At their recent summit in Beijing, the leaders of the European Union and China were politely enthusiastic about the current state of their relations. Certainly, ties between the two have been strengthened enormously in recent years. Economics has been the main driver of this rapprochement, but the increasing number of EU-China agreements, official 'dialogues' and summits on all manner of subjects attest to its growing institutionalization.
Nevertheless, despite the bonhomie in Beijing, the past year must have given the Chinese government reason to consider exactly what it gets out of the relationship and whether it is dealing with a coherent interlocutor. On a series of important issues, such as the EU embargo on arms sales to China, Market Economy Status (MES) and textiles, Beijing has faced disappointment, though MES was hardly a surprise. By the middle of last year, the EC had given a preliminary finding that under existing conditions China did not meet the required criteria to be granted MES. It is a narrow technical question that affects only a modicum of bilateral trade, but for China it is a yardstick of national status. The criteria concern state influence in the economy, corporate governance, equal treatment of all enterprises under property and bankruptcy law, and placing the banking sector under market law.
Flip flops
If the EU's position on MES was at least consistent, its stance on the arms embargo was certainly not. China could be forgiven for triumphing in the conditional agreement to lift the embargo agreed in 2004, but both Brussels and Beijing failed to take into account sensitivities surrounding arms sales, not least in the US, which beat the EU into a somewhat ignominious retreat. The union is now divided on the issue, and under the current UK Presidency has clearly decided to postpone this loaded decision indefinitely.
From China's point of view the most disappointing, and also most damaging, aspect of the EU's approach to China has been its handling of textile trade. The problems that would arise from the removal of the last restrictions under the Multi Fibre Arrangement were widely foreseen. Less expected was a surge in textile imports coinciding with a disastrous debate in France over the EU Constitutional Treaty, in which Chinese textiles, along with Polish plumbers, came to symbolize the threats faced by the French social model. For the first time ever, relations with China became subject to political debate in Europe, with dire consequences. Whether or not participants advocated adoption of the Constitutional Treaty, it was generally assumed that China represented a threat, and that the EU's role was to protect Europe against that same threat.
Political motivations
Although there was an economic case for the EU limiting surges in textile imports in the short term, as it has the right to do under international law, it would be naive to dismiss political considerations playing some part in the decision too. Thus, from the EU perspective, the initial agreement on limiting increases in textile imports was a carefully constructed political artifact created by Trade Commissioner Peter Mandelson, balancing the interests of China, EU member states and industry lobbies. Unfortunately it was smashed by hard business realities when legitimate imports ended up being blocked, forcing the Commission to break its original agreement and seek a new one.
The policy process in the EU is far from simple. China's direct interlocutor at the European level is usually the Commission, articulating what is supposed to be an agreed common policy. But this policy is usually the result of complex haggling over national interests of EU member governments, and has been shown to be subject to change in light of unforeseen events and political pressures.
Polar opposites
France and Britain, almost inevitably, find themselves arguing for different positions, although whether they are 'pro-China' depends on the issue. On the textiles issue, even Europe's closest partnership was out of synch, as Germany, China's largest EU economic partner and its main trading nation, found itself opposed to France, the heart of protectionist Europe.
Europe speaks with many voices. When Tony Blair arrives in Beijing for a EU-China summit representing the EU Presidency, but trails an entourage of UK business, cultural and sporting personalities and holds an almost simultaneous UK-China summit, the Chinese government might be forgiven for wondering whether any national leader truly speaks for the EU.
While both Europe and China recognize each other's importance, and there is much positive in the relationship, miscalculations on both sides could yet derail progress. For the moment it seems there is a greater possibility of miscalculation on the European side than the Chinese. Beijing and Brussels claim that their relations are 'strategic', but it is easier for China to define and implement a coherent policy than for the EU, for which it is often no more than the sum of diverse, sometimes opposing, national interests. As Chris Patten, the former EU External Relations Commissioner wrote recently in the Financial Times, "for some years, China has appeared to believe more strongly in Europe's role as a serious player on the world stage than we do ourselves." If the relationship is to continue to flourish between China and the EU, then Beijing will need to be realistic about what it can achieve and expect disappointments, and the Europeans will have to speak with one voice and mean what they say.
Duncan Freeman, writer and consultant in Brussels, specializes in China business.