OPINION – EU-China relations at 50 Giving content to the “comprehensive strategic partnership”

By José Luís de Sales Marques

On 6th May 1975, China and the European Economic Community (EEC) established diplomatic relations, after Sir Christopher Soames, Commission Vice-President in charge of Foreign Affairs, who was sent to Beijing to negotiate a trade agreement, declared that “all the member states of the Community recognised the Government of the People’s Republic of China (PRC) as the sole legal government of China and had taken positions with regard to the Taiwan question acceptable to the People’s Republic.” This landmark occasion opened the way to fruitful relations, based on fulfilling mutual economic and trade interest, developing people-to-people relations and balancing different worldviews and political beliefs with dialogues, built on the principle of cooperation and agreeing to disagree on major divergences. Fifty years on, and China and the EU relations are at a crossroad. This article will look at the current state of China-EU relations under the new international political and economic chaos caused by the Trump 2.0 trade policies and international political bullying, and why the EU must engage with the PRC differently from its current hybrid and confusing formula and policies of “de-risking” from China.

The Comprehensive Strategic Partnership

The trade agreement that Soames negotiated was only signed in 1978, due to major political changes in China after the deaths of Zhou Enlai and Mao Zedong in 1976, followed by political turmoil as a result of the Gang of Four’s attempted power grab. With Deng Xiaoping at the helm of China, the new policy of reform and opening up inaugurated an era of prosperity and great achievements. Fast growth and the development of export industries led inevitably to the intensification of trade, investment and political relations with the Community, leading to the signing in 1985 of the “Agreement on Trade and Economic Cooperation”, which is still the main legal framework for the bilateral relations.

By finding new paths for long-lasting cooperation, the EU and China will also do important services to the world, since they must partner to address climate change and environmental protections, save the multilateral trading system from its current paralysis, and promote multilateralism and multipolarity, provide public goods needed for the poorest countries and regions of the world to reach their sustainable development goals, among other commonalities.

With the peaceful retrocession of Hong Kong and Macau to the Motherland, through bilateral negotiations with the UK and Portugal, China was finally free of any foreign power administering part of its territory, resolving what the Chinese authorities called “legacies of the past”. Symbolically, the first China-EU Summit, elevating the level of the relation to heads of government, happened in London in 1997, after the Hong Kong handover, and the second in Beijing, one day after the Macau handover in 1999. On 13th October 2003, symbolism played again a role in establishing what some commentators called the beginning of the “honeymoon period” of China-EU relations. The EU Council adopted the Commission Paper entitled “A maturing partnership – Shared interest and challenges in EU-China relations”, while the Chinese government published its first “China’s EU Policy Paper”, opening the way for a “Comprehensive Strategic Partnership”, interpreted as being a relation that is long-term, multifaceted and resilient. Moreover, each party perceived the other as not presenting a strategic threat to the other.

In 2005, hard negotiations were needed to solve a trade conflict known as the “bra-wars”, with 80 million items of Chinese-made pullovers, trousers, bras and T-shirts blocked at European ports. The case was typical of a globalised world of trade. China had an obvious advantage in the manufacturing of consumer products while the EU reigned in high technology, cars and luxury brands. The deficit that Europe was running with China was somehow a symbol of success of resource allocation at a universal scale. Globalisation also had its hidden cost: for the Europeans, it was the demise of several industries with its consequences; for China, massive industrialisation and urbanisation led to environmental degradation and over-dependence on the industrial export model of economic growth. Political divergences also played an important role in the erosion in Sino-EU relations, particularly in matters related to human rights and Tibet. While there is a dialogue mechanism on human rights proposed by China to the EU in 1996, the issues of Chinese sovereignty and national security, such as Tibet, Taiwan and Hong Kong, are unquestionable principles — a fact the EU seems not to understand.

Changes in the EU view of China and the 2019 EU policy on China

With President Xi in power, China-EU relations had a promising start with him visiting the EU headquarters in Brussels in 2014. It was the first visit ever by a Chinese president and it was used to reconfirm both sides’ commitment to the “comprehensive strategic partnership”.

The Chinese Belt and Road Initiative was announced in 2013, having as one of its proposals a connectivity plan to develop China-Europe inland logistic corridors by train. China also took the initiative to establish the 16+1 initiative to strengthen relations between China and a number of European countries including EU member states located in Eastern Europe and the Baltic. Initially seen with reserved caution, those two initiatives were later on labelled with suspicion. The first one as a channel for China to export its over-capacity to Europe and the second as a political instrument to divide EU member states into taking unfavourable positions on the PRC. The same could be said about Chinese foreign direct investment in the EU. Starting from a low base, it topped in 2016, when the yearly figure reached 47.5 billion euros, starting to fall from then on due to Chinese state policies, which criticised non-productive investments such as football clubs, hotel chains and fashion labels, as well as policies set up by the EU to monitor Chinese investments and control their origin, after the attempted acquisition of technological firms that the Europeans considered to be of strategic value. Thus, in 2019, the European Union established a new China policy – EU-China: A strategic outlook – where the “comprehensive strategic partnership” was de facto replaced by a hybrid formula, the PRC being simultaneously labelled as a partner, a competitor and a systemic rival. That new policy became aggravated by the Covid-19 global pandemic and the Russian invasion of Ukraine. The Covid crisis revealed the vulnerability of EU supply chains to Chinese intermediate and finished goods. On the other hand, China’s declared neutrality while not breaking up and continuing to trade with Russia triggered emotional reactions from Europeans. The war and European dependence on NATO’s security umbrella placed some major EU members and political leaders in the arms of the Biden administration. Of particular concern is the political reshuffle taken under the influence of the Biden administration to align the EU’s foreign relations and security narrative to the American one by adopting a new “Indo-Pacific” framework for its relations with Asia and beyond. It is a policy that, although with some nuances, follows the footsteps of the same-named strategy which the US launched to contain China — a strategy that is contrary to Europe’s long-term interest and its historical relations with Asia.

Conclusion

The United States under Trump 2.0 is shaking the foundations of the transatlantic alliance and the world at large, sending shockwaves across a wide spectrum of issue areas, with effects that will last well beyond his mandate. The EU and China must be capable of finding solutions to the political problems that are straining their relations while respecting existing cultural, ideational and political differences. At the time of writing, there are news that the European Parliament (EP) president Roberta Metsola is in talks with China for the lifting of sanctions to EP members in retaliation to similar measures imposed by the EU over Chinese officials. If succeeded, it is likely that the ratification of the excellent Comprehensive Agreement on Investment (CAI) will see daylight. By finding new paths for long-lasting cooperation, the EU and China will also do important services to the world, since they must partner to address climate change and environmental protections, save the multilateral trading system from its current paralysis, and promote multilateralism and multipolarity, provide public goods needed for the poorest countries and regions of the world to reach their sustainable development goals, among other commonalities.

As Harish Kapur rightly wrote decades ago, China and Europe are “distant neighbours”, a geopolitical reality that is so often forgotten. Their geopolitical cooperation is crucial to resolve conflicts and instability and to promote long-lasting peace and prosperity in the whole of the Eurasian landmass.