The China Factor in the EU: A Realist Approach
Supposedly, 2020 should have marked a highpoint of EU-China relations as a milestone for upgrading the bilateral investment cooperation, namely the Comprehensive Agreement on Investment, which had entered the concluding stage. However, the unexpected Coronavirus pandemic seems to decelerate not only international politics, but also European affairs, including trade talks between these two economic superpowers.
During this pause, the relationship is worth-analysing on a factual basis. From a realist approach, this half of the article series will focus on trade and investment.
The EU-China relationship is multifaceted, sometimes even contradictory. It is a well-known fact that China is the second biggest external trading partner of the EU. If this statement is not put into perspective, Chinese influence can be exaggerated.
Firstly, European countries trade amongst each other more than with any other part of the world. Around 60% of national exports or imports in total are to or from another member state. Secondly, after Brexit, the United Kingdom becomes the third largest trader with the EU, just behind China and the United States. These three countries share 12.6%, 13.8% and 15.2% of extra-EU trade accordingly. Taking geographic proximity, level of development, long-lasting and intimate partnership, and ongoing negotiations all into account, the emergence from the East should not overshadow the significance and potentials of the British economy. Thirdly, quality is an issue required special attention.
“Made in China” is often associated with inexpensive and speedy production, together with poor quality and defects. Taking the latest disease as an example, the “world’s factory” has reacted promptly and supplied medical equipment to Europe, including masks and testing kits, soon after the outbreak across the continent. Yet the gesture named “Mask Diplomacy” has backfired. Several European states have found that the equipment from China failed to meet the required standards and were not adequately accurate. This experience definitely raises a red flag in the sector of public procurement of the member states.
Searching beyond the current crisis, development of 5G in Europe is another hotspot exemplifying the dilemma between tempting price and quality issues regarding supplies from China. Referencing a report published by the European Think-tank Network on China in January 2020, European governments, are, at least implicitly, open to Chinese firms’ intervention on deploying the up-to-date network generation. Along with modifying and tightening national regulations for limiting possible risks, there is a pragmatic consideration. An additional 55 billion euros and an 18-month delay will be the results of prohibiting the use of Chinese-built 5G equipment in Europe, an industry analysis reported by Reuters suggested.
In both the medical and the telecommunication examples, the key question at the European level remains unchanged – what should be done for maintaining close economic ties with China while holding threats to public health and security at bay?
Referring to the latest European strategy for China, Brussels describes Beijing as a partner, competitor and rival concurrently. Following with the issue-specific technique, the EU’s position towards China greatly varies depending on the policy area which is discussed.
In term of the Comprehensive Agreement on Investment, which is currently under negotiation, it aims at expanding market access, levelling the playing field, and ultimately improving the investment climate for European companies in China. As expected, the deal will widen the gate for bilateral investment and benefit both sides. Nonetheless, some concerns highlighted in the Sustainability Impact Assessment must be answered. For instance, increasing international exposure of China may not be a catalyst for social change if the agreement does not include specific provisions related to human rights. Although, make no mistake, the EU prioritises economic interests, opportunities in Chinese markets should always be explored with utmost caution. The strategic interests of Europeans should be defended whenever necessary.
Despite the advancement in economic relations, the partnership with China challenges European values to a certain extent. Well before the disease (and Brexit), 21 out of 28 EU member states predominantly held a rather negative view on China. It is the task for the second half of the article series to explore the EU-China relations with a value-oriented approach.
(Banner image: pixabay)