in the procrastinated WTO Doha round on trade liberalization, where the EU’s efforts to lever open markets and shape regulatory structures were resisted by China, as well as by other emerging powers such as India. This resistance reflects an apparent shift in the balance of trade power between Europe and Asia and which limits the EU’s institutional muscle within the WTO

China and the EU in the Global Context  177 to strong-arm Asia’s emerging trading powers (Smith, 2013). This view is contrasted by Moravcsik’s argument that Europe is the world’s leading regulatory superpower with particular power in the food, environmental and competition policy and that it  dominates global trade policy, having twice the size of China’s, even if all intra-EU trade is eliminated (Moravcsik, 2009). What is less contested is that China regards the EU as an important actor in the field of international trade and as a global counterweight to the US. This doesn’t, however, imply the absence of trade frictions between China and the EU, as numerous anti-dumping measures and the case over rare earth elements demonstrate. China has about 50 per cent of known rare earth ­elements world reserves and until very recently was behind 95 per cent of global supplies (European Parliamentary Research Service, 2013). It has reduced its export quotas drastically since 2010. In March  2012, together with Japan and the US, the EU demanded dispute settlement consultations in the WTO on China’s export restrictions. The consultations failed and, in June 2012, the EU, Japan and the US decided to pursue further litigation at the WTO. In contrast, the solar power panel dispute between China and the EU, after intense confrontation, was settled amicably in September 2013.

Conclusion China and the EU are greatly influenced by global issues and both have ­growing capacities to respond positively and jointly to these issues and to promote strong workable international governance structures. Despite these mutual interests and capacities, EU–China cooperation in the furtherance of global governance has not reached high levels of, and is at best unevenly, spread across the spectrum of security policy. Different perceptions and expectations the EU and China have of each other on key issues, as well as the different stages of development between the two partners, account for these shortcomings. The implications of these differences will be briefly summarized in the following. In terms of perceptions the different meanings the EU and China attach to the principle of sovereignty, to multilateralism and to other concepts ­indicate that disagreements between the two sides in the global context are not merely the reflection of different interests. The EU and China, two of the pillars in the emerging multipolar order, have fundamentally opposed attitudes to these key aspects of global politics, and these differences are bound to create further tensions in the development of global governance regimes in the future. Whereas the EU has found a fairly consistent view on its global engagement, enshrined in the principle of effective multilateralism, China has not yet found its international identity and remains a pragmatic player that gradually tries to define the level of its international engagement (Berger, 2009: 4). It straddles between being one of the most powerful economies in GDP terms and still being a developing country, and is affected by internal tensions between historical and cultural traits, domestic inequalities and huge environmental challenges on the one hand, and

178  The European Union and China global power aspirations on the other. Moreover, as its power globally has increased, China has sought to present itself not merely as the world’s factory, but also as a global diplomatic force. China therefore presents a complex picture, not only to the EU but also to the rest of the world. It acts at times in an unpredictable way and pursues both revisionist and status quo regional global governance policies apparently simultaneously. This is reflected in, for example, China’s willingness to invite cooperation on climate protection, external development, trade and security, and yet its reluctance to engage in binding international agreements. It avoids international engagements that would limit Beijing’s scope of action (Berger, 2009: 1). While China is keen to enhance its influence in existing international organizations such as the IMF and the World Bank, it is also promoting new international governance structures such as the NDB and the AIIB, which could be seen as rivalling – or in China’s parlance merely supplementing – the IMF, the World Bank and the Asian Development Bank. This diverging Chinese commitment presents an awkward choice for the EU as to whether to concede ground (i.e., a reduction of its representation in existing international organizations such as the IMF and the World Bank) to emerging powers like China, and how to react to the proliferation of a new governance structure in which China dominates. There is also the question of whether China will support and implement the EU’s ideas regarding international relations and human rights, as particularly expressed by the European Parliament (European Parliament, 2010). Kaya (2014: 214–216) takes the view that China’s rise is negatively affecting the EU’s ability to act as a ‘normative’ and ‘civilian’ power in international relations and to pursue the spreading of human rights and good governance. In other words, China challenges the EU’s ‘normative’ view with a strong Westphalian message of ‘national particularism, international ideological pluralism, state sovereignty, strong-state involvement and indigenous cultural development’ (Gat, 2010: 82). This view also tallies with Shambaugh’s observation that ‘China will involve itself internationally only when it benefits China, rather than out of any broader philosophical commitment’ (Shambaugh, 2010: 23). In terms of expectations China sees the EU both as an ally and as an opponent in its drive for reforms of the existing international system. The ally reference stems from the fact that China sees the EU as promoting multipolarity through being a forceful international trade actor, WTO negotiator and environment conservation protagonist. The opponent image portrays the EU as a defender of the status quo in the existing international system and its organizations, such as the IMF, and as an ally of the US in terms of political and security interests, as signified by the NATO alliance and the continued imposition of the arms embargo against China. A further concern for the EU is that China does not see the EU as a real security player and that it lacks strategic vision and suffers from internal divisions that limit its global weight. This perception was also affected by the impact of the Euro crisis (and potentially the refugee crisis) which has weakened the EU’s attractiveness

China and the EU in the Global Context  179 as a model. It is also not helped by its insufficient representation in international organizations. Except in the WTO, in many other international fora (G20, IMF), the EU doesn’t speak with a unified voice. These drawbacks not only trouble EU–China relations, but affect what the EU and China can do jointly at the global level. Despite shortcomings in the overall level of EU–China global security governance cooperation there are areas where both partners have made ­ progress, such as on maritime security, non-proliferation of WMDs and counterterrorism, especially with regard to combating the finance of international terrorism. With regard to China, the 2012 Guidelines on the EU’s Foreign and Security Policy in East Asia specifically identify these three areas, together with efforts on illegal migration, serious crime, conflict prevention and peacekeeping, for a further strengthening in EU–China relations (Council of the European Union, 2012: 12). Further evidence of both EU and Chinese commitments to global governance might be found in the i­mplementation of the EU–China 2020 Strategic Agenda for Cooperation, released at the 16th China–EU Summit on 21  November  2013 in Beijing. According to this Agenda the two sides will ‘reinforce cooperation in multilateral fora, ­including coordination before major meetings, to establish a rules-based, more efficient, transparent, just and equitable system of global governance, emphasize multilateralism and the central role of the UN in international affairs and value the role of multilateral organizations and platforms such as the G20’ (European Commission, 2013). However, even in the areas where there is EU–China cooperation at the global level, the two sides’ contributions to global governance are not always substantial. This is due to the fact that both players are only regional powers and are mostly concerned with their own neighbourhoods.

Chapter 11

Conclusions and Outlook

The previous ten chapters of this book have made clear how dense and complex the EU–China relationship has become over recent decades. It has been an organic growth driven by many actors, institutions and interests on both sides, as well as by world events, rather than by a strategy designed with an overall purpose in mind. Nevertheless, the policies on both sides have been fairly consistent despite many changes in the global environment. Their normative differences related to values, and the tensions between the EU’s preference for multilateralism and China’s strict interpretation of sovereignty have remained – the EU will have to deal with an illiberal China while ­seeking to promote a liberal world order and advancing globalization, sometimes together with China (Chapter 5). The discussion of developments across the various dimensions have shown the value, potential and shortcomings of the partnership that has grown to be one of the most important in the world. In the many fields not related to the traditional geopolitical prism of great power relations we have noted a fundamental difference to US–China relations. Firmly at the heart of the EU–China partnership is trade and investment, even if in recent years ­competition here has also become more fierce (Chapter 6). The EU and China share a common landmass but they are not as closely, and certainly not military or strategically, focused on each other as the US and China are across the Pacific (Chapter 8). The EU has in recent years been fairly inward-looking and focused on its neighbourhood and on ­migration – areas where China is not a major actor. Conversely, the EU is not an ­important strategic actor in China’s neighbourhood, although the EU has strategic ­partnerships and free trade agreements with China’s neighbours and competitors such as Japan, South Korea and some of the ASEAN countries. The way the EU, China and Russia interact on their shared continent is also of prime importance in particular for the EU, some of whose member states feel directly threatened by Russia since the war in Georgia (2008) and ­Russia’s annexation of the Crimea (2014). China’s Belt and Road Initiative has the potential to restructure some of that economic and political space on the vast Eurasian continent. The 16+1 initiative is part of that wider endeavour, viewed with scepticism in Brussels (Chapters 5 and 6). China is determined to build more bridges and ties across Eurasia (and the North Pole) in the coming years and decades through its BRI, an initiative that the EU has met with caution, and with some member states more enthusiastic than others. 180

Conclusions and Outlook  181 More generally, investment, trade, tourism, education, cultural exchanges and consular issues will remain largely characterized by intra-EU competition between member states, while the EU has to deal with the difficult issues of human rights and trade defence instruments (Chapters 5, 6 and 7). The EU must factor China into its policy-making and analyse its posture and interests in international politics but also in its bilateral relations with other countries. How that has been managed constructively was shown in Chapter  9. After all, China has become almost every other country’s top trading partner and with BRI and other forums China will become ever more influential across the globe including in Europe’s backyards. From our analysis in the preceding chapters we find that EU–China ­relations have reached a critical juncture at the end of the 2010s. This is for three reasons that can be advanced in support of this view. First, in a rapidly changing international context a more confident China is likely to play a more active role on global issues of interest to the EU. This role can be constructive (as in climate change) or competitive (as in trade relations or in Africa) or even at odds with the EU (as with regards to human rights, cyber security or space policy). As we have seen, China has expanded its institutional role in global governance and its economic and political relations with the rest of the world based on its national interest, while Europe’s role in all these areas has remained fairly stagnant or in some cases has diminished (Chapter 10). This rapidly evolving situation requires a much better understanding of respective interests and perspectives on global issues and how they can be negotiated between the EU and China. Despite these challenges and their normative differences, China and Europe could find themselves – temporarily at least – more often than before on the same side on global governance; for instance both support a strong UN, the existing international trade system, the non-proliferation regime and the Paris Agreement on Climate Change among others. This is in contrast to ­ resident the blatantly unilateral and protectionist stance of the US under P Trump who openly questions, and in some cases dismantles, elements of the international liberal order which the United States itself has built over decades. If US unilateralism continues to threaten these organizations, regimes and agreements and provokes tensions in the Middle East or in East Asia, then China and the EU are likely to draw together more closely. There are demands for European leadership in order to preserve a liberal world trade regime, an effective climate policy and multilateralism more generally. A fundamental issue is that the context of the relationship is evolving in ways that are more problematic for the EU than for China, notably if the US were to pursue a more lasting isolationist course and turn their back on the liberal world order for good. Alternatives to the liberal order are being pushed by countries opposed to the dominance of the US and Europe – including China. In this regard, it is important to look at the proposed alternatives to, and the possible reforms of, the international system (Chapter  10). An ‘alliance’ of countries rejecting Western values cannot simply be refuted as

182  The European Union and China aggressive authoritarianism, but needs to prompt a reflection in Europe (and in America beyond the White House) of how pluralism in the world can be better accommodated and reconciled with the proven advantages of the multilateral, liberal international order. In some of these efforts China – which, as we have shown in this book, has been a major beneficiary of that order – could be more helpful than the US (not to mention Russia or India), while in others it might be a powerful opponent. So far, many of the policy proposals from China (AIIB, BRI and others) – self-interested as they may be – are at least compatible with the multilateral and economically liberal ideas that the EU continues to promote, whereas in the promotion of rule of law, human rights and democracy – key objectives of the EU’s Lisbon Treaty – the EU cannot count on China. Second, another critical juncture is in the bilateral relationship. The EU can no longer base its policy on the hope that China will become more liberal or democratic due to Europe’s assistance in reform and opening up. That policy was successful in a way, with China firmly anchored in the international trade system and other multilateral organizations. Its domestic growth and reduction of poverty were also successful. But China’s Communist Party has no intention to allow major changes in China’s political system or in an opening towards Western values. In recent years, under Secretary-General Xi Jinping, the party has reasserted control over the military, vested interests at all levels of bureaucracy and in society and state-owned and even private enterprises (notably through a strong anti-corruption campaign and the reorganization of the administration). At the same time, and based on that retooled foundation of political rule, the Party has started socio-economic transformations that will affect China’s economy and society profoundly after the first phase of its rapid export-driven growth has evolved into a different development trajectory. The Communist Party seems determined to steer and manage this development in ways that are not necessarily coinciding with EU interests. Here the EU and China have to work to find common ground, to define the differences and ensure they are not working at cross purposes in order to maintain the fundamental agreement in Brussels and in Beijing that the two sides are partners. We have shown that the EU and China are far from being in a cosy ­relationship, and that this should come as no surprise – each side works from a unique historical experience, different political systems and values, distinct processes of economic and social development, and different g­eopolitical positions and interests. We have also shown that there are ways to manage profound differences and frequent conflicts cropping up in bilateral ­relations. Both sides will most likely pursue their partnership in more pragmatic, ­interest-based ways as it has become clear that the EU can no longer pretend to shape China in its image. Third, it is important to note that the EU itself is also transforming. Most importantly, it is on the way, for the first time in its history, to losing one of its member states. Brexit will not fundamentally change EU–China relations

Conclusions and Outlook  183 (Biscop, 2018), but Europe will be a more divided – and weaker – partner (or opponent) for China in the many negotiations across the various sectors covered in this book. While China has always been interested in a strong and integrated Europe as counterweight to the US and Russia, and has benefited from the advantages of exporting into a large Single Market, it has also taken advantage, whenever possible, of divisions and rivalries among EU member states in order to promote its own interests. The most obvious example here is the 16+1 agreement (Chapters 5 and 6), but other initiatives such as the more recent 5+1 partnership with the Nordic countries is another case in point (Sverdrup-Thygeson, Lindgren, and Lanteigne, 2018). Thus it will be interesting to see how China will deal with the new situation, for ­example by playing off the UK and the EU in trade negotiations or on political issues, or instead seeking to preserve a strong Europe for China’s geopolitical ­ambitions. But ultimately it is for the EU and its member states to devise a strategic consensus on its own priorities and to then stick to it. The erosion of the Western-led liberal international order has also affected Europe domestically through the rise of populism and through a spreading malaise or dissatisfaction with the democratic institutions in many countries, resulting in the criticism of elite politics. In some countries, public anger has been channelled through nationalism and directed at an EU that is perceived as an elite project. With China in some cases presented as part of the problem by globalization critics, the relationship could face headwinds also from this aspect of domestic politics. Apart from these three elements combining to create a critical juncture for EU–China relations in the coming years, the limited knowledge and recurrent misperceptions about China in Europe remain a problem. A more knowledgeable and sober approach to EU–China relations is important, and we believe this book has made a contribution to that. China appears to have a polarizing effect on societies everywhere: ‘dragon slayers’ confront ‘panda huggers’. Instead of simplistic support for, or ­opposition to, China, differentiated analysis is necessary to devise future EU policy. Similarly, many Chinese do not understand the EU and its policies well and tend to conflate Europe and the US as hostile forces seeking to ­undermine their country. This book has sought to advance a differentiated analysis to move away from black and white views. It has provided historical depth, institutional background on policy-making in the EU and in China, and in-depth and systematic overviews of developments across the key dimensions in the ­relations between the EU and China: political and diplomatic relations; trade, investment and monetary policy; the role of culture; educational contacts and people-to-people relations; traditional as well as non-traditional security issues; relations in the area of development policy and humanitarian aid; as well as developments in global governance. It has demonstrated that this is not a relationship that functions on autopilot, but one that needs daily efforts to manage.

184  The European Union and China We have emphasized the value of working with different theoretical and analytical perspectives to grasp the multiple and complex facets of the EU–China partnership. We thus tried to fill gaps in the mutual understanding of each side, given that these gaps have made strategic thinking and building trust difficult. As we suggested above, EU decision-makers tend towards a Liberal Institutionalist view of the world, a perspective that is only to some extent shared by their Chinese counterparts. International relations are seen much more through a realist prism in China, in particular when it comes to security questions and the balance of power with the United States, while China’s dream of rejuvenating its glorious past and forging a global ­community of shared destiny has a strong Constructivist connotation rooted in China’s Confucian civilization. The analysis of EU–China relations presented in this volume provides a broader picture than those focused only on one perspective of what is a complex, often unchartered and imbalanced, but crucial relationship in an uncertain world. In Chapter  1 we raised the question of how and why the EU–China ­relationship is strategic. The answer at the end of the book may not be clear-cut, and perhaps that means that the relationship itself is not strategic. However, we have seen how the partnership between the EU and China is of strategic importance in many ways, bilaterally and globally. That strategic importance is obvious for the future of the international order – whether it is based on multilateralism or on nationalism and multipolarity. It matters greatly, in particular on the shared Eurasian continent, where the EU and China, together with other powers, are in the process of reorganizing the political and economic space they jointly inhabit.

Appendix: Milestones in the History of EU–China Relations

1949 Founding of the People’s Republic of China 1957 Founding of the European Economic Community 1975 Establishment of diplomatic relations between the EC and China 1985 Signing of the EC–China Trade and Cooperation Agreement 1989 Introduction of an EC arms embargo on China in reaction to the Tiananmen protest suppression 1992 Maastricht Treaty, founding of the EU 1994 Establishment of structured EU–China political dialogue 1996 First Asia–Europe Meeting 2000 Signing of the scientific and technological cooperation agreement between the EU and China 2003 Launch of the EU–China Strategic Partnership 2003 EU–China dispute over French plans to meet the Dalai Lama 2005 Textile trade dispute between the EU and China 2009 Signing of the Science and Technology Partnership Agreement 2010 Establishment of the High-Level Strategic Dialogue on strategic and foreign policy issues 2012 EU–China High-Level ­People-to-People Dialogue launched 2012 First annual summit of the 16+1 initiative launching systematic cooperation between China and Central and Eastern European countries 2013 EU–China 2020 Strategic Agenda for Cooperation signed 2013 President Xi Jinping unveils the ‘One Belt One Road’ initiative, renamed in 2016 as the ‘Belt and Road Initiative’ 2013 Launching of negotiations for a Bilateral Investment Agreement (BIA) between the EU and China 2014 First official visit by the Chinese president to the European Union 2016 European Union adopts a new ‘EU Strategy on China’

185

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Index

In this index b indicates box, f indicates figure, and t indicates table A Accession process, WTO, 7 ACP group, 45 Advisory groups, 67 Africa aid and, 157–158 China and, 64 cooperation policies, 23 deficits in China trade and, 160–161 development/investment in, 144–147 trade, changes in, 145 transformation of, aid and, 159–160 views of/differences in approaches to, 148–150 Africa-China summit, 20–21 African Peace Facility, 47 African Union, 47 Afro-Asian conference, Bandung, 56 Agricultural aid/equipment, 157 Aid contributions, 126 development assistance, 152–155. See also Development assistance foreign, 142, 151 forms of, 157–158 Western ODA principles, 159 Amanor, K. S., 152 America First policy, 9, 21, 22, 131 Amsterdam Treaty, 16 Animal parts, smuggling, 138 Anti-colonial struggle, 150 Anti-hegemonism, 58 Arab League, 172 Arbitrational Tribunal, 131 Arbitration procedures, 171 Arms control, 16 Arms embargo, 24, 130, 133–134 Arms sales, 125 ASEAN Treaty of Amity and Cooperation, 125–126

ASEM summit 1998, 16–17 2010, 21 Ashton, Catherine, 40 Asia-Europe Meeting (ASEM), 42 Asia-Europe Parliamentary Partnership (ASEP), 42 Asia Infrastructure Investment Bank (AIIB), 60 Asian financial crisis, 17 Asian Infrastructure Investment Bank (AIIB), 105, 132, 159 Association of Southeast Asian Nations (ASEAN), 45 AU Constitutive Act, 160 Authoritarianism, 182 Autonomous state system, China, 55 Autonomy, China policy, 25 B Beijing Consensus, 145 Beijing Olympic Games, 82 Belt and Road Initiative (BRI), 3, 7, 60, 180 Bilateral Investment Agreement (BIA), 102 Bilateral Partnership on Climate Change, 136 Bilateral Political Dialogue, 1994, 75 Bilateral relations, 6, 182 Bilateral trade agreements, 98 Bio-fuel, 136 Bretton Woods Institutions, 56, 159 Brexit, 149, 150 economic impact, 34 EU-China relations and, 23, 182–183 BRICS New Development Bank, f­ unctions, 56, 60, 105, 159, 168–169 Bundled cooperation packages, 155 Business environment, 152

208

Index  209 C Celebrity advocacy, 150 Central and Eastern Europe (CEE), 34 Century of humiliation, 3–4, 79 Charity, 150 Chemical Weapons Convention (CWC), 135 China, foreign policy domestic agenda and, 62–64 EU and, 68–69 Five Principles of Peaceful Coexistence, 57b functions/policy actors, 65–68 history, 51–52 identity issues, 55–57 international policies, 52 Koreas and, 53 principles/priorities, 58–61 rising power, assertiveness, 52–54 See also Foreign policies entries China-Africa Development Fund (CADF), 145 China Development Bank (CDB), 158 China’s 12th five-year plan, 22 Chinese Communist Party Congress, October 2017, 10 Chinese communities, Europe, 119 Chinese Foreign Ministry (MOFA), 7 Chinese Model of Development, 143, 157. See also Development entries Chinese Renminbi, 103–105 Chinese restaurants, 120 Chinese White Paper, 145 Civil protection disaster management, 138–139 organized crime, 137–138 Civil society initiatives, 114–116 Civil Society Organizations (CSOs), 114–116 Climate change, 167, 169 post-Kyoto regime, 174–176 See also Paris Agreement on Climate Change Climate security, 136–137 Cold War, 15, 151 Collaborative projects, 100 Collective responsibilities, 79 College of Commissioners, 38

Colonialism decolonization, 150–151 source of, 3–4 Colonies independence, 149 return of European to China, 16–18 Commercial policy, 31 Committee for Civilian Crisis Management (CivCom), 38 Committee of Permanent Representatives (COREPER), 37 Common but Differentiated Responsibilities and Capabilities (CBDR-RC), 175 Common Commercial Policy, 35 Common external tariff, 31 Common Foreign and Security Policy (CFSP), 16–17, 31 Common interest, 30–31 Common market, 31 Communist expansion, 151 Communist Party, China, 58 structure, 65–66 Western values and, 182 Competition, cooperation, history, 148–152 Comprehensive Economic and Trade Agreement, EU (CETA), 35 Comprehensive Test Ban Treaty (CTBT), 135, 170 Compromise culture, 50 Concessional loans, 156 Constructivism perspective, 5 Convention Against Transnational Organized Crime (UN), 171 Convention on the Physical Protection of Nuclear Material, 135 Cooperation packages, bundled, 155 Cooperation programmes, 7–8, 60, 141 Cotonou Agreement, 45, 141, 149 Council of the European Union, role/ function, 37–38 Counterfeiting goods, 138 Counterterrorism, 137, 170–171 Court of Auditors, EU, 43–44 Court of Justice of the European Union, role/functions, 42–43 Cultural exchanges, 26, 119 Cultural identities, 167 Cultural Revolution, 14, 55–56

210  Index Culture, mutual knowledge, comprehension deficits, 116–118 Culture of compromise, 50 Currency Eurozone crisis and, 106 reform, 103–104 revaluation, 104 Customs union, 31, 149 Cyber-crime, 138 Cyber-security, 137–138, 171 Cyber Task Force, 138 D Dalai Lama, 78 Dali Lama, controversy, 20 Debt crisis, Eurozone, 5, 21, 106–107 Decision-making culture specific, 79 intergovernmental, 30–31 monetary policy, 103 Decolonization, 150 Democratization, 126 China and, 73 policy differences, 167 Deng Xiaoping, 58, 59, 64 Developing countries, 143 China and, 63, 150–152 climate change and, 174–175 Development Africa, China and, 144–147 aid and, 2, 157–158 Chinese Model of, 143 EU, China v approaches to, 140–144 geopolitics v, 144–147 global agenda, effectiveness, 159 historical views, Africa, 148–150 multicore, multipolar v, 169 private sector, 155 reform process, aid and, 17 state-centric, 157 Developmental policy, 144–147 Development assistance different approaches to, 152–155 EU/China, similarities/convergence, 158–160 taxpayer money and, 155–157 traditional, different approaches to, 157–158 Development Assistance Committee definition, ODA, 142b

Dialogues development, 147, 160–161 human rights, 79–81 Directorate-Generals (DGs), EC, 39 Disaster management, 138–139 Discrimination, trading partners and, 144 Disease control, 169 Dispute settlement system, 176 Divide and rule tactic, 34 Domestic agenda, 7, 62–64 Domestic institutions, EU member states, 32–36 Domestic reform, 7–8 Domestic reform, Africa and, 148–150 Double hatting, 134 Drivers, political relationships, 76–77 Dual-use goods, 170 Dual-use technology, 133–135 Duty-free access, 144 E East Asian Summit, 168 East China Sea, 64, 129 Ecological degradation, 169 Economic and Monetary Union (EMU), 17 Economic cooperation, 132 Economic development China and, 63, 143 top down/state led, market-driven v, 146 Economic dimension foreign direct investment, 98–103 monetary policy, international financial system, 103–106 trade, 89–98 Economic diplomacy, China and, 63–64 Economic integration, 31 Economic interdependence, 128–129 Economic Partnership Agreements (Peas), 150 Economic uncertainty, China assertiveness and, 53 Economy EU as world’s largest, 2 foreign trade, Chinese dependence on, 95 Education aid, 157 Education collaboration, 111–113 higher education, 114–116

Index  211 Emergency management, 138–139 Emission trading, 25 Energy, clean, 136 Energy efficiency, 169 Energy Environment Programme (EEP), 136 Energy mix, EU/China, 175t Energy resources, competition for African, 144 Energy security, 136–137 Environment energy/climate security, 136–137 EU external, 44 European Commission role, 39 policy and, 16 Ethnic separatists, 137 EU-China Free Trade Agreement (FTA), 22, 96 EU China High Level Strategic Dialogue, 27 EU-China Human Rights Dialogue, 75, 78–82 EU-China Joint Committee, 74 EU-China Trade and Cooperation Agreement of 1985, 74 EU 2016 Elements paper, 22 EU Global Strategy (EUGS), 22, 49 EU-Hong Kong relations, 84–85 EU member states, foreign policy development, 32–36 EU Military Committee (EUMC), 38 EU Military Staff, 47 EU Overseas Direct Investment (ODI), 98–99 EU policy paper, 1995, 16, 23–24 Eurafrique, 149 Eurasian Economic Union (EEU), 132 Europe 2020, 22 European Anti-Fraud Office (OLAF), 138 European Asylum Support Office (EASO), 44 European Border and Coast Guard, 44 European Central Bank (ECB), 44, 103 European Commission Communication, 75–76 European Commission Delegation, 15 European Commission (EC), role/ function, 38–39

European Community (EC), trade, reform and, 15–16 European Consensus for Development, 141 European Consensus, 141 European Constitution, 8 European Council (EuCo) political objectives, long-term, 35 role/function, 36–37 European Council presidency, 27 European Customs Union, 149 European Defence Agency, 40, 47 European Development Fund (EDF), 149, 152–153 European External Action Service (EEAS), role/function, 21, 31, 37, 39–40 European foreign policy structural, 44–46 values/interests of, 46–49 See also Foreign policies entries European Investment Bank, 44 European Liberal Institutional view, 53 European Monetary System, 103 European Parliament, role/function, 40–42 European Partnership Agreements (EPA), 149, 160 European Security Strategy, 18 European Union (EU) China foreign policy and, 68–69 Eurozone crisis and, 107 transformation, 182–183 Europol, 138 Eurozone debt crisis, 5, 165–166 financial reforms and, 174 impact of debt crisis, 106 EU-Taiwan relations, 83–84 Everything But Arms (EBA) initiative, 144 Exchange rate, 103–104 Exchange students, 112–113 Expansion policy, China, 58 Export-Import Bank (EXIM Bank), 155 Exports arms, dual-use goods, 170 Chinese growth, 94–95 world merchandise exports by region, 90t–91t External Economic Investment Plan, 159

212  Index F Financial crisis Asian, 17, 60 EU, 26 European decline and, 149 global, 95 US, 21 See also Eurozone crisis Financial Stability Board (G20), 173 Financial system, international, monetary policy and, 103–106 Financial Times, 64, 152 Fissile Material Cut-off Treaty, 135 5+1 partnership, 183 Five Principles of Peaceful Coexistence, 57b, 149 Foreign Affairs Council (FAC), 37 Foreign aid, 142, 151 Foreign currency transactions, 103 Foreign direct investment (FDI), 98–103 EU member states, China v., 101f Foreign Ministry (MOFA), China, 62 Foreign occupation, China, 3 Foreign policy America First, 9 China, 3, 166 EU, 2 EU member states’, role in, 32–36 making, characteristics of, 29–30 See also European foreign policy; China, foreign policy Free Trade Agreements, 9, 45 FRONTEX, 44 G Galileo programme, 126 General Agreement on Tariffs and Trade (GATT), 143–144 Generalized System of Preferences (GSP), 143–144 Geographic distance, 3 Geopolitical position, 54 Germany EU-China role, 33–34 trade balance, China and, 97 G20 group, 23, 168 development agenda, 158–159 global regime, 173–174 summit, 21 Global China, 26

Global economy, rule-bound, 99–100 Global financial crisis, 95 Global governance, 25 China perspective, 166–167 EU perspective, 165–166 multilateralism/multipolarity, policy differences, 167–170 sovereignty/non-intervention, 167 Global Islamic terrorism, 137 Globalization China and, 57 Global order, China leadership and, 61 Global power, 11 Global regimes G20, 173–174 post-Kyoto climate change, 174–176 United Nations, 170–173 World Trade Organization, 176–177 Global Strategy, 11 Global trade China’s rise in, 94 share of global GDP growth (PPP) 1991–2013, 94f world merchandise exports by region, 90t–91t world merchandise imports by region, 92t–93t Governance. See Global governance Government ownership, 156 Grants taxpayer money as aid, 154 traditional aid, 157 Gross domestic product growth, share of global (PPP) 1991–2013, 94f Group-to-group approach, 166 Growth export-led, China, 94–95 gross domestic product, 1991–2013, 94f models of economic, 143 raw materials and, 145 H Hague Code of Conduct on Ballistic Missiles, 170 Hard (physical) resources, 152 Hard power, 149 Health aid, 157 Hegemony, China, 58 Higher education, 114–116

Index  213 High Level Economic and Trade Dialogue (HED), 20, 22 Hinkley Point nuclear power station, 100 Historical evolution, EU-China relationship 1949–1975, 14 1975–1989, 14–15 1989–1995, 15 1995–2003, WTO and, 15–18 2003–2006, strategic partnership, 18–20 2006–2010, 20–21 2010–2020, 21–23 Historical relations/perceptions, 2–6 Historic development, EU-China partnership, 74–76 History competition, EU, China, developing countries and, 148–152 milestones, EU-China relations, 185 trade, EU-China, 89 Hobbesian world view, 11 Hong Kong One Country, Two Systems policy, 23, 79, 84–85 return to China, 16–17, 18 Hospitals, 157 Hotspots, 134 Hot wars, 59 Housing, 157 Hu Jia, 42, 78 Hu Jintao, 7, 62, 65 Humanitarian assistance, 39, 138–139 Humanitarian intervention, 167 Human resources, 152 Human resources development, 157 Human rights China, 15 policy and, 75 reform and, 16 Human Rights Dialogue, 16 Human rights disputes Hong Kong, 84–85 perspectives, EU, China v., 77–78 Taiwan, 83–84 Tibet and, 82–83 values/norms, 78–82 violations, 80–81 Human trafficking, 120

I Ideological differences, 25 Illegal migration, 16 Imbalance of initiatives, 6 Imperial Japan, 53 Imperial Reign mottos, China, 60 Imports punitive tariffs on, 95 world merchandise imports by region, 92t–93t Individual rights, 79 Infrastructure, 152 Infrastructure projects, investments, 100 Integration project, 47 Intellectual property rights, 99 Interest rates, 103 Intergovernmentalism, 30 International Atomic Energy Agency Comprehensive Safeguard Agreements, 135 International Civil Aviation Organization (ICAO), 25, 84 International Covenant on Civil and Political Rights (ICCPF), 78–79 International Criminal Court, 173 International financial system, monetary policy, 103–106 International Information Security system (China), 171 International Monetary Fund (IMF), 104, 143, 173 International Poverty Reduction Centre of China, 158 International Relations, 4 International trade, 177 Inter-regionalism, 126 Investment Agreement, 1, 23 Investments EU Overseas Direct Investment, 98–99 Eurozone crisis and, 107 foreign direct, 98–103 infrastructure projects, 100 16+1 initiative, 102 inward, 100 outward, China, 100 sixteen+1 16+1 investment initiative, 102 tourist industry, 121 Inward investments, China, 100 Isolationists, 181

214  Index J Japan, Diaoyu/Senkaku Islands, China and, 64 Junior Managers Training programme, 8 Junker Plan, 132 Justice and Home Affairs (JHA), 17

L Lagarde, Christine, 174 Language, migrants and, 120 Lawmaking powers, EU, 165 Leadership change, and, 27 Chinese, global order, 61 Least developed countries (LDCs), 144 Leinen, Jo, 42 Lending institutions, multilateral, 168–169 Leys, Simon, 3 Liberal Institutionalism, 5–6 Liberal order, 181–182 Liberal reforms, China, 27–28 Liberation movements, 150–151 Li Keqiang, 66 Li Peng, 79 Lisbon Treaty functions/rules, 8, 21, 26, 38, 182 monetary policy and, 102–103 pillar structure abolishment, 31 Loans China to Africa, 145 concessional, 156 Long Term Policy, EU-China, 74

Market Economic Status (MES), 24, 96–97 Market economic status (MES), 19 Market integration, 47 Market power, EU as, 48 Medical teams, 157 Member states, EU foreign policy role Council of the European Union, 37–38 European Council, role/function, 36–37 national and domestic institutions, 32–35 MERCOSUR, 45 Migrants, 119–120 Migration, 119–120 Military interventions, 172–173 joint exercises, 125–126 Millennium Development Goals (MDGs), 158 Ministry of Commerce (MOFCOM), 7, 62 Minority rights, Tibet, 82–83 Mixed trade agreements, 35 Modernization, China and, 55 Mogherinin, Federica, 40 Monetary policy, international financial system, 103–106 Money supply, 103 Monnet, Jean, 47 Moral cause, Africa as, 148–150 Moral obligation, 150 Multilateralism, 5, 166 effective, 29, 45 EU and, 11 policy differences, 167–170 Multipolarity, 5 policy differences, 167–170

M Maastricht Treaty, 15, 16, 31, 103 Macau, return to China, 16–18, 79 Mandela, Nelson, 42 Manufacturing China, 99 outsourcing, 145 Mao Zedong, 65 Maritime security, 134 Maritime silk road, 60

N National foreign policies, EU member states, 32–36 National interest, priority, 7 Nationalism China assertiveness and, 53 Diaoyu/Senkaku Islands, 64 National Security Leading Small Group, 66 National sovereignty, 11, 165

K Kantian world view, 11 Korean conflicts, China and, 53 Korean issues, non-proliferation, 135 Korean War, China and, 59

Index  215 National veto, 30 Natural resources, competition, 167 Navigation satellite system, 126 Near Sea Doctrine, 54 Neo-colonialism, raw materials and, 20 New Development Banks, 159 New Silk Route, 132 Nixon, Richard M., 14 Non-Governmental Organizations (NGOs), function/roles, 114–116, 141, 150, 157 Non-interference/intervention policy, 152, 172 bilateral/multilateral, economic interdependence, 128–129 policy differences, 166–167 regional cooperative approach, China, 127–128 US military presence, 129–133 Non-proliferation, 16, 134–137 Non-Proliferation treaty (NPT), 170 Non-tariff barriers to trade, 35 Normative Power Europe, 46, 48 Norms, human rights, 78–82 Nuclear non-proliferation, 134–136 Nuclear proliferation, 167 O Official Development Assistance (ODA) aid effectiveness, 159 DAC defines, 141, 142b definitions, 156 developing countries, 155 EU funds, 149 Olympic Games, 20 One Belt One Road (OBOR) initiative, 7 One China principle, 19 One Country, Two Systems, Hong Kong, Macau, Taiwan, and China, 23, 76 Opium Wars, 3–4, 55 Organization for Economic Cooperation and Development (OECD), 141 Organized crime, 137–138 Outsourcing, manufacturing, 145 Outward investments, China, 100 Overseas Direct Investment (ODI), China, 27 Ownership government, 156

P Paris Agreement on Climate Change, 10, 25, 137, 175, 181 Partnership and Cooperation Agreement 2007, 20 Peaceful coexistence, 19, 57b, 59, 167 Peaceful rise, 18 Peacekeeping operations (UN), 56, 171–172 People to people exchanges, 8 Permanent Structured Cooperation, 47 Physical resources, 152 Piracy, 169 Pluralism, 182 Policy makers Africa, development and, 145 China, 65–66 trade, 97 Policy papers 1995, 16, 23–24 China-EU, 19 2016 Communication, 23 EU-China, 19–20 factors, 6 Political and Security Committee (PSC), 37 Political attitudes, EU member states and China and, 33f Political dialogues, historical development, EU-China, 74–76 Political relationships, drivers, 76–77 Politicization, European Commission, 38 Populism, growth of, 183 Populists, 11, 165 Positive sum game, 5 Post-sovereign arrangements, 165 Poverty alleviation, 169 Price stability, 103 Private sector development, 155 Professionalization, China agencies, 67 Profit repatriation, 99 Project teams, EC, 39 Proliferation risks, 125 Public aid, 155 Public Security Ministry, China, 138 Punitive tariffs, trade disputes, 95–96 Q Quota-free access, 144

216  Index R Rare earth elements, 177 Raw materials colonialism and, 152 economic growth and, 145 neo-colonialism, 20 Realist perspective, 4–5, 53 Reform currency, 103 development aid and, 17 economic, China, 59, 145 IMF and, 104, 173 liberal, China, 27–28 political, 15 secretive, China, 65 trade, EC and, 15–16 Reform agenda, 7 Reform trends, 8 Refugee crisis, 173 Regional cohesion policies, 8 Regional cooperative approach, 166 China, 127–128 EU, 166 Regional economic interdependence, 129 Regional integration, 126 Regional security, 126–129 Regulator superpower, Europe as, 177 Regulatory environment, foreign direct investment and, 100 Relationship perspectives constructivism, 5 internal domestic/international priorities, 6–7 Liberal Institutionalism, 5–6 realist, 4–5 theoretical approaches, 4–6 See also Historical evolution, EU-China relationship RELEX working group, 38 Research collaboration, 111–113 Resource depletion, 169 Responsibility to Protect principle, 172 Rivalry, strategic, 9 Rule-based management, 168 Rule by law, 79–80 Rule of law, 46 Rules-based global governance, 148 Rules-based international order, 49 Ruling party reform, 8

S Sakharov Prize, 42, 78 SARS crisis, 18 Scholarships, 157, 158 Schools, 157 Security policy differences, 167 UN role, 172 See also Security policy Security hotspots, 131 Security policy Asian, Europe as actor/non actor in, 123–124 civil protection/disaster management, 138–139 environmental, energy/climate change, 136–137 EU, towards Asia, 124–126 non-interference policy, China, 127–133 non-traditional, 18–19 organized crime, cyber security, civil protection, 137–138 regional, 126–127 terrorism, organized crime, civil protection, 137 traditional, issues, 133–134 US influence on EU, 9 WMD/non-proliferation, 134–136 Self-perceptions, differences, 148–150 Shanghai Cooperation Organization (SCO), 60, 168 Shared interests, 49 Silk Road, 3 Single Market, 183 Sino-American tensions, 130 Sino-Russian alliance, 132 Six Party Talks, 18, 135 16+1 agreement, 183 16+1 investment initiative, 102 Small arms and light weapons (SALW), 147 Smuggling, 138 Social cohesion policies, 8 Social development, China and, 63 Social welfare, 157 Soft power, 125, 149 Soft resources, 152

Index  217 South China Sea, code of conduct, 125 South China Sea debate, 9, 23 South-South Cooperation (SSC), 142–143, 151–152, 159 Sovereignty China protection of, 58 global governance and, 165 non-interference and, 172 policy differences, 166–167 post-modern view, 168 Soviet-China split, 14 Soviet Union collapse, 60 fall of, 15 Special Agricultural Technology Demonstration Centres, 158 Special drawing rights (SDRs), 104 Sports, 118–119 Stability, China concern for, 58 State-owned enterprises (SOEs), 145–146 concessional loans and, 156 development aid and, 153–154, 158 Steel, pricing Chinese, 96 Strategic Agenda for Cooperation, 22 Strategic partnerships, 9 2003–2006, EU–China, 18–20 2010–2020, realistic, 21–23 bilateral, 75 characteristics/features of, EU-China, 72–74 EU Dialogues with ten, 74t Strategic rivalry, 9 Structural foreign policy, EU, 44–46 Success trap, 27 Supranational institutions sovereignty and, 168 Supranational institutions, EU external relations, 165 Court of Justice of the European Union, 42–43 European Commission, 38–39 European External Action Service (EEAS), 40 European Parliament, 40–42 Sustainable Development Goals (SDGs), 158

T Taiwan One-Country, Two Systems, 83–84 return to China, 79 Taiwan, loss of UN seat, 14 Taiwan Straits, 83 Tariff common external, 31 punitive, imports, 95–96 reductions, 144 Taxpayer money, foreign aid and, 154, 155–157 Technology China need for, 25–26 cyber-security, 137–138 dual use, 133–135 investments, 101 Terrorism, 132, 137, 169 Terrorist Bombing Convention (UN), 170–171 Terrorist Financing Convention, 171 Theory of power transition, China and, 53 Think tanks, 114–116 Tiananmen Square demonstrations, 15, 60, 72, 77, 130 Tibet minority rights, EU and, 82–83 unrest, EU reaction, 20 Tourism, 120–121 Trade Africa and, 145 aid to, shift, 160 balance of, 97 China dependence on foreign, 103 deficits, China/Africa, 160–161 developing countries and, 143–144 disputes, punitive tariffs, 95–96 EU-China, 89–98 Eurozone crisis and, 106 export-led, China, 94–95 foreign direct investment and, 98–99 international, 177 monetary policy and, 103 preferential agreements, 150 steel, Chinese, 96 See also Global trade

218  Index Trade and Cooperation agreement 1985, 20 Trade deficit, 103, 160–161 Trade liberalization, 176 Trade policy, 97 Trade relations, 3 divisive issues, 22 EU-Canada Comprehensive Economic and Trade Agreement (CETA), 35 EU-China Free Trade Agreement, 22 European Commission role and, 39 expansion, 25 gains/loss, 5 Transnational organized crime, 138 Trans-Pacific Partnership (TPP), 9–10, 98, 129 Travel, cultural exchange, 26 Treaty on European Union, 77 Trump, Donald America First policy, 9, 21, 22, 131 TPP revocation and, 129 unilateralism of, 181 U UN Arms Trade Treaty (ATT), 170 UN Convention on Climate Change (UNFCCC), 84 UN Convention on the Law of the Sea (UNCLOS), 23 UN Covenant on Economic, Social, and Cultural Rights, 78–79 UN Covenant on economic, social, and cultural rights, 16 UN HR International Covenant on Civil and Political rights, 18 Unilateralism, 181 United Kingdom Brexit and, 23, 34 role with China, 34 United Nations China membership, 56 global regime, 170–173 terrorism/crime conventions, 170–171 See also Peacekeeping operations, UN United Nations Commission on Human Rights (UNCHR), 77 United Nations Convention on the Law of the Sea (UNCLOS), 131 United Nations Human Rights Council (UNHRC), 75

United Nations Security Council (UNSC), 6 United States allies, 9 China v. leadership/policies, 54 exchange rate, China and, 103–104 financial crisis, 21 military presence, Asia, 129–133 relationship role, EU-China, 8–10 security policy, influences EU, 9 Trans-Pacific Partnership and, 98 UNSC veto power, 56 V Values human rights, 78–82 post-Cold War system, Western-based, 169 Western, liberal world order and, 181–182 Values, EU foreign policy interests and, 46–49 Veto national, 30 UNSC power, 56 Vietnam War, 3, 59 W Wang Yi, 54 Washington Consensus, 20, 143 Water scarcity, 169 Water-supply projects, 157 Weapons, small arms, light, 147 Weapons of mass destruction, 134–136 Wei Jingsheng, 42 Well-digging, 157 White Paper on Military Strategy of 2015 (China), 58 White Papers, China Foreign Aid, 142, 153 Wilhelminian Germany, 53 World Bank, 159, 174 World Economic Forum (WEF), 25, 61 World merchandise exports by region, 90t–91t World merchandise imports by region, 92t–93t

Index  219 World Organization for Animal Health (WOAH), 84 World Trade Organization (WTO), 7 China membership, 16–18, 60, 63 global regime, 176–177 Taiwan and, 84

X Xi Jinping, 60, 65–66, 99–100 Z Zero-sum game, 5, 105 Zhegn Bijian, 62