Stanley's blog

The UK House of Lords EU Committee published on 23 March an extremely thorough report of the state of the EU-China relationship. The following are its key conclusions and recommendations, and some comments on them:

A strategic relationship

The role which China and the EU can play in shaping 21st century global affairs will be crucial to solving the world’s problems.

There needs to be an effective strategic relationship between the EU and China, based on trust and mutual respect. Such a relationship does not currently exist beyond trade matters.

Comment: Agreed: not enough effort is being made beyond the rhetoric.

A US-China “G2”?

It is unlikely that a cooperative G2 model will emerge. It is conceivable that China and the US will concert more closely on world affairs. In terms of cooperative fora the G20 is the more likely formal model for the future.

The EU must play a stronger role in driving forward multilateral solutions to global problems. It should encourage the strengthening of the G20.

Comment: Agreed. China has expressly stated on several occasions that she is not interested in a G2 an idea floated by US academics, not the US government. China prefers to have good relations with everyone.

The arms embargo U-turn

The relationship between the EU and China deteriorated strongly in 2003 following the arms embargo debacle. The Chinese perceived the EU decision as driven by the US. The perception that the EU is the weak partner to the US rather than a strong partner to China still affects EU-China relations. The EU must avoid public division and policy reversals in future, which only serve to undermine its credibility.

The EU should never again advance along an important strategic dialogue with China only to fall into disunity or be effectively vetoed by other powers prior to implementation. The EU must fully consult, and ideally agree a common position with, the US where a US strategic interest is also involved. Then the EU should define a clear process and transparent criteria for lifting the embargo.

The EU should be prepared to lift the embargo only if the Chinese government makes progress on human rights and regional security, ratifies the International Covenant on Civil and Political Rights, ensures greater transparency on military modernisation and removes the military threat to Taiwan.

Comment: Agreed as to the assessment of the EU’s failings. The debate produced more heat than light. The embargo is symbolic as arms sales are controlled by the EU code, which in any case would be strengthened before the embargo is lifted. Wen Jiabao stated that were the embargo to be lifted, China would be willing to agree not to buy arms from the EU. It makes no sense to maintain the ban. It is inappropriate to attach all these conditions to its lifting.

A divided EU

The credibility of the EU as a strategic and important partner of China is regularly undermined by the tactical actions of individual large Member States. This is true from Tibet and meetings with the Dalai Lama through to bilateral commercial agreements.

We see little evidence of the EU’s diplomatic leverage being used effectively.

Whilst respecting the division of competences, the EU and its Member States need to decide the key issues on which, in practice, the EU should stand firm on a united approach and then fully implement this.

The EU and its Member States should take action promptly to uphold solidarity when there is unwarranted Chinese political or economic action against any Member State.

Agreed: Why not start with the Dalai Lama?

China’s lines in the sand

There are two key themes that drive all policy in China. These are the Chinese government’s lines in the sand.

First, “one China”. China will not accept any questioning of its territorial integrity. It must be made clear that a military solution to Taiwan must not be contemplated and would lead to severe repercussions.

Second, China’s need for development and economic growth. The Chinese Communist Party (CCP) depends for its legitimacy on guaranteeing prosperity for its citizens. No other policy will take precedence over the need to continue growing.

Comment: Agreed, but Beijing is fully aware of the EU’s position on Taiwan and nothing further needs to be done.

China – more than Beijing

The EU representation in China needs to be more effective, including giving higher priority to areas outside Beijing. This should be achieved in consultation with Member State embassies and consulates.

Comment: This recommendation is timely, having regard to the setting up of the External Action Service.

Knowledge and experience of China

The EU lags behind the US in the depth of its understanding of modern China.

The EU and its Member States, in cooperation with European business and civil society, must plan and fund the training and education of a greater number of specialists on all aspects of China, as well as boost Chinese language training and research on China.

Comment: Agreed. The Chinese are better informed about the EU than the converse. Greater resource is needed. The new External service should set an example.

The developing world and natural resources

China’s priority is to secure access to natural resources in order to fuel continued economic growth. It offers investment and trade in the developing world without the governance conditions upon which developed world donors insist.

The EU should encourage China to use the influence it has on developing countries to help the achievement of the Millennium Development Goals and build good governance.

But the EU must monitor Chinese natural resource deals with developing countries and remain focused on its own strategic interests.

Comment: Huge development aid to Africa has not produced many lasting results. China seems to be dong rather better. Lack of conditionality worries the EU. Promoting good governance is in China’s interests, in order to protect its investments in the future.

World citizen

China is increasingly engaging in global institutions, for example by contributing forces to UN peacekeeping missions. We welcome this increased engagement.

The EU has a unique role to play in further encouraging China to take on fuller and wider involvement in global governance.

Comment: The EU and China should work together on the reform of the UN, IMF and World Bank, and strengthen the organisation of the G20.

Democracy and human rights

China has made important progress on human rights in the last 30 years, primarily through lifting millions of people out of poverty. Progress on civil and political rights is slow despite efforts to introduce democracy at the village level. The CCP still tolerates no opposition to its one-party rule.

The EU should press on in a practical manner with its successful but lower profile rule of law and civil society projects which are making a real difference on the ground.

Comment: A realistic assessment. Some would question the success of rule of law and civil society projects.

Climate change

The Copenhagen conference illustrated a marginalisation of the EU, even when united.

We are concerned that competition for short-term commercial advantage between the Member States is undermining EU engagement with China on climate change. We recommend that the Member States put collective EU interests before short-term commercial advantage in the area of climate change.

The EU should be prepared to set an example on carbon emission cuts which is in the interests of the Member States and the world.

The EU must reassess its negotiating strategy prior to the UN meetings in Bonn and Mexico City in order to re-enter the negotiations as a player rather than as a spectator.

Comment: Agreed. Much of the problem is caused by the egos of Member State leaders.

Trade and currency imbalances

The vast trade imbalances between China and the West are not sustainable. The EU in partnership with the US must address this is issue firmly with China through the G20, in order to resolve it before a major US-China crisis results that will inevitably affect core EU interests.

The EU should fully assert its rights, whether access to markets or intellectual property issues, through WTO procedures. There must be equality of access to markets.

Comment: These issues are not likely to be resolved in the foreseeable future.

ASEM

The EU should explore ways in which to develop ASEM as a major forum for dialogue and cooperation between European and Pacific Asian countries.

Comment: The EU is taking very seriously the eighth ASEM summit to take place in Brussels in October.

Afghanistan and Pakistan

China and the EU share concerns about stability and terrorism in Afghanistan and Pakistan where China also has a considerable economic stake. The EU should explore the potential for sharing information and even intelligence with China on both countries.

Comment: China has a major stake in regional security and this is a good recommendation.

Science and technology

The EU’s engagement with China in the field of science and technology is to be commended. Such cooperation has brought benefits to both sides. However, the EU should be aware that China is probably collaborating with the EU to compete. The EU should be cautious about sharing technology that might involve commercial or strategic risk for the EU and its partners in the future.

Comment: A sensible caution. The costs and benefits of each case should be assessed.

Cyber attacks

The development by China of a cyber capability has potentially serious commercial and communications implications for EU Member States. When attacks emanate from China the EU should make strong representations to the Chinese government and be prepared to take strong counter-measures including the curtailment of collaborative technology programmes. The EU should begin by engaging the Chinese authorities in discussions on the proper development and employment of cyber capability. This is an area where the EU should work closely with the US through NATO and other relevant organizations.

Comment: The implication is that China is a threat in this area. The facts are not clear nor is the conduct of other countries known.

In Conclusion

We have become aware of the growing assertiveness of China on the international stage.

The EU has limited time to convince China of the value of a strong and active strategic relationship. It must do so. It can do so. But it must act quickly, consistently, in a united fashion, and with confidence.

Comment: There are no signs that the leaders of the bigger Member States are willing to subordinate their egos in their interests of their countries.

Market economy status (MES)

The EU should not consider granting MES until China meets its WTO obligations, including the lifting of non-tariff barriers and protecting intellectual property rights.

Comment: China will automatically obtain MES in 2015-6. This should be granted in return for the implementation of specific market commitments by China.

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Comments

  1. The European Union should try to strengthen the G20? However doubts about the effectiveness of the G20 are growing.

    The debt restructuring being negotiated by Dubai World is getting a lot of attention. Creditors seem resigned to taking a haircut.

    While Dubai’s financial obligations are not legally sovereign debt, it is suggested the heavily indebted eurozone could learn lessons from the debt restructuring.

    Should the principles behind such a process be ironed out at the G20 – which really usurped the United Nations role in balancing finance and politics around the world.

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