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China is now a huge foreign policy challenge to the EU: it must respond with a global China policy

China, emboldened by the impact of the economic crisis on the West, is becoming a huge test for Europe's foreign policy. If it doesn't rethink its strategy, the EU will lose its already limited influence over Beijing. If it does, on issues ranging from climate change to the Dalai Lama, Europe can build coalitions with others affected by China's rise, and take advantage of the few areas where it has real leverage.

• China's assertiveness at the Copenhagen climate change talks achieved short term goals but endangered its long term interests, including the move towards a low carbon global economy. Europe can leverage its technological lead in this area and reach out to others alienated by Chinese tactics in Copenhagen, including Japan and key African countries.
• Iran's nuclear policy is an immediate and urgent security threat to the EU, and it must make this clear to China. Beijing needs to understand its actions on Iran affect Europe's core interests, and the EU can use carrots and sticks to achieve its ends.
• Mutual investment, technology and industry are the next focus of EU-China relations. As China seeks to hedge its own financial holdings, its investments in Europe should be both encouraged and leveraged against a more open European access to China's finance, service and public procurement sectors.
• Europe needs to be consistent and persistent on human rights if it is to avoid China undermining its credibility on issues such as meeting the Dalai Lama. It must agree a minimal code of conduct on key issues and focus criticism on violations of China's own laws and international norms, including the use of the death penalty.

These are the main conclusions of A Global China Policy, a policy brief by European Council on Foreign Relations China expert Francois Godement.

In September EU heads of government and foreign ministers will hold a major European Council meeting in Brussels to look at how the EU deals with strategic partners such as China. Europe's leaders should waste no time in understanding how to get the most out of relations with Beijing.

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Godement says:

"Although China appears to be more powerful than ever after the global economic crisis, it is vulnerable in several respects. There is greater tension with the US, and between China and its neighbours. It also needs the international system of trade, security and access to resources. The key to a global China policy is therefore to work with others to assemble coalitions to increase Europe's leverage over China."

OVERVIEW:

Optimism that Chinese integration into the international system would lead to it becoming a responsible stakeholder has broken down. But as it has increased its leverage Beijing has hollowed out the international system, while intimidating, isolating or rewarding partners to achieve its own ends. An example of how China uses the current system while blocking change is carbon trading, which has become a cash machine for Chinese companies.

Although its leverage seems limited, Francois Godement believes that Europe can now strengthen its hand in dealing with Beijing by reaching out to other strategic partners that are affected by China's rise, including the US, India and Brazil.

Godement argues that Europe can make this global China policy work by focusing on a limited number of strategic areas: trade and investment policy; industry and technology; climate change; nuclear proliferation and Iran; and human rights.

Policy Recommendations:

• The Chinese need our markets, and need to diversify their investments away from the risks of the developing world. The EU can leverage this need for better access to China.
• The EU can build a coalition to encourage China's acceptance of sanctions against Iran's nuclear programme, for instance putting obstacles in the way of oil imports from the Middle East.
• Europe needs to improve its understanding of the diverse constituencies and interests within China's elites, and move to gain their support on specific issues.

A Global China Policy is a follow up paper to A Power Audit of EU-China Relations, co-authored by John Fox and Francois Godement and published by ECFR in April 2009.

Notes:

1. This paper, like all ECFR publications, represents the views of its authors, not the collective position of ECFR or its Council Members.
2. Francois Godement is a senior policy fellow at the European Council on Foreign Relations and is the Director of the Asia Centre at Sciences Po.
3. The European Council on Foreign Relations (ECFR) is the first pan-European think-tank. Launched in October 2007, its objective is to conduct research and promote informed debate across Europe on the development of coherent and effective European values based foreign policy.