China, Europe, and the United States: A Different Dynamic

2012-10-08 By Richard Weitz

Chinese Premier Wen Jiabao’s recent trip to Europe designed to secure the removal of the U.S. arms embargo on China is but the latest example of Beijing’s efforts to prevent Europe from supporting U.S. efforts to manage China’s rise.

It also provides an opportunity to assess Europe’s potential and possible role in the Asian Pivot.

Europeans and Americans share many common interests regarding the People’s Republic of China (PRC).

U.S. and EU policy makers agree on basic aims such as maintaining a stable, peaceful and prosperous East Asia that includes a well-integrated China that is part of the global order rather than isolated from it.

Furthermore, both Europe and the United States are interested in making China’s economic, political, and social transition into the Western- dominated global order as smooth as possible.

As the fastest rising power in the international system, China is in a position where neither side of the Atlantic can ignore it.

China is a major trading partner to both the United States and Europe, has purchased considerable U.S. and European debt, and has taken steps to stimulate transatlantic economic recovery. European and U.S. corporations engage in substantial joint investment, technology transfer and coproduction with Chinese firms.

Despite this positive agenda, the rise of China is seen as potentially threatening certain Western economic, strategic, and normative objectives.

The EU debate about lifting the arms embargo often revolves around competition with the United States. But increasingly it is about the global impact of China and the desire of states to protect themselves against Chinese actions and pressures. This market will be more significant than any PRC market, notably given the proclivity of the PRC to borrow more than produce foreign kit. Credit Image: Bigstock 

Chinese consumption of natural commodities like iron ore, copper, wheat and oil have driven up American and European import bills for these commodities. The PRC’s growing military potential risks disrupting the balance of power in Asia and presenting unwelcome arms sales competition to U.S. and EU defense companies. The PRC as well is exporting arms into high conflict areas, such as Africa.

Making China a “responsible stakeholder” in the international system is a phrase often used on both sides of the Atlantic.

It implies that increasing co-operation with China will go hand-in-hand with improving its human rights record and moderate in sometimes confrontation stance towards Taiwan. While China may value the United States and EU differently in strategic terms, both sides of the Atlantic are trying to engage the PRC while hedging against the emergence of a troublesome China.

Since the initiation of regular EU-China summits in 1998, the two parties have formalized cooperation in areas, such as economics, trade, science, technology and international security, with a number of official agreements. China-EU trade has grown 100-fold since the establishment of formal relations in 1975, making China the EU’s second largest trading partner after the United States.

Furthermore, the EU has been China’s biggest trading partner since 2004.  And China is the EU’s fastest growing export market.

The EU-China High Level Economic and Trade Dialogue was launched in Beijing in April 2008 and has dramatically increased dialogue between the European Commission and the State Council of China.  The EU was an earlier supporter of China joining the WTO, which has improved EU access to the Chinese.

Nonetheless, while the EU and China remain large trading partners, the deficit between the two countries is a major concern of the EU.

The large gap between import and export levels has persisted despite the EU’s using the regular Trade Policy Review of China in the WTO to address a number of issues it has with the PRC, including intellectual property rights, barriers to certain industries, and China’s raw material trading practices.

Although trade is the most notable indication of strengthened Sino-European connections, ties have increased in other areas.

Since 2003, the EU and China have acknowledged each other as “strategic partners.” This declaration was accompanied by China’s participation in the European Galileo Global Navigation Satellite System and a promise by the EU to initiate discussions on lifting the EU’s arms embargo.

The 2008 “Joint Statement of the 10th EU-China Annual Summit” indicated the comprehensive nature of EU-China relations, stressing political dialogue, multilateralism and the role of the UN, counter-terrorism, acute regional issues such as Iran and Darfur, as well as business, cultural and educational exchanges.

PRC officials see the strategic partnership with EU as a means to challenge U.S. global primacy. 

This unique partnership includes the transfer to the PRC of “dual-use” technology, which can have both civilian and military applications. For U.S. policy makers, the problems from this integrationist approach are compounded by the fragmented nature of the EU’s export control system, which Americans believe prevents the EU from effectively managing the security risks involved in technology transfers.

Yet, China has encountered great difficulties in playing off the transatlantic allies against one other.

Fundamental divergences exist in Western and Chinese values concerning international and domestic governance. These differences include China’s commitment to universal human rights, commitment to democratic institutions, the rule of law, minority rights, and the non-use of force against non-violent political protesters.  Human rights disputes continue to disrupt relations between Europeans and the PRC. Chinese actions in Tibet and the Xinjiang province have prompted prominent European criticism of China’s human rights record.  A particularly noticeable example of this was Chancellor Merkel’s refusal to participate in the 2008 Olympics’ opening ceremony.

The EU and United States have both claimed that China restricts their exports of raw materials, despite pledging against export charges when they joined the WTO.  They also both believe the PRC undervalues its currency and closes its markets to some Western investment. They share concerns regarding China’s growing energy consumption and CO2 emissions.

Nonetheless, the European Union’s experience with Chinese policy in recent times has a different dynamic than that of the United States.

Europeans, even when operating collectively within the EU, do not exert the level of influence over PRC policies that the United States often does. In the case of some of the most important security issues facing China, such as Taiwan and North Korea, PRC policy makers do not consider Europe as a major player.

Meanwhile, Europeans are less inclined than Americans or Asians to see China as a threat.

This has caused them to take approaches that differ on some vital issues. Because no EU member state has any security concerns at stake in East Asia since the UK’s 1997 handover of Hong Kong to China, the EU’s China policy is economically focused to promote the growth of Chinese imports from the EU, attract PRC investment and to protect the interests of European investors in China. Europeans simply do not perceive the PRC as a potential military adversary.

From the European perspective, the “threats” that exist are mainly related to “soft” areas, such as economic competition, environmental issues, illegal immigration and transnational crime. Any hard threats are deemed to be of an indirect nature, such as China’s role in nuclear proliferation.  The view from Brussels is that the dangers resulting from a weak China are as great as the dangers of a strong China. Through engagement in multiple areas, the EU hopes to “socialize” the PRC and secure constructive Chinese participation in international institutions such as the UN.

In contrast to Washington’s enduring security alliances with Asian states like Japan, South Korea, and Taiwan, European members of NATO do not have such a role.

Europeans have generally restricted their Sino-European ties in security and military related areas to military-to-military diplomacy, port visits, educational exchanges, peacekeeping training, basic joint military exercises, and occasionally weapons sales and high-technology trade which could have military applications.

High-tech trade is particularly relevant as the list of dual-purpose technology continues to grow. 

The European export criteria for sophisticated equipment and technology to China are less restrictive than U.S. export controls, which have penalized corporations like ITT for transferring night-vision technology to China.  For this reason, Europeans’ sale of potentially militarily useful products to China has been a source of transatlantic tensions.

Editor’s Note: European companies have a mixed record when working with China.  For example, the Eurocopter partnership in China led to copying of European technologies which were clearly of concern to the company.

(For our look at the potential role of the PRC in the Euro crisis, please see our recent Strategic Inflection Points report on the Strategic Impact of the Euro Crisis.)

"If everyone is thinking alike, someone isn’t thinking."

—General George Patton Jr.

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