Wednesday

14th Nov 2018

Opinion

Europe’s China policy coming of age?

  • Beijing stole a strategic win over Europe when it lured 15 EU member states into the The Asian Infrastructure Investment Bank (AIIB) (Photo: dolmansaxlil)

Good news from the EU-China Summit: Europe appears on track to taking itself and its relationship with China seriously.

An important outcome of the high-level meeting, the launch of the Connectivity Platform, shows that the EU and its member states are not a mere partaker to China-led initiatives.

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  • The EU lacks a coordinated approach to China (Photo: EUobserver)

This is important considering China’s vast ambitions in reshaping global economic governance reach.

European capitals play an important role in Beijing’s strategy, and only their combined strength can coax Beijing to agree with measures that are generally out of its comfort zone.

Visiting Brussels at the height of the Greek debt crisis, Chinese Premier Li Keqiang presented China as "a true friend of the European Union", adding that it wants "a prosperous EU, a united Europe and a strong Europe".

Europe can certainly use a share of the US$ 4 trillion in reserves that Beijing holds. And China wants to invest.

The Asian Infrastructure Investment Bank (AIIB), the Silk Road initiative, negotiations on economic agreements, and participation in the Juncker Investment Plan: Beijing is promoting a series of initiatives that ultimately aim to strengthen its domestic economy as well as its influence in the world.

The launch of the Connectivity Platform, aiming to improve infrastructure and transport links and to to develop synergies between European and Chinese projects, shows that Brussels is capable of reshaping Asian ideas into joint strategy and action.

Both the Asian buzzword of late – Connectivity – and China’s flagship initiative – the Silk Road-inspired 'One Belt One Road' – are transformed to an EU-China initiative that conforms with European economic and strategic interests.

Beijing's strategic win

It was high time: just a few months ago, in March, Beijing stole a strategic win over Europe when it lured 15 EU member states into the AIIB.

Just as with attracting Chinese investments, Beijing succeeded in playing off European capitals against each other, which tumbled over one another to court Beijing.

The episode was telling of Europe’s China policy of recent years, wherein economic diplomacy dominates, and European capitals fail to coordinate on a shared strategic vision of a world in which China is more influential.

Together with Beijing’s Silk Road Fund (US$40 billion), the multilateral but China-led AIIB (US$100 billion) is integral to China’s Belt-Road initiative.

This strategy aims to connect the Chinese and European markets by land through Central Asia, by sea through South East Asia and Africa.

The interest of Chinese banks to invest billions in the Juncker Plan for investment and the newly proposed EU-China investment fund are yet more examples of Beijing’s chequebook diplomacy.

Coordinated European approach

Clearly, Europe stands to gain from these undertakings. But only a shared European framework on how each of Beijing’s goals impact on European political and economic interests will press China to conform to our standards as it unfolds its own policies.

Cracks have already begun to appear in the aspiration not to repeat the faulty, lagging response to the AIIB-initiative and instead to develop a more coordinated approach to EU-China relations.

Hungary already signed an agreement under this flag, and France recently signaled its intention to be next.

Coordinated cooperation with China under the guise of the Connectivity Platform is therefore important. The EU, through taking action before member states do so individually, moderates the internal competition for Chinese favour.

Furthermore, the Platform is a way for Europe to continue to export its standards in the face of massive China led infrastructure spending.

Although EU member states are already legally held to certain standards, the Connectivity Platform can be used to export these to the EU neighbourhood and beyond.

The EU’s negotiations with China on a bilateral investment agreement serve as a good illustration of the benefits of coordinated European action.

A collective effort allows the EU to pull China closer to its position in areas such as market access, transparency, liberalisation of investments and a level playing field for companies.

This is necessary, as the widespread euphoria when China joined the WTO in 2002 is gradually being replaced by complaints of European companies about lagging legislative enforcement and unfair competition in China.

Moreover, if the AIIB, the Silk Road and other Chinese initiatives to reshape global economic governance were to become a reflection of recent Chinese reality – including growing repression of civil liberties, reversal of political reforms and continued influence of the state on the economy – Europe for the time being has reason to be worried about a world wherein Chinese standards dominate.

The AIIB-experience served as a wake-up call to many in Europe.

While there is no need to develop one answer or one voice for everything, at the very least there should be a shared framework for cooperation with China.

The EU and its member states are beginning to see eye-to-eye on this, and that is a good start.

Maaike Okano-Heijmans is a senior research fellow at the Clingendael Institute, The Hague. Daniel Lanting is a research assistant at this same institute.

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