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China-EU summit: reflections

The 12th China-EU summit unusually took place, not in Beijing but in Nanjing, on 30 November. The Chinese delegation was led by Premier Wen Jiabao; the EU by Prime Minister Fredrik Reinfeldt of Sweden, President of the European Council and Commission President, José Manuel Barroso. Commissioner Ferrero-Waldner also attended.

The atmosphere was overall friendly but nothing was agreed that had not already been agreed beforehand. These meetings are very short – maybe 90 minutes. But there were also meetings between Presidents Barroso and Hu Jintao. the Euro-zone troika (Commissioner Joaquín Almunia, ECB President Jean-Claude Trichet and Eurogroup President Jean-Claude Juncker) and their Chinese counterparts, and a Foreign Minister’s Troika.

European requests for a revaluation of the yuan were very firmly rejected. Wen Jiabao, speaking after the summit, said:

“Some countries on the one hand want the renmimbi to appreciate, but on the other hand engage in brazen protectionism against China. This is unfair. Their measures are a restriction on China’s development.”

He continues to suggest that the Western demands for a currency revaluation are fuelled by a desire to curb China’s economic development.

Beijing is making no concessions to the West and is contributing to mounting public disquiet, which political leaders may be unable to ignore.

It is disappointing to hear Premier Wen adopting such an assertive approach. Does he believe the picture he paints of countries unfairly asking for RMB appreciation and engaging in “brazen protectionism”? He must understand the European’s concern over the effect of an undervalued renmimbi? Does he not take into account that Europe has taken a moderate line on the currency and is only now becoming really worried?

Wen’s tone is a sign of a growing assertiveness in Beijing, with China’s position being stated more forcefully. It seems clear that no early change in policy can be expected. China believes that its stance on the RMB has contributed to stability, which benefits the domestic economy. The strong euro/weak US dollar problem cannot be resolved by floating the RMB upwards. This would indeed weaken the $US, but also devalue China’s foreign reserves and treasury bond holdings, and disturb its commercial relations in Asia. China should put more of its FOREX reserves into euros.

Joint statement

The joint statement contained the usual self-congratulatory list but very little of note.

“Both sides agreed that the political mutual trust is enhancing.”

Is it really?

“The two sides expressed determination to strengthen political dialogue and cooperation…, so as to further promote understanding and consensus and build stable and strategic mutual trust.”

This is essential but will it happen?

• “Leaders commended the progress in the negotiations on the EU-China Partnership Cooperation Agreement/updating the 1985 EEC-China Trade and Economic Cooperation Agreement. They encouraged the competent authorities to speed up the negotiations for an early conclusion.”

Progress in the PCA negotiations has been slow. These opened in January 2007, but less than 25 clauses have so far been agreed, and these do not include any of the more difficult ones, such as on migration. It is also currently hard to see the European Parliament approving the agreement, when negotiated. Trade negotiations are making no progress.

• “The two sides emphasized their commitment to the promotion and protection of human rights, the rule of law, and the strengthening of dialogue and cooperation in the field of human rights on the basis of equality and mutual respect. The EU welcomed China’s commitment to ratifying the International Covenant on Civil and Political Rights (ICCPR) as soon as possible. Both sides confirmed their commitment to cooperate with UN human rights mechanisms.”

But what actual progress is being made? China signed the ICCPR in 1998.

• “The two sides shared the view that climate change is one of the most important global challenges of our time which demands urgent and cooperative action, and agreed to further strengthen cooperation in this field.”

Climate change was the main issue discussed at the summit and there is considerable agreement between China and the EU. Hopefully, the summit discussions will have helped pave the way for an agreement at Copenhagen.

• “The two sides …welcomed the recent deepening of their Energy Dialogue, with a view to enhancing the use of clean and sustainable energy as well as global energy security… They thus called for further deepening of cooperation in the energy field.”

This is very important but will there be effective cooperation on energy security?

• “The EU and China welcomed trilateral dialogue between the EU, China and Africa, and agreed to explore appropriate areas for cooperation.”

Close cooperation on Africa was agreed at the 2007 China-EU summit, but little progress has been made.

• “The two sides commended the important role of the previous three G20 Summits in tackling the global financial crisis, and supported G20 to serve as the premier forum for international economic cooperation focusing on world economic, financial and development issues.”

There is clear agreement that G20 is the key forum.

• “In line with the three G20 summit communiqués, leaders
reaffirmed their commitment to increase the effectiveness, representation and legitimacy of the international financial institutions…”

There is broad agreement here, but will the big EU Member States be willing to give up any of their seats?

“Leaders welcomed the discussions in Nanjing on 29 November between the representatives of the euro-area and the Chinese authorities on macroeconomic policy issues.”

But no progress appears to hace been made on the revaluation of the yuan.

“Both sides agreed…to support the sustainable growth of the
economy in their regions and the world at large, not least by fighting all forms of protectionism, keeping open and free trade…”

While the EU takes anti-dumping measures against China and China makes access to its market more difficult.

• “The European Union appreciates the efforts of China to undertake trade and investment promotion missions to Europe during the economic downturn.”

This was indeed a welcome contribution.

• “Leaders also reaffirmed their commitment to the High Level Economic and Trade Dialogue (HED) and acknowledged that the HED is conducive to advancing their economic and trade relations in a strategic, forward-looking and plan-setting manner.”

This is potentially an important mechanism but will there be any really strategic thinking?

• “The EU and China will seek to facilitate trade and investment among small and medium sized enterprises (SMEs)…”

Promotion of SMEs is very important. The Commission’s SME support tender should be reinstated as soon as possible.

“They recognized the importance of open and non-discriminatory government procurement policies and agreed to pursue efforts to increase exchanges in this field.”

There is little sign of progress on the ground.

“Leaders acknowledged the need for a robust, efficiently enforced and wellfunctioning IPR system for continued economic development. They committed to step up their cooperation on intellectual property rights.”

This is critically important. Slow progress is being made. Enforcement remains the biggest problem.

• “Leaders discussed the politically important issue of Market Economy Status (MES). Both sides look forward to the timely update of the last MES report and recognize the important progress already made by China for the outstanding technical criteria.”

It is time that a major effort is made to reach agreement

“Leaders praised the fruitful exchanges and cooperation between the EU and China in a wide range of areas such as science and technology, people-to-people contacts, education, culture, customs, health and emergency management.”

See below.

• “The two sides agreed to strengthen exchanges and cooperation in various fields and decided (inter alia):
– to further strengthen exchanges and cooperation on the basis of the existing good cultural relations, continuously conduct EU-China cultural policy dialogue, and work closely together to push for the implementation of the Convention on the Protection and Promotion of the Diversity of Cultural Expressions;
– to further push forward the dialogue mechanism on educational policy, to strengthen their support for high-level talent cultivation, joint research, teaching and training in the languages of their respective country/region, academic staff and student exchange, and to make every effort to increase substantially the number of students exchanges in both directions;
– to further promote and deepen partnership between Europe and China by launching 2011 as the Europe-China Year of Youth;
– to support the continued constructive dialogue between the European Economic and Social Committee (EESC) and the China Economic and Social Council (CESC);
– and to strengthen high-level dialogue and exchanges between think-tanks from both sides, and to promote and support regular exchanges.”

Arguably, this is the most important, although long-term, set of measures that need to be taken. They all contribute to promoting mutual understanding and reducing misperceptions, which is critically important to strengthen the relationship. Cooperation and exchanges are necessary in all sectors and at all level. However, much greater support is required, both organizational and financial. Web-sites are needed.

Surprisingly, there is no reference to the relations between the European Parliament and the National People’s Congress.

The Agreements and memoranda signed were:
– The renewal of the Science and Technology Agreement.
– The Memorandum of Understanding launching phase II of the Near Zero Emission Coal Project.
– The Memorandum of Understanding on Consultation and Cooperation Mechanism on Industrial sectors.
– The Memorandum of Understanding on Cooperation Framework on Energy Performance and Quality in the Construction Sector.
– The Financing Agreement for the EU-China Environmental Governance Programme.
– The Financing Agreement of the new Trade project “Support to China’s sustainable trade and investment system”.

Conclusion

The summit is only one short event in a process. The atmosphere at China-EU meetings remains good but little seems to be achieved. The growing assertiveness of the Chinese leadership is noticeable, as is the increasingly negative attitude towards Europe being shown in frank discussions with officials and scholars.

We need to focus on increasing mutual understanding and hope that the fifth and sixth generations of Chinese leadership will adopt policies to Europe’s liking.

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Comments

  1. With due respect please change the name of President of P.R.China in the sentence “But there were also meetings between Presidents Barroso and Ju Jintao. “, I think it should be HU JINTAO, probably spell mistake. Thank you.

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