02.07.2017 Author: Vladimir Terehov

The EU—China Summit in the Context of the Global Game

EU-PRCThis year’s annual EU-China Summit, which was held on June 2, deserves special attention since it has occurred in a period of radical progress in the political world, as a whole, and the relationships between the main participants of the global game, in particular.

Signs of such developments began to take shape a long time ago. However, the impetus for their public manifestation was the election as President of the United States of Mr. Trump, who continues performing the role of world leader (so annoying to Americans) unabatedly. The process launched by the new President and aimed at the revaluation of the format of US participation in a global political game is the first (among several major) of its new features.

The second feature, closely (inter)related to the first, is the transformation of China into the second world power.

This is mainly due to the third feature, which is determined by the movement (probably forever) of the table of the global political game from the European continent to the Asia Pacific region. Despite the rhetoric of Mr. Trump at the last NATO Summit, which reflected the above inertia, key interests of the United States are being shifted in the same direction.

The fourth feature deals with the return to the global political game (in the status of the leading participants) of the losers both of the Second World War and the Cold War. We are talking about Japan, Germany and Russia. There is a chance that India might join these three countries.

The fifth feature is due to the uncertainty of prospects related to the development of relations between two major world players, i.e. the United States and China. This results in an increase for Beijing of the role of comprehensive cooperation with “Europe” in relationship with which there are almost no problems of a political nature.

Finally, the sixth feature is determined by the very real prospect of a complete reformatting of transatlantic relations, which directly follows the comments of German Chancellor Angela Merkel concerning the results of the G-7 Summit held late May 2017 in Sicily.

All these features of the current phase of the geopolitical game predetermine a mutual interest in the development of comprehensive Sino-European relations.

However, recently, the following question has become more acute: what is meant by “modern Europe”? Does it have any future headed by Germany, or will the latter be forced (against its preferences) to become a fully independent player? This is despite the fact that, let us say again, the European continent probably will never be in the centre of the global game in any scenario of its development. In case of the most unfavourable scenario, Europe will switch with Asia those roles that these continents have played in the Second World War.

However, the question of the future of “Europe” remains among the priorities of Chinese foreign policy. This is also because today, the EU shares with the US the first or second places as the foreign economic partners of China.

In recent years, the Sino-European trade has been at the level of USD 600 billion. So far, the sphere of mutual investments is lagging behind, which has been one of the main topics of the bilateral (complex) negotiations of recent years. The Europeans accuse their Chinese partners of dumping the prices for the products supplied, which serves as an excuse for refusing to grant China the Market Economy Status (MES).

In fact, a recent visit of Chinese Prime Minister Li Keqiang to Europe (with the stated goal of participating in the above bilateral forum at the highest level in Brussels) was devoted precisely to the strengthening of political relations with the EU, as well as addressing challenges in the field of economic cooperation.

At the same time, the preliminary visit by the Chinese Prime Minister to Berlin, where he held talks with Chancellor Angela Merkel, was quite natural, since the leadership role of Germany in the EU is also manifested in relations with China.

At the end of 2016, China was for the first time ranked first in the list of the trading partners of Germany, having displaced the US (thus giving way for France too). Last year, the volume of the German-Chinese trade reached USD 180 billion, which amounted to 30% of the trade of China with all EU Member States.

Apparently, Chinese Prime Minister was immersed in a completely positive atmosphere in Berlin and Brussels. Back in February, having referred to the tendency of protectionism of the new US administration, Vice-Chancellor of Germany Sigmar Gabriel said that the EU should reinforce the trend towards increasing economic ties with China.

The negotiations in both European capitals addressed one of the key problems of the Sino-European relations that is associated with the (alleged) underestimation of the real prices of goods exported by China. Using their own legislation, European countries still impose duties corresponding to the “correct” valuation of Chinese imported goods on them. Angela Merkel and the EU leadership promised the Chinese Prime Minister to “consider” eliminating such practices.

However, it should be noted that the real reason for such a practice is the concern about the possible impact on the European economy in case of the duty-free access of Chinese goods onto EU markets. We should also note that today, the EU-China trade deficit already amounts to USD 200 billion, i.e. a third of the total deficit volume.

Therefore, it remains unclear how significant will the factor of “geopolitical expediency” in the process of implementing the statements on the desire to expand economic ties with China be for Europeans. Will it be outweighed by the factor of “economic feasibility” (as has been observed in recent years)?

One thing is clear: addressing the issues in the current format of economic relations can only be achieved in case of the mutual movement of China and the EU towards each other.

The success of this movement will be judged by the progress of the talks on the following topics: eliminating “discrimination” against Chinese goods imported by Europeans, creating favourable conditions for mutual investment and, finally, concluding free trade agreements.

During the visit, the high Chinese guest addressed the question of what modern Europe really is. Due to the aforementioned reasons (and in connection with a specific reason to do with Brexit), the Chinese leadership has recently emphasized the desirability of maintaining the unity of the EU. The Chinese Prime Minister confirmed this position during his speech in Brussels.

Evidence of the rapprochement of the Sino-European relations was to become a negative assessment made by both parties to a statement by Mr. Trump on the US withdrawal from the Paris “Climate Agreement.” Here, however, some comments deserve to be made.

For China, the problem of the influence of human activity on the environment is real (almost already catastrophic) in its nature. The very emergence of this problem has become one of the most negative (and inevitable) consequences of the strategy for accelerated economic development of China in recent decades.

For Europeans, “the fight against climate change”, along with the topic of protecting various rights (for women, children, sexual minorities) is an element of a specific “creed” that they try to impose on other countries.

However, China may develop interest in European technological achievements in the field of purification of industrial emissions into the atmosphere. It is these issues, among others, that were apparently implied when Chinese Prime Minister talked about the “innovative character” of a new stage of development of relations with the leading EU Member States.

However, we cannot exclude the fact that (taking into account the cost factor for the introduction in the scale of the Chinese economy) China’s interest in these technologies will be mainly of an academic nature.

The latter presents an impetus to address the national context of the Chinese Prime Minister’s visit to Europe. This mainly concerns the course for radical change in the entire economic organism of the country that was adopted at the turn of 2015-2016.

Today, it is impossible to predict the consequences of the practical implementation of talks about the restructuring of the Chinese economy in China in line with the “Industry 4.0” concept drawn from the same “Europe.” One thing is certain: such a shift will be painful and dangerous for internal stability.

Thus, the scope and nature of the development of Sino-European relations will be determined by both internal and external complex factors for each of the members of the emerging “EU-China” tandem. And all of these factors by themselves are highly dynamic.

Vladimir Terekhov, expert on the issues of the Asia-Pacific region, exclusively for the online magazine “ New Eastern Outlook.”

Please select digest to download: