As the EU-China Summit opens in Brussels today, is there now a common ground on which the two can come together?
The EU-China Summit opening in Brussels today is already notable for its promise to produce a joint communiqué (as well as a separate one on climate issues) from the two parties. The previous summit held in Beijing in July 2016 ended without any common conclusion, perhaps reflecting that 2016 was a tough year for EU-China relations. Among other things, Chinese expectations to obtain market economy status and have special anti-dumping criteria lifted were frustrated (The Hague arbitration panel ruled against China on the very day that the 2016 summit opened), and China was unhappy about the insertion of unprecedented language about ‘reciprocity’ and ‘values’ in the EU’s emerging China strategy.
Have things changed so much in the space of one year? Is there now a common ground on which the EU and the PRC can come together?
Well, for one thing, China and the EU both fear Donald Trump’s attack on multilateral institutions and rules – on which both China and Europe depend. Of course, even on that score perspectives differ. The European Union is the world’s pre-eminent example of international law and due process binding together nation states. China, on the other hand, benefits from international rules – chiefly, free trade with the added benefit of remaining classified as a developing economy – and craves stability, but not necessarily multilateralism. Nonetheless, Donald Trump’s unpredictability poses common challenges, and China can see the opportunity in stepping into the breach of multilateralism created by Trump’s America First doctrine.
This will be easier than usual on one major issue: climate and the environment. China, despite being the world’s number one emitter of CO2, has no plans to renege on its commitment to the Paris climate deal. China’s energy policy has zigzagged in the past three years – profligate coal use rebounded in 2016 but has been curtailed once more this year. Against the backdrop of Trump’s vacillation on America’s commitment to climate progress, China has a chance to boost its image by joining hands with the EU. Contrary to popular perception, this will not hurt its business interests: the Chinese solar industry is bankrupting its competitors in Europe and the United States.
We can also expect joint words against protectionism, although they have a very different meaning for China and the EU. Free trade is for China the freedom to export, while the EU is a principal promoter of deep and reciprocal trade agreements. This is where difficulties are likely to emerge at the summit: the EU Chamber of Commerce in China has just published a survey of its members that confirms their pessimism about Chinese opening and reform. Yet the European Commission seems to have decided to take Mr Xi Jinping at his words in Davos, where he mentioned further openings of Chinese markets and even spoke the magic word ‘reciprocity’.
China, for its part, has had to contain its anger at seeing the EU deny it market economy status in December and prepare new trade defence instruments. With the arrival of the Trump administration, Beijing suddenly had other priorities than trade skirmishes with Europe. But as China’s fear of the US recedes, the need to assuage Europe again becomes less pressing. Since 2009 there have been 13 rounds of negotiation on a new EU-China bilateral investment treaty, without discernible progress. Chinese media still routinely assert that an immediate jump to a free trade pact would be more expedient, but this is deemed unrealistic by Europeans.
Europeans have been disappointed by the gap between statements and the reality of the famed Belt and Road Initiative: China talks about investment but in practice generally lends funds (with interest) for these infrastructure projects. Perhaps that explains why so few EU member states signed up to a trade declaration at the recent Silk Road Conference in Beijing, with many citing the need for more transparency, openness and environmental concerns.
Perhaps most importantly, China should grasp the changed atmosphere in the European Union. Several election results – especially in France and the Netherlands – have dimmed the prospect of populist insurgent forces, and continuity also seems likely to prevail in Germany. External events, too, have conspired to kick-start renewed European unity.
In spite of the occasional judgement that Europe’s time is over, the EU market is still crucial for China. Equally, China has lots of positives to offer Europeans – Chinese investment and Chinese tourists being two prime examples.
On one key issue, Europe hopes that China will finally up its game. China is the top trade partner of all Near and Middle East countries, but it contributes almost nothing to their development funds or to the plight of refugees. This is striking, especially in comparison with China’s regional rival Japan, which contributes a great deal: in 2015 Prime Minister Abe pledged $1.5 billion aid for the Middle East. China stepping up to this plate would be a welcome practical demonstration of responsibility. The same would be true of greater Chinese co-ordination with European actors in Africa, where Beijing is beginning to beef up its military projection through United Nations Peacekeeping Operations and its Djibouti bases.
But for now, the traditional tactics of division that China practices through its preference for bilateral relations are not working so well with Europe. This was not generally predicted. It suggests that this summit could be the occasion for China to reassess how it conducts its overall relationship with Europe. Only then will we know whether enough has changed in the space of one year.