Regardless of their many disagreements, China and the European Union appear willing to team up against anti-globalist and anti-systemic forces that, they argue, threaten world stability.
Exchanging views with French Prime Minister Bernard Cazeneuve in Beijing on February 21, Chinese Premier Li Keqiang stressed that Europe was an important pole in the multipolar world that China was committed to building. He then added that his country “firmly supports the European integration process”, as “a united, prosperous and stable EU” was beneficial to globalization and multilateralism.
Li’s words about the EU sharply differ from those of US President Donald Trump. The new White House tenant has often been critical of the European bloc, which he maintains is dominated by Germany – a potential trade competitor to the United States – and “on the brink of collapse”. In the past, he went to the extent of calling Brexit “a great thing” and saying that other nations would follow London’s path and abandon the European grouping.
Beijing is emerging as the new champion of globalization and a bulwark against protectionism. China fears that the United Kingdom’s exit from the EU will damage the European project, consequently weakening a potential partner in its pitch for safeguarding global multilateral institutions and processes. Hence Brexit and EU integration are tipped to be key topics in the “Two Sessions”, the annual plenary gatherings of China’s top legislative and advisory bodies, the National People’s Congress and the Chinese People’s Political Consultative Conference, which started on March 3.
Sino-European differences
As trade-oriented realities, the EU and China agree on protecting free trade and battling protectionism. Trade turnover between them reached US$547 billion in 2016, according to Eurostat; China is the EU’s second-largest trading partner, while the European grouping is the most important for Beijing.
It is doubtful, however, that a Sino-European entente will stand the test of time if the two parties fail to solve their problems. Most important, there is the EU’s resistance to recognize China formally as a market economy, followed by the imbalance in two-way foreign direct investment – with Brussels accusing Beijing of unfairly penalizing European investors – and the EU’s discomfort with dumped and subsidized Chinese exports. As well, the Asian giant’s poor human-rights record is always in the EU’s crosshairs, even if it now looks like a marginal issue in their dialogue.
China and the EU are even at odds over “One Belt, One Road” (OBOR), Chinese President Xi Jinping’s signature initiative to boost Eurasian interconnectedness, which European leaders have often touted as a boon for the bloc’s trade. The European Commission – the EU executive body – is in fact investigating Beijing’s first railway project in Europe, a high-speed train that will link Belgrade and Budapest in the framework of OBOR. Hungary is an EU member state and could have breached the grouping’s rules on public tenders for infrastructure projects in assigning the contract to China.
The South China Sea, in contrast, is not currently a big area of disagreement between China and the EU, although European Council President Donald Tusk recently numbered China among the bloc’s top external threats, along with Russia and … the Trump administration, in particular for Beijing’s maritime assertiveness. European leaders have so far taken a principled position about the issue, pointing out that territorial disputes in the region should be managed in accordance with international rules. France, the only European country with some Pacific projection, has naval vessels routinely sailing through the South China Sea, but Paris’ real focus is on its overseas dependencies and relative economic exclusive zones in the South Pacific.
China knows well, however, that EU countries could influence the Asia-Pacific geopolitical scenario through arms sales to its rivals in the macro-region. From 2012 to 2016, EU member states delivered $7 billion worth of arms and defense systems to Asian nations that are challenging, or could challenge in the near future, China’s regional clout, with India, Australia, South Korea, Indonesia and Malaysia topping this list, the Stockholm International Peace Research Institute reports. Furthermore, arms-transfer agreements between EU members and these Indo-Pacific actors are steadily on the rise.
Geopolitical compromise
Thus if China and the EU really want to join hands and try to shield free trade and multilateral institutions, they first must accommodate their many points of friction. In this sense, media reports speak of concerted efforts by Beijing and Brussels to move forward to April or May their annual summit, usually scheduled for July. They have to deal with the Trump problem and need to take action sooner rather than later.
Once they have settled their economic differences, a geopolitical compromise between the two sides could be on the table. China would give the EU more voice and space on the world stage as the European bloc accepts becoming Beijing’s buffer against the US superpower now that this is run by a more unpredictable and confrontational administration.