2012 was a year of change in China as the new generation of leaders, headed by Xi Jinping, who will run China for the next five years, took over. The new number two, Li Keqiang, is widely viewed as a reformer and his pet project on sustainable urbanisation has already been identified by the EU institutions as a new area of cooperation. But, on most other issues, the new leaders are likely to be as intransigent as ever. Meanwhile, Europe was forced to think about how it should respond to the US “pivot” to Asia and what its response would mean for its relationship with what will likely become the world’s largest economy in the next decade. Should it support the US, engage more in Asia as an independent actor, or stay out of Asian security issues altogether?

Notwithstanding High Representative Catherine Ashton’s visits to Asia in the middle of the year – what she called her “Asian Semester”– Europe seemed to be uncertain on how it could play a role in Asian security or even to react coherently to the pivot. During the Asia–Europe Meeting (ASEM), EU member states stayed ominously silent on the maritime disputes between China and its neighbours. At the ASEAN Regional Forum in July, Ashton and her American counterpart, Hillary Clinton, issued a joint statement on coordinating Asia policy, but this went unnoticed by the Chinese and other Asians. Nor, so far, has the statement become the blueprint for a more strategic approach to Asia even within the EU. Later in the year, the EU wasn’t invited to or even associated with the East Asia Summit, in which President Barack Obama participated before making a high-profile visit to Burma.

Nevertheless, Europeans put in a slightly improved performance than in 2011. In 2012, the EU seemed to be slightly less panic-stricken in its approach to China than it was in 2011, when it even cancelled the EU–China summit as it dealt with the euro crisis. Instead of massively diversifying its currency reserves into European bonds, China made a sober but not exactly game-changing contribution to solving the euro crisis by contributing to bailouts through the IMF and kept up its public support for the euro. Chinese companies and state institutions continued to see opportunities to buy up European companies as they had in 2011. But against the background of a record $10 billion in Chinese investments in Europe, the EU inched slowly towards starting talks with China on an investment treaty that could entail a reciprocal deal for protecting Chinese investments while also increasing market access for European companies in China.

There were two EU–China summits this year but they had little impact as member states put much more energy into their bilateral relations. Ireland was the latest member state to sign a bilateral “strategic partnership” with China. Meanwhile, Central and Eastern European member states led by Poland held their own regional summit with China, which established an Eastern European secretariat in its foreign ministry that is focused on investment opportunities which includes a soft loan package from Chinese banks that is reminiscent of Chinese practices in Africa. But the closest bilateral relationship is now with Germany. Chancellor Angela Merkel visited China twice in 2012, including once as part of the so-called government-to-government consultation in August, the largest official gathering China has with a foreign power. In fact, she – rather than the so-called troika – seemed to be the key interlocutor for the Chinese on the euro crisis.

In September, there was also uncertainty about whether Merkel was speaking for Germany or for Europe when she seemed to undermine the European Commission in its case against China for providing unfair subsidies to its solar-panel manufacturers. Notwithstanding German government fears of a trade war with China, the European Commission pursued the solar case. But the commission’s tougher approach means that the Chinese increasingly shun the EU’s powerful trade negotiators and instead seek bilateral deals with individual member states. It is symptomatic of this tendency that the high-level economic dialogue between the EU and China has not been held since December 2010. The EU postponed its aviation carbon tax scheme but the fight with China on this issue is likely to resume in 2013.

It was an unimpressive year for the EU in its attempts to secure Chinese cooperation in the Middle East. In 2011, Europe and the United States persuaded the Chinese to support UNSC Resolution 1970 and 1973 on Libya. But in 2012, in part because of China’s perception that the West had exceeded its mandate in Libya, China joined Russia in blocking action against Syria (although China did twice make independent suggestions for stabilising the conflict in order to placate the Arab League and in particular Saudi Arabia and Qatar, which were disappointed by China’s veto). By establishing official contacts with the Syrian opposition, China is preparing itself for the fall of President Bashar al-Assad, but will still reject any Western intervention. On Iran, the EU maintained tight diplomatic contacts with China, particularly through Ashton and the EU3 (France, Germany, and the United Kingdom), but China nevertheless openly opposed the EU’s sanctions.

China was slightly more cooperative in Africa. The Chinese showed pragmatism and cooperated with France in the UNSC and in October gave a green light to intervention in Mali. China’s economic interests in Sudan meant it stayed engaged in the simmering conflict between South and North Sudan, and it even worked with the EU for clear statements on conflict reduction through the UNSC. China also indicated a shift towards more civil-society engagement and capacity building in Africa rather than just building roads, but this was a response to criticism from African partners. Thus, although Chinese policy in Africa is changing, this is more due to local pressure and its larger national interest in conflict mediation than to Western or European influence. 

The EEAS delegation in Beijing helped improve European consistency on human-rights issues. But in general the shift away from collective European action towards China continued as member states pursued their own bilateral strategies, with Germany increasingly the main interlocutor for the Chinese and other member states struggling to compete. Denmark, the Netherlands, Sweden, and the UK put forward proposals for greater coordination of EU China policy. But when European leaders took stock of the “strategic partnership” with China in October, the result was simply a reiteration of the need to implement agreements reached in 2010.

Trade Liberalisation and overall relationship - Grade: C+
Category Unity Resources Outcome Total Grade
1 - Formats of the Europe-China dialogue 3/5 3/5 5/10 11/20 B-
2 - Investment and market access in China 3/5 4/5 4/10 11/20 B-
3 - Reciprocity in access to public procurement in Europe and China 2/5 2/5 4/10 8/20 C
4 - Trade disputes with China 4/5 3/5 6/10 13/20 B
5 - Cooperation with China on the euro Crisis 2/5 2/5 4/10 8/20 C

Human Rights and Governance - Grade: C
Category Unity Resources Outcome Total Grade
6 - Rule of law and human rights in China 3/5 3/5 2/10 8/20 C
7 - Relations with China on the Dalai Lama and Tibet 2/5 3/5 2/10 7/20 C-

Cooperation on regional and global issues - Grade: B-
Category Unity Resources Outcome Total Grade
8 - Relations with China on Iran and proliferation 5/5 4/5 3/10 12/20 B-
9 - Relations with China in Asia 4/5 3/5 6/10 13/20 B
10 - Cooperation with China on Africa 3/5 3/5 5/10 11/20 B-
11 - Relations with China on reforming global governance 2/5 2/5 2/10 6/20 C-
12 - Relations with China on climate change 4/5 5/5 6/10 15/20 B+