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China and EU - the new partners?

Category:[world] [Opinion] [Commentary]

About six years ago, while serving in the British Embassy in Beijing, I had to attend a meeting with fellow member states of the European Union at the EU delegation.

A visitor from the Commission in Brussels was talking about the impact of the recent entry of China into the WTO.

"The problem is," he said, "though the EU signed an agreement for all the member states, to the Chinese nothing has really changed. On the one hand, we stand in front of them and say we are one, and then, when some big contract for infrastructure or airplanes comes up, we all scrap in front of them, the French against the British, the Germans against the Italians.

"No wonder they are confused. They wonder what is this thing that one moment says it is one, and the next splits up and starts beating to their door separately."

The visitor had a valid point. In China, awareness of the identity of separate member states of the EU like Germany or the UK is far stronger than awareness of the EU per se. But there is one big change in the last few months that might help the EU get a stronger message across.

In 2006, the EU was the largest trading partner for China for the first time. For years, it had been chasing the US, but now, officially, it has overtaken it.

Total trade between the two entities reached 254.8 billion euros ($341.4 billion), with EU exports to China rising 23 percent to reach 63 billion euros ($84.4 billion). This has been backed up by foreign direct investment, with Europe committing $5.6 billion in 2005, compared with North America's $3.7 billion, according to Chinese Ministry of Commerce statistics.

Chinese investment in Europe rose to $1.6 billion by the end of 2005, compared with $1.3 billion in North America. In the key areas, Europe matters more to China economically than the US.

Of course, the economy isn't the whole story. While there might be lots of "soft power" leverage between China and the EU, we have to look elsewhere in the dialogue between the two to see whether this has really translated into broad political cooperation and, to use the words of an earlier Commission paper on China, a genuine "strategic relationship".

The EU is viewed as a source of good technical partnerships, and the value of a lot of its trade is in the high-technology end of exports and imports. This is something China appreciates.

In one of the most important areas of dialogue between the two sides - the environment - commitments were made during a high level visit to Beijing in January to share environmentally friendly technology, and to look at ways of spreading the successfully launched carbon trading system adopted in Europe.

The EU and China are also working together on Galileo, the EU-led global navigation satellite system, and since October 2003 have been discussing lifting of the EU arms embargo. Frequent visits by government heads like the chancellor of Germany and the president of France give a momentum to discussion of EU issues. There is an EU-China Political Dialogue and an annual EU-China summit.

To some degree, China might see the EU as a counterweight against the might of the US, creating a genuinely multipolar world. The careful way in which China divides orders of US Boeing planes against Europe's Airbus is a good illustration of this policy of not putting all the eggs in one basket and balancing out interests.

At the heart of this all, however, is the most difficult issue of all, and it comes back to the comment made by the official six years ago. Just how strong is the political will between the member states in the EU, with their strongly separate identities, histories and cultures?

This is especially true now that the EU has undergone two waves of enlargement and has nearly doubled its membership in a little under a decade. China may well understand the EU on the level of a free trade zone. But it is much harder to see it as a place where one can have the sort of hard-nosed negotiations that happen with, primarily, the US government.

The principle foundation of the EU is that for major issues there must be unanimous agreement among member states. That, or the measure doesn't get taken. This means that the EU is, in some ways, only as strong as its weakest link. For contentious issues, brokering a compromise either leads to impasse or a watered down agreement that might be satisfactory to all the parties but carries very little meaningful weight.

Ironically, the EU's relationship with China does give it a role where it can fulfill a function quite different from that of the US and bring a fresh perspective to issues. On energy usage, Africa, the environment, and enterprise regulation there are ongoing dialogues.

The EU needs to get the maximum out of the powerful fact that it is the key trading partner for China now and use this to promote a much more positive image of the EU overall.

Too often, the dialogue has been seen to be only about negative or contentious issues, like the arms embargo or market access issues. Maybe it is time to have an "EU Year" in China, to project a more unified, positive image.

And perhaps, for an issue like the environment, the EU needs to find the political will to look seriously at ways of achieving the technology transfer the Chinese want and showing that in the most critical areas, the EU can deliver.

With some talking of a looming wave of protectionism from the US, it may well be that the EU can play a useful mediating role too. For all these reasons, the EU and China may well need each other and have more in common than they currently think.

The author is director of Strategic China Ltd, an associate fellow of Chatham House, an organization for the analysis of international issues, and author of Struggling Giant: China in the 21st Century (Anthem Press, 2007)

(China Daily 06/07/2007 page11)



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