EUROPEAN STUDIES

27

EUROPEAN STUDIES

An Interdisciplinary Series in European Culture, History and Politics

Series Editors

Robert Harmsen, The Queen’s University of BelfastJoep Leerssen, University of Amsterdam

Menno Spiering, University of AmsterdamThomas M. Wilson, Binghamton University,

State University of New York

Executive Editor

Menno Spiering, University of Amsterdamm.e.spiering@uva.nl

EUROPEAN STUDIESAn Interdisciplinary Series in European Culture, History

and Politics

27

THE EUROPEAN UNION AND CHINA:INTERESTS AND DILEMMAS

Edited by

Georg Wiessala, John Wilson and Pradeep Taneja

Amsterdam - New York, NY 2009

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NOTE FOR CONTRIBUTORS

European Studies is published several times a year. Each issue is dedicatedto a specific theme falling within the broad scope of European Studies.Contributors approach the theme from a wide range of disciplinary and,particularly, interdisciplinary perspectives.

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Subscription details and a list of back issues are available from the pub-lisher’s web site: www.rodopi.nl.

CONTENTS

Authors in this volume 9

PRADEEP TANEJA, GEORG WIESSALA AND JOHN WILSONIntroduction 17

THE CONTEXT OF EU-CHINA RELATIONS ANDTHE HUMAN RIGHTS DILEMMA

NICHOLAS REESEU-China Relations: Historical and Contemporary Perspectives 31

FRASER CAMERONThe Development of EU-China Relations 47

NATEE VICHITSORATSATRAThe EU and China in the Context of Inter-Regionalism 65

GEORG WIESSALADuality - Dialogue - Discourse:

Some Perspectives on Human Rights in EU-China Relations 83

DAVID ASKEWSport and Politics: The 2008 Beijing Olympic Games 103

ASPECTS OF THE GEO-POLITICAL SETTINGOF EU-CHINA INTERACTION

JENNY CLEGGChina Views Europe: A Multi-Polar Perspective 123

RAJENDRA K. JAINThe European Union and China:

Indian Perceptions and Perspectives 139

8 EUROPEAN STUDIES

CHRISTOPHER WILLIAMSRussia’s Closer Ties with China: The Geo-politics of Energy

and the Implications for The European Union 151

MICHAEL SMITH AND HUAIXIAN XIEThe European Union, China and The United States:

Complex Interdependence and Bi-Multilateralismin Commercial Relations 167

PAUL JOSEPH LIMThe European Union’s Economic Ties

with The Republic of China (Taiwan) 187

ISSUES – POLICIES – PERCEPTIONS

PETER J. ANDERSONChina, News Media Freedom and the West:

Present and Future Perspectives 209

CARLO FILIPPINITrade and Investment in the Relations between

the European Union and the People’s Republic of China 225

VALERIA GATTAIEU-China Foreign Direct Investment: A Double-Sided Perspective 241

PRADEEP TANEJAChina’s Search for Energy Security and EU-China Relations 259

ZOU KEYUANRecent Chinese Practice in the Maintenance

of Maritime Security and the European Experience 275

GEORG WIESSALA, PRADEEP TANEJA, JOHN WILSONConclusions: Towards an EU-China Research-Agenda 2010 291

AUTHORS IN THIS VOLUME

PETER J. ANDERSON is a Reader in News Media and the JournalismResearch Coordinator at the University of Central Lancashire. He haspublished a variety of books, articles and book chapters on both commu-nication and politics, including (with Geoff Ward, eds.) (2007) The Fu-ture of Journalism in the Advanced Democracies, Aldershot: Ashgate;(with Anthony Weymouth) (1999) Insulting the Public? The British Pressand the European Union, Harlow: Longman; (with Christopher Williamsand Georg Wiessala, eds.) (2000) New Europe in Transition, London:Continuum; and (1996) The Global Politics of Power, Justice and Death,London: Routledge. He also co-edited with Georg Wiessala the Septem-ber 2007 volume of European Studies dedicated to EU-Asia relations.He taught previously at the universities of Lancaster and Southamptonand runs a small consultancy on the EU, the news media and the citi-zenry. (pjanderson1@uclan.ac.uk) DAVID ASKEW is an Associate Professor of Law in the Faculty of AsiaPacific Studies of the Ritsumeikan Asia Pacific University in Japan(http://www.apu.ac.jp). Together with J. S. Eades, he is Series Editor of‘Asia Pacific Studies: Past and Present’ with Berghahn Books. Davidteaches various legal courses. His main research interests include LegalTheory, Human Rights, Intellectual History, and the Sino-Japanese War(1937-1945). Amongst his recent writings is a piece on ‘NankinAtoroshiti Kenkyû no Genjô to Dôkô – Gurôbaru na Giron no Shosô oChûshin to shite’ (The Current Situation in and Movements in Researchof the Nanjing Atrocities: An Examination of Global Perspectives)(Ritsumeikan Gengo Bunka Kenkyû, vol. 18, 2007). His latest bookpublications include, in addition to (with Paul Close and Xu Xin), TheBeijing Olympiad: The Political Economy of a Sporting Mega-Event(Routledge, 2006 and (with Kanemaru Yûichi), Nankin (Nanjing)(Yumani Shobô, 2008), chapters in B. T. Wakabayashi ed., The NankingAtrocity, 1937-8: Complicating the Picture (Berghahn, 2007. He is cur-rently working on an edited volume on Japan’s Jury System, 1928-1943and various books on Nanjing, 1937-1938. (askew@apu.ac.jp.)FRASER CAMERON is Director of the EU-Russia Centre, Senior Advisorto the European Policy Centre (EPC) and to the European Institute forAsian Studies (EIAS), all in Brussels. He is also Director of ECAN, anacademic and think tank network linking European and Chineseresearchers and scholars. He is a Visiting Professor at the Hertie School

10 EUROPEAN STUDIES

of Governance in Berlin, at the Europa College in Bruges and at a num-ber of other universities in Europe, the US, Canada and Asia. A formeracademic and diplomat, Dr Cameron was an adviser in the EuropeanCommission for more than a decade and served at the EU’s delegation inWashington DC. Dr Cameron was Director of Studies at the EuropeanPolicy Centre from 2002-2005. He is the author of several of books andarticles on European and international affairs. His most recent booksinclude ÚS Foreign Policy after the Cold War (2005) and An Introduc-tion to European Foreign Policy (2007). He is a well-known commenta-tor on international affairs and moderator of conferences and work-shops. He has extensive experience of working with the corporate worldin Europe and elsewhere. (fc@eu-russiacentre.org)JENNY CLEGG is a Senior Lecturer at the University of CentralLancashire and course leader for the B.A. Hons Degree programme inAsia Pacific Studies in the School of Languages and International Stud-ies. She is involved in teaching modules on Asia Pacific developmentand international relations as well as on China and Globalisation at un-dergraduate and postgraduate levels. Her current research interestsmainly focus on China’s development and its implications for the worldorder. Her new book China’s Global Strategy: towards a multipolarworld was published by Pluto Press in January 2009. In recent years, shehas also carried out research on management and ownership reforms inChina’s rural enterprises, and has published her results in the form ofbook chapters and journal articles. Her other main publications includeFu Manchu and the ‘Yellow Peril’: the making of a racist myth (Trent-ham Press). She has a Ph.D. from the University of Manchester.(JClegg4@uclan.ac.u)CARLO FILIPPINI was awarded a Professorship in Economics at BocconiUniversity in Milan in 1981. He is currently the director of ISESAO, aResearch Centre devoted to East Asian economic and social studies. Hegraduated in Economics and Management at Bocconi University in 1969and spent two years at the University of Cambridge, UK as a researchstudent. He has visited East Asian countries many times and given shortcourses, seminars or contributed with papers to conferences in Universi-ties and research centres of the region, in particular Japan, Thailand, andVietnam. His research interests presently focus on regional integrationand trade relations between East Asian economies and the rest of theworld. In 1993–2002 he was the Director of the Master in Economics

AUTHORS 11

programme at Bocconi University and in 2002-2004 the European Coor-dinator of the European Studies Programme Vietnam. In 2004 he wasawarded the Japanese Order of the Rising Sun, 3rd class.(carlo.filippini@unibocconi.it) VALERIA GATTAI was awarded a PhD in Economics from BocconiUniversity in 2007 with a thesis on the boundaries of multinational en-terprises. Her research interests move within the fields of InternationalEconomics (Foreign Direct Investment, Multinational Firms, Interna-tionalisation) and Asian Studies (Chinese Economy). She is author of anumber of publications on FDI, and she has been invited to many inter-national conferences on the topic. Valeria Gattai is currently a post-doc-toral researcher at Bologna University and a lecturer in Micro- and Mac-roeconomics at Bocconi University. (valeria.gattai@uni-bocconi.it) HUAIXIAN XIE is a Phd candidate at Loughborough University. Herthesis on EU-China trade relations will be submitted in late 2009.(H.Xie@lboro.ac.uk) RAJENDRA K. JAIN is Professor of European Studies and Chairperson,Centre for European Studies, School of International Studies, JawaharlalNehru University, New Delhi. He has been Visiting Professor atFreiburg, Leipzig, and Tübingen Universities and at the Maison desSciences de l'Homme, Paris. He is the author/editor of 30 books and haspublished 80 articles/chapters in books. He has most recently publishedIndia and the European Union: Building a Strategic Partnership (2007)(editor). (rkjain13@googlemail.com) PAUL LIM has been a Senior Academic Adviser at the European Institutefor Asian Studies (EIAS) from October 2007 onwards. He was one ofthe EIAS co-founders in 1989. He was the Research Coordinator andSenior Research Fellow at the EIAS before his departure in 2002 to theUniversiti Sains Malaysia in Penang, Malaysia, where he set up and ran anew Master in International Studies (European Studies). His latest publi-cations in 2008 have been ‘European Studies: Any sense in Malaysia’ and‘Living in Two/Three Cultures’. His other forthcoming publication willbe ‘European Perspectives of Taiwan’ which he will co-edit with Assis-tant Prof. Jens Damm from the Institute of East Asian Studies at FreieUniversität, Berlin. His chapter in his own co-edited book has the provi-sional title of ‘The European Union’s Relations with the Republic of

12 EUROPEAN STUDIES

China (Taiwan)’ which he co-writes with Ms. Sigrid Winkler, a PhDresearcher. (pjplim@gmail.com) NICHOLAS REES is Professor of International Politics and Head of theDepartment of Politics and History at Liverpool Hope University. Hewas formerly Vice President for Research, National College of Ireland,and Dean of the Graduate School and Jean Monnet Professor, Universityof Limerick. His teaching and research interests include EU institutionsand policy-making, EU external relations, EU-Asian relations, regionalintegration, international relations and UN peacekeeping. He is co-au-thor of The Poor Relation: Irish Foreign Policy Towards the ThirdWorld (Gill and Macmillan, 1993), United Nations Peacekeeping in thePost-Cold War Era (Frank Cass, 2005), EU Enlargement and Multi-Level Governance in Public Policy-Making (eds.) (Ashgate, 2006), aswell as the author of numerous book chapters and journal articles.(reesn@hope.ac.uk) MICHAEL SMITH is Professor of European Politics and Jean MonnetChair in the Department of Politics, International Relations and Euro-pean Studies at Loughborough University. His principal areas of researchare transatlantic relations, relations between the EU, the US and Asia, themaking of EU external policies and the role of the EU in post-Cold WarEurope, as well as more general issues of international political economyand international relations. Among his recent books are Europe's Experi-mental Union: Rethinking Integration (2000, with Brigid Laffan andRory O'Donnell); The State of the European Union, Volume 5: Risks,Reforms, Resistance and Revival (2000, edited with Maria GreenCowles); International Relations and the European Union (2005, editedwith Christopher Hill); and The European Union’s Roles in internationalPolitics: Concepts and Analysis (2006, edited with Ole Elgström). He iscurrently working on the early stages of a project dealing with the Euro-pean Union and international regimes, and has just published (with Ste-ven McGuire): The European Union and the United States: Competitionand Convergence in the Global Arena. Basingstoke: Palgrave/Macmillan,2008. (m.h.smith@lboro.ac.uk) PRADEEP TANEJA lectures on Chinese politics, political economy andinternational relations in the School of Social and Political Sciences at theUniversity of Melbourne, Australia. He lived and worked in China formany years and is a fluent Mandarin speaker. His current research inter-ests include China’s energy security policy, the rise of China as a regional

AUTHORS 13

and global power and government-business relations in China. He alsoworks on China’s relations with the European Union and India. Pradeepearned his PhD in Chinese political economy at Griffith University,Brisbane and his MA at Jawaharlal Nehru University, New Delhi. He isthe author of Hong Kong and Australia: Towards 1997 and Beyond(Griffith University, 1994) and co-author of China Since 1978: Reform,Modernisation and Socialism with Chinese Characteristics (Longman,1998). He has also contributed to the Dictionary of the Politics of thePeople’s Republic of China (Routledge, 1998), Encyclopedia of ModernChina (Charles Scribner’s Sons, 2009) and many other publications.(ptaneja@unimelb.edu.au)NATEE VICHITSORASATRA is a diplomatic officer at the Department ofEuropean Affairs in the Thai Ministry of Foreign Affairs. He recentlycompleted a doctoral research project at Loughborough University underthe supervision of Professor Michael H. Smith. His thesis was focusedtowards international political economy theory, interregionalism and the‘evolution of cooperation’ between the European Union and East Asia .Natee undertook his undergraduates studies in International Relations atChulalongkorn University ( Thailand ) and completed a MA in Interna-tional Political Economy at Warwick University in 1999. Natee alsoworked as a journalist for The Nation newspaper (Thailand) where hespecialised in politics, corruption, technology, and social issues. He con-tinues to contribute to The Nation as a guest columnist on a regularbasis. His wider academic research interests include international politicaleconomy theory, the global information society, and external relations ofthe EU. (natee@natee.org) GEORG WIESSALA is a Professor of International Relations in the Schoolof Education and Social Science of the University of Central Lancashirein Preston, UK. He is the Research Co-ordinator for UCLan’s Faculty ofArts, Humanities and Social Sciences (AHSS). Georg has co-edited TheEuropean Union: Annual Review, from 1999 to 2003, and acted as aCommittee member of UACES, the University Association for Contem-porary European Studies in London. He teaches on European Studies,International Criminology and International Relations courses in boththe Asia-Pacific and Europe, and is holding visiting teaching positions inthe European Institute for Asian Studies in Brussels and the Centre forEuropean Studies of Chulalongkorn University in Bangkok. His mainresearch interests revolve around European Union Foreign Policy, Hu-

14 EUROPEAN STUDIES

man Rights, EU Relations with the Asia-Pacific, Australia and NewZealand, and the Asia-Europe Meeting. His most recent book publica-tions include: The European Union and Asian Countries(UACES/Sheffield Academic Press, 2002), Re-Orienting the Fundamen-tals: Human Rights and New Connections in EU-Asia Relations(Ashgate, 2006) and Reflections and Reorientations: EU-Asia Dialoguein the New Millennium (Rodopi, October 2007). He is currently workingon a single-authored book on the role of educational exchange andknowledge-transfer in the East-West dialogue. (gwiessala@uclan.ac.uk)CHRISTOPHER WILLIAMS is currently Head of Politics in the Departmentof Education and Social Science, University of Central Lancashire, hav-ing previously worked at the Universities of Amsterdam, 1988; Helsinki,1988-89 and Cork, 1989-91. In the year 2000, he was awarded an Hon-orary Degree in Political Science by the Institute of Socio-PoliticalResearch, RAN and made a member of the Russian Academy of PoliticalScience, Moscow. He has served as Secretary of the British Associationfor Slavonic and East European Studies from 1998-2001. He has pub-lished articles in Revolutionary Russia; Sociology of Health and Illnessand the Journal of Communist Studies and Transition Politics. His recentbooks include Youth, Risk and Russian Modernity (Ashgate 2003); (ed.),Sotsial’naia politika: Istoriia i sovremenost´(Social Policy: Past and Pres-ent) (Udmurtskii gosudarstvennyi universitet, Izhevsk, 2005) and Casual-ties of Change: The rise and fall of the Russian welfare State (Ashgate,forthcoming 2010). His other works include ‘The Modernisation ofRussian health care: Challenges, policy, constraints’ in J.R. Smith (Bir-mingham) and M. Kangaspuro (Helsinki) (ed.), Modernisation in Russiasince 1900, (SKS Helsinki, Studia Fennica Historia 12 2006), pp. 206-220; with Zoya Baranova, ‘Zashchita prav detei i profilaktika sotsial’nogosirotsva v postprestroechnoi Rossiii’ (The protection of child welfare andthe fate of social orphanages in post-Soviet Russia) VestnikUdmurtskogo universiteta: Seria Psikologoya I sotsial’naya pedagogika2007 and with E. Luchinskaya), ‘Developing and sustaining social workeducation and training in Russia – Lessons from a Tempus project inUdmurtia’ in Matthias Bürgel and Andreas Umland (ed.), Higher Educa-tion in the Humanities and Social Sciences in Eastern Europe III: Transition andStagnation at Post-Soviet Universities (Frankfurt am Main: Peter Lang, 2007).(cwilliams2@uclan.ac.uk)

AUTHORS 15

JOHN WILSON is A Professor of Strategy in the Management School OFTHE University of Liverpool. He has also worked at the Universities inManchester (where he was awarded his PhD in 1980), Leeds, Belfast,Nottingham and Central Lancashire, as well as being an Adjunct Profes-sor of Copenhagen Business School. His main interests are strategy andstructure in international business, knowledge transfer issues, manage-ment education and training, and international management and businesshistory. Apart from being executive co-editor of Business History, he haspublished extensively in these fields, including the two leading textbooksin management and business history, as well as a series of other booksand articles that have influenced research agendas in his chosen areas.Over the next years, with collaborators in nine other European countries,he is working on a project entitled Mapping Corporate Europe, whichaims to compare strategy, structure and performance across this Conti-nent. (john.wilson@liv.ac.uk)

ZOU KEYUAN is Harris Professor of International Law at the LancashireLaw School of the University of Central Lancashire (UCLan), UnitedKingdom. He specializes in international law, in particular law of the seaand international environmental law. Before joining UCLan, he workedin Dalhousie University (Canada), Peking University (China), Universityof Hannover (Germany) and National University of Singapore. He haspublished over 50 referred English papers in more than 20 internationaljournals and his recent books include Law of the Sea in East Asia: Issuesand Prospects (London/New York: Routledge, 2005), China’s MarineLegal System and the Law of the Sea (Leiden/Boston: Martinus Nijhoff,2005), and China’s Legal Reform: Towards the Rule of Law(Leiden/Boston: Martinus Nijhoff, 2006). He is member of EditorialBoards of the International Journal of Marine and Coastal Law (MartinusNijhoff), Ocean Development and International Law (Taylor & Francis),Journal of International Wildlife Law and Policy(Taylor & Francis), andChinese Journal of International Law (Oxford University Press), andAdvisory Board of the Chinese Oceans Law Review (Hong Kong: ChinaReview Culture Limited). (kzou@uclan.ac.uk)

1 Reported, e.g., in the Daily Telegraph, 7 February 2009, 18.

EUROPEAN STUDIES 27 (2009): 17-27

INTRODUCTION

Pradeep Taneja, Georg Wiessala and John Wilson

China is a continent, not just a country. It is a series of identities, some shared, somedifferentiated, and some contradictory: modern, Confucian, authoritarian, democratic, free,and restrained. Above all, China is a plural noun. (Rana Mitter 2008: 11)

There is, indeed, something ‘plural’ about the relations between theEuropean Union (EU) and the People’s Republic of China (PRC). Per-haps the best way to encapsulate this phenomenon is by reference to theconcepts of ‘contradiction’ and ‘duality’, ‘challenge and opportunity’ - ofbeing, at the same time, fundamentally the same, and yet essentiallydifferent.

On the one hand, views on China, more often than not, fall prey toheadline-grabbing, media hype, as witnessed in the discussions about theEuropean Parliament’s 2008 Sakharov Prize award to Hu Jia, a Chinesehuman rights activist. Other, more recent, issues have concerned, forexample, the humanitarian and political fallout from the 2008 Sichuanearthquake, the cancellation of the 2008 EU-China summit and theproblem of unsafe Chinese consumer products. At times, the glare ofpublicity has been focused on matters as diverse as anti-dumping taxeson Chinese candles, ‘cyber-wars’ and virtual ghost-networks allegedlyattacking the West, Dalai Lama visits and German students throwingshoes at the Chinese PM in Cambridge1 – the list of incidents and issuescould easily be extended.

At the same time though, there is much more than just detail: theEU-China relationship – although at times on rocky roads – is the most

18 European Studies

2 Phrase borrowed from: Times Higher Education magazine, 22 January 2009: 26/7.3 See, for instance: ‘China tells Europe to Mind its Manners’ in Far Eastern Economic

Review, March 2009 and: ‘A Time for Muscle-Flexing’ in the Economist, 21 March 2009: 29.

wide-ranging and complex among all EU dialogues with Asian partners;it certainly receives the most foreign-policy emphasis from the EU. Be-hind this lie some wider, equally binary, processes and perceptions. Someof them can be explained by the mixture of admiration and revulsion soemblematic of many European views of China in former ages. Others liein the way in which subject-matters such as freedom and democracy,human rights, political sovereignty and religion can act as both accelera-tors and brakes in EU-China relations. Others still reflect different pathsto modernity, law, values and wealth. Behind most of them, we argue,lies a deeper enigma shaping contemporary EU-China relations. This isbrought to the surface by exactly such issues as are discussed in thepages of this book: rights to development, economics, regionalism, de-mocracy, tolerance and control, dialogue and respect, contributions tocivilisations and interference in domestic matters.

The crux lies in the two almost diagonally opposing ‘Dinosaur-Views’2 of China, which are still in currency at the moment and – if theypersist – are in danger of obscuring the commonalities between Europeand China. Fundamentally, both these views choose to assume a strongbias, emphasising, respectively, elements of ‘sameness’ and ‘commonal-ity’ and aspects of ‘difference’ and ‘strangeness’ between China andEurope.

Mindful of the dangers of over-simplification, the first view can bedescribed to be wholeheartedly embracing China’s right to finding herfuture place in world affairs, through a method of ‘peaceful rise’. Seenthrough this analytical prism, the PRC becomes a uniquely successful,and increasingly assertive, muscle-flexing,3 example of a non-liberal-democratic, authoritarian state under one-party rule; a ‘socialism-with-local-flavour’ system; a country, which achieves staggering economicdevelopment, and superpower-status, in a short time, while retainingstate-control; a paradigm for other developing countries around theworld, especially on the African continent. In spite of – perhaps justbecause of – promoting wealth-creation and socio-economic and culturalrights over and ahead of civil and political ones, the country has pulledmillions of its citizens out of poverty and introduced significant legal andinstitutional reform in an increasingly wealthy society. Within this soci-

INTRODUCTION 19

4 B. Emmott: ‘Opinion’, The Times, 22 May 2009; 34.5 A. Willis, EU-Observer, 17 March 2009 (http://www.euobserver.com).6The ‘trial’ of Aung San Suu Kyi, in May 2009, over-shadowed the 2009 EU-China

Summit, see: http://euobserver.com/9/28135?print=17 See: I. Buruma: ‘Culture is no Excuse […]’ in The Observer, 3 February 2008: 29.8 One example is the new InBev-Baillet Latour Chair of EU-China Relations, at the

College of Europe in Brugge; recent EU-China related conferences included meetings inBristol in May 2009 (Europe’s China Strategy) and Groningen in December 2009 (Concordor Conflict?).

ety, the forces of the ‘New Left’ and the ‘New-Right’ are vying for intel-lectual supremacy, influence and political predominance, over issues,welfare the environment, the rule of law and the scope and optimumpace of reform (Leonard 2008).

In stark contrast to this, the proponents of an alternative view fre-quently point to the China-threat: in this perspective, the PRC has mu-tated into ‘angry China’: an ‘accidental empire’4 and an aggressive pariah-state threatening both Taiwan and world peace; a country whose defenceexpenditure rose by 17.6 per cent in 2008,5 which props up ‘rogue-re-gimes’ in Sudan, North Korea and Burma6 and insists, unreasonably, onits ‘developing-nation-status’; a violator of human and personal integrityrights on a massive scale, which silences human rights advocates, ‘playson’ colonial guilt, hides behind the ‘Olympic’ spirit and ‘Asian’ values tosuppress dissent and democracy.7 In this view China is a state whicheradicates autochthonous cultures in Tibet and elsewhere, stifles religiousfreedoms and seeks to censure the internet (Ching 2008).

While many aspects of both these points of view can, at times, beideologically-motivated, and may be, at times, insufficiently backed-up bydata, they remain, more often than not, influential and persistent bonesof contention, as well as background issues.

A substantial proportion of the theory and political practice of currentEU-China relations is linked to the various interpretations of these dispa-rate views. Concomitantly with this, there is a resurgence of interest inthe academic study of matters relating to Europe’s China strategy;throughout 2008/09, both new Confucius Institutes and Chairs of EU-ChinaRelations have been cropping up on an ongoing basis, while the subjecthas been debated at Academic Symposia around the globe.8 And, increas-ingly, European (and western) debates about how to ‘engage’, ‘socialise’,‘contain’ and ‘tie-in’ China are echoed in a Chinese mirror-discourse on

20 European Studies

9 See: Europe’s World, autumn 2008, (http://www.europesworld.org), the Economist,21 March 2009: 15 and FEER, 1 May 2009 (http://www.feer.com).

10 Francis Smith ‘Lessons from the East’ in Asian Affairs, March 2009: 6; WorldAffairs 2001 (Special Issue).

how best to ‘manage’ the ‘decline’ of the West and shape the world in anAsian mould (Mahbubani 2007; Leonard 2008).

These perceptions are, of course, ultimately connected to wider dis-courses about new ‘Great Games’: what kind of superpower is Chinabecoming? Can the PRC perceive the EU as more than a mere counter-balance in its relations with the United States of America?9 What isChina’s and the European Union’s rightful place in global affairs? Whichlessons can be learned from the global economic downturn, and canChina lead on putting them into practice?10 How important are ‘culture’and ‘rights’ in the debates about politics and human rights? Who will thiscentury – and the next one – ‘belong’ to? What is the most appropriateway for the European Union to shape its relations with the PRC?

The attempts to resolve these questions, in turn, unfold against abackground of swift, unprecedented, change in China, characterised byvoracious demands for energy, the Chinese wish for market-economy-status, an increasing population imbalance, persistent wealth disparitiesbetween coastal and inland provinces, the emergence of a new – largelyconservative – middle-class, the Chinese anti-secession legislation of2005, an unprecedented expansion of higher education and progressiveenvironmental degradation – to name but a few developments recentlycommented on (e.g.: O’Callaghan 2004; Gungwu and Wong 2007;Crossick and Reuter 2007; Shambaugh et al 2008; Leonard 2008; Ching2008).

The Chapters in this Book

On the one hand, Europe should not listen to Europeans who assume Europehas all the answers for China as though it was somehow cloning Dolly the sheep,because it does not; on the other hand, China should not listen to those Chineseconservatives who believe that China is so different that it can only learn fromwithin. China is and does need to go through a process of enlightenment-stylethinking to underpin its future political, economic and social trajectory and torationalize the current contradictions of Marxist-Leninist thought with a free-wheeling economy (Gary Hallsworth in Crossick and Reuter. 2007: 221)

INTRODUCTION 21

It is with these general comments and developments in mind that thispresent volume seeks to gather the best of contemporary research onEU-China relations, in order to offer both an overview of the currentintellectual landscape of the relationship, and to point to some of the keystrands which are set to shape future interaction between the two part-ners. It can be read in conjunction with a predecessor-volume on EU-Asia Relations in this same series (Anderson and Wiessala 2007), and itseeks to add to the academic analysis of EU-Asia relations in general.The book is divided into three sections. The principal content and pur-pose of the first section is evident from its title: the Background of EU-China Relations and the Human Rights Dilemma.

In the first chapter of this book, Nicholas Rees provides a historicaloverview of China’s relations with three of the EU’s biggest powers –Germany, Britain and France – before examining the impact of thoseencounters on contemporary relations. He gives particular attention tounderstanding how China and its EU partners view each other and whatthis means for the contemporary relationship. While he demonstratesclearly that the relationship between the EU and China is a multifacetedone, covering a whole gamut of areas and interests, he also reminds us ofthe challenges that lie ahead.

In the subsequent chapter, Fraser Cameron surveys the evolvingstatus of EU-China relations by examining the contents of the variouspolicy papers or communications of the European Commission focusing onChina. He also assesses the impact and influence of the other EU institu-tions in shaping the EU-China relationship. In doing so, Cameron re-veals an important shift in EU policy over the past two decades, whichhas been evolving from assisting China in its development and reformprocess to a focus on dealing with the challenges posed by its rise. Hischapter further examines the views of the European Parliament, whichfrequently takes a more strident position than the Commission or theMember States on issues such as human rights or arms sales to China.

In a broad analysis of the material, institutional, and ideational ele-ments of the EU-China partnership, Natee Vichitsorasatra argues in thethird chapter that the EU has consistently opted for a bilateral strategywith a priority on material interests in its relationship with China. Usingthe Asia-Europe Meeting (ASEM) as an example, he finds that there islittle evidence to suggest that the EU has pursued a multilateral strategywith China. Describing the ASEM process as passive multilateralism,

22 European Studies

Vichitsorasatra nevertheless cautions that ASEM should not be consid-ered a failure since its role has always been to stimulate and sustaingrowth in bilateral interactions.

The chapter by Georg Wiessala offers seven diverse perspectives onwhat may well be the ‘thorniest’ issue in contemporary EU-China rela-tions: the human rights question. The chapter examines the fundamentalambiguities in Sino-European relations and points to the legacies of pastcivilisational encounters. It proceeds to discuss how EU-China relationscan be conceptualised from the point of view of international relationstheory and intellectual discourse in China and Europe. It subsequentlyanalyses the role of ‘ideas’, ‘identity-politics’ and ‘perceptions’ in EU-China human rights discussions, and it examines how EU China foreignpolicy can be understood to be constructed around some ‘key’ elementsand frameworks. The chapter closes by emphasising the roles of intellec-tual exchange and knowledge-based co-operation and by offering a briefassessment of the likely future course of EU-China debates over humanrights.

Finally, in the first section of this book, David Askew’s chapter is notso much a tale of EU-China relations, more a critical examination of therelationship between politics, sports and human rights. In China, wheresport has long been mobilized to construct narratives of national identity,the nationalistic pride generated by sporting success has become increas-ingly important to the Party-state. Askew also reminds us that until themid-1970s, the European Commission saw economic development as aprecondition for the realization of human rights, rather than the currentposition, which is to see the guarantee of human rights as a preconditionfor development. This attempt by the EU to recreate itself as a norma-tive power means that its relationship with China has been a troubledone because Beijing’s official position today shares much in commonwith the pre-mid-1970s European Commission.

The second section of this book, The Geopolitical Setting of EU-ChinaInteraction, deals with a number of important, global, facets of the con-temporary EU-China relationship. It introduces into the frame of thisbook the concepts of multi-polarity, complex inter-dependence, bi-multi-polarity, and an in-depth analysis of a number of international partnersother than the European Union, whose relations with the People’s Re-public of China, nevertheless, constitute an important frame of referencefor Sino-EU contacts, such as India, Russia and the US.

INTRODUCTION 23

The main theme of Jennifer Clegg’s chapter is how, in developing itsviews and policies as regards the EU, China has developed a wider,multi-polar, approach to international relations. One of the biggestthreats to this approach, of course, have been the unilateralist policies ofprevious US administrations, while the widening trade gap betweenChina and the EU is a cause of major concern especially in a period ofacute economic difficulty. Above all, China has been trying to use theEU as a buffer with the USA, demonstrating how the multi-polar policyworks in practice.

Rajendra K. Jain provides a fascinating insight into Indian percep-tions of the evolving relationship between the EU and China. Startingwith an overview of Indian attitudes towards both the EU and China,the chapter reveals the country’s concern about the US-orientation thatcurrently dominates international relations. Jain also makes it clear thatIndia fears being marginalized by both this trend and the EU’s apparentcloseness to China. He then develops a series of policy-recommendationsfor overcoming these threats, focusing especially on closer links betweenIndia and the EU in the areas of trade relations, education and research.

In the subsequent chapter, Christopher Williams assesses how Rus-sia’s links with the EU and China can be improved. Given the substan-tial border between Russia and China, as well as issues arising fromenergy and arms trading, it is clear from this chapter that extensive ef-forts have been made since the 1980s to devise effective channels ofcommunication. While these efforts have to a large extent been success-ful, Williams also warns of potential future problems that could interruptthe relationship. This reveals the constant fluidity in international rela-tions, a theme that runs effectively throughout many other chapters inthis book.

In this vein, and using the concepts of ‘complex interdependence’ and‘bi-multilateralism’ as organising and evaluative analytical devices, Mi-chael Smith and Huaixian Xie assess the complex relationships betweenChina, the EU and the US. The chapter focuses on two linked case stud-ies, dealing with China’s accession to the World Trade Organisation(WTO) and the 2005 dispute over trade in textiles, demonstrating clearlyhow these complexities create a major challenge for policy-makers. Inparticular, the conclusion reveals that the concepts can also be applied tomany other areas, including arms embargoes, other security issues andthe environmental debate.

24 European Studies

Last but not least, for this second section of the book, Paul Limassesses in some detail the place of Taiwan in the EU’s thinking, and inEU-China relations. He focuses especially on the ‘One China Policy’,adhered to by the EU in order to maintain good relations with the PRC.After surveying an extensive amount of archival materials and data ontrade and investment between Taiwan and the EU, Lim demonstratesthat the Union has made every attempt to obviate the One China Policy,without offending China. Indeed, Lim claims that, working through itslinks with the EU, Taiwan has found a place on the international stage,anticipating further progress in the near-future through further negotia-tions.

The third, and final, segment of this book aims to ‘home in’ on anumber of key topics which have been selected for their potential to giveshape to contemporary EU-China relations, and to determine its immedi-ate future. The section is entitled Issues, Policies and Perceptions in EU-ChinaDialogue, a choice of title which is meant to hint at the potential of thesubject-areas chosen, not only to be the practical drivers of EU-Chinadialogue, but also to function as important indicators of how the twopartners will view one another in the further course of the 21st Century.

This final part of the book does not lose sight of the role of ideas andperceptions in EU-China relations. However, it enlarges the scope of theinvestigation, in order to embrace some of the ways in which present andfuture EU-China co-operation is rooted in a range of developmentspertaining to economics, law, security, energy, crime, media freedom andmaritime matters, to name only a few.

The section begins with an essay by Peter Anderson, revolvingaround the situation of Chinese journalism, its freedom of manoeuvreand the limitations imposed upon it in contemporary China. It places aparticular emphasis on the pressures generated by the impact of theInternet, and on attempts by the Chinese leadership to police it, in theyear of the Beijing Olympics. In 2009, the year which marks the 20thAnniversary of the Tiananmen Square crackdown, Anderson investigatesthe Chinese Government’s perspective on media control and ‘gate-keep-ing’, with reference to national security, stability, political liberty andeducation of Chinese students abroad. He offers a range of speculativepolitical scenarios on the future course and possible extension of journal-istic freedoms in the PRC. In some areas, this chapter can be read in

INTRODUCTION 25

conjunction with the chapters about human rights, the Olympic Gamesand the context of EU-China relations.

The following two chapters add to the analysis of the state of Chinaby means of economic evaluation. In the first chapter, Carlo Filippini,following a thorough examination of the development of economicrelations between the EU and China, focuses mainly on MerchandiseTrade and the Trade in Services. Fillipini relates his analysis, on the onehand, to the EU’s trade deficit with China, and, on the other hand, toissues of democratic reform in the PRC. He investigates both EU con-cerns over competition, corruption, regulation and product safety inChina, and analyses Chinese views on the question of Market-Economy-Status (MES), protectionism and the EU nexus between economic mat-ters and human rights developments. Moreover, Filippini calls for a moreopen ‘ranking’ in the EU’s aims for its economic China policy, for theclarification of competencies, and for a fuller understanding of issues oflanguage and culture when dealing with China. This latter view relates toan overall theme of this volume, and it is echoed throughout a numberof other contributions.

The second chapter focusing on economics, by Valeria Gattai, buildson the previous economic analysis, through her detailed analysis of theimpact of Foreign Direct Investment (FDI) patterns in EU-China inter-action. In her chapter, Gattai suggests a ‘double-sided’ conceptualisation,examining the EU and China in their respective, mutual, roles as ‘host’and ‘home’ economies. Gattai’s chapter is informed, on the one hand, bya comprehensive analysis of the outward internationalisation of Chineseenterprises since Deng’s 1978 Open-Door approach, and with the ‘go-global’ policies implemented by successive Chinese leaderships. On theother hand, her key concern lies with the physical, normative and psy-chological hurdles European firms often face when seeking to invest inthe PRC. Gattai, furthermore, seeks to point to other factors, such asskills, intangible resources and capabilities. In pointing to the challenge,for example, of ‘cultural distance’ Gattai’s chapter relates to the argu-ments also put forward by other authors in this volume, among them byFraser Cameron, Carlo Fillipini and Nicholas Rees.

The final two chapters in this last section of the book are concernedwith different aspects of ‘security’ in China-EU relations, particularly inthe areas of energy and maritime security. These chapters have beenincluded, not only because there appears to be a significant dearth of

26 European Studies

analyses of these matters in contemporary EU-China research, but alsoon account of their significance for the mid-term future of the EU-Chinarelationship. The first chapter, by Pradeep Taneja, offers an extension ofthe analytical frame of EU-China relations, by means of an analysis ofthe role of energy security. The focus of his chapter is on China’s searchfor energy security and its impact on China’s relations with the EuropeanUnion. The author outlines the key initiatives China has taken to ensureregular and cost-effective supplies of oil and gas. Taneja argues thatChina’s search for energy security has led it to develop closer politicaland military ties with a number of countries in Africa, which have tradi-tionally relied on Europe for investment and development assistance.This is seen by many European politicians and EU officials as undermin-ing their long-term efforts to improve the quality of governance and therespect for human rights in those countries. While China’s search forenergy security does cause some difficulties in EU-China relations,Taneja suggests that this also provides an opportunity for the two sidesto engage in a constructive dialogue on climate change and alternativesources of energy.

The final chapter in the section on Issues Policies and Perceptions stayswithin the area of security relations and highlights the issue of maritimesecurity in the East and regions of high strategic importance, such as theEast and South China Seas and the Straits of Malacca. The author,Keyuan Zou, offers a comprehensive analysis of the maritime legal in-struments and policies in this area. He is one of the first observers toconnect these to China’s relations with the EU, examining which lessonsthe two world players can learn from one another. Keyuan Zou relateshis investigation to questions of energy demand and terrorism, securityof the sea lanes and trade, criminal law, weapons of mass destruction andpiracy, all of which were newly-resurgent issues in 2009. His examinationis embedded in the wider contexts of the Association of South EastAsian Nations (ASEAN) and of relevant EU experience in maritimesecurity. The author offers some in-depth case-studies, contributing to aperspective which is informed by international law, practical examplesand the details of Chinese policy-formation in this field. In looking at theissue of sovereignty and the perceptions of EU, US and Chinese mari-time diplomacy, Keyuan Zou continues the analysis of an importantstrand of thought which is appearing throughout this volume.

INTRODUCTION 27

Taken together, the fifteen chapters in this collection offer a largevariety of contemporary approaches to the critical examination of EU-China relations in 2009. By the time we were putting the ‘finishingtouches’ to this collection, the 4th June 2009 had ‘crept up’ on us, andwith it, the 20th Anniversary of the Tiananmen Square crackdown in 1989.It is with the victims and continuing implications of that act of violencein mind that we offer for further scrutiny and development, the diversefindings of the researchers assembled in this volume. Around this poi-gnant anniversary, the world was, once again, mindful of the awesomepower of China, then as now, and of the challenges facing both hercurrent leaders and the EU. In summer 2009, the media and the aca-demic debate alike, in both China and Europe were thus newly alive withspeculation about whether, and in what ways, China had changed sincethen, and where the country would be heading in the space of the nexttwenty years.

Although it is, of course, difficult to provide precise answers to thesequestions, the editors of this volume hope that the chapters which followwill provide some of the viewpoints and tools required by present andfuture observers to understand the ever-more dynamic, fascinating andchallenging relationship between the People’s Republic of China and theEuropean Union.

References Anderson, Peter and Wiessala, Georg (eds) 2007. The European Union and Asia –

Reflections and Re-orientations. Series European Studies, Vol. 25. Amster-dam/New York: Rodopi.

Andreosso-O’Callaghan, B. et al. 2004. ‘Economic Change and Political Devel-opment in China […]’ in: Journal of Contemporary China 13(39): 203-222.

Ching, Frank. 2008. China: The Truth about its Human Rights Record, London:Rider

Crossick Stanley and Reuter, Etienne. 2007. China-EU A Common Future. Lon-don: World Scientific.

Leonard, Mark. 2008 What Does China Think? London: Harper Collins.Li Jinshan. 2007. ‘Governance’ in Crossick, Stanley and Reuter, Etienne (eds.)

China-EU A Common Future, London: World Scientific: 215-227.Mahbubani, Kishore. 2007. The New Asian Hemisphere. New York: Public AffairsWang, Gungwu and Wong, John. 2007. Interpreting China’s Development, London:

World Scientific.World Affairs. 2001. Special Issue: China: A Focus, October-December 2001.

THE CONTEXT OF EU-CHINA RELATIONS ANDTHE HUMAN RIGHTS DILEMMA

EUROPEAN STUDIES 27 (2009): 31-46

EU-CHINA RELATIONS: HISTORICAL AND CONTEMPORARY PERSPECTIVES

Nicholas Rees

AbstractThis chapter offers and in-depth examination of the origins and thedevelopment of EU-China relations, in the context of the EU-China‘Strategic Partnership’. The chapter looks at how contemporary, bilat-eral, Member State relations have formed the background to theemergence of EU policies with regard to the PRC. It places a particu-lar focus on offering a contribution which can help in our under-standing of how the actors in the EU and in China view each other.The chapter examines how perceptions which shape the contempo-rary EU-China relationship have been influenced by the legacies ofpast encounters.

IntroductionThe rise of China and its growing role in international affairs providesboth challenges and opportunities for the European Union and its Mem-ber States. The challenges for the EU lie in understanding and workingwith China. Economic relations, reflecting trade and European invest-ments in China, tend to dominate the contemporary relationship, al-though other issues are increasingly on the agenda. The economic rela-tionship also makes it more difficult for the EU to develop a coherentpolicy towards China, as those EU Member States with significant eco-nomic interests in China are unlikely to agree to a more comprehensiveEU policy towards China that may damage their economic relations. Thechallenge for China is to maintain its strong economic and trading rela-tionship with the EU and its Member States while ensuring that anypotentially divisive issues such as human rights, Tibet and Taiwan do not

32 Nicholas Rees

damage the development of these relations. It appears that China wouldlike to have a closer relationship with the EU, especially if it had theeffect of dividing Europe and the United States and provided a means ofbalancing US interests. The US and the EU have been supportive ofintegrating China into the global system, hoping that this will ensure itscommitment to international institutions and bring about domestic politi-cal and social change in China (Shambaugh 2005a: 58).

Early Engagements and Contemporary Bilateral Member State RelationsThe fascination with China is not a new phenomenon in Europe andreflects a past that has included many encounters with China, some ofwhich shape the contemporary relationship. Europe and China have beenintermittently engaged in relations since as early as 1514, when the Por-tuguese first arrived in China via Macau (Yahuda 2008: 13). The follow-ing analysis focuses only on the German, British and French experiences,highlighting how past relations have influenced recent bilateral relationsand what this means for the development of the EU-China relationship.

Sino-German RelationsGerman involvement in China dates back to the 1700s, and its commer-cial relations today reflect those early experiences and encounters withChina. Germany is also China’s largest trading partner in the EU and itseconomic interests in China are considerable with most of the largerGerman companies such as Siemens and Volkswagen present in China.In its earlier involvement, Germany, like Britain and France in the mid-nineteenth century, saw opportunities to advance trade and territory inChina. Formal relations were established by Prussia with China in 1861,through the first Sino-German Treaty. In pursuing its links with China,Germany faced tough competition from the British. In 1890 theDeutsch-Asiatische Bank was established and by the end of the 1890sGermany had gained considerably in economic importance. In 1897Germany invaded Qingdao and established the Jiaozhou Bay colony(Kiautschou Bay), thereby providing a naval base and opening up eco-nomic opportunities. The intensity of Sino-German relations between theBoxer Rebellion (1900-1901) and World War I varied, although Germaninfluences and interests were apparent in China. In 1917 China declaredwar on Germany and was able to regain some of its earlier concessionsthat had been forced on it in 1897. Following the Treaty of Versailles,

EU-CHINA RELATIONS 33

1 ‘Pressure Growing on Merkel to Fix Squabble with China’, Spiegelonline,27/11/07 http://www.spiegel.de (accessed 28/01/09)

and during the 1920s, Sino-German trade grew with a number of Ger-man armament companies establishing links in China. This was rein-forced and intensified following the rise to power of the Nazi Party in1933, with Germany concluding a treaty with China in 1934 ‘On theExchange of Chinese Raw Materials and Agricultural Products for Ger-man Industrial and Other Products’. The relationship, however, falteredfollowing the outbreak of second Sino-Japanese war in 1937 and theincreasing pro-Japanese line followed by Germany. In 1941, followingthe attack on Pearl Harbour, China joined forces with the allies anddeclared war on Germany.

The ensuing legacy of the earlier period and the division of Germanyafter World War II meant that China’s relations with Germany havealways been relatively good with less ‘baggage’ from the past impactingon the relationship. Germany (then the German Federal Republic) estab-lished diplomatic relations with China in 1972 with the aim of underpin-ning its commercial relations and supporting German companies doingbusiness in China. This involved an increasing range of bilateral visits,including annual visits by the German Chancellor to China, as well as thedevelopment of further systematic cooperation. As with the other EUstates, relations between Germany and China ‘dipped’ after TiananmenSquare, but were quickly placed back on track reflecting the importanceof the commercial relationship (Stumbaum 2007: 60). Germany, alongwith France, has been a strong advocate of removing the EU arms em-bargo on China. It has also been cautious about criticising China’s recordon human rights, supporting the EU’s approach of constructive engage-ment.

The relationship between China and Germany hit rocky waters fol-lowing a ‘private’ meeting between the German Chancellor Angela Mer-kel and the Dalai Lama in September 2007. This was in marked contrastto the visit by the Chancellor to China the previous August, where shewas warmly welcomed. The meeting with the Dalai Lama annoyed theChinese, temporarily leading to a ‘drop to almost freezing point’ in rela-tions and the cancellation of a number of meetings.1 It also led to criti-cism from within Germany by a powerful German industrial lobby ledby Jürgen Thumann. The Social Democrats (SPD) and Christian Demo-crats (CDU), including the German Foreign Minister Frank-Walter Stein-

34 Nicholas Rees

meier (SPD) were also critical of the Chancellor’s actions. This incidentserves to highlight the dilemma for states such as Germany, who find itdifficult to balance economic interests with issues such as Tibet andhuman rights.

Sino-British RelationsBritain is the fourth largest exporter of goods to China in Europe andsecond in terms of imports from China (Stumbaum 2007: 66). The im-portance of China to Britain today reflects not only recent developmentsbut also a considerable history of relations dating back as early as 1637when Captain John Wendell arrived in Macau and attempted to establishtrading relations with China. These early attempts failed in the face ofopposition from both the Portuguese and the Ming Dynasty (1388-1644). During the Qing Dynasty (1644-1911), British trade developedwith China, although the relationship was often considered highly un-equal. The Treaty of Nanjing, signed in August 1842, brought to an endthe first Opium War (1939-42), and led to the acquisition of Hong Kongas a crown colony.

This was a highly significant development and one that has had aconsiderable impact on the development of British relations with China.Foreign involvement in China later led to the Boxer rebellion, once againprompting foreign military intervention and suppression of the rising bya coalition of states, which included Britain. On the Chinese side this lefta lasting impact, with many considering it as imperial aggression andnational shame that has continued to impact on the development ofChinese foreign policy. Following successful military cooperation duringWorld War II, where British and Chinese troops fought together againstJapan, the emergence of the People’s Republic of China (PRC) in 1949,presented a fresh set of challenges for British foreign policy.

The British government recognised the PRC as the legitimate govern-ment of China, which led to the reestablishment of diplomatic relationsduring the 1950s, first with the appointment of a chargé d’affaires in Beijing(1950), and later the appointment of a Chinese chargé d’affaires in Lon-don (1954). It was, however, only in 1972 that full diplomatic relationswere established. As early as 1950 trade matters were of growing impor-tance to British companies leading them to form the Group of 48 (com-panies), which is now the China-Britain Business Council and the Sino-British Trade Council (1954).

EU-CHINA RELATIONS 35

2 See http://www.cabinetoffice.gov.uk for further details on the task force.3 UK bilateral relations with China, http://ukinchina.fco.uk/en/working-with-

china/bilateral-relations

It could be argued that it was not until 1984, with the Sino-BritishJoint Declaration, which led to the return of Hong Kong to Chinesesovereignty in 1997 that the injustices of the past were addressed andthat relations with China were placed on a better footing. The impor-tance that Britain attaches to its relations with China is reflected in thefact that the UK government established in November 2003 a ChinaTask Force, which is chaired by the Chancellor of the Exchequer. Thetask force covers seven areas of possible cooperation and includesamong its members a mix of business leaders, academics, and politi-cians.2

Relations between Britain and China intensified after May 2004, whenPrime Minister Blair and Premier Wen Jiabao signed a statement on theestablishment of a comprehensive strategic partnership and agreed tohold annual summits.3 This has been exemplified in the intensity ofdiplomatic visits, with the visit of Premier Wen Jiabao to Britain in Sep-tember 2006 and both the British Prime Minister and Foreign Secretaryeach making two visits to China in 2008. It is also evident in the range ofinstitutional channels for communication, which include the summitmeetings and task forces, as well as the UK-China Economic and Finan-cial Dialogue, sector specific dialogues, and the UK-China HumanRights Dialogue.

These are mirrored on the Chinese side by bodies such as the UKTask Force. Most recently, in 2009, the UK Government published anew strategy document on ‘The UK and China: A Framework for Engage-ment’ in which it identifies why China matters, the key challenges andthe UK response. It is suggested that China matters to the UK in a num-ber of areas, including in terms of British prosperity, globalisation, cli-mate change, development, international security and the internationalsystem. The document identified three key elements of British foreignpolicy towards China: getting the best for the UK from China’s growth,fostering China’s emergence as a responsible global player, and promot-ing sustainable development, modernisation and internal reform inChina.

In respect to each of these areas, the paper outlines more detailedtargets and deliverables. In seeking to achieve these targets the UK has

36 Nicholas Rees

developed a strong diplomatic presence in China, including an embassyin Beijing, Consulates General in Shanghai, Chongqing, Guangzhou andHong Kong plus offices of the China-Britain Business Council. In addi-tion to an array of high-level bilateral meetings, the UK also worksthrough the EU, UN and with the USA. The new strategy documentdoes refer to the EU and other partners in the EU, although the focus islargely on the UK response to China reflecting the importance of Chinato the UK and its continuing pursuit of its own commercial interests.

Sino-French RelationsFrench engagement in China followed a similar pattern to that of otherEuropean states, with early interest in and fascination with China in the1600s and 1700s being replaced in the nineteenth century by a desire togain overseas colonies and territories. By 1844, with the Treaty ofWhampoa, France won from China the same type of concessions as theirBritish counterparts. It later seized Guanzhouwan as a treaty port andgained concessions in Shanghai. As with Britain, France gained furtherconcessions and engaged in military endeavours during the secondOpium War, the Sino-French War and in French Indo-China. Theseengagements left both a colonial legacy, as well as a deeper understand-ing of China, thereby providing the basis for the development of con-temporary Sino-French relations. In the post-World War II era, Francewas one of the first European states to establish diplomatic relationswith the People’s Republic of China in January 1964, arising out of deGaulle’s recognition of the PRC. The relationship, however, was at timestempestuous, with various incidents leading to confrontations withChina. In particular, the sale of military weapons (Mirage 2000-5s and LaFayette-class frigates) to Taiwan in the 1990s, angered the Chinese gov-ernment and led to the temporary closure of the French Consulate-Gen-eral in Guangzhou. In 1997, France sought to establish a strategic part-nership with China in an attempt to ramp-up its relations and developfurther commercial opportunities. France is the second largest EU ex-porter of goods to China, as well as being the fourth largest EU investorin China, so it has a considerable stake in developing and building onthis relationship. It has also sought to promote a greater understandingof China in France, through events such as in 2004 a year of Chineseculture, as well as high-level diplomatic visits to and from China, includ-ing the French President and the Chinese Premier.The predominant

EU-CHINA RELATIONS 37

focus of many of these activities and visits has been on developing eco-nomic relations and trade. Notable examples of major contracts awardedto French companies include the sale of Airbus planes to China andcooperation in areas such as energy and information technology. Therelationship, however, has also had its problems. In early 2008 therewere significant public protests in Paris during the Olympic torch relayabout human rights in China and the issue of Tibet. This led to protestsin China, including a campaign by the Chinese to boycott the Frenchhypermarket Carrefour, as well as warnings from the Chinese govern-ment that Sino-French relations could be damaged by such incidents. Inresponse to this situation, both the French and Chinese governmentssought to calm the situation. An indication of how seriously the Frenchgovernment took the situation was that President Sarkozy wrote a letterof sympathy to the Chinese athlete who had carried the Olympic torch inParis, which was delivered in person by the President of the FrenchSenate. However, Sarkozy’s own meeting with the Dalai Lama in De-cember 2008 had detrimental effects on Sino-French relations, with theChinese cancelling the EU-China summit that France was meant to havehosted as part of its EU Presidency.

The EU and China: Developing a Multi-Faceted RelationshipThe EU and China are now engaged in cooperation on a number oflevels, including on international and bilateral issues, reflecting the grow-ing complexity and density of the relations. This reflects the EU’s objec-tive of trying to move away from a relationship largely based on eco-nomic and commercial interests, towards a more strategic partnershipbased on a comprehensive set of relations between the EU and China.The partnership has also been increasingly institutionalised and forma-lised, ensuring a continuous dialogue and stream of visitors betweenChina and the European Union (Men 2008). It has been variously de-scribed as a ‘long-term relationship’, ‘a comprehensive partnership’, ‘amaturing partnership’, ‘a strategic and enduring relationship’ and ‘closerpartners’ (Dai 2007). Since the late 1990s, there has been a profusion ofnew strategy papers and communications published by the EuropeanCommission, reflecting the increasing levels of EU-China engagementand activity (see Chapter by Cameron). The titles of these papers areimportant as they indicate how the relationship has been evolving, atleast from the European Commission’s viewpoint.

38 Nicholas Rees

4 The EU is also a significant provider of development assistance in China, which isadministered through the Commission Delegation in Beijing.

5 EU-China Trade in Facts and Figures, 23 September 2008 http://europa.eu/rpid/pressReleasesAction.do?reference= MEMO/08/580&format=H… (accessed28/01/2009)

The overall theme has been one of engagement, linked to develop-ment of a strategic partnership that is maturing based on shared interestsand challenges. On the Chinese side, the Ministry of Foreign Affairs inresponse to the 2003 Commission paper published its own strategy pa-per, ‘China’s EU Policy Paper’, in October 2003. The paper identifiedthe EU as ‘a major force in the world’ and one that will ‘play an increas-ingly important role in both regional and international affairs’ (MFA2003, 1). It suggests that the two sides share some common interests,including support for a strong multi-lateral (or multi-polar) internationalsystem. The paper identifies the objectives of China’s EU strategy asbeing: closer political ties with the EU, continuing economic cooperationand integration with the EU, and more people to people exchanges toincrease learning from each other. It notes, however, given the ‘differ-ences in historical background, cultural heritage, political system andeconomic development level, it is natural that the two sides have differ-ent views or even disagree on some issues’.

The EU and China are increasingly engaged in a multi-faceted rela-tionship across areas that include trade and aid, human rights, securityand international cooperation. It is, however, trade that dominates therelationship, with other issues arising on a periodic basis and providingthe basis for dialogue and progress.4 In trade terms, the European Unionis China’s largest market and China is the EU’s fourth largest market. In2007, the EU imported €231 billion worth of goods from China, while itonly exported €72 billion in goods to it.5 In this trading relationship, theEU is the primary supplier of technology and goods to China in compar-ison to the USA. Arising out of nature of this relationship, the EU hassuffered a significant trade deficit with China amounting to €159 billionin 2007. In 2007, European companies invested €1.8 billion in China,considerably less than in 2006 (€6.2 billion), with Germany being thelargest investor followed by the Netherlands, the UK and France. Thisinvestment is not simply in manufacturing but also includes R&D, high-lighting the importance of China to large European companies. How-ever, China is also investing in Europe by directly manufacturing prod-

EU-CHINA RELATIONS 39

6 [editors’ note]: see also the chapter by Georg Wiessala in this volume.

ucts close to the market, especially in Central and Eastern Europe(Verganon 2007: 14).

Underlying these statistics, however, is a somewhat more complicatedtrade relationship in which a small number of the larger EU states arethe prime traders with China as discussed earlier. The trade deficit hasbeen the subject of increasing high-level discussions between the EU andChina (Vergeron 2007: 7). European companies have encountered tradebarriers in trying to access Chinese markets (especially services) and havefound it difficult to overcome these barriers (Godement 2008). As aresult, China is the subject of a significant number of trade defenceinvestigations and the EU has a large number of anti-dumping measuresin force against Chinese imports. Similarly, there have been claims byChinese companies that the EU has been protectionist toward Chinesegoods and investments.

Outside of trade, the issue of human rights has been a continuingproblem in the EU-China relationship, as well as more broadly for theEU in Asia (Anderson and Wiessala 2007).6 The EU has a strong com-mitment in its foreign policy outlook to upholding human rights, asreflected in its enlargement negotiations with accession states, third partyagreements and broadly in its European Security Strategy. In its 1995China Strategy Paper the EU Commission stated that human rights wereintegral to EU foreign policy. The EU has previously condemned re-gimes that have a poor record of upholding human rights, as well asimposing sanctions against a number of countries known to be violatinghuman rights, such as Myanmar and Zimbabwe. In the case of China,however, the EU has changed its position from one of being openlycritical of China, as typified in the annual support for a resolution againstChina in the UN Human Right Commission, to one of trying to engageChina on this difficult issue. In part the change of position represents abroader EU engagement with China, in a belief that this is more likely toachieve change through a human rights dialogue, as well as recognitionthat some of the larger Member States prefer to pursue human rightsissues on a bilateral basis. The issue of human rights also provides aninteresting example of where the European Parliament has been morecritical of China than the EU’s own Member States.

40 Nicholas Rees

7 The lifting of the arms embargo has also been opposed by the European Parlia-ment.

In terms of ‘traditional’ security matters, there is a limited degree ofdirect cooperation between the EU and China, which is hardly surprisinggiven their geographical distance and different foreign policy orienta-tions. It does not feature as an aspect of the EU Country Strategy Paper,although EU and Chinese leaders at their summit meetings have dis-cussed security issues. For example, following the seventh EU-Chinasummit (2004), a joint declaration on non-proliferation and arms controlwas issued with the two powers committing to work together tostrengthen the international non-proliferation regime (Men 2008: 9). Itdoes, however, also underlie some of the discussions in other forumswhere the EU and China meet including at the United Nations, andthrough regional cooperation, such as in the ASEAN Regional Forumand the Asia-Europe Meeting (ASEM) (Rees 2008).

The partners also meet in other regional bodies, such as the Councilfor Security and Cooperation in Asia Pacific (CSCAP). In these variousorganisations and forums both traditional and non-traditional securityissues are discussed and some common actions agreed. In the areas ofsoft security, which includes issues of particular concern to the EU suchas illegal immigration, transnational crime, contagious diseases, energy,environment and sustainable development, there are possibilities forcooperation (Shambaugh 2005a: 15). In practice, there are also instancesof bilateral security cooperation between China and states such as Ger-many, France and the UK, including exchanges of military personnel,high level visits and some joint military exercises. A major limitation inthis relationship remains the 1989 Arms Embargo, which limits the saleof military equipment by European firms to China. The lifting of thisembargo, which has been advocated by France and Germany, has beenopposed by states such as Denmark and Sweden.7 The possible lifting ofany such embargo is also likely to anger the United States and Japan,which continue to see China’s military growth as a threat, especially toTaiwan. This ongoing issue is a cause of concern in China and limits thepossibilities for further developing cooperation in the security arena.

EU-CHINA RELATIONS 41

8 The other states indicated as strategic partners in this document included Canada,India, Japan, and Russia.

EU and Chinese Views of Each OtherThe relationship between the European Union and China has beenshaped by past historical encounters, the contemporary nature of the twopolitical systems and their interests in the international system. This isreflected in their complex views of each other that influence the potentialfor the development of a further comprehensive relationship. The Euro-pean Union’s vision of its role in the world is very much as a post-mod-ern actor committed to supporting the development of democracy, goodgovernance, the rule of law and respect for human rights. In its 2003‘European Security Strategy’ the EU made a commitment to developingstrategic partnerships with a number of states, including China, reflectingits desire to strengthen its role in international affairs.8

The dilemma for the EU is that, while the European Security Strategyaims to position the EU as a global player, much of the EU’s foreignpolicy is focused on the states that border the European Union. China isphysically distant from Europe and is not an immediate security consid-eration. This means that there is a tendency for the EU to view Chinalargely in economic terms, given that much of the day-to-day relationshipconcerns trade matters. This view is reinforced by the nature of the EUas an actor with the Commission leading in the economic arena. It ismore likely that political and security matters concerning China will behandled by the EU Council of Ministers (and its Secretariat), whichmeans that some of the more thorny and sensitive issues in the EU-China relationship are subject to the machinations of member state dis-cussions. The challenge lies in the fact that the EU’s Member States arelikely to pursue their own particular national economic interests in China.The EU’s Member States are well aware that aside from supporting thedevelopment of commercial relations, they must also be seen by theirown citizens to be addressing some of the broader issues of concern,such as Tibet, treatment of ethnic minorities, the use of the death penaltyin China, state control of the media and freedom of expression. Thediscussion of such issues in the public realm in EU Member States maysatisfy domestic opinion, but it tends to alienate the Chinese authorities,who often feel misunderstood and have engaged in retaliatory measureswhen offended. At elite political and officials levels there are clearly

42 Nicholas Rees

9 This initially began under Deng Xiaoping, with the Five Principles of PeacefulCo-existence, and was then replaced by the new Security Concept, which emphasisedcooperation as an alternative to the Cold War environment.

individuals who are well informed and knowledgeable about the EU andChina respectively (Algieri 2008: 67-69). However, public knowledge andunderstanding of China is relatively limited, reflecting the geographicaland cultural distances that exist between Europe and China (Crossickand Reuer 2007).

The effectiveness of the EU as an actor is also questionable and theChinese authorities are well aware of this. At the EU level, the MemberStates do engage in cooperation by sharing information and coordinatingaction and in most instances the EU as a group has more influence thana single member state (Keukeleire and MacNaughton 2008). Individualstates do, of course, pursue their own economic interests and commer-cial relations with China. This is inevitable given the importance of theChinese market, which has a huge potential for European companies andwhich cannot be ignored. This is always likely to make it difficult todevelop a more comprehensive EU view and policy towards China andmakes it easy for the Chinese authorities to exert pressure on particularMember States when they feel it is to their advantage and when theywant to reward/sanction behaviour.

Nevertheless, as indicated later in this chapter and elsewhere in thisbook (see Chapter by Cameron), the EU Member States have coordi-nated their actions and agreed common approaches towards China onvery specific issues. For example, the issue of intellectual property theftis a major concern for many European companies and a coordinated EUapproach is more likely to achieve results in China. It is also the type ofissue which the EU through the Commission can pursue in the WTOand through bilateral links with China. As a result, in January 2009 theEU and China signed an agreement on intellectual property rights, high-lighting the success of a unified EU approach to China.

The Chinese view (or views) of Europe needs to be placed and un-derstood in the broader context of China’s growing role in internationalaffairs. In the international system China is striving to establish its posi-tion as a major international player or great power. It aims to do thisthrough a policy of cooperative engagement and the use of soft powerwithin the international economic system (Narramore 2008: 90; also Gilland Huang 2006).9 On its immediate borders it has to contend with

EU-CHINA RELATIONS 43

Russia, India and other East Asian states, while its relationship with theUnited States still remains problematic especially in relation to Taiwan.Against this backdrop, the European Union is seen as relatively benignand a potential partner in international relations (Crossick and Reuter2007: 4). In this context, Chinese political leaders and intellectuals havediverse views and understandings of Europe (Leonard 2008). They are,however, engaged in trying to more fully understand Europe and, at thesame time, build an understanding in Europe and elsewhere of China(Gill and Huang 2008).

There are clearly possibilities for cooperation with the EU and Chi-nese leaders often find the EU’s approach to international relations moreacceptable than that of the United States or Russia. Equally, however,there is recognition that the EU and United States do work in closecooperation in organisations such as NATO and on issues such as inter-national terrorism. China has also drawn some lessons from the EUexperience with regional cooperation and has committed itself to closerregional cooperation in Asia through organisations such as the ShanghaiCooperation Organisation and ASEAN, including ASEAN + 1 (China),ASEAN + 3 (China, Japan and South Korea), the ASEAN RegionalForum and ASEM (see Shambaugh 2005b). Chinese political leadershave a good understanding of how the European Union works and therole of its Member States than perhaps it is given credit by many ‘Europe-ans’ (Sandschneider 2002: 44).

ConclusionIn looking to the future, the challenge for the EU and China is to try todevelop a more long term strategic partnership that enables them towork more closely together in the international system. There are un-doubtedly some similarities between China and the European Unionwith both committed to some form of multilateralism, the rule of law,supportive of regional cooperation and the pursuit of economic andpolitical objectives by peaceful means. But there are also significantchallenges. First, as is evident from this analysis, the EU is far from acomposite international actor with a clear focus on what it wants toachieve in its relations with China. China and the EU are very differenttypes of actors, coming from differing political and ideological traditionsthat may make cooperation more difficult to achieve (Scott 2008). Sec-ond, the EU’s own Member States are committed to pursuing their own

44 Nicholas Rees

economic interests in China, reflecting national priorities and domesticconsiderations (Heron 2007). As suggested, this can in some cases leadto competition for contracts and limit the willingness of states to committo developing a stronger EU China policy. Third, China views Europe aseconomically important, but still politically (and militarily) weak and asan international actor that lacks a strong longer-term vision (Vergeron2007). The failure of the EU to reach agreement on lifting the armsembargo against China highlighted the inability of the EU to develop acommon position and the continuing influence of the United States andJapan, who lobbied against lifting the embargo. Finally, China as anemergent or rising power is committed to developing its relations with itsimmediate neighbours through peaceful cooperation. All of this militatesagainst an emergent China-Europe axis and any attempt by the EU andChina to balance the United States and work more closely together oninternational issues such as Iraq, Sudan and Climate change (Shambaugh2005a; Narramore 2008). It also points to the continuing importance ofthe US-EU relationship, where there are greater similarities in values,cultural and historical backgrounds, political traditions and bilateralrelations (Men 2008: 17).

ReferencesAlgieri, Franco. 2008. ‘It’s the system that matters: institutionalization and

making of EU policy toward China’ in Shambaugh, David, Eberhard Sand-schneider and Zhou Hong, (eds.) 2008. China-Europe Relations: perceptions,policies and prospects. London: Routledge: 63-83.

Anderson, Peter and Georg Wiessala. 2007. The European Union and Asia: Reflec-tion and Reorientation. Amsterdam and New York, NY: Rodopi.

Balm, Richard. 2008. ‘A European Strategy towards China? The Limits ofIntegration in European Foreign Policy Making’ in Balme, Richard andBrian Bridges (eds.), Europe-Asia Relations: Building Multilateralisms.Houndmills: Palgrave Macmillan: 125-44.

Balme, Richard and Brian Bridges, (eds.). 2008. Europe-Asia Relations: BuildingMultilateralisms. Houndmills: Palgrave Macmillan.

Barysch, Katinka with Charles Grant and Mark Leonard. 2005. Embracing theDragon: The EU’s Partnership with China. London: Centre for European Re-form.

Casarini, Nicola and Costanza Musu, (eds.). 2007. European Foreign Policy in anEvolving International System. Houndmills: Palgrave Macmillan.

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Crossick, Stanley and Etienne Reuter, (eds.). 2007. China-EU: A Common Future.New Jersey: World Scientific.

Dai, Xiudian. 2007. ‘EU-China Relations in the New World Order: An Uncer-tain Partnership in the Making’. Paper presented at the 57th PSA AnnualConference, 11-13 April.

Foreign and Commonwealth Office (FCO). 2009. The UK and China: A Frame-work for Engagement. London: Foreign and Commonwealth Office.

Gill, Bates and Yanzhong Huang. 2006. ‘Sources and Limits of Chinese ‘SoftPower’ in Survival 48(2): 17-36.

Godement, François. 2008. ‘The EU and China: A Necessary Partnership’ inGrevi, Giovanni and Álvaro de Vasconcelos (eds.) Partnerships for EffectiveMultilateralism: EU Relations with Brazil, China, India and Russia. Paris: EUInstitute for Security Studies, Chaillot Paper No. 109, May: 59-76

Grant, Charles with Katinka Barysch. 2008. Can Europe and China Shape a NewWorld Order? London: Centre for European Reform.

Grevi, Giovanni and Álvaro de Vasconcelos (eds.). 2008. Partnerships for EffectiveMultilateralism: EU Relations with Brazil, China, India and Russia. Paris: EUInstitute for Security Studies, Chaillot Paper No. 109, May.

Heron, Tony. 2007. ‘European Trade Diplomacy and the Politics of GlobalDevelopment: Reflections on the EU-China ‘Bra Wars’ Dispute’ in Govern-ment and Opposition 42(2): 190-214.

Keukeleire and Jennifer MacNaughtan. 2008. The Foreign Policy of the EuropeanUnion. Houndmills: Palgrave Macmillan.

Leonard, Mark. 2008. What does China Think? London: Fourth Estate.Men, Jing. 2008. EU-China Relations: From Engagement to Marriage? Brugge: Col-

lege of Europe, EU Diplomacy Papers, No. 7.Möller, Kay. 2002. ‘Diplomatic Relations and Mutual Strategic Perceptions:

China and the European Union’ in The China Quarterly 169: 10-32.Narramore, Terry. 2008. ‘China and Europe: Engagement, Multipolarity and

Strategy’ in The Pacific Review 21, no. 1: 87-108.Rees, Nicholas. 2008. ‘European and Asian Security and the Role of Regional

Organisation in the Post- 9/11 Environment’ in Murray, Philomena, (ed.).Europe and Asia: Regions in Flux. Palgrave Macmillan: 149-169.

Scott, David. 2007. ‘China and the EU: A Strategic Axis for the Twenty-FirstCentury?’ in International Relations 21(1): 23-45.

Sandschneider, Eberhard. 2002. ‘China’s Diplomatic Relations with the Statesof Europe’ in The China Quarterly 169: 33-44.

Shambaugh, David; Eberhard Sandschneider and Zhou Hong (eds.). 2008.China-Europe Relations: perceptions, policies and prospects. London: Routledge.

Shambaugh, David. 2005a. ‘The New Strategic Triangle: US and EuropeanReactions to China’s Rise’ in The Washington Quarterly 28(3): 7-25.

Shambaugh, David. 2005b. ‘China’s New Diplomacy in Asia’ in Foreign ServiceJournal May.

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Stumbaum, May-Britt. 2007. ‘Engaging China, Uniting Europe? EU ForeignPolicy Towards China’ in Casarini, Nicola and Costanza Musu (eds.) Euro-pean Foreign Policy in an Evolving International System. Houndmills: Palgrave: 57-75.

Vergeron, Karine Lisbonne-de. 2007. Contemporary Chinese Views of Europe. Lon-don: Chatham House/Foundation Robert Schuman.

Yahuda, Michael. 2008. ‘The Sino-European Encounter: Historical Influenceon Contemporary Relations’ in Shambaugh, David; Eberhard Sandschneiderand Zhou Hong, (eds.) China-Europe Relations: perceptions, policies and prospects.London: Routledge: 13-32.

EUROPEAN STUDIES 27 (2009): 47-64

THE DEVELOPMENT OF EU-CHINA RELATIONS

Fraser Cameron

AbstractThe EU and China have both undergone dramatic changes in the past20 years. With 480 million citizens, a single currency and the largestGDP in the world the EU has become an important actor on theinternational stage. China, with over 1.3 billion citizens, has under-gone dramatic reforms and enjoyed unprecedented economic growththat has also led to a greatly increased world role. Both the EU andChina are now keen to develop and further deepen their relationship.As Commissioner Benita Ferrero-Waldner stated in February 2005:‘There is no greater challenge for Europe than to understand thedramatic rise of China and to forge closer ties with it’. But what doBrussels and Beijing mean when they talk of a ‘strategic partnership’?To what extent do they share the same conceptual ideas and princi-ples? The EU proclaims it stands for a values-based foreign policywith the emphasis on ‘effective multilateralism’. China asserts that itspeaceful rise is aimed at developing a ‘harmonious world’. But oftenthe two sides seem to talk past each other. In recent years there hasbeen a flurry of EU policy papers on China. In contrast, China pub-lished just one paper in 2003 which was highly appreciative of theEU. This chapter reviews the EU approach to China, assesses thethinking behind the various communications and examines the mainchallenges the EU is facing in forging a new strategic partnershipwith China.

IntroductionRelations between the European Union (EU) and the People’s Republicof China (PRC) have developed remarkably fast over the past decade.

48 Fraser Cameron

1 In the end, most EU leaders did attend the Olympics, which were widely re-garded as a major success, and which marked China’s ‘coming-out-party’.

The two very different actors now engage in a large number of dialoguescovering issues ranging from trade and development to climate changeand global governance. Both sides are negotiating a new partnership andcooperation agreement (PCA). The EU side has been prolific in terms ofpolicy papers about China with the European Commission issuing sev-eral Communications which have provoked debate in the EuropeanParliament and decisions in the Council. Several research institutes,academics and NGOs in Europe have also produced policy papers andreports on China. In contrast, China has published only one major docu-ment about the EU, in 2003, but there is a growing interest about theEU in China reflected in the fact that more and more academic institu-tions and think tanks are studying the EU (Grant 2008).

Although relations between the EU and China have developed rap-idly in recent years, there are several contentious areas concerning issuessuch as human rights, the arms embargo, the trade imbalance, marketeconomy status (MES), currency levels and intellectual property rights(IPR). Increased contact has, no doubt, led to greater understandingbetween both sides but there remain considerable misperceptions onboth sides. This could be witnessed during the disputes over Tibet in thespring of 2008 and in the subsequent divisions within the EU aboutwhether to attend the Olympic Games.1 Differences over the then EUPresident Sarkozy’s announcement in early November that he wouldmeet with the Dalai Lama led to the cancellation of the EU-China sum-mit in December 2008. This move was a blow to those who argued thatEU-China relations were on a continuous upward trajectory, althoughChina stressed that the matter should be seen more as a bilateral disputewith France, rather than with the EU itself.

This chapter reviews the development of EU-China relations sincethe establishment of diplomatic relations in 1984. It focuses on the vari-ous China Communications of the European Commission and seeks toassess the impact and influence of the other EU institutions on the de-velopment of the relationship. It does not cover bilateral relations of EUMember States with China, reviewed elsewhere in this volume. Thechapter highlights how EU policy has changed during the past two de-cades evolving from a focus on assisting China’s development and re-

THE DEVELOPMENT OF EU-CHINA RELATIONS 49

2 The troika is the unwieldy EU representation for political dialogue with thirdcountries. It comprises the current and future EU Presidencies, plus Commission andCouncil.

form process to a focus on dealing with the challenges posed by the riseof China.

The Legal Framework of EU-China RelationsThe 1985 EC-China Trade and Economic Co-operation Agreementcontinues to be the main legal framework for EU-China relations. It wascomplemented, in 1994 and 2002, by means of exchanges of lettersestablishing a broad EU-China political dialogue. Both sides signed aTextiles Agreement in 1979 while the following year the EU agreed toinclude China in the general system of preferences (GSP). The develop-ment of the relationship was not without its problems during the earlyperiod, with China’s rapid economic rise leading to calls for EU protec-tionism. Similarly, the issue of human rights in China has also risen upthe agenda and is highly contentious among the EU Member States,epitomised by the controversy surrounding attempts to lift the armsembargo. The relationship has also been beset by competition betweenEU Member States, which, spurred on by economic interests, have oftensought to develop their own bilateral relations with China. By the 1990s,the EU-China relationship had significantly altered and expanded with abroader set of dialogues being developed, including through the estab-lishment of the first Joint Working Group on Economic and TradeMatters (1993), the establishment of regular meetings between the EUtroika2 and Chinese ministers and annual EU-China summits since 1998.

Negotiations on a more comprehensive Partnership and Co-operationAgreement (PCA) started in January 2007 and are still on-going, havingreached the half-way stage in January 2009. In 2008, a new High LevelEconomic and Trade Dialogue (ETD) format was launched, following asimilar Sino-US model. The EU and China have also concluded a num-ber of sectoral (sector-specific) agreements, notably the following:

• The Science and Technology Agreement (1998, renewed in 2004)• The Maritime Transport Agreement (2002)• The Agreement on Cooperation in the EU Galileo Satellite Navigation

Programme (October 2003)

50 Fraser Cameron

3 A Long Term Policy for China EU Relations, 24.6.1995 COM (1995) 295.

• The ‘Approved Destination Status’ tourism agreement (October2003)

• The Customs Co-operation Agreement (2004) and • The Research Agreement on the peaceful use of nuclear energy

(2004).

A number of new agreements setting up EU-China dialogues have alsorecently been inaugurated. They concern diverse areas, such as Intellec-tual Property Rights (IPR), Competition Policy, Enterprise Policy, Tex-tiles, Macroeconomic and Financial issues, Civil Aviation, Labour andSocial Issues, as well as Education and Culture.

Foundation: The Commission’s 1995 and 1998 Communications on China The 1995 Communication from the Commission, A Long Term Policy forChina EU Relations, praised China’s unrivalled progress since 1945. Ittiptoed around the ‘1989 Tiananmen Square events’, arguing that, ‘thetime has come to redefine the EU’s relationship with China.’ Europe’srelations with China were bound to be a cornerstone in Europe’s externalrelations, both with Asia and globally. Europe needed an ‘action-ori-ented, not a merely declaratory policy’, to strengthen that relationship.The Communication concluded that the EU should encourage China tobecome fully integrated in the international community, to widen thepolitical dialogue to include all issues of common interest and globalsignificance, to support China’s WTO membership, to contribute toreform inside China, to pursue EU concerns on human rights, to pro-mote economic and social reform, and to improve the business environ-ment for EU firms in China. There was little in the Communication,however, about how these aims were to be fulfilled.3

The Commission’s 1998 succession strategy on China was entitledBuilding a Comprehensive Partnership with China. The blueprint, once again,drew attention to China’s economic transformation. It further noted thatthis ‘has been accompanied by a significant evolution in China’s civilsociety, even if the full respect for universal standards in the field ofhuman rights remains incomplete’. The paper stated that most of theinitiatives proposed in 1995 were already under way, while others had yetto mature.

THE DEVELOPMENT OF EU-CHINA RELATIONS 51

4 Building a Comprehensive Partnership with China (25.03.98) COM (1998) 181.

The analytical foundations of the 1995 Communication still held truebut a number of significant developments occurred, which would leadthe EU to further ‘upgrade’ the relationship. These included China’sunambiguous commitment to a market economy at the 15th ChineseCommunist Party Congress in 1997; China’s at once more assertive andmore responsible foreign policy, as epitomized by China’s role in pro-moting peace in Cambodia as well as the smooth and successful hand-over of Hong Kong to Chinese sovereignty in July 1997. The EU wasalso on the threshold of a single currency and enlargement eastwards,and with the Treaty of Amsterdam had equipped itself with new meansto assert itself on the world stage.

Such developments, the Commission argued, called both for long-term vision and for active engagement. In the words of the paper, ‘engag-ing’ China’s emerging economic and political power as well as integratingthe country into the international community, ‘may prove one of themost important external policy challenges facing Europe and other part-ners in the 21st century’. The new EU-China partnership was aimed atengaging China further, ‘through an upgraded political dialogue; support-ing China’s transition to an open society based upon the rule of law andthe respect for human rights; integrating China further in the worldeconomy and by supporting the process of economic and social reformunderway in the country’. The paper also called for an increase in EUvisibility in China, as well as, for measures being taken to make EUfunding ‘go further’.4

Consolidation: The Commission’s 2001 and 2003 China Strategies The 2001 Commission Communication on the PRC bore the title: EUStrategy towards China: Implementation of the 1998 Communication and FutureSteps for a More Effective EU Policy. In explaining the need for yet anotherCommunication, the Commission stated that this policy paper aimed at,‘defining concrete and practical short and medium term action points’ forEU policy, in order to progress more effectively towards the long-termaims defined in 1998. The paper’s principle suggestions included:

• Engaging China further by strengthening the political dialogue toensure greater coherence and continuity in discussions at all levels.

52 Fraser Cameron

5 EU Strategy towards China: Implementation of the 1998 Communication and Future Stepsfor a More Effective EU Policy (15.5.2001); COM (2001) 265.

• Supporting China’s transition to an open society through a morefocused and results-oriented human rights dialogue, working withChina to support relevant reforms under way; implementing andpreparing human rights-related assistance programmes.

• Integrating China further in the world economy by finalising China’sWTO accession, monitoring the implementation of its WTO commit-ments, and strengthening the sector-specific dialogues and agree-ments in key areas (information society, environment, energy, scienceand technology). By developing new areas of co-operation (enterprisepolicy, industrial standards and certification, customs, maritime trans-port, securities and competition policy).

• Making better use of EU co-operation programmes. • Raising the EU’s profile in China by strengthening all aspects of EU

information policy vis-à-vis China.5

The follow-up document to this paper, the Commission’s 2003 Commu-nication on A Maturing Partnership – Shared Interests and Challenges in EU-China Relations (Updating the European Commission’s Communications on EU-China Relations of 1998 and 2001) was largely self-explanatory. The Com-mission defended the publication of yet another policy paper by insistingthat, ‘much has changed in Europe, China and the world since 2001’.These changes included the advent of the euro, the imminent enlarge-ment of the EU, new responsibilities in justice and home affairs (JHA).China had also entered a new and challenging phase in its social andeconomic reform process, had become increasingly involved in worldaffairs, and was rapidly emerging as a major player in the world economythanks to its dynamic growth and accession to the WTO. Moreover, anew generation of leaders had recently assumed power in Beijing andwould be engaging the EU at the highest level for the first time at theEU-China summit in late October 2003. At the same time, both sideshad to adapt to a fast moving international scene, with terrorism, weap-ons proliferation and other concerns, such as the threat of SARS, risingto the top of the agenda. The sluggish world economy and concomitantnegative trends in protectionism and regionalism also loomed as poten-tial threats to global trade and development.

THE DEVELOPMENT OF EU-CHINA RELATIONS 53

Against this background, the EU and China were seen to have anever-greater interest to work together as strategic partners to safeguardand promote sustainable development, peace and stability. Europe had amajor political and economic stake in supporting China’s successfultransition to, ‘a stable, prosperous and open country that fully embracesdemocracy, free market principles and the rule of law.’ The paper henceargued that, ‘the EU has much to offer here, stemming in part from itsown experience in integrating accession countries from East and CentralEurope’.

The communication proceeded to an assessment of progress since2001 and to making recommendations for the future. In the terms of thelatter the political dialogue should be improved ‘by systematically ad-dressing global and regional governance and security issues.’ Moreover,the paper demanded that the dialogue on illegal migration should bemore result-oriented, and that an agreement on the readmission of illegalmigrants ‘should be concluded soon’. Anticipated measures to improvehuman rights dialogue included, ‘greater focus on key issues, strongercontinuity and follow-through on issues and individual cases, maximisingsynergies with existing bilateral Member State efforts, and raising thevisibility and transparency of the dialogue.’

In promoting China’s economic opening at home and abroad, priori-ties were to work together to ensure success of the Doha DevelopmentAgenda, monitor and assist China’s compliance with its WTO commit-ments, and monitor new regional agreements to ensure WTO-compati-bility. Support for China’s reform process and sectoral co-operation wasto be strengthened through: the launch of new dialogues and co-opera-tion in the fields of intellectual property rights, sanitary standards, com-petition policy, industrial policy and human resource development; fur-thermore, through the reinforcement of existing dialogues and agree-ments on the regulation of industrial products, information society,environment, energy and scientific & technological co-operation. Newagreements, covering co-operation in research and related peaceful use ofnuclear energy, and in regard to the EU Galileo programme, were alsoenvisaged.

The 2003 Commission blueprint proposed that the steering role ofthe EC-China Joint Committee be reinforced, not only as regards tradeand co-operation, but also for the various sector-specific dialogues. Last,but not least, new measures aiming at raising EU visibility in China were

54 Fraser Cameron

6 A Maturing Partnership: Shared Interests and Challenges in EU-China Relations(10.9.2003); COM (2003) 533.

proposed. These were to embrace better understanding of the Chineseaudience, the use of a few targeted messages and closer collaborationwith EU Member States. The paper concluded that, ‘the course ahead islong and challenging and if it is to be successfully navigated, it is essen-tial that there is full and lasting commitment from all players. On the EUside, close co-ordination of Union and Member State policies will berequired and China will have to ensure that all branches and levels of itsadministration are on board’.6

New Horizons: The 2006 EU China StrategyThe 2006 Communication ‘EU – China: Closer Partners, Growing Responsibili-ties’ marked a significant change in EU attitudes towards China. It statedthat China had re-emerged as a major power in the last decade. It hadbecome the world’s fourth largest economy and third exporter, but alsoan increasingly important political power. China's economic growth hadthrown weight behind a significantly more active and sophisticated Chi-nese foreign policy. China’s desire to grow and seek a place in the worldcommensurate with its political and economic power was a central tenetof its policy. Given China’s size and phenomenal growth, these changeswould have a profound impact on global politics and trade.

With what may well amount to a touch of hubris, the paper assertedthat the EU was capable of exerting a progressive influence well beyondits borders and Europe needed to respond effectively to China’s renewedstrength. This meant factoring the China dimension into the full range ofEU policies, external and internal. It also meant close coordination insidethe EU to ensure an overall and coherent approach. The lament aboutthe failure to coordinate policy on China between the Member States wasa familiar critique.

In the words of the Commission’s 2006 China Communication, theEU’s fundamental political approach towards China remains, ‘one ofengagement and partnership’. This means that both sides are collaborat-ing, in order to promote a ‘strong and effective multilateral system.’ In arebuff to those calling for a more protectionist stance, the paper statedthat closing Europe’s doors to Chinese competition was not the answer.Adjusting to the competitive challenge and driving a fair bargain with

THE DEVELOPMENT OF EU-CHINA RELATIONS 55

7 COM (2006) 0632 of 24.10.06.

China would be the central challenge of EU trade policy in the decade tocome. This key issue was set out in more detail in a trade policy paperentitled Competition and Partnership, which accompanied the Communica-tion.7

The Commission’s policy paper subsequently touched on China’sinternal stability which remained the key driver for Chinese policy.China’s high growth had resulted in the steepest recorded drop in pov-erty in world history, and the emergence of a large middle class, bettereducated and with rising purchasing power and choices. But the story ofthis phenomenal growth masked uncertainties and fragility. The Chineseleadership faced a range of important challenges including a growingwealth gap, social, regional and gender imbalances, plus a huge stress onhealthcare and education systems. Furthermore, China was already facingsignificant demographic shifts and the challenges of a rapidly ageingpopulation. The Commission then opined that conditions for stabilitywould improve as the Party and State relaxed control. A more independ-ent judiciary, a stronger civil society, a freer press would ultimately en-courage stability, providing necessary checks and balances.

The document further welcomed the decision at the 9th EU-ChinaSummit to launch negotiations on a new, extended PCA. This new agree-ment would provide a single framework, ‘covering the full range andcomplexity of our relationship. At the same time, it should be ‘forward-looking and reflect the priorities outlined in this Communication.’ Thecommunication also called for the EU to help strengthen the rule of lawand the development of healthy and independent civil society in China.On matters of energy, the EU priorities should be to ensure China’sintegration into world energy markets and multilateral governance mech-anisms and institutions, and to encourage China to become an active andresponsible energy partner. Both sides should build on the climatechange partnership, reinforcing bilateral cooperation, and strengtheninginternational co-operation, meeting shared international responsibilitiesunder the Climate Change Convention and Kyoto Protocol and engagingactively in the dialogues on international climate change co-operationpost-2012.

The 2006 policy-blueprint went on to call for improved exchanges onemployment and social issues such as health and safety at work, decent

56 Fraser Cameron

8 On the Taiwan question, see also the chapter by Paul Lim, in this volume.

work standards, and meeting the challenges of an ageing population.There should be closer co-operation on international development issues,especially on Africa. The EU and China should engage in a structureddialogue on Africa's sustainable development. There should be transpar-ency on the activity and priorities of both sides, and support for regionalefforts to improve governance in Africa.

As regards matters of economics and trade, the Commission’s 2006China strategy noted that China had become a source of growth for theEU and the world, but China's current growth model was also the sourceof important imbalances in EU China trade. Policies which would lead toa reduction of its current account surplus would increase China’s controlof its economy and contain risks of overheating, and at the same timemeet China’s shared responsibility to ensure a stable and balanced worldeconomy. The EU was China’s largest trading partner, representingmore than 19 per cent of China’s external trade. An economically strongChina was in Europe’s interest. But there were doubts about China’simplementation of its WTO commitments, especially on protection ofintellectual property, and new bureaucratic barriers to market access werepreventing a genuinely reciprocal trading relationship. There were alsorestrictions in the service sector and protection of ‘strategic’ industries.

The 2006 policy document subsequently assessed the numerousbilateral agreements and sector-specific dialogues, describing them as‘successful and positive’. But more had to be done, according to thisassessment, in order to focus co-operation and ensure balance and mu-tual benefit in all areas. The paper called for increased co-operation inscience and technology, migration issues, people-to-people links, andmore effective bilateral structures.

In terms of international relations, the policy document called on theEU and China to cooperate more closely in regard to areas such as theMiddle East, Africa and East Asia, and with reference to ‘cross-cutting’challenges such as terrorism and non-proliferation. The communicationnoted China’s central role in tackling proliferation on the Korean penin-sula and stated that, ‘continued Chinese support will be crucial to prog-ress on the Iranian nuclear issue.’ On the Taiwan issue8, the communica-tion affirmed that the EU should better explain its One China Policy to

THE DEVELOPMENT OF EU-CHINA RELATIONS 57

9 EU-China: Closer Partners, Growing Responsibilities (24/10/06); COM (2006) 631. 10 Official Journal of the European Communities (OJ) (01.10.2001); C276/279.11 P5_TA(2003)0599.

both sides. Regarding the rather sensitive issue of the arms embargo thepaper avowed that ‘further work will be necessary by both sides.’9

A review of these Commission communications reveals a majorchange in EU concerns. For most of the 1990s, China was tarred withthe Tiananmen-Square brush. The EU was willing to assist China injoining international bodies such as the WTO but closer cooperationwould depend on Beijing paying more attention to domestic reforms,especially in human rights. In the first decade of the twentieth century,the balance of power began to shift in China’s favour, and EU concernsnow surrounded economic and trade issues, especially protecting EUjobs from alleged unfair Chinese competition.

The Commission does not produce policy papers in a vacuum. Itconsults regularly with Member States about their interests and concerns.The resulting communications are thus a balancing act between what ispolitically feasible, taking into account the views of the Member States,the Commission services, other EU institutions, and China.

Alternative Agendas: Views of the European Parliament and CouncilThe European Parliament (EP) has traditionally taken a much morecritical approach to China than the European Commission or, indeed,most of the Member States. While approving the various CommissionCommunications outlined above, Parliament often added Resolutionscritical of China’s human rights record. One example of this was an EPResolution of February 2001 when Parliament called on China to guar-antee the constitutional right to freedom of religion and belief, togetherwith the exercise of the associated rights of freedom of conscience, free-dom of expression, freedom of association and freedom of assembly.10

Another contentious issue was the arms embargo. In December 2003,Parliament adopted a Resolution opposing any arms sales to China untilthere was a significant improvement in human rights.11

Moreover, in April 2005, the European Parliament adopted a Resolu-tion stating that strategic partnerships with third countries must be basedon the sharing and promotion of ‘common values’. It regretted thatrelations with China had made progress only in the trade and economicfields, without any substantial achievement as regards human rights and

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12 P6_TA(2005)0132.13 P6_TA(2005)0381. 14 P6_TA(2006)0346.

democracy. It supported Taiwan as ‘as a model of democracy for thewhole of China’ and expressed its ‘deepest concern at the large numberof missiles in southern China aimed across the Taiwan Straits.’ It con-demned the so-called ‘Anti-Secession Law’, which, in its view, ‘in anunjustified way aggravates the situation across the Straits.’ It called onBeijing and Taipei to resume political talks on the basis of mutual under-standing and recognition in order to promote stability, democracy, hu-man rights and the rule of law in East Asia’.12

In October 2005, Parliament debated economic issues and adopted afurther Resolution on trade relations between the EU and China. Thiscritical resolution covered WTO accession, unfair trade practices, andsocial and environmental issues.13 In September 2006, Parliament urgedthe Council and the Commission ‘to formulate a consistent and coherentpolicy towards China.’ It deplored that increased trade and economicrelations with China had brought about no substantial progress in thefield of democracy, human rights and the rule of law, which were seen asbasic components of the political dialogue between China and the EU.14

By April 2008, Parliament had adopted a further critical Resolutionfollowing demonstrations in Tibet. In October 2008, it went one stepfurther, by awarding the Sakharov Prize to the human rights activist, HuJia – a move that infuriated the Chinese authorities.

The Council of the European Union has only given occasional atten-tion to China. Most of the Communications cited above were adopted bythe Council without any serious debate, although they were usually sub-ject of extensive consultations with Member States. Overall, the Coun-cil’s conclusions have tended to reflect the balance that has to be struckbetween the 27 Member States. For example, in December 2004, it is-sued the following statement, in relation to the arms embargo:

The European Council confirmed that EU-China relations have developedsignificantly in all aspects in the past years. It is looking forward to furtherprogress in all areas of this relationship as referred to in the EU-China JointStatement, in particular the ratification of the International Covenant oncivil and political rights. In this context the European Council reaffirmed the politicalwill to continue to work towards lifting the arms embargo. It invited the next Presi-dency to finalise the well-advanced work in order to allow for a decision. Itunderlined that the result of any decision should not be an increase of arms exports from

THE DEVELOPMENT OF EU-CHINA RELATIONS 59

15 Brussels Council Conclusions, No. 16238/1/04 REV1, 16-17 December 2004. 16 European Council, Brussels European Council Conclusions, No. 10255/1/05/ REV1,

16-17 June 2005.17 Council: Press Release of 20.12.07.

EU Member States to China, neither in quantitative nor qualitative terms [emphasisadded].15

Within months of these Council conclusions, the politics within the EUchanged, partly under pressure from the US, Japan and Taiwan. Thus, byJune 2005, there was no more mention of lifting the arms embargo in therelevant European Council conclusions:

The European Council welcomes the 30th anniversary of the establishmentof diplomatic relations between the EU and China. It reiterates its determi-nation to develop the strategic partnership with China by intensifying thedialogue in all areas, whether of an economic or political nature, and byworking towards a rapid solution to its trade dispute. It asks the Counciland the Commission to speed up the proceedings on a new frameworkagreement.16

Another pertinent document to be considered in this study was con-tained in the ‘East Asia Policy Guidelines’, agreed by the Council inDecember 2007.17 The Guidelines emphasised the importance of inte-grating China into the global system, with the aim of tackling issuesranging from climate change and nuclear proliferation, to trade andregional security, especially in the case of Africa.

An Overview of Chinese ViewsThe Chinese authorities have been much less prolific about producingpolicy papers on the EU. The only Chinese paper so far, specificallyfocusing on the EU, appeared in 2003. It was compiled by the ChineseMinistry of Foreign Affairs (MFA) and reflected a glowing picture of theEU, which was seen as ‘a major force in the world’. In the paper’s view,and in spite of their twists and turns, China-EU relations were seen to be‘better than any time in history.’ The paper saw no fundamental conflictof interest between China and the EU and neither side posed a threat tothe other. However, given their differences in historical background,cultural heritage, political system and economic development level, it wasseen as natural that the two sides would have different views or evendisagreed over some issues. Nevertheless, according to this paper, the

60 Fraser Cameron

common ground between China and the EU outweighed any disagree-ments by far.

The Chinese EU policy paper did not omit the sensitive issues in therelationship. It encouraged EU officials and others to visit Tibet and‘welcomed the support of the EU and its members to Tibet's economic,cultural, educational and social development and their cooperation withthe autonomous region subject to full respect of China's laws and regula-tions.’ The Chinese side requested the EU side not to have any contactwith the ‘Tibetan government in exile’ or provide facilities to the separat-ist activities of the ‘Dalai clique’.

On human rights, the strategy noted that there was both consensusand disagreements between China and the EU. The Chinese side appreci-ated the non-confrontational approach but reminded the EU that therewere social, economic and cultural rights to be protected. The paperemphasized that the proper handling of the Taiwan question was essen-tial for a steady growth of China-EU relations. China appreciated the EUcommitment to the one-China principle and hoped that the EU wouldcontinue to respect China's major concerns over the Taiwan question,guard against Taiwan authorities' attempt to create ‘two Chinas’ or ‘oneChina, one Taiwan’ and prudently handle Taiwan-related issues. EUexchanges with Taiwan must be strictly unofficial and non-governmental.

In terms of economics, the Chinese document demanded that the EUshould grant China full market economy status at an early date, reduceand abolish anti-dumping and other discriminatory policies and practicesagainst China. The EU should also lift its ban on arms sales to China atan early date so as to remove barriers to greater bilateral cooperation ondefence industry and technologies.

China’s 2003 EU policy paper represented the apex, so far, of thePRC’s assessment of the EU. Over subsequent years, China becamemore frustrated with the EU over a range of issues, including the failureto lift the arms embargo, to receive market economy status, a plethora ofanti-dumping cases, the perceived European support for the ‘DalaiClique’, and European threats to boycott the 2008 Olympics. Chineseresentment over some of these matters led to the cancellation of the EU-China summit in December 2008. It remains to be seen to what extentthese negative reactions on the Chinese side were tactical and temporary,rather than genuine and permanent. At the same time, the EU’s failure to

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18 The paper is available on the website of the Chinese MFA and of DG RELEX.

resolve its institutional crisis (Lisbon Treaty) reduced its standing inChinese eyes.18

Conclusion and AssessmentIn any assessment of the official approach to EU-China relations, one isstruck by the disparity in policy papers produced by both sides. TheCommission has produced at least six (major) strategy-blueprints, com-pared to one from the Chinese. This may be due to bureaucratic influ-ences and interests, but it also reflects the EU’s growing fascination withChina and its attempts to fathom the right policy-mix. President Barrosotook no less than nine Commissioners to visit China in June 2008. Theastonishing growth rates in China during the past decade, and the suc-cessful Beijing Olympics, have also given the Chinese authorities a newself-confidence in dealing with the EU (Crossick and Reuter 2007;Shambaugh 2008). This is reflected in the current PCA and related tradenegotiations which are proving very difficult to achieve progress. Someexperts regard the PCA as more of a laundry list of dialogues and agree-ments rather than a genuine strategic partnership (Wacker 2006). Hopesof a free trade area have receded into the distance.

However, in spite of a plethora of China-EU meetings, fora anddialogues, misperceptions of one another’s motives seem to be rising,rather than diminishing. China, in particular, resents the continuation ofthe arms embargo which places it in a category alongside Zimbabwe andMyanmar (Zhou and Wu 2004). PRC leaders were shocked by someEuropean reactions to the troubles in Tibet in spring 2008, and by thedemands to boycott the 2008 Olympics. China also complains about theEU’s refusal to grant it market economy status and its obsession withanti-dumping. There was little understanding in the PRC, of formerTrade Commissioner Peter Mandelson’s description of China as ‘an outof control juggernaut’ and ‘the biggest challenge for EU trade policy’. Onthe one hand, China appears critical of the ‘politicisation of trade issues’in the EU, while, on the other hand, practising it too, by ‘rewarding’France and ‘punishing’ Germany. It considers that EU fears about Chi-nese competition are unfounded, pointing to the huge profits of Euro-pean firms operating in China.

62 Fraser Cameron

The EU, by comparison, has spoken of China as a major partner in aglobalised world; however, it appears to also be suspicious of China’smotives in Africa and other parts of the world (Gill 2007; Holslag 2007;Stumbaum 2007). The Union is, furthermore, critical of the Chineseauthorities’ failure to implement, rather than just pass, legislation con-cerning issues such as intellectual property rights. The Union, last, butnot least, maintains that China operates many barriers to investment inthe services sector.

It thus seems clear that there are still major gaps in mutual under-standing. The only way to bridge these gaps is by means of a muchgreater expansion of contacts at all levels. Some useful steps have alreadybeen taken, including the launch of the new High-Level Economic andTrade Dialogue, and the visible EU support for various BusinessSchools and EU Institutes in China.

Should it prove to be possible to finally agree on the new Partnershipand Cooperation Agreement (PCA), at the State Council level on China’sside, the quality of the political and cooperation dialogue across theboard can be expected to be greatly enhanced. The limited contactsbetween EU and Chinese think tanks are in dire need of a substantial,and meaningful, expansion. There also need to be more exchanges, and agreater commitment on each side, to studying the politics, economicsand culture of the other.

EU China relations will continue to develop and there will be anever-expanding agenda. But without a greater degree of mutual under-standing the relationship will not be able to flourish and benefit bothparties as it could.

It must also be recognised that there are some fundamental asymme-tries in the relationship, in terms of political systems, economic develop-ment, history and culture (Grant 2008; Zabarowski 2006). China is a farcry from the post-modern, sovereignty-sharing EU. Unlike the US,which views the rise of China in geopolitical terms, the EU has regardedChina’s growth as an opportunity and a challenge. In recent years theemphasis has been on the aspect of challenge; some commentators areeven talking of threats. In the early Commission communications con-sulted for this chapter, there was much emphasis on the promotion ofdemocracy and human rights with the EU seen as being able to play asignificant role in the internal reform process in China.

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But by the time of the 2006 Communication, the emphasis hadswitched away from democracy and human rights to meeting the chal-lenges posed by China, especially in the economic field. Although therehave been differences at the highest political level, there has been anexpansion in sector-specific dialogues (see annex below). Many of thesehave achieved progress without having to take into account the overallpolitical relationship, especially as regards sensitive questions of democ-racy, political reform and human rights.

Seen from Brussels, EU-China relations have made significant prog-ress over the past decade. China and the EU have moved closer on anumber of global issues, from climate change to the need to strengthenthe multilateral institutions of global governance.

The key question for the future is how the EU can best tailor itsstrategy towards China to achieve its political, security and economicinterests. If the past decade is typical, then the European Commissionwill not find it easy to navigate through the competing, and sometimescontradictory, approaches of the Member States, even though the adop-tion of the Lisbon Treaty may help.

At the same time, it can confidently be predicted that Chinese repre-sentatives will continue to seek to exploit these differences to their ad-vantage. China appears as a tough and stubborn negotiating partner, andthe EU has few bargaining chips although they are not altogether negligi-ble. For example, faced with the prospect of global recession, China isanxious to ensure continued access to the EU Single Market for its ex-ports. As in other policy areas, the EU will best be able to defend andpromote its interests when it speaks with one voice.

ReferencesCrossick, Stanley and Reuter, Etienne. 2007. China-EU: A Common Future.

Singapore: World Scientific Press.Gill, Bates 2007. Rising Star: China’s New Security Diplomacy. Washington DC:

Brookings Institution Press.Grant, Charles. 2008. Can Europe and China Shape a New World Order? London:

Centre for European Reform.Holslag, Jonathan. 2007. ‘China and Europe: the Myth of Post-Modern World’ in

Brussels: BICCS Background Paper, Volume 2/2007

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Shambaugh, David et al (eds). 2008. China-Europe Relations: Perceptions, Policies andProspects. London: Routledge.

Stumbaum, May-Britt. 2007. ‘Opportunities and Limits of EU-China SecurityCooperation’ in International Spectator, No. 42

Wacker, Gudrun (ed.). 2006. China’s Rise: The Return of Geopolitics. SWP WorkingPaper, S3.

Zabarowski Martin (ed.).2006. Facing China’s Rise: Guidelines for an EU Strategy.(Chaillot Paper, no 94), Paris: EU Institute for Security Studies.

Zhou Hong and Wu Baiyi (eds). 2004. China-EU Partnership: Possibilities andLimits. Beijing: China Social Science Press.

Annex: Sector-Specific (‘Sectoral’) Dialogues in EU-China RelationsThe EU and China are involved in many sector-specific dialogues:Agricultural dialogueCivil aviationCompetition policyConsumer product safetyCustoms cooperationEducation and cultureEmployment and social affairsEnergyEnvironmentFood safety- Sanitary andphyto-sanitary issuesGlobal satellite navigation services

Information societyIntellectual property rights (IPR)Macro-economic policy and the reg-ulation of financial marketsMaritime transportRegional policyRegulatory and industrial policyScience and technologySpace cooperationTrade policy dialogueTextile trade dialogueTransport (in general)

These take place at various hierarchical levels, from working level to ministeriallevel. A variety of participants may be involved, including officials, politicians,business organisations, and private companies. Proceedings are organised in aflexible way and take the form of working groups, conferences, annual formalmeetings or simply informal exchanges. Most of the dialogues have been estab-lished over the past two to three years, and they reflect the massive growth inactivity which defines the relationship. Sectoral dialogues & agreements areexpected to play an increasingly important role in building a privileged EU-China relationship with important benefits for both sides.

Further Details: http://ec.europa.eu/external_relations/china/sectoraldialogue_en.htmEuropean Commission: Rapid Database: IP 09/212

1 In this chapter, the terms ‘EC’ and ‘EEC’ refer to the ‘European Communities’and the ‘European Economic Communities/Community’ and the ‘First Pillar of theEU’, where the focus is on economic, social, and environmental aspects of Sino-European relations. Where the analysis extends to the CFSP or Police and JudicialCooperation, the chapter employs the terms the ‘EU Member States’ or ‘EU’.

EUROPEAN STUDIES 27 (2009): 65-82

THE EU AND CHINAIN THE CONTEXT OF INTER-REGIONALISM

Natee Vichitsoratsatra

AbstractThis chapter focuses on the analysis of cooperation between theEC/EU1 and China using an eclectic approach which proposes thatthe fluctuation between bilateral and multilateral interregional cooper-ation process is influenced by actors’ strategic choices in pursuing amaterial, institutional or ideational focus in their interaction. Thechapter conducts a broad analysis of the material, institutional andideational elements of the EC-China inter-regional partnership. Itcontends that, in its relationship with China, the EU appeared toconsistently opt for a bilateral strategy, with a priority on materialinterests. Using the Asia-Europe Meeting (ASEM) as the main multi-lateral forum for engagement between Europe and Asia, there is littleevidence to suggest that the EU pursued a multilateral strategy withChina. The first part analyses the EC’s motivations for inter-regional-ism. The second part observes the material, institutional andideational influences in the EC-China bilateral and multilateral part-nerships. The final part argues that active bilateralism has taken pre-cedence in the EC’s dealings with China, while passive multi-lateralism remains an option for future engagement between the two.

66 Natee Vichitsoratsatra

2 Second generation regionalism has been labelled ‘new regionalism’ due to itsmulti-faceted nature and the fact that it refers to a much wider number of policies(Langenhove and Costea 2005: 4)

Introduction: The EU in Regionalism and Inter-regionalismToday, regionalism is said to be in its ‘third generation’ in which theinstitutional environment to handle external regional policies is moreapparent and powerful. Regions are also becoming more proactive andcan involve themselves in inter-regional arrangements and agreementsthat can have an impact on partnerships at the global level. (Soderbaumet al. 2005: 257) note that third generation regionalism is clearly differentfrom second generation regionalism (an example being the EU) in thatthird generation regionalism is focused more externally and towardsshaping governments while second generation regionalism2 mainlyconcentrated on maximising economic and political processes. The in-creasing presence of regional actors also created a demand for intermedi-aries which link global and regional systems (at the top end of the inter-national system) as well as regional and national policy-making levels (atthe bottom end of the international system). It is suggested that the needfor intermediaries at the upper end of the international system resulted intwo forms of inter-regionalism, bilateral inter-regionalism and trans-regionalism (Rüland 2001: 5).

There have been calls for inter-regionalism to be analysed in its ownright and not just within the framework in which regionalism is studied.This would, Soderbaum et al. (2005: 378) argue, allow for research onhow regionalism and inter-regionalism relate and impact on one another.They further explain how inter-regionalism has an effect on both bilater-alism and multilateralism, with inter-regionalism becoming an alternativeto classical, Westphalian, multilateralism. In the meantime, bilateralismand inter-regionalism can either compete or exist side by side while actu-ally mutually reinforcing each other (Soderbaum et al. 2005: 379).

The EC has, indeed, been prolific as a global actor, and this has ex-tended to its involvement in proliferating regionalism and inter-regional-ism. One of the clearest reflections of relevant EC activity has been itspursuit of regional and inter-regional partnerships, which include at-tempts to speak with a single voice in multilateral fora, such as theWTO, through its European Neighbourhood Policy (ENP) and in its tieswith the developing world, as well as through unified strategies in creat-ing global regimes (Langenhove and Costea 2005: 12). In similar fashion,

THE EU AND CHINA IN THE CONTEXT OF INTER-REGIONALISM 67

3 http://ec.europa.eu/trade/issues/bilateral/index_en.htm

the EU is able to reach agreements with other states (bilateralism), actwithin the UN and WTO framework (multilateralism) and also engage in‘constructing’ inter-regionalism (Soderbaum et al. 2005: 379). The EChas completed negotiations for Preferential Trade Agreements (PTA)with South Africa, Mexico, Chile, Croatia, Former Yugoslav Republic ofMacedonia (FYROM) and a selection of Mediterranean partners. The ECis also currently in negotiations with MERCOSUR, Syria, India, theRepublic of Korea (South Korea, ROK) and the Gulf CooperationCouncil (GCC) member countries (Lamy 2002; Doctor 2007).3

Arguments have been made that inter-regional efforts are influencedby a complex set of factors, although economic factors continue to playone of the most important roles and are reflected in the contents ofpreferential agreements (Tharakan 2002: 1396). Current literature onregionalism shows that a variety of theoretical approaches ranging fromrealism to liberal institutionalism and social constructivism are useful inexplaining EU inter-regionalism (Soderbaum et al. 2005: 368). The expla-nations for the EU’s inter-regional efforts include the its desire to pro-mote liberal internationalism, to build ‘EU identity’ as a global actor andto promote EU power and competitiveness (Soderbaum et al. 2005: 368-377).

Alecu de Fleurs and Regelsberger (2005) note that the EU’s inter-regional policy relations can be explained by a combination of its ‘Euro-centric approach’, as well as its desire to ‘counterbalance’ US influence inLatin America (2005), a strategy which combines institutional as well asneorealist roots. Making similar use of a number of traditions in interna-tional relations and comparative literature, Aggarwal and Fogarty (2003:6-16) put forward four hypotheses concerning the origins of EU inter-regional trade strategies. They argue that EU trade strategies are vari-ously determined by the influence of specific interest groups withinEurope, by bureaucratic attempts to maximise influence in the Europeanpolicy-making arena, by international systemic constraints and opportuni-ties and by the need to forge a common European identity.

These varied explanations are by no means the only description of theEC’s motivations for inter-regionalism. In an assessment of the EU’sinter-regional policy towards Africa, Farrell (2005: 263) argues that theunderlying EU motivation is in furthering goals of economic liberaliza-

68 Natee Vichitsoratsatra

tion rather than democratization, and proclaims the possibility of ‘atriumph of realism over idealism’. With Mercosur, for example, the EUhas been found to provide support for institution-building and region-building in its attempt to increase EU legitimacy and its role as a globalactor through political dialogue, cooperation, and trade (Santander 2005).

The idea that the EU is actively pursuing inter-regionalism has alsobeen proposed by other scholars who explain that EU foreign policystrategy in promoting inter-regionalism could act as an alternative modelof world order to the unipolar pax americana (Hettne 2001). Institution-building and region-building to enhance the EU’s influence as a globalactor have both been evident in the creation of ASEM (Forster 2000:796). Gilson (2005: 326) adopts a social constructivist stance and seesASEM as embedded with ‘Western’ norms, contending that the EU hasutilized inter-regionalism as a means to manage economic and politicalrelations with a region that it is increasingly distant from and unfamiliarwith.

These popular explanations of the EC’s inter-regionalism effortsreflect a mix of motivations implicit in mainstream international politicaleconomy (IPE) theories. The material desire to maximise the EC’s eco-nomic power and influence, for example, could be explained by neo-realism and neo-mercantilism, while the desire to promote liberal interna-tionalism reflects the ideas of neo-liberal institutionalism. Social con-structivism would explain the EC’s desire to create a common Europeanidentity, particularly through the promotion of European ideas, normsand codes of conduct. The issues of material interest, institutions andideas are used to explain the EC’s interaction with China in the followingsections.

The EC-China Bilateral Partnership: Materialism in FocusOne of the main features which distinguished the EC-China partnershipfrom, for instance, the EC-Japan and the EC-ROK partnerships, was theway in which the EC and China were able to establish an early dialoguewithout direct involvement by the Americans. The 1954 Geneva Confer-ence may have proven to be one of the major landmarks which had apositive impact on the relationship between China and Europe. During aperiod when China urgently needed a number of goods which the SovietUnion was unable to provide, the West Europeans, on the whole, were

THE EU AND CHINA IN THE CONTEXT OF INTER-REGIONALISM 69

seen to hold a friendlier attitude towards the Chinese than the Ameri-cans.

This positive attitude the Europeans appeared to offer might havebeen critical in improving subsequent commercial and political relation-ships. The French and the British sincerely believed that China couldhave a role in maintaining peace and stability in Indochina. Following theGeneva conference, trade quickly increased between China and the WestEuropean countries with (West) Germany, Britain and France being thelargest traders with China (Shambaugh 1996: 5). At this stage, the USAhad already terminated all commercial ties with China after Mao’s acces-sion to power. The USA also tried to influence its Western allies to re-strict the export of strategically sensitive products to communist coun-tries through the Paris Co-ordinating Committee (COCOM) (Dent 1999:129).

The 1960s Sino-Soviet split provided the next crucial period in theEuropean’s early relationship with the People’s Republic of China (PRC).When China and the Soviet Union parted ways, China found itself in-creasingly dependent on West European commerce. In 1964, FrenchPresident Charles de Gaulle gave diplomatic recognition to the PRC.Kapur describes a ‘three-pronged policy’ whereby in the early 1960s theChinese under the leadership of Liu Shaoqi and Deng Xiaoping usedpublic relations, economic initiatives and diplomacy to improve the coun-try’s relationship with the West Europeans, particularly the members ofthe then EEC (1986: 8-15).

The years between 1971 and 1985 proved a critical time, both forChinese domestic reform and in terms of China’s interaction with theinternational community. To begin with, this was a period when Chinafinally became fully accepted by the international community and theWestern blockade against China ended. This was also a period whenDeng Xiaoping’s market reforms started to take place, thus enablingChina to enter the international trading arena with renewed vigour. Fi-nally, this was the period when the international trading communityrealized the possible impact the Chinese trading capacity could have ontheir own economies, and this was marked by increased signs of protec-tionism against Chinese products.

By the time the ‘Cultural Revolution’ ended in 1969, the opportunityarose for moderates in the Chinese Communist Party (CCP) to have alarger role in the domestic policy making process. It is assumed that Mao

70 Natee Vichitsoratsatra

Zedong’s assent to separate foreign affairs from internal issues mighthave been the key to China’s friendlier attitude towards the world com-munity (Kapur 1986: 23), and this opened up the opportunity for theWest to engage China in a friendlier manner. The PRC government wasofficially admitted to the United Nations in October 1971 and this wasfollowed by the normalization of Sino-US relations, highlighted by Presi-dent Nixon’s visit to China in February 1972. The resumption of normalties between the Americans and the Chinese meant that China’s foreignrelations with other countries would also be altered accordingly.

China welcomed EC enlargement in 1973 because it allowed a chal-lenge to the bipolar status quo, even though Beijing recognized that thegrouping would wield more economic power than political power in theglobal arena (Dent 1999: 132). It appears that due to the EEC’s leverag-ing of the bipolar status quo, the group’s autonomy from the US, thepossibility of military autonomy, and the general lack of any controver-sial conflicts with China, the EEC had become one of the most attractivepartners for China as it looked outwards (Kapur 1986: 24-25). This putthe EEC in perfect position to extend recognition to China in 1975,while China also became the first communist country to recognize theEEC (Shambaugh 1996: 12). Kapur (1986: 26-30) describes a transitionfrom ‘communicatory diplomacy’ between China and the EC to ‘explor-atory diplomacy’ and ‘operational diplomacy’. These were a series ofdevelopments which started from favourable communications betweenthe two partners, which later developed into high-level meetings, andfurther down the track led to full-fledged cooperation starting with theEuropean Commission Vice-President Sir Christopher Soames’ visit toBeijing in 1973 (Kapur 1986: 26-30).

The fruits of this quick transition in the relationship between Chinaand the EC were soon visible. As bilateral trade agreements betweenindividual member states and China were due to end in 1974, the Euro-pean Commission was given the responsibility of conducting future tradenegotiations with China in accordance with the EC’s Common Commer-cial Policy (CCP). This assignment of competence to the EC yielded aquick progression in the formalized relationship and resulted in the EC’sfirst bilateral trade agreement with an Asian country. The 1978 EC-China Trade Agreement subsequently became the first agreement thatthe EC had agreed with a non-market economy (NME) and the mostinstitutionalized component of the EC’s interaction with China (Wong

THE EU AND CHINA IN THE CONTEXT OF INTER-REGIONALISM 71

2005: 5). It is noteworthy that constant political problems between Chinaand individual EC states convinced the EC states to give their support tothe Trade Commissioner in order to improve their economic leverage asa powerful trading force in the Chinese market (Wong 2005: 6).

The 1978 framework was later extended to the hotly-debated 1979Textile Agreement. After the talks between the Americans and the Chi-nese on textiles had broken down, the Chinese, who were very eager toreach some sort of agreement, backed down and accepted a quota for40,000 tons of textile. This was down from the 60,000 tons the Chinesehad insisted on from the EC in the beginning stages of negotiation(Kapur 1986: 62-63). The fact that the EC and China managed to reachan agreement where the Americans had failed is an indication of a highdegree of willingness to cooperate between the Chinese and the Europe-ans.

By the 1980s, the EC was beginning to feel the pressure from China’srising economic power and a number of protectionist measures werebeing put into place. According to Dent (1999: 134), China attracted anaverage of two Anti-Dumping duties per year from the EC, consideredto be a rather high number in relation to its other trading partners. Safe-guard measures were also being used against low-cost Chinese exportsconsidered to have ‘injurious competition’ effects against industries inthe EC. China’s export to the EC had increased from Ecu 628 million in1975 to Ecu 1786 million in 1980, and Ecu 3936 million in 1975 (Dent1999: 134).

The 1978 Trade Agreement showed early signs of protectionismagainst Chinese imports by the EC (CEC 1978). It included a safeguard-ing clause, allowing the EC to take unilateral action against sudden in-fluxes of Chinese imports, a restrictive Most-Favoured-Nation (MFN)treatment clause, whereby the Chinese were not given the same treatmentas the GATT countries, and a clause which protected against Chinesesales at low prices (CEC 1978; Kapur 1986: 47-48). The content of the1985 revision to this agreement remained essentially the same (CEC1985), which is not surprising considering the extent of China’s eco-nomic growth during the period spanning the two agreements.

While these were critical times for the relationship between the ECand China, it was clear that the institutionalization of the relationship aswell as established dialogue between the partners were already at a ma-ture level. At this stage, regular contacts were in place to resolve any

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trade issues in the China-EC Joint Committee, in accordance with the1985 framework agreement. When the EC issued its 1995 Communica-tion (see the chapter by Cameron in this volume for details), China wasalready making positive moves to liberalize its economy. According toKokko (2002: 25), China had made several unilateral import tariff cutssince the early 1990s, and other reforms were resulting in an increaseddegree of current account convertibility of the renminbi.

The EC’s vociferous support for China’s early entry in the WTO mayhave been another milestone in the EC-China relationship. The ECsupported China’s entry as a developing nation, and these offered farmore preferential entry terms than the Americans were willing to con-cede. This was reaffirmed in the Commission’s 1995 Communicationwhich acknowledged that China was ‘yet to become a developed econ-omy’ (CEC 1995). In March 1994, the European Commission and Chinainitiated bilateral discussions under the GATT Working Party on Chinato encourage reduction of non-tariff barriers (NTB) and changes to whatwas considered to be a monopolistic foreign trade regime in China(Shambaugh 1996: 23). The EC clearly saw itself as having a major partin facilitating China’s entry to the WTO, indicating that the ‘EC consis-tently sought to accelerate progress towards a decision on Chinese mem-bership’ since China’s application to return to the GATT in July 1986,and that the EC had a ‘leading role in the negotiations’ (CEC 1995). Thishas also been reflected in bilateral trade discussions since 1992 which,according to the Commission, have promoted China’s economic andtrade reforms, helped China’s entry into the multilateral trading systemand achieved better market access for European goods and services(1995).

In 1996, the EC made the critical proposal that China be given transi-tion periods to implement certain WTO obligations after its accession.This was eventually accepted by the WTO members. In 1997, Chinaagreed to phase out its trading monopolies and give full trading rights toall Chinese and foreign individuals within three years of accession. Chinaalso agreed to fully implement the WTO TRIPs agreement upon acces-sion. This was followed by China’s announcement that it would carry outan overall restructuring of the state enterprise sector, as well as imple-ment some measures of privatization.

Given the clear intentions of the European Commission, it was to beexpected that some sort of breakthrough would be achieved soon. In

THE EU AND CHINA IN THE CONTEXT OF INTER-REGIONALISM 73

October 1997, the European Commission referred to a ‘conceptual break-through’ in its bilateral accession negotiations with China, and a provi-sional deadline of December 1998 was set for China’s WTO accession(Dent 1999: 147). During this critical period, the first two EC-ChinaSummits were held in 1998 and 1999, bringing along an expansion of thepolitical as well as the economic dialogue. The actual signing took placein May 2000, allowing China to accede to the WTO. It should be noted,however, that the US had already concluded its own bilateral agreementwith China in 1999.

While the maturing of relations and dialogue between China and theEC continued between 1995 and 2000, the EC trade deficit continued togrow. EC imports increased from Ecu 26.4 billion in 1995 to Ecu 69.6billion in 2000, while EC exports to China only added up to Ecu 14.6billion in 1995 and Ecu 25.4 billion in 2000. This meant that the ECMember States’ trade deficit with China had quadrupled from Ecu 11.6billion in 1995 to a staggering Ecu 44.6 billion in just five years (Allen2002).

In 2003, China had become the EC’s second largest trading partnerafter the US, but by this stage the EC had already amassed its biggestbilateral trade deficit of Ecu 64 billion against the Chinese. This was,according to the Commission, continuing to widen (CEC 2005).

The Commission’s 2003 Communication praised China for makingconsiderable efforts to keep up its WTO accession commitments, but italso highlighted substantial concerns including the lack of transparencyof economic governance, restrictive regimes in certain sectors and intro-duction of new NTBs. The EC clearly stated that a year and a half afterChina’s WTO accession, it continues to encounter problems with marketaccess, services, the enforcement of intellectual property rights and com-pliance with international standards (CEC 2003: 15-16).

If a single feature were to mark the difference between the EC-Chinapartnership against others such as the EC-Japan and EC- Republic ofKorea partnerships, it would be the manner in which the EC-Chinapartnership has witnessed continuous cooperation right from the begin-ning of the EC’s history. Issues of exogenous against endogenous effectsand patterns of interaction and communication continue to play ex-tremely important roles in the EC-China cooperation process, but in thisparticular case, progress appears to have resulted from familiarity and

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continuous dialogue rather than from conflict as was the case with theEC’s partnerships with Japan and the ROK.

The first principal feature of the EC-China partnership is based onexogenous effects, and focused mainly on the lack of US involvement inthe partnership. The US’s refusal to engage with China after World WarII provided the Europeans with a unique opportunity to engage with theChinese. This was not the case with Japan and the ROK where the UShad considerable sway over its East Asian allies. West Europeans werequick to engage with the Chinese during this period of US hostilityagainst the Chinese, which provided them with the opportunity to engagein a healthy trade relationship with China. Eventually, it appears that theEC-China trade partnership has become based on this long and steadycooperative relationship which began in the 1950s. When the US finallyre-established direct trade with China, it had an important impact inreducing the EC’s trade share with China, but the cooperation remainedand the examples in this chapter have shown how EC-China differenceswere resolved quickly, perhaps due to the familiarity and long-standingengagement between the two sides.

The second key feature of the interaction is the manner in whichendogenous effects appear to have been handled in a far more cautiousmanner by the Europeans. Endogenous effects, particularly China’sopening of its economy since 1978, has resulted in a widening trade gapbetween the EC and China. The EC’s trade deficit with China has con-tinued to grow. On the European side, the Commission’s collectiveaction in dealing with the Chinese on trade matters has proven to beeffective, with most of the European countries preferring to hand overcompetency to the Commission. This positive trend has broadly contin-ued, apart from perhaps a minor incident involving textiles exports to theEC in 2005 (commonly referred to as the ‘bra wars’) which was laterresolved amicably.

The third main feature of the EC-China relationship relates directly tothe first and second features and demonstrates how a long history ofinteraction and communication has resulted in an optimistic and cooper-ative attitude between the partners. Numerous Communications by theCommission also mark an exceptionally cooperative and patient under-tone.

THE EU AND CHINA IN THE CONTEXT OF INTER-REGIONALISM 75

Multilateral Inter-regionalism: Trends and TrajectoriesA close look at the inter-regional ASEM process and the global eco-nomic environment surrounding it reveals three distinct stages in multi-lateral cooperation between China and the EU. They provide some im-portant insights into the nature of cooperation and answer some interest-ing questions posed by inter-regionalism. The trends and trajectorieswitnessed in the ASEM process also provide some useful insights intothe reasons partners may choose to shift between bilateral and multilat-eral strategies.

The first stage covers the period leading up to the 1990s, when bothsides appeared uninterested in developing a multilateral relationship inany sense and all interactions were predominantly bilateral. This is, onceagain, clear evidence of the priority of states as the main actors in theEC-East Asian partnerships. Key European member states were at bestindifferent towards East Asia, including Japan, the Republic of Koreaand China. At worst, they were distrustful of what were then perceivedto be Japan’s neo-mercantilist policies. The East Asian states, some vic-tims of trade barriers, began to perceive the EC as a fortress. This cre-ated a feeling of mutual distrust which may have resulted in a low levelof cooperation between the Europeans and the East Asians.

Before long, the mutual distrust began to take its toll, particularly onEurope. The lack of a formal, multilateral, dialogue with the East Asiannations meant there was no collective mechanism for dealing with EastAsia as a whole. During this period, the East Asian economies grewspeedily and the European trade deficit against the East Asian economiesmirrored this growth. There also appeared to be a cooling of enthusiasmin the bilateral cooperation process between the EC and East Asianstates. This was made more obvious by the enhanced American presencewithin the region in the form of Asia Pacific Economic Cooperation(APEC), which the EC was not part of. Asia similarly lacked the accessto EC markets that other groupings, such as the ACP, were enjoying. Bythis time, a formal multilateral relationship between the EC and EastAsia appeared to be long overdue.

The second stage began with the EU 1994 New Asia Strategy, whichwas the beginning of signs that the EC was interested in engaging Asiaas a whole, and possibly through multilateral channels (CEC 1994). TheAsian economies were booming and the official declaration issued at theend of the inaugural Asia-Europe Meeting in Bangkok in 1996 held the

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promise of further cooperation between the two regions. Had the dy-namics of the international political economy not changed the followingyear, it is perhaps possible that cooperation between the European andAsian members of ASEM would have continued fruitfully according tothe guidelines set by the Bangkok Declaration. The period leading up tothe Bangkok Declaration can undeniably be described as the most prom-ising period in the evolution of EU-Asia cooperation.

This stage provides some important insights into inter-regionalismbut it also raises some additional questions. It appears that the EC’sstrategy was to begin institutionalizing the process and to sidetrack therole of states as much as possible through the process. The strategy of‘mirroring’ of the EC’s own institutions and the use of institutions tocreate stability was used actively to draw in the East Asians (Smith andVichitsorasatra 2008).

The onset of the Asian Financial Crisis from July 1997 saw a shift inthe cooperation scenario and the beginning of the third phase of collabo-ration. The balance of trade between the EC and Asia, already in Asia’sfavour, tripled as Asian currencies devalued. Since the establishment ofASEM, trade between the EC and Asia had already increased substan-tially, although the EC did not view this as particularly helpful due to theincreased trade deficit.

The third phase of the evolution of cooperation in the ASEM processhighlights several important facts about the entire relationship. It showsthat ASEM clearly has the potential to succeed as an alternative methodto bilateralism and global multilateralism in conducting a multilateralrelationship between the two regions. Despite the informality of theprocess and its non-binding nature, there is clear evidence that tradebetween the two regions has significantly increased since the establish-ment of ASEM.

Moreover, the third stage of cooperation in the ASEM process indi-cates that if both sides of the ASEM equation do not feel that they areequally benefiting from the cooperation process, either the EC or indi-vidual East Asian member states could refuse to extend their full cooper-ation. This clearly amounts to the accentuation of hierarchy, or at least anattempt to accentuate hierarchy, whereby the EC tries to take control ofthe process particularly when smaller states are involved. Once again, theinformality of the ASEM process acts as a double-edged sword andoffers the defecting side an easy excuse to leave the cooperation process.

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Instead of attempting to renegotiate the terms of engagement, as aninstitutionalized process would encourage, the Europeans appear to bephasing out cooperation in ASEM in favour of bilateral talks. The inabil-ity to advance conditionality in the ASEM process may appear to theEuropeans as another deadlock in the relationship. The 2003 ‘New Part-nership with Southeast Asia’ communication from the Commissionappears to be an alternative means of dealing with the ASEAN membersof ASEM (CEC 2003). It also offers a way out for the EC, which wouldbe more reluctant in placing conditionality on its relationship with Chinathan it would with ASEAN member states.

Thirdly, suggestions that ASEM could play an important role as acatalyst for action in other international forums and be a valuable instru-ment for formalizing structures of regional economic integration in Asia(Krenzler 2002: 10) might be rather unfounded. The 2003 Cancun tradetalks indicate that ASEM members are extremely fragmented in theirstand on trade liberalisation, and that the ASEM process has done littleto improve communication or cooperation between Europe and Asia inmatters concerning multilateral trade in the WTO (Gilson 2004; Kwa2002; Maull and Okfen 2003: 245). The implication for multilateral inter-regionalism is that ASEM may not be an adequate supporting process ofinternational trade liberalization efforts, particularly if the partners havenot yet reconciled and agreed on their common interests.

Conclusion: Active Bilateralism and Passive MultilateralismEC/EU-China relations have certainly evolved over the past five de-cades. The form they have taken is a reflection of the various balances inconscious and subconscious policy choices made between shifting modesof cooperation and material or ideational interests. The establishment ofaccepted principles of conduct has also been derived from the history ofinteraction between the EC and the East Asian nations, often resulting ina mixture of material interest and ideas being used in the cooperationprocess. The result of the evolution of EC-East Asian cooperation hasbeen the current process of active bilateralism juxtaposed with passivemultilateralism.

Right from the start, EU-China relations were thus rooted in strong,common and material interests. A high degree of institutionalization, inboth the bilateral and multilateral relationships, can explain how thedesire for unrestrained material achievement was controlled. Neo-realism

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and neo-liberal institutionalism can explicate the EC-China relationshipto a certain extent but they fail to explain how and why the ASEM multi-lateral forum has still managed to survive. Rational choice theory alsofails to conclusively explain how the EC-Japan relationship, seriouslytroubled at its initiation, managed to mature and its cooperation sus-tained despite serious periods of high tension conflict and trade imbal-ances. Similarly, the EC ambition to enter into an early friendly partner-ship with China, despite its fledgling economy and status as a non-mar-ket economy, cannot be entirely justified through neo-realism and neo-liberal institutionalism.

The EC’s desired identity as both an economic and a political power-house in the context of inter-regionalism has been a factor in its attemptsto make certain that its conduct of external relations is not only based onmaterial factors, but ideational ones as well. In the case of the EC andChina, a friendship has been established based on the long term accep-tance of each other. Meanwhile, the resilience of the multilateral ASEMprocess has been grounded in ideas, in addition to having a strong insti-tutional basis.

The EC and China appear to have opted to place priority on theircommon material interests, an exercise which has seen them head to-wards a period of active bilateralism. The EC-China relationship hasproven, over the years, to be based almost entirely on the common ambi-tion for increased trade between the regions. While some politicizationof the process has taken place, this has mainly been from the influencesof trade. Likewise, the purpose of any established dialogue or institutionsis to promote the common material interests and to ensure that bothsides are guaranteed reciprocal treatment.

Given the preliminary empirical evidence surveyed for this chapter, aperiod of active bilateralism has ensued during which trade issues receivepriority in the evolution of cooperation and where reciprocity is a re-quirement. The issues of institutions, values and ideas are factors whichmight enter this active bilateralism as a secondary influence in order tosustain cooperation. More importantly, whether cooperation thrives inthe evolution of active bilateralism depends strongly on accepted princi-ples of conduct which include the partners’ reputations, the consistencyof dialogue, and the question of whether or not negotiations are usuallyconcluded in a reciprocal manner. These have been some of the keyfactors which have sustained the EC-China relationship in the past.

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While an active and ongoing bilateral cooperation process dominatesthe EC-China relationship, the ASEM process can be best described aspassive multilateralism. During the course of the relationship and thecreation of great expectations for ASEM during the Asian economicboom, the partners may not have acknowledged that the true purpose ofASEM may have simply been to encourage bilateralism. As such, onemight suggest that ASEM as a passive multilateral forum may not beconsidered a failure, since its role has always been to stimulate and sus-tain growth in bilateral interaction.

ASEM’s ‘failure’ is subject to ongoing speculation and interpretation.It seems fair to say that it failed more severely in some areas than inothers. While trade interaction between the EC and the Asian ASEMmembers only increased marginally, leading to its poor reputation as amultilateral forum, a steady process of increased institutionalization anddialogue has been kept active. European and East Asian partners arecontinually engaged in a series of meetings between top level bureaucratsand political leaders, convening as often as twice a year. At ASEM sum-mits, sensitive political dialogue is undertaken, alongside economic is-sues; this is rarely seen at a bilateral level. ASEM is, hence, the onlyforum where the EC could actively engage the East Asian nations in adialogue on issues which would be almost impossible to address bilater-ally.

The notion that passive ASEM multilateralism may have led to arelatively successful set of EC-East Asian bilateral relationships is, how-ever, misleading for several reasons. First, trade data indicate that Japan(and ASEAN) has actually declined in importance as a trade partner forthe EC. Secondly, the ASEM forum has not had any role in amelioratingor mediating any major bilateral trade conflicts, with the EC-ROK ship-building conflict being one of the most striking cases. Thirdly, the suc-cessful and maturing EU relationships with Japan and China are attribut-able more to bilateral institutionalization, developed long before theinitiation of ASEM, than to any initiatives started by the multilateralforum.

For these reasons, ASEM appears to be a passive multilateral modeof cooperation which has had limited benefit, particularly in the materialsense, for both sides of the partnership. The passivity, however, hasmeant that the European and Asian ASEM members have been able toenter into at least a rhetorical dialogue on political issues. It has also

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ensured that accepted principles of conduct are agreed on and that bothsides become familiarized with each other’s ideas and values. These ideasand values have been introduced by both the European and AsianASEM members into ASEM, and the ASEM process has been con-ducted around these ideas and values. Last but not least, an extremelyintense nature of dialogue and institutionalization, possibly leading to thedreaded ‘forum fatigue’, might actually be one of ASEM’s most usefulfeatures. The lack of understanding of ASEM’s purpose and value maybe the primary factor keeping this multilateral forum from advancingfurther.

A concise evaluation of the significance of this multilateral mode ofcooperation results in the preliminary finding that, while being onlymarginally important, the evolution of cooperation between the EC andChina would have been different without ASEM. The relationship wouldhave been one with a smaller degree of trust, less dialogue and a lowerlevel of ‘caring for’, and familiarity with, ‘one other’. Although passive,the presence of the multilateral mode of cooperation in the EC-Chinaengagement is justified if only because of the manner in which ASEMhas gradually introduced ideational values into the relationship. Thesehave been important in shaping the behaviour of the partners as well asin ensuring that dialogue continues, even in the face of recurring in-stances of conflict.

ReferencesAggarwal, Vinod K. and Edward. Fogarty (eds). 2003. EU Trade Strategies: Be-

tween Regionalism and Globalism. Basingstoke: Palgrave/Macmillan.Allen, T., 2002. EU Trade with China and Russia. Eurostat Statistics in Focus.

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China-Europe Relations: Communication of the Commission’, Com(279)final (Brussels: European Community).

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Commission of the European Communities. 2003a. ‘A new partnership withSoutheast Asia: Communication from the Commission’, COM399/4(Brussels: European Community)

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Commission of the European Communities. 2003b. ‘A maturing partnership –shared interests and challenges in EU-China relations: Communication ofthe Commission to the Council and the European Parliament’, Com(533)final (Brussels: European Community).

Dent, C.M., 1999. The European Union and East Asia: An Economic Perspective.London: Routledge.

Doctor, M. 2007. ‘Why Bother With Inter-Regionalism? Negotiations for aEuropean Union-Mercosur Agreement’ in Journal of Common Market Studies,45(2): 281-314.

Farrell, M., 2005. ‘A Triumph of Realism over Idealism? Cooperation betweenthe European Union and Africa’ in Journal of European Integration, 27(3): 263-283.

Forster, A., 2000. ‘Evaluating the EU–ASEM Relationship: A Negotiated Or-der Approach’ in Journal of European Public Policy, 7(5): 787-805.

Gilson, J., 2004. ‘Weaving a New Silk Road: Europe Meets Asia’ in Aggarwaland Fogarty (eds), EU Trade Strategies: Between Regionalism and Globalization,Houndmills. 64-92.

Gilson, J. 2005. ‘New Interregionalism? The EU and East Asia’ in Journal ofEuropean Integration, 27(3): 307-326.

Hettne, B. 2001. ‘Regional Co-operation for security and development inSouthern Africa’ in Vale, P., Swatuk, L. A. and Oden, B. (eds) Theory, Changeand Southern Africa’s Future. New York: Palgrave.

Kapur, H. 1986. China and the European Economic Community: The New Connection.Lancaster: Martinus Nijhoff.

Kapur, H. 1990. Distant Neighbours: China and Europe. London: Pinter Publishers.Kokko, A. 2002. ‘Export-led Growth in East Asia: Lessons for Europe's Transi-

tion Economies’ in Asia-Pacific Studies in Australia and Europe: A ResearchAgenda for the Future, 5-6 July 2002. 1-34.

Krenzler, H. 2002. ‘The 4th ASEM Summit in Copenhagen’. Paper presented atthe Cooperation between Asia-Pacific, Latin America, and Spain Confer-ence (Barcelona, 28 November 2002).

Kwa, A. 2002. Power Politics in the WTO: Developing Country Perspectiveson Decision-making Processes in Trade Negotiations. Bangkok: Focus on theGlobal South.

Lamy, P. 2002. ‘Stepping-Stones or Stumbling-Blocks? The EU’s ApproachTowards the Problem of Multilateralism and Regionalism in Trade Policy’in The World Economy, 25(10):1399-1414.

Langenhove, L. and A.C. Costea. 2005. The EU as a Global Actor and theEmergence of ‘Third Generation’ Regionalism. UNU-CRIS OccasionalPapers, 0-2005/14: 1-21.

Maul, H.W. and N. Ofken. 2004. ‘Inter-regionalism in international relations:Comparing APEC and ASEM’ in Asia-Europe Journal, 1(2): 237-249.

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EUROPEAN STUDIES 27 (2009): 83-102

DUALITY - DIALOGUE - DISCOURSE:SOME PERSPECTIVES ON HUMAN RIGHTS

IN EU-CHINA RELATIONS

Georg Wiessala

AbstractThis chapter offers seven perspectives, and a conclusion, on what is,arguably, the ‘thorniest’ issue in contemporary EU-China relations:the human rights question. The study examines a number of funda-mental ambiguities in Sino-European relations, and points to thelegacies of past civilisational encounters, in as far as they continue tohave an impact on current EU-China interaction (‘dualities’, ‘encoun-ters’). The chapter then briefly discusses how the EU-China dialoguecan be conceptualised from the point of view of international rela-tions theory and discourse in China and Europe (‘embeddings’, ‘dis-courses’). The essay proceeds to an analysis of the role of ideas,identity-politics and perceptions in EU-China human rights discus-sions and examines how EU China foreign policy can be understoodto be constructed around some key elements and frameworks (‘identi-ties’, ‘pathways’). The chapter closes by emphasising the roles ofintellectual exchange and knowledge-based co-operation and by offer-ing a brief closing assessment of the likely future course of EU-Chinadebates over human rights (‘connectivities’, ‘appraisals’).

Dualities

When a citizenry that lacks rights consciousness is confronted with foreignpressures, it is like a withered tree in a storm. Or – if there are no foreignpressures – such a citizenry is like the tree in a drought. I see that all of themillions of inhabitants of the earth, except for the black savages of India,

84 Georg Wiessala

1 Liang Qichao (1873-1929). Xinmin shuo, Chung-hua shu-chü (ed. Taiwan: Zhonghuashuju, 1959). Ch. 8, 31-32; 38-39 - PZ; quoted from: WM T. De Bary and R. Lufrano.2000: 295.

2 BBC Radio 3: English Takeaway, 2009.

Africa, and Southeast Asia, no one has a weaker sense of rights than do weChinese.1

The relations between the European Union (EU) and the People’s Re-public of China (PRC) are a game of two halves, in more ways than one.In one sense, there is more than meets the eye when it comes to EU-China interaction – an important phenomenon this chapter will explore.But beyond that, perhaps more importantly, ‘duality’ seems to be thewatch-word of China-EU contacts. Some would go further and say thatambiguity is the leitmotiv of the relationship, as well as the handmaiden ofconsensus, in the China-Europe inter-continental conversation. When itcomes to what one may call the intellectual geography, and the positionof human rights, in the EU-China exchange, a number of paradoxes anddualities become apparent.

On the most general level, there is the duality of history. The keyparadoxes here concern, for instance, the fact that it was often Chineseinventions of many centuries ago, which, when borrowed by Europe,allowed the latter to steam ahead of China from the late 19th Centuryonwards. On the flipside of this paradox, Yahuda (2008: 20/1) rightlypoints to the thought that it was the very assimilation of the European,Westphalian, system by China which did much to determine Chineseconcerns for issues such as territorial integrity, national security andclaims to succession, for instance in regard to Taiwan and Tibet. A sec-ond intriguing paradox is the way in which European attitudes towardsChina have always vacillated between admiration and disgust, Sinophiliaand Sinophobia, since before Montaigne, Leibnitz or Voltaire.2 The argu-ments advanced by Sen (2006) about European ‘curatorial’, ‘magisterial’and ‘exoticist’ approaches towards India transpose quite easily to theEurope-China context.

This chapter suggests that these perceptions continue to count today,for instance, in debates over Chinese agency in world history, ‘AsianValues’, globalization, contributions to civilisation and the ‘right’ pathtowards democracy and fair and equitable development. In this context,it is fair to say that what has been termed ‘human rights diplomacy’(renquan waijiao) mirrors another, wider, duality in EU-Asia relations:

SOME PERSPECTIVES ON HUMAN RIGHTS IN EU-CHINA RELATIONS 85

3 The novel French term Chinafrique aptly encapsulates this phenomenon. 4 See for example: ‘China Reluctant to Lead’, Policy Innovations, 18 March 2009. 5Recent example: Guardian, 20 March 2009: 29.

debates about rights contain the potential to become, firstly, an ‘en-abling’, accelerating, aspect of relations. Secondly, they can also turn intoan ‘inhibitory’ mechanism, slowing down progress. Human rights issues,in the shape of EU policy-conditionalities are, thirdly, often drivers ofinternational foreign-policy decisions pertaining to the EU and China –as the activities of the PRC in Africa3 show (Holslag 2006: 11/12; ZhangTiejun 2007: 153/4; Leonard 2008: 96/7). This chapter seeks to demon-strate that this enabling-inhibitory-dynamic is alive in contemporary EU-China dialogue.

In China-EU exchanges, a dynamic tension exists between, on theone hand, the lure and ‘myth’ of the (Chinese) market (Yahuda 2008: 21)and China’s impact on Europe’s economic recovery, and, on the otherhand, human rights and the rule of law; this tension forms a key dualisttheme in this chapter. It is not just since US Foreign Secretary HillaryClinton’s explicit de-coupling of trade from human rights in US-Chinarelations4 that some point to liberties being ‘sacrificed’ on the ‘altar’ ofSino-European trade.

But the most pertinent duality of all, framing human rights in EU-China relations, lies in the starkly contrasting views of China in circula-tion at present (Peerenboom 2008: 2-22; World Affairs 2007): on the onehand, the PRC is seen, in a phrase coined by Kishore Mahbubani, asmanifestation of the ‘New Asian Hemisphere’ (Mahbubani 2008), a self-confident, peacefully-rising superpower, replacing the prevailing Washing-ton Consensus on world affairs with ideas like Beijing Consensus, HarmoniousSociety, Walled World and Lawfare; a successful rational-authoritarian one-party state, with an emerging, largely conservative, middle-class; a gov-ernment putting economic and cultural rights before civil and politicalones; a state jockeying for position in a new Asian ‘Great Game’; aboveall, a potential example for other developing nations in Asia and Africato follow suit (Youngs 2001; Leonard 2008: 96-107). Its many critics, onthe other hand, perceive the PRC as a brutal human rights pariah, cen-soring the press and the internet, closing human rights law firms,5 de-stroying Tibetan culture, propping up ‘rogue-states’ such as Sudan,North Korea, Uzbekistan and Burma, and abusing the prestige afforded

86 Georg Wiessala

6 See the chapters by David Askew and Peter Anderson in this volume. 7 Zhang Zhidong (1837-1009) ‘Rectifying Political Rights’; source as fn 1: 247.8 See: The Sunday Times, 8 April 2004: 4.9 China still commemorates the protests, on May 4 1919, against the Versailles

Treaty, bequeathing German ‘concessions’ in China to Japan.

by the Olympic Games to hide intolerance, corruption and manipu-lation6.

The dualities hinted at, above, seem to be woven deeply into the veryfabric of EU-China interaction – this chapter cannot, therefore, resolvethem in one stroke. It may, however, be useful to explore some of theways in which ‘duality’ contributes to a frame of reference for the humanrights question in EU-China contacts, and to offer for further scrutinysome of the borders of this frame.

Encounters

The theory of people’s rights will bring us not a particle of good but ahundred evils. Are we going to establish a parliament? 7

It is well nigh impossible to refer to human rights in EU-China relationswithout recourse to the basic historical legacies of the relationship. TheEuropean ‘mood-swings’ which accompanied Sino-European contactshave already been hinted at. They were a wider manifestation of the wayin which Europe and China have always defined themselves, for betteror for worse, in contra-distinction of one another, as each other’s – attimes distorted – mirror-image. In See China, learn what Europe must become,Umberto Eco raised the ongoing implications of this for the EU8.

However, any understanding of why human rights are causing frictionin China-EU dialogue also has to embrace some appreciation of whatone may call the ‘iceberg-issues’: obstacles to understanding beneath thesurface of discussion-formats, such as the Informal ASEM Seminars onHuman Rights (e.g. ASEF, 2001), the ASEF University, the ASEAN Hu-man Rights Mechanism and the EU-China Human Rights Dialogue. Iceberg-issues, nevertheless, possess the potential to cause serious harm, if theyare, wilfully or inadvertently, ignored. The history of China-Europecivilisational exchange looms large here: suffice it to mention Chinesehumiliation and European colonial guilt stemming from the time of theTreaty Ports,9 and the debates between European Jesuits and Chinese

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10 Phrase borrowed from the Observer newspaper, 21 September 2003: 30. 11 The University of Central Lancashire opened its Confucius Institute in 2008.

intellectuals over the ‘right’ way, to measure time, decode the heavensand grasp the place of human beings in society.

These episodes have left important legacies, as has the developmentof diverse traditions in East and West. The Enlightenment left Europewith a taste for individualism and a curiosity of enquiry (de Prado 2007;Ringmar 2007). Confucian scholars, by contrast, emphasised societalharmony, duties and subordination of the individual to group require-ments. Both intellectual traditions continue to be instrumentalised inhuman rights and ‘Asian Values’ debates of our era, in spite of theirwider potential (Bell 2008; Garton Ash 2009). However, in our time,Confucius has ‘gone to market’.10 The Master’s teachings experienceexperiencing a renaissance as a tool in contemporary Chinese interna-tional diplomacy.11

These legacies of China-Europe relations have important contempo-rary repercussions: they live on in the enquiries of the 21st Century, as towhat kind of contributions East and West will have made to global civili-sation. They also inform debates over just how instrumental economicand cultural, civil and political, rights were in these contributions. Interms of China-EU, the lessons of the past – if they have indeed beenlearned – influence the present and the future. They constitute a knowl-edge resource base and a store of memories, determining how concep-tions of ‘rights’ are shaped, how research agendas develop and howpolitical labels such as ‘knowledge-based-dialogue’ or ‘value-guided poli-cies’ emerge. In EU-China relations, issues such as global leadership,involvement in international organisations, rights régimes and securitychallenges have deep roots in the connections of former centuries. Con-temporary arguments about ‘de-Westernisation’, the ‘Asian Hemisphere’,‘Clashes of Civilisations’ and ‘Peaceful Rise’ owe a recognisable debt tothe vagaries and stereotypes of China-Europe civilisational encounters ofpast ages; and a consciousness regarding human rights and their relativeranking in society is an integral part of this picture.

88 Georg Wiessala

Embeddings

The most immediate consequence of China’s rise is that the much predicted‘universalization of Western liberal democracy’ has stalled (Leonard 2008: 117)

A large number of intellectual threads have emerged as possible tools fora critique of human rights matters in EU-China relations. Some soughtto position the issue in the context of ‘globalisation’, ‘clashes of civilisa-tions’, ‘paths to modernity’, ‘development studies’ and ‘normative theory’.At least one, realist-inspired, ‘global political economy’ perspective hasbeen very influential (Close and Askew 2004). However, the most deep-seated EU-China human rights dichotomy is, arguably, the universalist-versus-relativist paradigm: its tenor hardly needs elaborating. In the ‘West-ern’ tradition, an understanding of civil and political rights was influ-enced by a Judaeo-Christian background. Those categories of rightsparticularly, but by no means exclusively, are seen as ‘all-embracing’,embedded in the very nature of what it means to be human, and globallyapplicable, quite irrespective of local traditions. They cannot be abro-gated with impunity, by reference to concepts like ‘culture’ or ‘values’. Bycontrast, relativists and ‘Asian Values’ proponents point to the divisionof rights into economic-cultural ones on the one hand, and civil-politicalones on the other; they stress that the latter do not make sense withoutfirst creating the right conditions for the former, such as wealth. Manysupporters of this view emphasise collectivist over individual entitle-ments, often stressing regional traditions.

In addition to these views, it is possible to delineate the EU-Chinanormative territory with reference to the term ‘identity’. Here, humanrights, especially civil liberties and integrity-rights, are perceived to forman intrinsic part of the ‘political DNA’ of regions. In the case of the EU,largely derived from Development Policy, human rights consciousness isconstructed as a part of the very cloth of European-ness, from whichfollows that human rights cannot be subservient to economic and otherconditions. This results in a particular promotional agenda of exportingthe ‘Western’ model of rule of law, democracy, good governance andhuman rights to the international stage (Youngs 2001). In the case ofChina, this notion of a mission democratique of the EU is countered by anemphasis on Asian legal traditions, ‘Asian Values’ and an insistence onnon-interference in ‘domestic’ affairs – an approach polemicised as

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12 The Economist, 2 August 2008: 11.13 Phrase inspired by: E. Friedman in Jacobsen and Bruun 2000: 21.

Beijingoism.12 Many of these notions are rooted in concepts of specificnational ‘identities’ and regional ‘destinies’.

A further, major, part of the EU-China research agenda is driven by afocus on regionalism, institutionalism and regime-types (Katzenstein2005), inter-regional co-operation and the question of the ‘model-charac-ter’ of regional entities for one another (Fort and Webber 2006; Welfenset at 2006). Here, the issue, for example, of what China, ASEAN and theEU can possibly learn from one another about human rights, can assumea central position. A notable portion of this programme of enquiry ispredisposed towards social-constructivist, theories, the key to which is anunderstanding of the dialectic of ‘agency’ and ‘structure‘, and the role of‘ideas’, ‘role-concepts’ and ‘identities’, as drivers of politics and constitu-tions (Tonra and Christiansen 2004; Wiessala 2006). Political actors likethe EU or China are moulded by the very way they interact, the condi-tions they create – for instance for a fruitful human rights – dialogue,and by the ‘patterns of opportunity and constraint’ within which politicalagency and advocacy occur (Bretherton and Vogler 1999: 29). The ‘en-abling’ versus ‘inhibitory’ dynamic of divergent ideas on human rights inEU-China interaction can, therefore, be seen to be playing itself out inoverlapping, normative and identity-related, arenas of the EU-Chinadialogue. The rejection of realist and liberal approaches and the juxtapo-sition of ‘hard’ versus ‘soft’ power appears common to most construct-ivist views. For EU-China relations, an emphasis is placed, rather, onnegotiation, persuasion, knowledge-partnerships and intellectual ex-change, all of which are seen as powerful agents of change and conduitsfor ‘people-to-people-relations’.

Discourses

Since there is no East and there is no West, how could either be the best?13

These theoretical conceptualisations of EU-China interaction are under-pinned by a range of powerful discursive traditions influencing humanrights discussions in EU-China relations. The ‘Asian Values’ debates ofthe 1990s (e.g. Bauer and Bell, 1999; Youngs 2001) might seem datednow (World Affairs, 1998), but it is by no means dead, and China has its

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14 For example: BBC History Magazine 9(8) August 2008: 21.15For example: Asian Affairs, 02/08: 28.

unique place in it. For many, the Asian Financial Crisis (1997/98) ren-dered thinking about ‘Asian Values’ obsolete. After all, the Asian Sonder-weg, or special path to development, did not prevent the collapse; it didnot then, nor does it now, in the global downturn of our times. For thoseof a universalist normative persuasion, the ‘Asian Values’ label was al-ways little more than an ideological tool, justifying authoritarianism inAsia, on the spurious grounds that states are rather like families, andduties count for more than rights. It is not necessary to dwell on this fortoo long here, as China, in any case, escaped much of that particularcrisis owing to its government’s fiscal policies. However, this did notprevent the PRC’s leaders from promoting many of the paternalisticideas attributed to this particular discursive channel, especially whenfaced with criticism from the EU or US over the Chinese human rightsrecord. Even now, the spirit of the ‘Asian Values’ debate is never faraway – instead, it has metamorphosed into wider arguments over whohas been the real engine of world history,14 and who contributes most tointernational organisations and inter-civilisational dialogue.

Next to cultural politics and ‘Asian Values’, the normative spacesoccupied by the human rights issue in EU-China dialogue are inspired bydiscursive traditions analysing democratic institutional practice, securityand regionalism (Katzenstein 2005), ASEAN-EU relations, and Asianhuman rights mechanisms (e.g. Muntarbhorn 2001; Close and Askew2004). Alternative enquiries focus on Asian constitutionalism (e.g. ANU2003), limitations of rights, civil society (e.g. Ratnam 2003; Singh 2007)and Chinese legal thought.

In the latter area, a cluster of writers espoused a religious-philosophi-cal dimension, seeking to recruit Buddhism or Confucianism15, in orderto buttress human rights, humanism, communitarian ideas and non-interference (World Affairs, 1998: 25/6; Bauer and Bell 1999; Wiessala2006: 44-47). Thus, personalities from times past and present, from theIndian Emperor Aśoka, to the Dalai Lama, have become something akinto ‘human rights heroes’ (World Affairs, 1998: 26-28; Sen 2001: 236). Inaddition, some have suggested that a ‘special path’ for China is justifiedby her size, age and other conditions (Christie and Roy 2001; Barr 2002).

But contemporary, discourse inside the ‘Chinese power-house ofideas’ is as wide-spread, as it is generally underrated by many Western

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16 English-language Shortwave Frequencies in May 2009 included: 5960, 7205,7285 and 9440 kHz. See: http://english.cri.cn/. Radio Taiwan International is on 6155kHz.

observers. This holds true for debates between the ‘New Left’ and the‘New Right’ in China, on economic reform, political power, equality,markets, neo-liberalism and the role of the state. Leonard (2008: 29, 94-99) demonstrates cogently how Chinese intellectuals – of a liberal-inter-nationalist, ‘nationalist-neo-comm’ or pragmatist ilk – are appropriating‘western’ globalization discourses, adapting them to a Chinese context.This is apparent in current Chinese discourse on ‘soft power’ (ruanquanli), through an enhanced dissemination of Chinese culture and ideasworld-wide, through agents such as Confucius Institutes, CCTV 9 andChina Radio International.16 But it applies equally to human rights debates(Jacobsen and Bruun 2000). Indeed, ‘rights’ and ‘values’ have alwaysbeen key leitmotivs of post-enlightenment China-Europe exchange; in thiscontext, Chinese intellectuals thematised ‘freedom’ and ‘personal liberty’(Angle 2002; Yun 2002), examined the ‘fragmented’ character of Chinesesociety and explored notions of ‘human nature’, ‘good’ and ‘evil’, ‘duties’and ‘rights’ (He 1996: 110).

The subordination of ‘rights’ under prerequisites, such as economiccircumstances, development and national conditions (guoqing) is a recur-ring theme (Yun, 2002: 7; Angle 2002: 256). Scholars like Chih-Yu Shih(1999: 97-99), related human rights with current Chinese rule-of-law-thought. Others investigated the potential of a ‘hybrid-constitutional’,party-rule (dangzhu lixian) in China (Zou 2007). Observers like Wang(2003: 16-73) scrutinised the relationship between ‘rights’, ‘reciprocity’and ‘power’ within Confucianism and Chinese history. And other con-temporaries (Chan 2000: 218/9; Christie and Roy 2001: 220) argued thatConfucian morale transcends a relationship-based ethic and does notneed to be seen to reject human rights ideas (see also: de Bary 1998).

The last decade resulted in many unique discursive contributions,some of them of a more constructivist, cultural-linguistic, bend. DavidKelly’s ‘Asian Lexical Matrix’, demonstrating the associations between‘freedom’, ‘human rights’ and such concepts, and the accessibility ofappropriate words/ signs for them in Asian languages has lost none ofits power more than ten years after its first publication (Kelly 1998).More recently, scholarship on ‘discursive constructions’ and ‘communica-tive strategies’ in EU-China relations was contributed by Séan Golden

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(2006), perhaps as a reminder of just how powerful, yet under-repre-sented, the analytical tools of integration-discourse-analysis can be in thestudy of EU-Asia interaction (Diez 2001).

In the present, scholars like Peerenboom (2008) are attempting toseparate ideological ballast from pertinent critique in EU-China relations.Peerenboom’s work helps to isolate the key questions: what is the rela-tionship between development and the rule of law, between the latterand democratisation, between wealth, civil society and human rights? Isan amount of discretion compatible with rule of law, and can trade bemarried to human rights? Many China-watchers have queried whether‘civil society’ is a political, economic or ‘alternate’ concept (Singh 2007:115), and whether democracy and growth have to be in direct competi-tion to one another. Is China, as Christie and Roy have claimed (2001:232), really ‘too vast, too poor and too populous to sustain political andeconomic rights’? Is it disingenuous to state, as some do (Cameron andYongnian 2007: 13), that human rights are ‘too sensitive’ a subject to bebrought to the (Chinese) leadership level? Is economic advancement ipsoiure changing political assertiveness among the Chinese public, and fos-tering convergence on human rights and democratic reform (Haina Lu2003; Andreosso 2004)? Will political pluralism – as if on ‘auto-pilot’ –contribute to a resolution of China’s problems? There are no simpleanswers to these questions, but it seems that the PRC is currently some-thing akin to a ‘global laboratory’ of political transition. There is evidencethat economics, democratisation and human rights are, indeed, stronglyinter-linked (Wei-Wei Zhang 2003: 11; Andreosso O’Callaghan 2004).On human rights, many comment on the EU’s policy-preference for thecivil-political side of the spectrum. Is this justifiable or, as some havesuggested (Angle 2002: 256/7; Peerenboom 2008), merely a tacticaldialogue-debate, deliberately conflating liberal democracy with the rule oflaw, and seeking to skirt awkward questions about global inequalities?

IdentitiesMany of these questions are indeed behind the ‘ups and downs’ of EUdialogue with China over human rights. In addition to this, what makesthis particular aspect of EU-Asia relations so special is a peculiar, three-fold, phenomenon:

Firstly, EU-China human rights interaction can be said to be charac-terised by a large number of, what may be termed, ‘signature-issues’. This

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17 Trade with China falls under the 1985 EEC-China Co-operation Agreement,which does not include a ‘human-rights-clause’ (see: [1985] OJ L250/2).

18 The 20th Anniversary of the killings in 2009 coincided with the publication ofex-premier Zhao Ziyang’s secret memoirs Prisoner of the State. In May 2009, the BBCWorld Service broadcast a series of commemorative programmes, entitled The Lost Voicesof Tiananmen Square (http://www.bbc.co.uk/podcasts/series/docarchive).

19 Events in Burma in May 2009 influenced the 11th EU-China Summit in May2009 (http://www.euobserver.com of 18 May 2009).

20 See also the chapter on Taiwan by Paul Lim in this volume. 21 For example, the International Campaign for Tibet (ICT): http://www.

savetibet.org/

term is meant to imply that (a) these topics have become emblematic fora focus on the civil and political category of human rights; (b) that theystand out through their recurrence and ‘recognisability’ in the officialEU-China dialogue; and (c) that they are, by their very, contentious,nature, able to ‘raise the diplomatic temperature’ in China-EU relations(Ching 2008; Jing Men 2009: 3).

Amongst these issues are: human rights in commercial agreements(Bartels 2005: 33),17 freedoms of speech and media control in the PRCand in Hong Kong, the suppression of opposition and political dissentsince the Tiananmen Square massacres;18 conditions of detention, the deathpenalty, the ‘Sinification’ of Tibet; the position of the Dalai Lama andreligious choice for Christians, Muslims and Falun Gong practitioners inChina; the Chinese ‘strike-hard-at-crime’ campaigns, the Chinese judicialsystem and the pace of (legal) reform (Ching 2008; Peerenboom 2008).Last, but not least, this, incomplete, list must also include Chinese ratifi-cation of the International Covenant of Civil and Political Rights(ICCPR), the situation in Myanmar (Burma)19 and issues of ‘association-politics’ and national identity across the Taiwan Straits (Fuh-Sheng Hsieh2004).20

Secondly, a number of questions, such as the arms embargo, and EUMember States’ sponsorship (until 1998) of a Resolution censuring thePRC over human rights at the UN Human Rights Commission, havebecome ‘wedge-issues’ in EU-China dialogue, dividing Member Statesand Council alike (Close and Askew 2004: 106; Balducci 2009: 9-11).Some see in those developments the fruits of a deliberate Chinese strat-egy of divide et impera.21 To counterbalance this, there are also ‘hinge-is-sues’, bringing the EU and the PRC closer together over common inter-ests. Terrorism, climate-change and policy towards Burma (Myanmar)constitute pertinent examples. These issues have become corner-stones

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22 For example: COM (1995) 279; (1998) 181; (2001) 265; (2003) 533; the PRCcountered with its first ‘EU-Policy’ paper, in 2003.

23 The 27th round of the EU-China HRD, as well as, the 11th EU-China Summitboth took place in Prague in May 2009 (Council: Press Release 9995/09 Presse 134).

in the EU’s diplomatic toolkit for China, the rhetorical construction ofwhich has, at times, been more ‘declaratory’, at times more ‘activist’ innature. This can be seen in at least eight Commission papers on China,which increasingly employs a discourse of ‘commonality’, ‘responsibility’and ‘maturity’, in line with general perceptions about contemporary, ‘ris-ing’ Asia.22

In spite of this, the EU has but trifling successes to point to. In theface of an institutionalised EU-China Human Rights Dialogue (HRD) from1995 onwards,23 and after the 60th Anniversary of the UNDHR in 2008,many Chinese activists continue to be in detention, while pre-Olympicspromises of liberty are not being honoured. Success eludes the EU inhuman rights engagement with China, and China demonstrates to Eu-rope that, ‘the king is naked’ (Baker 2002: 60/1; Balducci 2009: 8). Not-withstanding this, the EU has, thirdly, been uniquely successful in ren-dering human rights and liberal democracy integral parts of its ownpolitical identity, acquis communautaire and self-image. This ‘incremental’constitutionalisation of human rights into a ‘value-based’ EU foreignpolicy owes much to the eventful European history of the last two de-cades, as well as to EU co-operation with international organisations,although, in the case of China, there has been little European unity at theUN of late.

The principal EU human rights stance can be said to have arisenfrom (a) a progressive, incremental, ‘politicisation’ of the DevelopmentPolicy and the CFSP (Bartels 2005; KAS 2006); (b) the growth of supra-national competencies; (c) many ‘integration-friendly’ decisions of theEuropean Parliament and the European Court of Justice; and (d) thewider EU treaty-architecture and legal institutionalism, which graduallybecame more inclusive of human rights (K. Smith, 2003; Wiessala,2006). This specific EU ethic of a ‘principled’ political actor-ness ispowerfully articulated through a paradigm-shift towards a ‘soft’, ‘civilian’,‘normative’ power-base, from which stems democratic pressure to pro-mote human rights, globally and in China (Wiessala 2006; Haltern 2004:184-191; Youngs 2001: 2). This inter-locking of identity, unity, integra-tion, and law in the EU polity yielded a ‘culture of rights’ and culminated

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24 Copenhagen Summit, 14 December 1973: EC Bulletin, 12-1973.25 An EU-China Conference in Brussels in May 2009, co-organised by Friends of Europe

had, as its central subject, the EU-China ‘Strategic Partnership’.26 cf. http://ec.europa.eu/external_relations/china/sectoraldialogue_en.htm; IP 09/212

in the EU Human Rights Charter. The spirit of the 1973 Declaration onEuropean Identity,24 referring to human rights as part of a shared ‘Euro-pean heritage’, has clearly been acted on. Few in the EU-Asia epistemiccommunity have since asked against whom or what this identity may bedefined.

Apart from the legacy of stereotyping, there is another, potentiallymore serious, issue here. This concerns divergent levels of stringency andlegal scrutiny in EU human rights standards towards the PRC, on theone hand, and elsewhere, on the other. The EU’s human rights policy –if one can indeed be said to exist – is not cut from one cloth and, conse-quentially, the Union has to face accusations of political double stan-dards in foreign policy, demanding higher standards, in an unequal man-ner, to no-democracies (e.g. Bartels 2005: 39).

Pathways

China’s inertia towards European proselytism is not going to change soon.On the contrary, China is determined to write its own story. It does notneed a ghost writer (Holslag 2006: 12)

EU foreign policy towards the PRC on human rights exists next to simi-lar initiatives of at least five EU Member States in China (Holslag 2006:2). Moreover, since 2003, the EU’s approach has been billed as part of awider, ‘strategic’, dialogue (zonghe zhanlue huoban guanxi) (KAS 2006;Shambaugh 2008: 135). Looking at its detail, Algieri (2008: 79) mentionsthe EU’s policy-making and institutionalization patterns as the two mainwellsprings of its China policy. The ‘strategic partnership’ entails a net-work of sector-specific, regional and multi-lateral co-operation, althoughthe use of the term is still subject to critical scrutiny (Holslag 2006; JingMen 2009: 4).25

While the multitude of EU-China sector-specific dialogues cannot beelaborated here26, it is worth noting that relations stand out noticeably,even in the limited context of EU-Asia relations, in two ways: firstly,through their complexity and ability to shape wider EU-Asia relations;secondly, by the way they suffer from incoherence, imbalance and

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27 European Voice, 23-29 October 2003: 29.28 IP/08/648, of 25/04/08. A recent addition was the High Level Economic and Trade

Dialogue (ETD). The 2nd ETD took place on 7/8 May 2009 in Brussels.29 cf. the chapter by Michael Smith and Huaixian Xie, in this volume.30 COM (2006) 631.

credibility-deficit. There is no co-ordinated EU-China policy on humanrights, and the EU does not have sufficient political instruments anddialogue-capacities for its efficient construction (Youngs 2001: 188/9;Algieri 2008). For some (Holslag 2006), this is part of the ‘Great Disillu-sion’ of EU-China.

What strategy there is, remains clearly skewed towards economicobjectives. The European Voice summarised this dilemma with character-istic aplomb: Galileo grabs the Headlines, but Human Rights Problems in Chinastill a Major Bugbear.27 China-EU analysts are right in deploring a defi-ciency in mutual ‘understanding’ at the root of relations; perhaps anotherduality of the dialogue is apparent here (Cameron and Zheng 2007: 12;Yahuda 2008: 30; Jing Men 2009: 5). This gap is in strange contradictionto the branched-out nature of EU-China initiatives.28 Some have claimedthat this ‘mushrooming’ of initiatives, much like the Asia-Europe Meet-ing (ASEM), hides real progress on the ground in exactly such matters ashuman rights, democracy and the pace of reforms. Others would levelsimilar allegations against two other pillars of EU China policy: the ‘one-China-principle’ and the EU’s method of ‘constructive’, or ‘conditionalengagement’, an approach the EU appears to have borrowed from theASEAN vocabulary, and which is distinct from the containment-compe-tition approach at times preferred by the US.29

In the past, the EU routinely framed its China approach in terms of adialogue ‘backed by action’. This meant a ‘carrots-and-sticks-approach’which made co-operation contingent on progress ‘on the ground’. Thus,human rights observance appeared more of a conditio-sine-qua-non forcollaboration. Europe, in Holslag’s words, did ‘not try to floor thedragon, neither to cage it, but to discipline it’. (Holslag 2006: 5). Morerecently, the EU’s linguistic-constructive diplomatic arsenal produced anew, subtler, flavour, emphasising commonality, shared responsibilitiesand respect for difference.30 A May 2009 statement of James Moran,Asia-Director in DG RELEX, summarised this new way: human rightsdivergencies must not be allowed to ‘undermine’ the ‘overall direction’ ofEU-China relations (Moran 2009: 4/5). Thus, trade is the real ‘back-

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31 See: euobserver of 19 May 2009 (http://euobserver.com/9/28156?print=1).32 In 2008/09, the exhibition The Lure of the East at the Tate Britain and a series of

programmes entitled English Takeaway on BBC Radio Three were useful reminders ofthis history.

bone’ of EU-China relations, and relations are vital to the Europeaneconomic recovery.31 Not quite the Clinton-take, but, perhaps, not faroff. Other practically-minded policy-makers point out that the old EUconcept may have proved too rigid, and that human rights issues nowrequire dis-association from broader co-operation. If China has indeedchanged beyond recognition over the last decade, so it is argued, is it notsomewhat anachronistic that EU human rights policies vis-à-vis Chinaremained so comparatively immutable?

ConnectivitiesOne more point deserves to be mentioned – just because there are nowsigns that this immutability is slowly being overcome: geo-politics, hu-man rights and knowledge do, of course, go hand in hand. Indeed, recentEU policy papers on China are now strongly foregrounding education,people-to-people exchanges, inter-civilisational dialogue, common curric-ulum development (Wiessala 2008; Shambaugh et al 2008), intellectualexchange and an EU-Asia partnership of knowledge. This new strand inEU-Asia relations calls for more knowledge-based co-operation andappears driven by conclusions drawn about the global village and theimportance of knowledge-economies for future multi-level governance(de Prado 2007).

This is, of course, not a new idea at all: knowledge-transference, aswell as stereotyping have a venerable tradition in the centuries-old EU-Asia-China civilisational encounter, since long before the time of the SilkRoad.32 From Europe’s point of view, for instance, the ‘learning dimen-sion’ of a relationship with China (and Asia) has embraced aspects asdiverse as the ‘discovery’ of Buddhism by European ‘Orientalists’, thestructured learning environment (ratio studiorum) introduced by the Jesuitenterprise in China, the amnésie philosophique of European intellectualstowards India (Droit 2004) and the defensive modernisation of parts ofAsia vis-à-vis European colonisation, to name but a few examples.

In fact, EU-China and EU-Asia relations can be said to be the veryembodiment of a ‘connectivity of ideas and knowledge’ stipulated bysome observers (World Affairs 11:4 (2007) 17, 107). The most recent EU

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33 http://esia.asef.org34 A Survey of China, 25/03/06: 13.

policy papers on Asia now routinely foreground issues such as‘knowledge-based-cooperation’ and ‘the warp and weft of growingpeople-to-people-contacts’ (Crossick and Reuter 2007: xx). It seems thatnow is a good time to ‘put flesh to the bones’, and to extend this ‘learn-ing dimension’ into the area of human rights.

A ‘holistic’ extension of EU-China relations, into the field of educa-tion, would appear to be vindicated by current analyses of the links be-tween the ‘thirst for knowledge’ and human rights, in China and else-where. Thus, Will Hutton identified the ‘dare to know’ and the ‘capacityto aspire’ (Hutton 2007: 53, 201) as keys to future pluralism and humanrights consciousness. Similarly, de Prado (2007: 26-29, 97), identifies‘soft intellectual power’ and ‘knowledge-mediators’ as facilitators of Asia-Europe dialogue. Ringmar (2007: 221-241) stresses the importance of‘reflective institutions’ and the potentialities of institutionalised learningin China-Europe relations. In terms of human rights in EU-China rela-tions, these debates may, over time, become important tools of the newknowledge-economies; tools, which benefit the East-West dialogue,because, in Li Jinshan’s phrase (2007: 223), they ‘amplify the mentalpower of mankind’. Perhaps initiatives such as the European Studies inAsia (ESiA) programme of the Asia-Europe Foundation (ASEF) and theEurope through the Eyes of Asia project (Holland et al 2007),33 can be a firststep on this particular Long March to understanding.

AppraisalsIn 2006 the Economist could still claim that:

Whereas economically, China has surged ahead in the past few years, politi-cally, it remains almost as secretive, just as risk-averse nearly as dictatorialand every bit as determined to crush any organised dissent as it was at theturn of the decade.34

And, near the end of the present decade, Rana Mitter (2008: 91) elabo-rated on the same topic:

The wider Chinese world opens up intriguing divisions between what is‘free’ and ‘democratic. China itself is neither fully free nor democratic.Taiwan, since the 1990s, has been both free and democratic. Singapore, alargely Chinese society, is democratic, in that it has regular elections which

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are nominally open to opposition candidates (but at high cost to them-selves), but is not free (the media and political activism are both heavilyregulated). Most intriguing though, is Hong Kong, which is little moredemocratic than it was under the British.

Notwithstanding these comments, China has made significant strides onher path to social re-structuring, poverty-alleviation, freedom for itscitizens, wealth-creation and, to some degree, political transparency(Cameron and Yongnian 2007: 11). Keyuan Zou’s assessment encapsu-lates the transitoriness of the current state of affairs best (Zou 2006: 27):‘rule of man’ and ‘rule of law’, ‘rule by law’ and ‘rule of law’ co-exist incontemporary China, governed by a version of ‘rule of the Party by law’.

In this situation the suggestions put forward by some (e.g.: Crossickand Reuter 2007: 192), that human rights ought now to begin to bearticulated towards China as a matter of ‘national interest’, rather thanone of ‘external pressure’, can point to a constructive way forward forone of the most significant foreign policy human rights relationships ofthe European Union. Perhaps the EU and China may wish to be guidedin their future relations by both the inspiration and the challenge ex-pressed in the Chinese axiom of ‘overcoming difficult times together’(gong ke shi jian):

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SPORT AND POLITICS:THE 2008 BEIJING OLYMPIC GAMES

David Askew

AbstractDuring the Cold War, and in post-Mao China today, internationalsporting events have been, and continue to be, seen as an arena inwhich to display national superiority. Despite the emphasis of theOlympic movement on the ability of sport to promote internationalunderstanding and peace, the sporting field all too frequently remainsa political arena that is divided by rivalry instead of united by friend-ship. In China, sport has long been mobilized to construct narrativesof national identity. In the twentieth century, initial anxieties aboutChina’s place in the world were projected onto the bodies of Chineseathletes, and produced a discourse that fixated on what were per-ceived to be inherent national weaknesses. Sporting success hashelped China to overcome, at least in part, this sense of inferiority.Today, the Olympic Games provide a newly confident China with ahighly visible arena in which the new Chinese body can be displayed,and in which athletic ability and national competitiveness can becelebrated. In particular, the Beijing Olympic Games functioned as asite of intense nationalistic emotion and pride. Following the collapseof communism as a legitimate ideal, an attempt has been made inChina to graft aspects of the market economy on to a Marxist politi-cal dictatorship. Since the CCP suffers questions of legitimacy, thenationalistic pride generated by sporting success has become increas-ingly important to the Party-State. However, the narrative on Beijingand national identity also faces many challenges, with China’s humanrights record in particular threatening to cast a dark shadow over theOlympic success story.

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IntroductionHong et al (2005) note that Beijing views international and, in particular,Olympic sporting successes as a significant, symbolic, demonstration ofits determination to forge a place in the international community forChina as a superpower. Beijing hoped and believed that the BeijingOlympic Games would function to announce the arrival of an emergingglobal power, and sought to recreate the global narrative of China as thestory of a forward-looking, modern nation that can boast a long andglorious past. When China bid for the Games, the confident and reveal-ing slogan it used was ‘New Beijing, Great Olympics’ (in English) – and‘New Beijing, New Olympics’ (Xin Beijing Xin Aoyun) in Chinese. Ac-cording to the official Party version of Chinese history, China’s modernhistory consists of a century of shame and humiliation that lasted fromthe Opium Wars through to 1949. This century was followed by a longperiod of international isolation and what can only be called the geno-cidal madness of the PRC – the Anti-Rightist Campaign of 1957, theGreat Leap Forward of 1958-1960 and subsequent mass starvation, theCultural Revolution of 1966 to 1969, and the Tiananmen Square (Junethe Fourth) Massacre of 1989, together with the invasion and occupationof Tibet in 1950 and continuing human rights abuses throughout China.China has moved away from this history, and so the term ‘New Beijing’is a highly pregnant one.

At the same time, however, the ghosts of the past are not easily laidto rest. In a fascinating and insightful paper, Lovell (2008: 765) arguesthat, ‘an unstable consciousness of ancient glory and modern humiliationstill haunts the contemporary China’s self-image, and provides the con-text against which we must read the mixed messages of the BeijingOlympics – a metonym for the curious phenomenon of modern Chinesenationalism’. To understand the Beijing Olympic Games, we have todiscuss this ‘unstable consciousness’, and also introduce modern Chineseperceptions of ‘Self’ and ‘Other’ which were created through the encoun-ter with an imperialistic West and then Japan. We will start, however,with an examination of the three decades that led up to the Games.

The China that Deng BuiltDecember 2008 was the thirtieth anniversary of the CCP meeting atwhich Deng Xiaoping announced a reversal of communist dogma andthe introduction of a pragmatic and outward-looking policy of gaige

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kaifang (reform and opening). As Chang (2008: Part 1) notes, the ‘greatlegacy’ of Deng was that he undid that of Mao Zedong. The ‘reform’ and‘opening’ policies introduced in December 1978, and pursued now forthree decades, sought to promote economic growth by learning from theexperience of the East Asian ‘economic miracle’. Thus, 1978 ushered ina new era in which a Western and, in particular, an American way of lifewas embraced, and the commercialization of life and consumerism werepursued. Rejecting communist dogma in favour of pragmatism, Beijingin effect decided to westernize the Chinese economy. The result has beena Chinese economic miracle that has attracted as much, if not more,attention than the original models provided first by Japan and then bySouth Korea, Taiwan, Singapore, and Hong Kong. One unforeseenconsequence has been the commercialization not only of the economybut also of culture. Indeed, Chinese culture has become increasinglywesternized as the country has been exposed to the values of hedonisticmaterialism, capitalism, and consumerism. The forces of globalizationthreaten to bury both Chinese traditions and Chinese communism, andso inevitably challenge Chinese cultural identity.

Three decades after Deng decided on a pragmatic acceptance ofmarkets, China has emerged as a powerful global actor. China orZhongguo, the Central Kingdom, once was central in fact as well as name.Following a long hiatus of half a millennium, China is today quicklyrecovering lost ground. The economy has averaged growth of 9.8 percentper year for the past three decades (Chang 2008). In 1978, China’s shareof the global economy was only 1.8 percent; today it is 6 percent (TheEconomist 2008b). Millions of impoverished Chinese individuals – 200million, according to The Economist – have been lifted out of poverty.Since Deng launched his market-oriented policies, China has also comeof age as a political power. A major Chinese goal has long been nationalreunification – and Hong Kong was handed back to China in 1997,while Macau was returned in 1999. Another major goal has been to fullyrejoin the international community after decades of self-imposed isola-tion under Mao. China did in fact join the World Trade Organization in2001, and, after failure in 1993, made a successful bid for the OlympicGames in 2001.

The year 2008 marked another anniversary: 1978 saw the spontane-ous outbreak of the first major democracy movement in China since1949 – the Democracy Wall Movement. Wei Jingsheng, perhaps China’s

106 David Askew

1 Wei was released in September 1993, as part of the Chinese government’s effortsto woo the IOC and global opinion in advance of the vote on the venue for the 2000Olympic Games. Once Sydney was awarded the Games, Wei found himself back inprison. In 1997, he was released and deported to the USA.

most famous dissident, called for the Fifth Modernization – democracy –in addition to Deng’s Four Modernizations (see Seymour (ed.) 1980).Wei’s goals were the realization both of human rights and of democracy;political reforms to complement Deng’s economic reforms. For his trou-bles, Wei was imprisoned for 15 years.1 The second major democracymovement in China was that of 1989, and 2009 marks the twentiethanniversary of the Tiananmen Square massacre which ended it. Chinatoday is, therefore, a country that has embraced economic reform andsubsequently experienced remarkable economic growth over the pastthree decades, but which remains an authoritarian state ruled by theCCP-Party State. It is emerging as a significant regional power. However,the Party-State suffers from an Achilles Heel. As Ha Jin (2008), amongmany others, notes, ‘No party members believe in the ideal of commu-nism any more’. Together with the threat posed to Chinese cultural iden-tity by the forces of globalization, the structural contradictions between amarket economy and authoritarian politics have produced a crisis oflegitimacy. The Party-State can no longer rely on communism to providethe legitimacy it needs, and instead has turned increasingly to national-ism. In other words, China has become a commercialized society run bya communist party that no longer is ideologically committed to commu-nism.

From the 1990s on, following the collapse of communism as a legiti-mate ideology – a collapse symbolized by the implosion of the SovietUnion, the spontaneous destruction of the Berlin Wall, and, in China, theTiananmen Square massacre – the Party-State has sought to legitimize itsrule by mobilizing and promoting nationalism, especially in China’sschools, and by promising continued economic growth in return for ageneral acquiescence to political dictatorship. Those who challenge or areseen to challenge the right of the CCP to rule are suppressed; those whodo not are allowed to chase the dream of material wealth. This dovetailswith what Nathan (2008) has identified in a review article as one of themajor themes of a recent publication on the Beijing Olympics, Owning theOlympics (Price and Dayan eds 2008): ‘the Olympics redefine citizenship

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2 See: Tiantsin Young Men, 26 October 1907 and 23 May 1908, frequently cited inthe literature.

(…) as consumership, abetting the depoliticization of public life that liesat the heart of China’s post-Mao propaganda strategy’.

China then appears as a country which has experienced an economicmiracle, is still labouring under a political dictatorship, and is increasinglyturning to nationalism, in order to provide the legitimacy to fill the vac-uum left by the collapse of communism. However, China is also thecountry which staged the global extravaganza of 2008: the Beijing Olym-pic Games. Many areas of the Chinese economy, of politics and legiti-macy, can be explored through an examination of the role of sports inChina today.

Sports in China: From the ‘Sick Man of East Asia’ to Olympic SuperpowerChina has certainly come a long way since the Opium Wars and since1978. The Epilogue of Hong’s (1997) insightful book Footbinding, Femi-nism, and Freedom is entitled From Cripples to Champions. Like China itself,Chinese women have indeed been slowly liberated, albeit sporadicallyand incompletely, since the mid-1800s (in fact, Chinese women todaymassively outperform their male counterparts at events like the Olym-pics).

Staging the Olympic Games in China has long been a Chinese na-tional aspiration. In 1907, the YMCA journal Tiantsin Young Men dis-cussed a speech about China and the Olympics in which the future par-ticipation of China was anticipated (it was not until 1932 before China’sfirst athlete participated in an Olympic event). The next year, in 1908, thefollowing three questions were asked:

When would China be able to send a winning athlete to Olympiccontests?

When would China be able to send a winning team to the Olympics?When would China be able to invite the world to come to Beijing foran Olympic Games?2

The aspiration to stage the Olympics was finally realized, of course, in2008.

108 David Askew

3 Sport in China has slowly emerged as a burgeoning area of increasingly sophisti-cated research in the West. A history of sport in Republican China is provided inMorris (2004). But it is Susan Brownell, in particular, who revolutionized the state ofacademic research (Brownell 1995: 2008).

4 Mao Zedong, ‘Tiyu zhi yanjiu’ (The research of physical education), Xin qingnian(New Youth), April 1917. A translation of (much of) the text is provided in Hong(1997: 313-317).

Among others, Xu (2008: 4) uses sports as a means to examine ‘theformation of China’s modern national identity and its sometimes ambiva-lent embrace of internationalization’. The history of sports in modernChina is also a history of the introduction of Western sports at the ex-pense of indigenous physical activities, and so is a history of China’sembrace of the West.3 It is also a history of a distinct Chinese discoursein which the state or condition of the physical body, of what was per-ceived as the typical Chinese physique, was projected onto the bodypolitic, and in which training the body was seen as an essential part ofthe nation building process. For much of the twentieth century, a phrasethat summarized China’s national identity was ‘the sick man of EastAsia’ (dongya bingfu).

Although probably coined by a Chinese intellectual, in the nationalistdiscourse, dongya bingfu became a label imposed on China and the Chi-nese body politic by Japan and the West. Curing the ‘sick man’, a sav-agely self-critical image, has thus long been a central goal of China inorder to gain international respect and status. The major means chosento affect this cure was the area of Western sports, since traditional sportswere perceived to have failed to do so. For instance, the Boxer Rebellion(1898-1900) was led by ‘Boxers’, a Western term describing practitionersof traditional martial arts. Their failure undermined the Qing Empire,which finally collapsed in 1912. Turning its back on its past, modern,post-Qing, China adopted Western sports.

The dongya bingfu discourse can be seen throughout modern China’shistory. For instance, in his first published article, ‘Tiyu zhi yanjiu’ (Theresearch of physical education) (1917), a young Mao Zedong called on allChinese to strengthen their bodies in order to save the country.4 Mao’sideas were repeated by his arch-rival, Chiang Kai-Shek, who said ‘wehave to work hard to make our country strong, if we don’t want to bedespised by other nations, and our foremost task is to emphasize physi-cal education and work on it’ (cited in Xu 2008: 66). This discourse isstill seen today. For instance, after the Athens Games, the People’s Daily

THE 2008 BEIJING OLYMPIC GAMES 109

trumpeted China’s sporting successes, claiming ‘When a country is pow-erful, its sports will flourish (…) Chinese athletes will make contribu-tions to realize our nation’s great revival’ (cited in Lovell 2008: 773).Even famous dissidents such as Wei Jingsheng draw on the discourse.‘Wei wrote his first articles on democracy precisely to show that theChinese were not “a bunch of spineless weaklings”, and that when indi-vidual citizens learned to straighten their spines China would stand tall inthe world’ (Fitzgerald 1999: 47).

As reflected in the popular slogan from the 1930s, jiuguo qiangzhong(save the nation and strengthen the [Chinese] race), it was believed that astrong and healthy state required a strong and healthy people (Xu 2008:62). Sports and physical exercise were thus crucial in re-forging the na-tional image. The various attempts to cure the ‘sick man’ focused onWestern ideas of physical education and Western sports. Moreover,China believed that it needed to demonstrate to the world that it hadbeen cured, and therefore ached for opportunities to excel in interna-tional competitions. Because it was believed that the physical vitality ofthe new China could be demonstrated through victory on internationalplaying fields, the Olympics and other international competitions prom-ised to provide a means to achieve the recognition China so desperatelysought. It is no coincidence that the visit to Beijing by President Nixonwas prepared through Ping-Pong Diplomacy. And it is because of thishappy coincidence of physical activities, national health and vitality,legitimacy, and subsequent international status, that ‘the Chinese haveshown [such] unbridled enthusiasm for using sports for political pur-poses, most especially for strengthening the ruling party’s legitimacy andas a means of garnering international prestige’ (Xu 2008: 49).

Victory in international sporting events served as a symbolic repre-sentation of a revitalized national strength and national status and fed ameta-narrative of national vigour. The hated ’sick man’ label was ban-ished for good by sporting victories from the 1980s and most emphati-cally by the Beijing Olympic Games. Without understanding China’smodern history, and especially the crisis following the end of commu-nism, it is difficult to understand the way in which, for instance, theChina’s women’s volleyball team triggered such nationalistic pride in the1980s when the Chinese women’s volleyball team defeated Japan, in1981, in the final of the World Cup, and went on to dominate the sportfor much of the decade. This team and its sporting prowess demon-

110 David Askew

strated the power of sports to promote the creation in China of ‘politicalidentity, national confidence and international status for China’ (Hong1997: 11). Xu (2008: 268) notes that:

A nation that obsesses over gold medals is not a self-assured nation. Agovernment that needs gold medals to bolster nationalistic sentiment and itsdomestic legitimacy is not a confident government. And a population thatcannot gracefully accept losses in sports is not a composed and securepopulation.

However, China is not yet able to readily accept losses. Training thebody was thus seen as a means of national salvation (the personal wasthe political). Mao’s famous swim across the Yangtze River in 1966 wasa reflection not only of his belief that a strong body meant a strong na-tion, but also of the notion that legitimate leadership rested on physicalprowess – the swim proved he was fit to rule (Browell 1995: 57 uses thepun too). In terms of the Olympic Games, the sleek, healthy, and athleticbody of Olympic sportsmen and sportswomen can be viewed as anofficial attempt to project to the world an image of a healthy, modern,and Western China.

However, China’s Westernization is a selective Westernization inwhich technology, for instance, is vigorously adopted, but democracy iskept firmly at arm’s length. In terms of sports, Olympic sports in Chinaare without exception foreign imports, and are defined in China as ‘modern’sports and contrasted to indigenous traditional or pre-modern sports thatare not privileged by the Party-State (one indigenous practice is qigong, aquiet, meditational breathing exercise that is increasing popular in Chinatoday, and, as seen in practitioners of Falun Gong, is used to articulate aquiet resistance to communist rule).

Thus Western sports were adopted and vigorously promoted in Chinaas a tool for promoting the image of a healthy body politic and as ameans of both stimulating and satisfying nationalistic emotions. It is,however, important to stress both the political and the ambiguous natureof Western sports in China: traditional (pre-modern) Chinese cultureplaced an enormous weight on literacy. This was encapsulated in thepopular phrase of zhongwen qingwu (esteem literacy, despise martiality).Sports are, of course, frequently seen to be military in nature, and so, inChina, the acceptance of modern sports required a rejection of traditionalbeliefs. With women in particular, sport also symbolizes a political rejec-tion of traditional ideas of femininity (footbinding) and therefore sym-

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5 For the Beijing Olympic Games, see in particular Brownell (2008), Close, Askewand Xu (2007), Jarvie, Hwang, and Brennan (2008), Price and Dayan eds (2008),Worden ed. (2008), and especially Xu (2008).

bolizes a radical emancipatory revolution of ideas and practice. More-over, as Brownell (2008: 62) notes, ‘Chinese people embraced modernsports, as they did the form of the nation, because of their desire to taketheir place on the global stage of modernity’. Sporting prowess is thus ameans of reinforcing notions of national identity, of highlighting com-munist legitimacy, and of recreating the image of a powerful China.However, at the same time, the Chinese government wishes to rejectwhat it sees as Western cultural pollution.

The Beijing Olympic GamesAn examination of the literature on the Beijing Olympics reveals that amajor theme is that of narrative, and in particular Beijing’s official narra-tive of the Games and various contesting counter-narratives.5 The offi-cial narrative is a product of state and society; of the CCP’s propagandamachinery and of a strong nationalistic desire on the part of majorityHan Chinese for China to gain due recognition in the eyes of the world.It is embodied in a number of core themes. For instance, in bidding forthe games, the PRC claimed that Beijing would provide a Green Olym-pics, a People’s Olympics, and a High-Tech Olympics. The official slo-gan of the 2008 Games was ‘One-World-One-Dream’.

The CCP hoped to use the Games to promote a story that focuses onthree decades of economic growth and the subsequent success in over-coming poverty, on present prosperity, and on future aspirations to fullyrejoin the global community. Beijing has attempted to persuade theworld that China is a powerful but peaceful, a prosperous and normalstate, and in doing so hopes to enhance the stature of both China and theCCP at home and overseas. The Beijing Games would allow Beijing tosymbolically declare an end to the century of national humiliation thatbegan with the Opium War, the subsequent collapse of the Sino-centricworld, and the brutal exploitation of China by imperialist powers. Beijingwill wish to emphasize political stability in addition to economic growth,and will want to claim the status of a major global power, specifically interms of sporting prowess, but also generally in terms of both soft andhard power.

112 David Askew

A number of counter-narratives can be identified. Some play onofficial themes, slogans, and symbols. Reporters without Borders, forinstance, has used five interlinked handcuffs to create a disturbing andpowerful image of the 2008 Games. In a play on the official Chineseslogan, activists have used slogans such as ‘One-World-One-Dream’,‘Free Tibet’ or ‘One-World-One-Dream, and Universal Human Rights’.

Human Rights NGOs such as Amnesty International and HumanRights Watch – note that some NGOs like Olympic Watch were createdspecifically to deal with the Beijing Games – have also developed acounter-narrative that critically exposes China’s human rights record,shedding light on the ongoing persecution of the Falun Gong religiousmovement, of peasants, of various ethnic minorities, and of the poorerresidents of Beijing whose homes and communities have been destroyedto make room for the Olympic Games. China’s record overseas has alsobeen highlighted, with its close ties to unsavoury regimes in Myanmar(Burma), Zimbabwe, and especially Sudan denounced. Indeed, the 2008Games were, at times, labelled the ‘Genocide Games’, because of China’sinvolvement with Sudan.

The first attempt to host the Games failed at least in part because ofWestern concerns about Beijing’s human rights record. Jarvie et al (2008:118) argue that, ‘as far as the critical Western gaze was concerned’, thedecision to award the 2008 Olympic Games to Beijing was, ‘a compro-mise between the political imperative to give the Olympic-host role toChina and the ethical imperative to refuse to do so’. Having turnedBeijing down once, it was decided that the West could not afford to doso again.

In the period leading up to the Beijing Olympic Games, concernsabout human rights abuses in China continued to be widely raised in theWestern media. Following the campaign to label the Beijing Games the‘Genocide Olympics’, the Washington Post published an editorial callingfor a boycott, and Steven Spielberg resigned from his position as artisticadvisor in protest of China’s refusal to do more to end the widespreadcrimes against humanity in Darfur (Washington Post, 2006). Throughout2008, unrest and then violence in Tibet served only to underline thesequestions about China’s status as a responsible international citizen. AsSheridan (2008) emphasized at the time, ‘with the Olympic Games dueto start in just a few months, and with the global media poised to de-scend en masse on its national capital, Beijing found itself caught in a

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6 For Joseph Needham, see Winchester’s (2008) recent biography, Bomb, Book andCompass. Brook’s paper is a review of Winchester.

dilemma when protesters in Tibet took to the streets’. Sheridan contin-ues:

The eyes of the world are on Beijing, as perhaps never before. Nevertheless,despite the promise (or threat) of a looming concentration of media, Beijingdecided to crack down savagely on its own citizens, sending in massivenumbers of soldiers – not police, mind you, but soldiers – and clearly givingthe order to shoot its own citizens down in the streets. Slaughter in Tibetposes a dilemma for the international community – especially given that theChinese economy is now so large that many nations might decide that theyneed China more than China needs them (Sheridan 2008: 6).

Together with close ties to ‘unsavoury’, ‘rogue’ regimes, domestic op-pression poses a major stumbling block in Beijing’s attempts to constructan image of a benign and peaceful power and threatens its Olympicnarrative.

During the Games, the official narrative in which Beijing attemptedto use the Games to construct a new national identity and to articulate itsaspirations for a new world order in which China will play an increas-ingly central role, and the counter-narrative which criticized China’shuman rights record, were both unveiled on the global stage. The Open-ing Ceremony, for instance, was widely seen as a huge success. It hasbeen claimed that the Ceremony reflected Needham’s China. Brook(2008) notes, ‘indeed, were it not for Needham, I doubt that the Olympicorganisers would have chosen the history of Chinese science as theirtheme for the opening extravaganza in Beijing this summer’.6

The Opening Ceremony did, on the one hand, reflect the officialnarrative, in which a secure, confident and westernizing China demon-strated that it was both willing and able to (re)join the community ofnations and seemed to confirm one understanding of China – that of amodern, sophisticated, and powerful nation with a glorious past. On theother hand, however, the violence and bloodshed immediately precedingthe Games lent support to the counter-narrative, and seemed to confirma very different understanding of the Chinese Party-State as a savage andbrutal power, indifferent to human rights and contemptuous of its colo-nized peoples.

Lovell (2008: 759) argues that Beijing hoped the 2008 Olympicswould prove to ‘be a harmonious fusion of nationalism and internation-

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alism, of Chinese tradition and high-tech modernity: a utopian symbol ofChina’s triumphant – but decidedly non-hegemonic – recovery of centralposition in the international political, economic and cultural realm, some150 years after the country’s humiliating nineteenth-century clash withWestern imperialism’.

These hopes were threatened, if not thwarted, by the torch relay thatheralded the opening of the Games. The torch relay was disrupted, par-ticularly in Europe. In China, there was a massive nationalistic backlash,with the French retailer Carrefour boycotted. As Economy and Segal(2008) note, ‘it is clear that the Games have come to highlight not onlythe awesome achievements of the country but also the grave shortcom-ings of the current regime’. Beijing was unprepared for the global pro-tests on issues such as Sudan, Tibet, and democracy.

Economy and Segal (2008) comment as follows: ‘as the Olympictorch circled the globe with legions of protesters in tow, Beijing’s Olym-pic dream quickly turned into a ‘public-relations nightmare’. Beijing hadbeen anxious to use the Games not only as a coming out party to an-nounce the arrival of a new global power, but also to enhance China’sreputation overseas and boost the CCP’s legitimacy domestically. Thiswas threatened by the torch relay. Instead of being the party Beijingdesired, ‘preparations for the games have degenerated into some of theugliest verbal confrontations for years between China and its critics’ (TheEconomist 2008a). As Mangan (2008: 753) notes, the torch relay degen-erated into ‘symbol not of friendship but of friction, not of harmony butof disharmony, not of peace but of protest’.

The violence in Tibet significantly diminished China’s global status,but the Games undoubtedly enhanced it. The international respect, statusand recognition converted readily to legitimacy for the regime. The ques-tion is what will Beijing do with this enhanced legitimacy? Jarvie et al(2008: 144) end their Sport, Revolution and the Beijing Olympics with a call to

acknowledge the transformative capacity of sport while at the same timeevaluating whether sport, China or indeed the world is a more just place, amore trusting place, a more humane place, a more safe and secure place tobe as a result of sport, revolution and the legacy of the Beijing Olympics.

This question ultimately can only be answered by Beijing.

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7 Hobbes used the Latin tag homo homini lupus – man is a wolf to man – in his DeCive (The Citizen) (1651). See Hobbes (1998: 3).

8 Charter 08: http://www.canyu.org/n4460c6.aspx (original Chinese document).Link (2009) has published an English translation, which has been used here.

Human Rights LegaciesThe Chinese state can be brutally repressive. Kristof (in Worden ed.2008) begins his introduction to China’s Great Leap with a terrible story,first recounted in China Wakes (1998). When the IOC inspected Beijingin 1993 to evaluate China’s bid for the 2000 Games, neighbourhoodcommittees were ordered to tidy up their respective districts. As part ofthis tidying up, the police arrested a mentally retarded man, 40 year-oldWang Chaoru. Wang had been ‘beaten (…) to a pulp’ the year before hedied as part of an official effort ‘to beautify Beijing’ before the beginningof the annual National People’s Congress (Kristof and WuDunn1994/1995: 99).

A year later, the order to ‘beautify Beijing’ was issued again. Kristof(2008: 19) continues: ‘just hours before the Olympic visitors actuallytouched down, the police beat Wang Chaoru to death. His parents wereallowed to view the body, which was covered with blood and bruises,and then the police officials invited them to a hearty lunch to makethings up’. The murder of ‘a mentally retarded man because he didn’t fitin with the Olympic image’, WuDunn claims, ‘was the kind of thing thatthe Nazis might have done before their 1936 Berlin Olympiad’ (Kristofand WuDunn 1994/1995: 99). As Thomas Hobbes also noted, man is,without question, a wolf to man.7

Despite – or perhaps just because – of such brutality, China is alsohome to some incredibly courageous individuals. For instance, on 10December 2008, to mark the 60th Anniversary of the Universal Declara-tion of Human Rights, a group of 303 dissidents and human rights activ-ities unveiled Charter 08 (Lingba Xianzhang), a document calling fordemocracy, freedom, and political reform. This is, of course, a call forpolitical liberalization – the Fifth Modernization. As is the case withmuch public debate, and especially dissident debate, in contemporaryChina, Charter 08 was published on the internet, which now functions asthe modern equivalent of China’s ‘Democracy Wall’. Charter 08 beginsas follows.8

A hundred years have passed since the writing of China’s first constitution.2008 also marks the sixtieth anniversary of the promulgation of the Univer-

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9 This difference can be understood in terms of dissimilarities between the norma-tive assumptions of each ‘national’ Enlightenment period, and also between the ‘Com-

sal Declaration of Human Rights, the thirtieth anniversary of the appear-ance of the Democracy Wall in Beijing, and the tenth of China’s signing ofthe International Covenant on Civil and Political Rights. We are approach-ing the twentieth anniversary of the 1989 Tiananmen massacre of pro-de-mocracy student protesters. The Chinese people, who have endured humanrights disasters and uncountable struggles across these same years, nowinclude many who see clearly that freedom, equality, and human rights areuniversal values of humankind and that democracy and constitutional gov-ernment are the fundamental framework for protecting these values.

By departing from these values, the Chinese government’s approach to‘modernization’ has proven disastrous. It has stripped people of theirrights, destroyed their dignity, and corrupted normal human intercourse.So we ask: Where is China headed in the twenty-first century? Will itcontinue with ‘modernization’ under authoritarian rule, or will it embraceuniversal human values, join the mainstream of civilized nations, andbuild a democratic system? There can be no avoiding these questions.

The strong integrity and moral courage of such dissidents lends hopeto the dream of a better tomorrow. However, it has to be noted that theuniversal values advocated here, are ‘Western’ in origin. Indeed, both themodern Olympic movement and the concept of human rights are Euro-pean products that have been increasingly adopted by the modernizingworld. A discussion of the Beijing Games (or of China and humanrights) is therefore inevitably also a discussion of the impact of Westerni-zation, modernization, and globalization on the Chinese body politic.

In hosting the Olympics, Beijing hoped to be able to demonstrate thatChinese culture, society and the economy have caught up to the West,that China can now take its rightful place as a member of the modern,Western world. One of the hurdles China will have to overcome, how-ever, is the test posed by human rights (understood here to include bothcivil liberties and individual freedoms). To the extent that human rightsare universal, China needs to be able to show that this aspect of globallegal culture has also been successfully adopted and internalized.

The interaction of Games and rights presents a rich and multi-tex-tured cultural terrain. There are a number of different understandings ofhuman rights. Within the EU itself, the British Enlightenment has pro-duced a perception of human rights that differs to that of the FrenchEnlightenment.9 Moreover, the EU position on human rights is best

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mon Law’ and ‘Civil Law’ traditions.10 See also the chapter by Georg Wiessala, in this volume.

understood as an evolving rather than a static position. For instance,until the mid-1970s, the European Commission saw economic develop-ment as a precondition for the realization of human rights, rather thanthe current position, which is to see the guarantee of human rights as aprecondition for development. Needless to say, Beijing’s official positiontoday shares much in common with the pre-mid-1970s European Com-mission (Bartels 2005: 7, cited in Wiessala 2006: 68).10

The EU has proclaimed itself to be in favour of a global promotionof core values – including tolerance, democracy, and human rights (inaddition to being an exercise in soft power, this promotion can either beviewed as embodying good global citizenship or criticized as yet anotherround of Eurocentric cultural imperialism). The attempt by the EU to re-invent itself as a ‘normative’ power means that its relationship withChina – which is certainly not a democracy and has a human rights re-cord that is not infrequently denounced as abysmal – has been a troubledone. This is mainly due to Beijing’s human rights record, but is alsopartly because comparisons between and contra-distinction to an ideal-ized notion of the Western ‘rule of law’ and the orientalized concept of‘Oriental Despotism’ have such deep roots in Western culture.

ConclusionViewed as a text, the spectacle that is the modern Olympic Games servesas a cultural space in which perceptions of ‘Self’ and ‘Other’ can be andhave been debated, articulated, and challenged. This is especially true ofthe Beijing Games, where these perceptions were tied to discursive narra-tives on the West and the East, on Capitalism and Communism, and onthe politics of emerging power. Indeed, a symbolic landscape functionsas a backdrop to the Chinese Olympic discourse. When reduced to itsbare structure, the symbolic landscape maps a progressive movement ofChina vis-à-vis the global world. Beijing marks both the end of China’sstruggle to rejoin, and the beginning of China’s full participation in, theglobal community.

The symbolic significance of Beijing can perhaps be boiled down tothe term recognition. This symbolic landscape reflects a similar discourseon the history of sports in China. As seen in Hong’s history, Footbinding,

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Feminism and Freedom, an evolutionary history can be projected onto theChinese body, in which a past culture that restricted bodily movementthrough such traditions as footbinding was overcome and replaced bynew emancipation. In combating the legacy of the century of shame andhumiliation, Beijing has turned to international sporting success as ameans of regaining national dignity and prestige and of overcoming thehumiliating label the ‘sick man of East Asia’. Many Chinese share thisgoal and, as a consequence, in China today ‘Sports patriotism unites thewhole nation’ (Hong 2004: 345).

In his Olympic Dreams, Xu (2008: 225) raises a frequently-asked ques-tion about the Beijing Games: will China’s Olympics be seen as theequivalent of the 1936 Berlin Games, which strengthened a terribleregime, or of the 1998 Seoul Games, which initiated democratic reformin South Korea and helped transform it into a dynamic democracy? Theanswer will almost certainly come to be seen as lying somewhere be-tween the dystopian and utopian alternatives. The Games were a success,and certainly perceived so in China, and as a result have strengthenedboth the prestige and legitimacy of the Party-State. This increased secu-rity could be used to promote further reform, and in particular a politicaltransition towards democracy. However, it could also be used to crackdown on those demanding change. For the international community, asignificant question is, will the emerging nationalistic China participate inor confront the existing world order?

ReferencesBrook, Timothy. 2008. ‘Sapient Sinophile’ in Literary Review. Online at:

www.literaryreview.co.uk/brook_09_08.html.Brownell, Susan. 1995. Training the Body for China: Sports in the Moral Order of the

People’s Republic. Chicago: University of Chicago Press.Brownell, Susan. 2008. Beijing’s Games: What the Olympics Mean to China. Lanham,

Maryland: Rowman & Littlefield.Chang, Gordon G. 2008. ‘China After 30 Years of Reform, I’ in Forbes, 16

December 2008. Online at: www.forbes.com/opinions/2008/12/16/china-economic-reform-oped-cx_gc_1216chang.html.

Close, Paul, David Askew, and Xu Xin. 2007. The Beijing Olympiad: The PoliticalEconomy of a Sporting Mega-event. London: Routledge.

The Economist 2008a. ‘Chinese Nationalism: Flame On’ in The Economist, 26April 2008.

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The Economist. 2008b. ‘China’s Reforms: The Second Long March’ in TheEconomist, 13 December 2008.

Economy, Elizabeth C. and Adam Segal. 2008. ‘China’s Olympic Nightmare:What the Games Mean for Beijing’s Future’ in Foreign Affairs, July/August.

Fitzgerald, John. 1999. ‘China and the Quest for Dignity’ in The National Interest,Spring: 47-59.

Ha Jin. 2008. ‘The Censor in the Mirror’ in The American Scholar. Online atwww.theamericanscholar.org/au/08/censor-jin.html.

Hobbes, Thomas. 1998. Hobbes: On the Citizen, Cambridge University Press.Hong, Fan. 1997. Footbinding, Feminism, and Freedom: The Liberation of Women's

Bodies in Modern China. London and Portland, Oregon: Frank Cass.Hong, Fan. 2004. ‘Innocence Lost: Child Athletes in China’ in Sport in Society.

7(3): 338-354.Hong, Fan, Ping Wu, and Huna Xiong. 2005. ‘Beijing Ambitions: An Analysis

of the Chinese Elite Sports System and its Olympic Strategy for the 2008Olympic Games’ in The International Journal of the History of Sport 22 (4): 510-529.

Jarvie, Grant, Dong-Jhy Hwang and Mel Brennan. 2008. Sport, Revolution and theBeijing Olympics. Oxford: Berg.

Kristof, Nicholas D., and Sheryl WuDunn. 1994/1995. China Wakes: The Strug-gle for the Soul of a Rising Power. New York: Vintage Books.

Link, Perry. (trans.). 2009. ‘China’s Charter 08’ in The New York Review of Books56 (1), 15 January 2009.

Lovell, Julia. 2008. ‘Prologue: Beijing 2008 – The Mixed Messages of Contem-porary Chinese Nationalism’ in The International Journal of the History of Sport25 (7): 758-778.

Mangan, J.A. 2008. ‘Preface: Geopolitical Games – Beijing 2008’ in The Interna-tional Journal of the History of Sport 25 (7): 751-757.

Morris, Andrew D. 2004. Marrow of the Nation: A History of Sport and PhysicalCulture in Republican China. Berkeley, Calif.: University of California Press.

Nathan, Andrew J. 2008. ‘Medals and Rights: What the Olympics Reveal, andConceal, about China’ in The New Republic, 9 July 2008: 41-47.

Price, Monroe E., and Daniel Dayan (eds). 2008. Owning the Olympics: Narrativesof the New China, Ann Arbor: The University of Michigan Press.

Seymour, James D. (ed.). 1980. The Fifth Modernization: China’s Human RightsMovement, 1978-1979. New York: Human Rights Publishing Group.

Sheridan, Greg. 2008. ‘Chinese Engagement is a Two-way Street’ in The Austra-lian (27 March 2008).

Washington Post. 2006. ‘China and Darfur: The Genocide Olympics?’ in Wash-ington Post (14 December 2006).

Wiessala, Georg. 2006. Re-orienting the Fundamentals: Human Rights and New Con-nections in EU-Asia Relations. Aldershot: Ashgate.

Winchester, Simon. 2008. Bomb, Book and Compass: Joseph Needham and the GreatSecrets of China. London: Viking.

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Worden, Minky (ed.). 2008. China’s Great Leap: The Beijing Games and OlympianHuman Rights Challenges, New York: Seven Stories Press.

Xu, Guoqi. 2008. Olympic Dreams: China and Sports, 1895-2008, Cambridge,Massachusetts, and London: Harvard University Press.

ASPECTS OF THE GEO-POLITICAL SETTINGOF EU-CHINA INTERACTION

EUROPEAN STUDIES 27 (2009): 123-137

CHINA VIEWS EUROPE:A MULTI-POLAR PERSPECTIVE

Jenny Clegg

AbstractThe formation and development of the European Union, and the riseof China, are transforming the global order, promoting a more multi-centred world. Sino-EU relations will play a key role in shaping thecharacter of the newly-emerging multi-polarity. In examining howChina views Europe, this chapter is concerned to set out China’sstrategic perspective on Europe’s role in world multi-polarisation,explaining its significance from the Chinese perspective. By improv-ing its relations with Europe step by step, China has been able tostrengthen its own status in a world order dominated by the US. Thediscussion opens with a consideration of China’s multi-polar concep-tion, illuminating this further by tracing the origins of the analysis tothe 1970s, to Mao Zedong’s Theory of the Three Worlds. The chap-ter then outlines developments in Sino-European relations in thewider context of the changing international situation, to reveal howthese have helped shape China’s strategic choices. Finally, the discus-sion reviews recent Chinese views on relations with the EU and con-siders the prospects for a strengthening of Sino-EU strategic coopera-tion.

IntroductionThe idea of a multi-polar world came to the forefront in Western debateas the transatlantic rift opened over the issue of the US-led Iraq war.With France and Germany joining Russia, China and India to oppose theaction, this was seen by some not merely as a new alignment against USunilateralism and aggression, but as having the potential to provide the

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foundation for an entirely new kind of peaceful developmental worldorder (Amin 2004). The year 2003 saw a new momentum in advancingthe Sino-EU strategic partnership. However, difficulties soon arose andas transatlantic ties began to reassert themselves when the second BushAdministration reverted to a more multilateralist approach, the questionwas: had the multi-polar trend been over-exaggerated? China has longviewed Europe as a force capable of restraining US hegemonism, lendingparticular weight to emerging differences in the Western alliance in de-veloping its own strategy against superpower dominance. This chaptersets out to explore China’s distinctive view of Europe, taking a long-termmulti-polar perspective to highlight the strategic dimension of Sino-Eu-ropean relations. The step-by-step improvements in Sino-Europeanrelations, despite certain temporary setbacks, have been significant ininfluencing China, as it shifted towards a more cooperative stance inworld affairs towards pursuing a strategy of multi-polar developmental-ism.

This chapter, firstly, sets out China’s multi-polar conception, its stra-tegic partnership approach and New Security Concept which togetherunderpin its peaceful development path. It moves on to a historicaloverview, starting by tracing the origins of China’s particular perspectiveon Europe to the 1970s to Mao Zedong’s Three World Theory, thenconsidering the developments in Sino-European relations in the widercontext of the changing world situation shaping China’s strategic choices.Finally, after setting out more recent Chinese views on the basis of theSino-EU relations, the discussion concludes with a consideration of thelatest developments in their partnership and, noting China’s diplomaticadvances worldwide, the prospects for a strengthening of Sino-EU stra-tegic cooperation.

China’s Multi-polar Perspective In China, the concept of multi-polarisation has been under serious con-sideration since the mid-1980s (Segal 1982: 37). Seen through Chineseeyes, multi-polarisation involves, on the one hand, readjustments in therelations between the major powers, with the growing role in interna-tional affairs of Europe and Japan, and on the other, the rise of develop-ing countries, as well as their regional associations such as ASEAN, theAfrican Union, Mercosur, OPEC, together with the Shanghai Coopera-

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tion Organisation, and their international organisations such as the G77and the non-aligned movement (Jin Yinan 2002).

Whilst a multi-polar world order is seen to have the potential to con-strain the ability of any superpower to dominate world affairs, China’sstrategy is not one which seeks simply to counterbalance the other majorpowers against US dominance. Unlike the Western concept of balance ofpower, the Chinese view of multi-polarisation entails a world develop-ment dimension, furthering North-South dialogue and South-Southcooperation, with developing countries playing a key role. According toChinese strategists, the US has, since the end of the Cold War, en-deavoured to pursue a unipolar world, strengthening its Cold War mili-tary alliances, primarily with NATO and Japan, to form a ‘python strat-egy’, with the aim of controlling and incorporating Europe and Japan,and suppressing and containing Russia and China (Yao Youzhi 2003).

By contrast, the significance of multi-polarisation as China sees it, liesin the possibility of a more democratic and peaceful determination ofworld affairs. In seeking to hasten the trend, China’s aim is not only tofind room, in a world situation in which unipolarity is the dominantaspect, to pursue its own development path and rise as a major power init is own right, but also to create a new international political and eco-nomic order. With a strengthening of the world’s various powers andregional organisations providing the basis for a genuine multilateralismcoordinated through the UN, this would enhance the possibilities ofpeaceful solutions to conflictual situations through dialogue and of newapproaches to world development.

Partnership ArrangementsChina’s vision for a multi-polar world is one coordinated through part-nership arrangements between powers based on equality and respect forsovereignty and on common interests rather than shared values andideologies. The EU-China strategic partnership arrangement announcedin 1998 should be seen as one of a series initiated by China as it hassought to strengthen its relations with other major powers. The first tobe agreed was with Russia (1996). Following this, discussions wereopened with the US (1997), with Germany, France and the UK on anindividual basis (1998), Japan (1998), ASEAN (2004) and India (2005).From a critical point of view, China’s partnership arrangements are seento promise much, but lack substance. Indeed, nearly all have encountered

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1 Position Paper: ‘New Security Concept’, 31 July 2002: China Report 39 (1): 128-131.

difficulties; nevertheless, persistent endeavours have made a certain ifvariable progress. Partnerships should be viewed as much as a process asa goal; not so much an accomplished result, but a ‘possibility that may berealised’ (Saunders 2000: 62). China’s leaders recognise that their coun-try’s emergence as a new international power is bound to give rise totensions and strains in its relations with other powers, and so seek tobuild workable frameworks, with potential adversaries as well as non-adversaries, within which to handle differences, manage difficulties andresolve disputes and potential conflicts through dialogue over the longterm (Goldstein 2001: 847; 850/1). China’s strategic partnerships are nottargeted at the US: a conflictual strategy would be liable to achieve pre-cisely what China seeks to avoid, creating an opening for the US to ex-tend its alliances of encirclement around China (Goldstein 2001: 855).Unlike alliances which commit partners to come to each others defence,China’s arrangements are designed to be flexible. By adopting the ap-proach of ‘setting aside differences and seeking common ground’, theaim is to avoid conflict in order to focus on shared interests, buildinggood relations with other powers despite their military alliances and tieswith the US, thereby deflecting the US encirclement strategy. Rather thanbeing anti-American, its partnership arrangements are geared to maxi-mise mutual benefit. The strengthening of both partners, and thereby thepromotion of multi-polarity, will ultimately reduce US dominance.

The New Security StrategyThe articulation of a New Security Concept (NSC), based on ‘mutualtrust, mutual benefit, equality and coordination’ in 2001 set out moreclearly the kind of international order China is seeking to create throughits partnership approach. The NSC guidelines call for adherence to prin-ciples of mutual respect for sovereignty, and the peaceful settlement ofdisputes through dialogue and negotiation; the strengthening of the UN,giving full play to its leading role in world affairs; and the reform of theexisting international economic and financial organisations to provide forthe financial and economic security of all countries and promote com-mon prosperity and common development.1 At one level, the NSC pro-vides a broad statement about the kind of international political environ-ment in which China would feel secure to concentrate on its own devel-

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2 Pei Yuanying ‘The Five Principles of Peaceful Coexistence and the Theory andPractice of China’s Diplomacy in the New Era’ China Institute of International Studies.On-line at: http://www.ciis.org.cn; Jiang Zemin’s speech at the Russian Duma inBeijing Review (12-18 May 1997).

3 See: Chairman Mao’s Theory of the Differentiation of the Three Worlds is a Major Contribu-tion to Marxism-Leninism. 1977. Peking: Foreign Languages Press.

opment goals, but as Van Ness argues, it represented much more thanthis, forming a response, as it were, to US interventionism and to thethen US President George W. Bush’s unilateralist, ‘preventive war’ doc-trine (Van Ness 2005: 264).Whilst the US stands for a largelyideologically-driven international security environment which is shapedby military power and military alliance, the NSC opposes this revival of‘Cold War’ mentality, instead positing a cooperative view of security, onewhich is not just something for countries with similar views but in whichall countries to work together to foster a shared sense of security, toachieve common security for the world as a whole. Differences betweencountries, it is argued, should not become the reason for estrangement,hostility and conflict, posing barriers to the development of normalState-to-State relations, but should serve as driving forces behind closerexchanges and cooperation of countries and greater common develop-ment and progress.2 The NSC offers an alternative system for managingrelations between diverse countries, a qualitatively new type of interna-tional relations of non-alliance and non-confrontation, inclusive of theUS, and based not on power politics but on equality and trust. It reflectsChina’s interests in peaceful development, in creating a stable interna-tional environment which allows it to focus on its own development, notleast by opening opportunities for others. What provides the strategicsubstance of China’s partnerships is not simply the shifting from a worldpattern based on US dominance, but a world multi-polar develop-mentalism with its goals of conflict resolution through dialogue, ‘win-win’ economic cooperation and institutionalised multilateralism.

Historical OverviewThe origins of China’s distinctive view of Europe’s multi-polar role canbe traced to Mao Zedong’s Theory of the Three Worlds, which was initiallydelivered as a speech by Deng Xiaoping to the UN in 1974, aimed atsupporting Third World demands for a New International EconomicOrder (NIEO).3 At this time, US leadership of the Western capitalist

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bloc was coming under increasing challenge. The Vietnam War wasbeing fought at huge expense and the collapse of the dollar saw thebreakdown of the Bretton Woods system of economic coordination.From the perspective of the Theory of the Three Worlds, the worldsituation was not one of straightforward imperialist-socialist confronta-tion, but instead was being shaped by power relations between the threeworlds of the superpowers of the US and USSR, the second order pow-ers, namely Europe and Japan, and the Third World. These togethercreated a complex web involving both cooperation and conflicts of inter-ests. The theory focused in particular on superpower rivalry and domi-nance which was seen primarily as dividing and subordinating the ThirdWorld, and called for an international united front against hegemonismand superpower aggression. In this it sought to unite Third World states,regardless of their revolutionary or progressive stance, as the main forceagainst imperialism, whilst also winning over second order powers.Whilst recognising the extensive cooperation amongst the advancedcapitalist countries to shape the rules of the global economy to reflecttheir interests, the analysis nevertheless lent particular weight to thedifferences emerging within the Western alliance. This was considered toreveal a certain potential for Western Europe as well as Japan to developas a counter hegemonic force.

With the end of colonialism, both Europe and Japan were no longerthe main forces of imperialist domination and oppression. They werenow seen to emerge as intermediate global players. Although they lookedto the US to maintain and promote the capitalist world system, drawingbenefits from their relationship with the superpower, they in turn had toadapt their own development to the priority needs of the leading power.With the US seeking to extend its global domination, this tended toreduce their own independent influence in world affairs, limiting theirsovereignty. However, in the eyes of Chinese strategists, these ‘second-ary’ powers were becoming less willing to accept US leadership uncondi-tionally, seeking instead a more equal partnership as they themselvesstarted to outpace US growth after their successful post war reconstruc-tion. The establishment of the Common Market in Western Europe,France’s partial withdrawal from NATO and De Gaulle’s independentstance, the reluctance of European powers to support US aggression inIndochina, the collapse of the dollar-based monetary system, and sharp-ening trade and currency conflicts between Europe and Japan on the one

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4 1982 saw the Joint Sino-American Communique, pledging to scale back arms sales toTaiwan; consultations also started on the normalisation of Sino-Soviet relations.

hand and the US on the other, the refusal by European allies to allow USplanes to use US air bases on their soil in the Middle East war, were allseen by the mid-1970s as marking a serious weakening in the Westernalliance, a harbinger, together with the Sino-Soviet split, of the break upof Cold War bipolarity (Ding Yuanhong 1983: 85-102).

With the Third World pressing for a new more equal internationaleconomic order, the propoents of the Three Worlds Theory argued forthe recognition of a degree of common ground, between the secondarypowers and developing countries, as regards their discontent with USdominance. Although tied to US power, these states might, in theirsearch for equal partnership with the US, remain neutral or even beprepared to make concessions to Third World countries. Indeed, bothJapan and Western Europe were to respond after a fashion to the callsfor an NIEO with their own development agendas, the Fukuda doctrine(1977) and the Brandt Report (1980). Taking a strategic perspective onthe international trends of cooperation and conflict, the Three Worldstheory was of fundamental significance, in that it opened up opportuni-ties for the emergence of counter-hegemonic alternatives to superpower-dominance. It paved the way for a qualitative shift in China’s diplomacyin the early 1980s from a revolutionary to a non-ideological approach, asthe country strove for equal status as a world power and a level playingfield in the global economy through North-South dialogue based onSouth-South cooperation.

In 1982, China’s strategic direction underwent a qualitative shift, withthe adoption of an independent foreign policy of peace and develop-ment. Following significant improvements in its relations with bothsuperpowers, China no longer considered itself under pressure of immi-nent attack and could afford to take a more non-aligned stance.4 Its viewthat world revolution was the only alternative to imperialist wars andinterventions had dictated a foreign policy based on ‘friends and foes’.Now China was to give priority to securing a peaceful internationalenvironment, whilst refocusing its objectives towards domestic construc-tion. Chinese observers saw the improvements in their country’s situa-tion as indicative of a qualitative, world-wide, shift, accompanied bydeclining capabilities, in both the US and USSR, to sustain Cold Wardivisions and dominate the world. Western Europe’s stance, in particular,

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which favoured East-West détente during the nuclear arms race betweenthe US and USSR in the 1980s assumed great significance in China’seyes. Weak in military power, Western Europe still tied its defenceagainst the USSR to the US, agreeing to the rearmament of NATO in1979, with both Britain and Germany accepting the siting of US cruisemissiles in their countries from 1983.

Nevertheless, Western Europe’s strategic situation was very different.Whereas the US regarded Soviet rivalry to its hegemony as the strategicpriority and determined to maintain rough balance in nuclear arms, suchthat the two superpowers in effect held each other in check throughmutually assured destruction, this placed the Western Europeans facingthe prospect of a ‘limited nuclear war’ on European soil. So despite theirdependence on the US alliance, Western Europe sought to expand itspolitical and economic exchange with the USSR in order to shift rela-tions from Cold War freeze towards dialogue (Guo Fengmin 1982: 98-123). For China, the Reagan-Gorbachev agreement on nuclear armscontrol marked a monumental shift in the world situation: ‘war was nolonger inevitable’ (Chan 1999: 121); the door had thus been opened for amulti-polar world. By the end of the 1980s, although the US and USSRwere still overwhelmingly strong militarily, their political influence wasdwindling. The EEC and Japan, both surpassing the US in economicterms, were starting to pursue at least a quasi-independent approach inworld affairs across a range of issues. With this, the trends towards thegreater independence of smaller and medium-sized nations were making‘hegemonism and power politics run up against a wall’ (Quian Quichen1989). In these new circumstances of emerging multi-polarity, shapednot least by Europe’s greater assertiveness, China, whilst still intendingto keep a low profile, gradually stepped up its commitment to multi-lateralism and a negotiated world order, starting to seek membership ofinternational organisations and participate in multilateral treaties.

Although, with the end of the Cold War, the US clearly emerged asthe sole superpower, Chinese analysts saw the world order configurednot simply by unipolarity but characterised as a five-pointed star pattern:one superpower (the US) and four major powers (Europe, Japan, Russiaand China) (Chan 1999: 110-112). This was seen to allow China to takea more proactive role. The US, indeed, had put on a dramatic display ofoverwhelming military superiority in the 1st Gulf War, but its economywas plagued by deficits, whilst Europe and Japan were continuing to

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5 See: ‘Factors hindering US hegemonic moves’in People’s Daily (8 April 2003).

develop as powerful economic entities. The deadlocked situation of theUruguay round of GATT in the early 1990s was seen to prove that USrelations with its chief allies were becoming more difficult to manage(Chen Xiaogong 1992: 3), with neither one keen to remain junior part-ners of the US, and wanting greater equality (Xin Hu 1993). Followingthe formation of the EU, its move towards closer relations with China in1995 was remarkable from China’s perspective, coming as it did at a timeof near breakdown in Sino-US relations over the Taiwan Strait crisis. Atthe same time, Sino-Russian relations were fast moving ahead.

Towards the end of the 1990s, the multi-polar trend appeared to havetaken a downturn. The US had been able to re-establish its superiority,reviving both NATO and its military alliance with Japan to rein in theirgrowing assertiveness, whilst the developing world, which ultimately,according to China’s strategic vision, was the decisive factor in multi-polarisation, remained weak and disunited. Nevertheless, as China saw it,the trend took a zigzag path of development as the major powers ad-justed and readjusted their positions in the five pole pattern. This createdthe possibility of facilitating the trend through a mutual checking andbalancing among the major powers (Cheng 1999: 2).

It was in this context of the unipolar-multi-polar dynamic, with pros-pects of stronger relations with Europe and Russia, that China embarkedon a more active international engagement to cultivate partnerships withall the major powers to minimise US dominance. What made these part-nerships workable was that, although dominant, the US superpowercould not entirely dictate how other powers conducted their relationswith each other, leaving a certain room for manoeuvre. At the same time,as evidenced in its war on Yugoslavia, the US was not strong enough toact on its own but had to work in conjunction with other major powersto maintain its dominance. As was to become increasingly clear, thismeant that in order to achieve its strategic objective of unipolar hege-mony, the US had at the same time to network and collaborate withother powers, thereby promoting a cooperation which conversely wasconducive to improving the overall strength and international influenceof its potential rivals.5 When France and Germany joined Russia andIndia to oppose the Iraq war, despite the fact that they all attached greatimportance to their relations with the US, this was seen to represent in

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6 See: ‘US global strategy foiled’ in People’s Daily (28 May 2004).

Chinese eyes a substantive development in multi-polarisation. Althoughall of these major powers together had not been able to stop the USlaunching the war, nevertheless they could provide a certain restraint onits unilateralism.6

Debating Sino-EU Relations From China’s perspective, Europe’s search for its own equal partnershipwith the US after the end of the colonial era provided China with moreoptions, and more room to bring into play its dynamic strategy rooted inthe Three World Theory, with the aim of manoeuvering towards multi-polarity (Yu Xintuan 2004). China’s view is that Europe offers a ‘bridge’for China to enter a world system, dominated by the US, on its ownterms. In particular, Europeans are seen as far less concerned than theUS with the ‘threat’ of China’s ‘hard’ power. Europe has no militaryforces stationed in East Asia. Lacking the hegemonic reach and ambitionof the US, the EU is regarded as more prepared to treat China as anequal.

Following the return of Hong Kong (1997) and Macao (1999), theabsence of any fundamental conflicts of interest in terms of geopoliticsand strategic intention meant that whatever differences there may bebetween the two sides can be resolved through dialogue (Mai Zhaorong2004). Many Europeans were critical of excessive US pressure on Chinain the negotiations over its entry into the WTO and advocated greaterflexibility in terms. In this Europe is seen as more prepared to viewChina as a large developing country, rather than a ‘threat’, and to assist inits process of transition (Arias 2005). What provides the basis for a long-term stable relationship between China and the EU, are their commonfoundations as major trading partners, their shared interests in multi-lateralism, and in supporting the core role of the UN in handling regionaland international crises (Feng Zhongping 2004). Nevertheless, manyChinese analysts recognise that considerable differences exist betweenChina and Europe, given their different understandings of human rightsand of free trade. The EU shares with the US a basic aim in ‘socialising’China into the established Western-dominated international order. Butwhilst the EU pursues issues of labour standards and favours more rapidliberalisation, which could have a negative impact on development in

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7 Over 60 per cent of the trade deficit was created through Sino-EU joint ventures(Ding Ying. 2008)

China (Yu Xintuan 2004), its concerns with labour rights, gender equalityand prison conditions are regarded as more in accord with China’s ownaims to improve its governance (Yan Wei 2006).

When, following the attack on Iraq, the tone of the EU towardsChina became more muted, indicating a greater willingness to accommo-date China’s gradualist approach towards political reform, China took theopportunity to expand its engagement (Lanxin Xiang 2004: 113). Ana-lysts were nevertheless cautious not to overstate the discord across theAtlantic, given the shared values and ideologies at the base of the US-European alliance (Wu Baiyu 2004). Once transatlantic commonalitiesbegan to reassert themselves, however, it was also noted that consider-able potential still existed for new rifts to emerge. Differences over theUS missile defence system, the Kyoto Protocol to curb global warming,as well as the war on Iraq, meant that the rifts, rooted in their rivalry tore-divide the world’s strategic resources, would not be easily repaired(Wu Liming 2004).

Recent Developments: Towards Strategic Co-operation? After 2003, EU-China relations appeared to reach a new watershed, withagreements on China’s participation in the Galileo satellite tracking sys-tem, and on ITER - the International Thermonuclear ExperimentalReactor - signifying new heights in technological cooperation. However,as the second Bush Administration returned to the multilateral fold, notleast to ease the transatlantic rift, it at the same time exerted intensepressure on the EU not to comply with the Chinese government’s ex-plicit request to lift the arms embargo, imposed after the 1989Tiananmen Incident.

As Europe’s trade deficit with China widened, the EU has also ex-pressed economic concerns, deciding against granting China marketeconomy status. This is despite the fact that China’s economy is alreadyfar more open than for example India or Russia, whose bids for thisstatus the EU supports. The EU has also taken to joining US calls forrenminbi revaluation. On the other hand, as Chinese commentators havepointed out, much of the deficit in trade is accounted for by Sino-Euro-pean joint ventures in China.7

134 Jenny Clegg

8 See ‘Bush, the new international order and China’s choice’ in People’s Daily (22November 22).

To explain these limitations on the Sino-EU partnership, and espe-cially the European reluctance to strain relations with the US, someWestern commentators argue that the EU’s multilateralism and China’smulti-polarisation are at odds with the former emphasising a rules-basedorder and the latter seeking to adjust the world power balance (e.g.:Geeraerts 2008, 34). Indeed, China’s main aim has to be to deflect theUS ‘python strategy’, preventing any link-up between NATO and the USallies in Asia. Direct relations with the EU are seen to offer a bufferbetween China and the US (Ni Yanshu 2005). But what China seeks inrelation to the US is a peaceful ‘sharing of space’ so that it can make itsown distinct contribution in shaping the future world.8 In advocating amulti-polar world, then, China is pursuing no more than the EU - anequal partnership with the US. The challenge, as China sees it, is to ‘fig-ure out a way to make the US an ordinary member of the … [worldorder], rather than a lawmaker (Zhang Yansheng 2007)’.

In fact, although the ‘US effect’ continues to exert an influence on theSino-European relationship, the EU has not entirely lined itself up withthe US. Europe continues high-level cooperation with China, includingin sensitive technologies, indicating a certain preparedness to assist di-rectly in China’s economic development (You Ji 2008). At the same time,although it has become more strident on the issue of RMB revaluation,the EU tends to emphasise that the Chinese government should decidewhen and how to change its policy (Ming Wan 2008). In 2007, the Sino-EU relations took the further step of agreeing to cooperate on prevent-ing big exchange rate fluctuations (Barber 2007). But how far will theEU be willing cooperate in China’s calls for the democratisation of theinternational order and the creation of a more stable international finan-cial and economic system favourable to world development? Both Chinaand the EU, lacking the military means to pursue their interests globally,share the need for a rules-based negotiated world order. They do, how-ever, differ with respect to the type of rules needed for this - those shap-ing a liberal or a developmental international political economy. China’smulti-polar vision seeks an international order in which developing coun-tries have their say to ensure that the system operates in their interests. Aparticular problem here for Europe is that the multi-polarising worldtrend brings into question its own over-representation in international

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organisations such as the IMF and the UN Security Council permanentmembership. Will the EU then choose a strategic cooperation with Chinato build a stable multi-polar order or will it instead seek a closer geo-political coordination with the US, joining its containment strategy torestrain the rise of China and its multi-polarising impact?

The Sino-European relationship is not the only one driving the multi-polar process. China’s diplomatic relations have expanded extremely fastover the last few years, while the growing significance of the ShanghaiCooperation Organisation and the China-Africa forum in particular openup a new area for EU consideration. Indeed, there are huge opportunitiesfor the EU in participating in China’s development. With the Chinesegovernment planning to invest almost $200bn in renewable energy by2020, there is significant potential here for collaboration in R&D. Suc-cessful cooperation through this and other joint projects in China haspotential for a much wider application worldwide, teaming up with localactors, for example in Africa, to assist in development and poverty eradi-cation, as well as in advancing the Eurasian link. Now that a new ‘energySilk Road’ of oil and gas pipelines linking Europe and North East Asiawith Central Asia and the Middle East, with China at the centre, hasbecome a viable proposition, this calls for the EU and China to worktogether to invest in transcontinental infrastructure projects including anintercontinental road and railway link.

As a partnership between the world’s largest developing and thesecond largest developed economic power, China attaches a global sig-nificance to Sino-EU cooperation in its potential to promote the multi-polar trend and shape a more peaceful international order conducive todevelopment. China’s aim as it develops, as we have argued here, is tobuild a stable relationship with the US. A strengthening relationship withthe EU is a means of achieving this, helping to limit the possibility ofbreakdown in Sino-US relations by making it hard for the US to treatChina as an enemy. At the same time, by helping to demonstrate thatChina’s emergence as a world power is peaceful, it also provides a way togain US recognition of its needs to access state of the art technologies inorder to develop. It is equally important for the EU to create a favour-able atmosphere for international cooperation. A new polarising ColdWar would inhibit its own role.

On the other hand, there are ‘development dividends’ to be gainedthrough strategic cooperation with China to promote multi-polar

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developmentalism. Such cooperation does not preclude human rightsdialogue with China. By and large, China recognises its problems, thoughconsidering that improvements in human rights must follow social andeconomic development. As it seeks its place in the international order asan equal and responsible world power, China looks to the EU to play aspecial role in assisting US adjustment to the status of a ‘normal power’.For the EU, strategic cooperation demands recognition of its own role inhelping to smooth Sino-US relations. It has to think strategically abouthow European participation in China’s development - and in the Eur-asian and African dimensions of the Sino-EU partnership - can be pur-sued, without antagonising the US, as the latter’s global power status isthereby adjusted.

ReferencesAmin, Samir (cited in Bond, P. 2004). ‘Facing the Global Apartheid’ in Free-

man, Alan and Kagarlitsky, Boris (eds.) The Politics of Empire. London: PlutoPress: 211.

Arias, J. 2005. ‘China and Europe look ahead’ in Beijing Review (6 October 2005).Barber, Tony. 2007. ‘EU joins China in currency moves pact’ in Financial Times

(28 November 2007).Chan, Gerald. 1999. Chinese Perspectives on International Relations. Basingstoke and

London: Macmillan PressChen Xiaogong, cited in Zhao Suisheng. 1992. ‘Beijing’s perception of the

international system and foreign policy adjustment in the post-Cold Warworld’ in East Asia: An International Quarterly 11(3).

Cheng, Joseph Y.S. 1999. ‘China’s ASEAN Policy in the 1990s’ in ContemporarySoutheast Asia: A Journal of International and Strategy Affairs 21(2).

Ding Ying. 2008. ‘Symbiotic Relationship’ in Beijing Review (15 May 2008).Ding Yuanhong, 1983. ‘Vicissitudes in West European-US Relations’ in China

and the World (4) Beijing: Beijing Review: 85-102.Feng Zhongping. 2004. ‘Forming a Closer Bond’ in Beijing Review (27 May

2004).Geeraerts, Gustaf. 2008. ‘Chinese Perceptions of the EU as a Global Actor’ in

CEMC (ed.) China, Europe, facts and perceptions. Antwerp: China-EuropeManagement Centre: 34.

Goldstein, Avery. 2001. ‘The Diplomatic Face of China’s Grand Strategy’ inThe China Quarterly 168

Guo Fengmin. 1982. ‘Western European Countries –The Canons of theirForeign Policy’ in China and the World (2). Beijing: Beijing Review: 98-123.

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Jin Yinan. 2002. ‘Multi-polarization irrevocable trend’, China Daily (15 July2002).

Lanxin Xiang. 2004. ‘China’s Eurasian Experiment’ in Survival 46(2):113Mai Zhaorong. 2004. ‘Expanding and strengthening ties with the EU’ in China

Daily (12 April 2004).Ming Wan ‘Engaging China: the Political Economy and Geopolitical

Approaches of the United States, Japan and the European Union’. On lineat: www.japanfocus.org/products/topdf/2576 (consulted 9.12.2008).

Ni Yanshu. 2005. ‘Diplomacy Gathers Steam’ in Beijing Review (27 January2005).

Qian Qichen. 1989. ‘Year marks improved world situation’ in Beijing Review (26December - 1 January 1989).

Saunders, Phillip. 2000. ‘China’s America Watchers: Changing Attitudes To-wards the United States’ in The China Quarterly 161

Segal, Gerald. 1982. The China Factor. London: Croom HelmVan Ness, Peter. 2005. ‘Conclusion’ in Gurtov, Mel and Van Ness, Peter (eds.),

Confronting the Bush Doctrine. London and New York: Routledge CurzonXin Hu. 1993. ‘Characteristics of the World Situation’ in Beijing Review (11-17

January 1993).Yan Wei. 2006. ‘Great Expectations’ in Beijing Review (9 November 2006). Yao Youzhi, cited in Roy, Denny. 2003. ‘China’s Reaction to American Predomi-

nance’, in Survival 45(3): 58. You Ji ‘The Rise of China and its Implications on the ASEAN-EU-America

Triangle Relations’ Panorama: Insights into Southeast Asian and European Affairs(http://www.kas.de/db_files/dokumente/7_dokument_dok_pdf_5857_1.pdf#page=71) (consulted 9.12.2008)

Yu Xintuan. 2004. ‘EU enlargement: An East Asian Perspective’; on-line at:http://www.rus.org.cn/newsp/shownews.asp?NewsID=266.html.

Wu Baiyu. 2004. ‘Divergence Remains’ in Beijing Review (15 July 2004). Wu Liming. 2004. ‘Golden days for EU-US ties gone’. On line at:

http://www.chinaview.cn (consulted on (13.04.2008); ‘EU moves towardindependent military role’ in People’s Daily (19 December 2004).

Zhang Yansheng cited in McGregor, R., and Callan, E. 2007. ‘Bejing’s uncom-fortable deal with America’ in Financial Times (11 April 2007).

EUROPEAN STUDIES 27 (2009): 139-150

THE EUROPEAN UNION AND CHINA:INDIAN PERCEPTIONS AND PERSPECTIVES

Rajendra K. Jain

AbstractBoth China and India are important partners for the European Union(EU) because of their demography, large domestic markets of a bil-lion plus each, significant energy-consumption patterns, and becausethey are vital for resolving regional problems as well as global issues.However, Beijing has been - and continues to be - more central toEuropean interests than New Delhi because of its political clout, itseconomic potential, the substantially higher economic stakes, andtrade. As a result, there is a variable engagement of the Union to-wards the two rising Asian powers and a qualitative difference in theattention and focus given by the European Union to China thanIndia. This chapter is divided into four sections. The first sectionbegins with a discussion of how the EU perceives India and China.The second section discusses Indian perceptions of EU-China rela-tions. The third one highlights some similarities in the Chinese andIndian approaches towards the EU. The concluding section outlinesseveral lessons that India can learn from China’s engagement of theEU.

EU Perceptions of China and IndiaThere are differences in the ways in which the European Union per-ceives India and China. EU policy-makers and think-tankers have formany years argued that China takes the European Union far more seri-ously. Most people in Brussels have generally tended to feel that Indianpolicy-makers appeared to need convincing that the EU is ‘a player thatmatters’ (Patten 2002). Former European Commission President

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Romano Prodi complained that India was ‘too focused’ on the UnitedStates in its foreign and economic policy, which ‘came at the expense ofthe EU’ (cited in Shedde 2001). Europeans often have urged India toshed its so-called narrow ‘prism of Pakistan’ once and for all and de-velop a wider ‘world-view like that of China’ in order to create a moremeaningful partnership.

Europeans argue that China has made greater efforts at understand-ing EU institutions than India. Some of them conclude that the Chineseperhaps understand Europe better than even the Europeans themselves.The EU, many Indians feel, does not make things easy, given the com-plexity of its institutions, proliferating regulations and rotating presi-dency. A major reason for this is that the Indian elite’s perceptions of theEU continue to be essentially conditioned by the Anglo-Saxon media,which impedes a more nuanced understanding of the processes anddynamics of European integration, as well as the intricacies and roles ofEU institutions. China, Europeans argue, has been a much greater sup-porter of European integration, whereas India has tended to stay awayfrom the debate. Even though India was one of the first countries toestablish diplomatic relations with the European Economic Community,India has tended to take a comparatively more measured approach to-wards European integration. To many Indians, Europe is like ‘the doudyold lady’, known for over four centuries. There is ‘no excitement, nopassion’ between India and Europe (Raja Mohan 2002: 62). India, theEuropeans often complain, ‘like’ Europe, but ‘love’ the United States,even though it is ‘tough love’.

China, many Europeans feel, has over the years developed a far moresophisticated approach towards Europe. Even though EU officials con-cede that the core of the relationship with both China and India is eco-nomic, but China, they insist, functions more like a demandeur, continu-ously seeking to widen constantly interaction and dialogue. People inBrussels often argue that India was neither proactive nor entrepreneurialenough like China to avail of existing opportunities. This may partlystem from the fact that on most things which are of vital concern toIndia, the EU as a collective is neither able nor willing to make a differ-ence, with the result that most deliverables are perceived to essentially liein bilateral relationships.

EU officials are fond of saying that India does not devote adequatehuman resources commensurate with the need to meaningfully engage

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the Union. In this context, they are fond of stating that China has aseparate embassy accredited to Belgium and a separate 60-member oneto the EU. India, on the other hand, has a combined one of about one-third its size for Belgium, Luxembourg and the European Union.Whereas Beijing has about half a dozen officials for closely following thework of the European Parliament, India has none. There are about twodozen Chinese officials dealing with political affairs, whereas India hasjust a few. At summits and other dialogues, the Chinese are said to fol-low a structured approach with usually several rows of participants fol-lowed by note-takers, whereas EU officials say they confront a randomdemocracy on the other side. Despite about 45-odd issues, on whichthere is dialogue and consultations with India under the Strategic Part-nership, Brussels feels that it does encounter the problem of capacity andresources in the Ministry of External Affairs.

Whereas the Union respects China as a great power, some in Indiafeel that Brussels tends to regard India as a regional South Asian powerand does not adequately appreciate its rise in the Asia-Pacific. Europeanstend to consider India as still ‘an emerging country’ whose status is beingslowly enhanced, but the process of its global empowerment is just be-ginning, whereas China is clearly ahead in terms of GDP, defence capa-bilities and diplomatic clout (Racine 2007: 53-54). To most Indians, aSino-centric Europe has been more willing to accommodate China ratherthan India; there is a tendency to draw a comparison with China, thatIndia should emulate China in its dealings with EU and try to introducea competitive spirit (‘you have only yourselves to blame for the lowerlevel of interaction and engagement’).

Beijing views the European Union as a pole in an emerging multipo-lar world and as a potential counterbalance to the United States. To thatend, it has been keen that Europeans develop a more united voice. Indi-ans, however, feel that it is going to be ‘a long, long way’ before Europeis going to act as a pole, largely because of the inherent constraints of theCommon Foreign and Security Policy in a heterogeneous EU of 27member states. Indian analysts as well as upper and decision-makingclasses do not see the EU as a counterweight to the United States, but as‘a building process and a construct’ that could be able to deliver long-term gains for the Indian subcontinent, while maintaining intact thediverse range of Indian bilateral relations with specific European coun-tries (Ruel, Chowhdury and Vasudevan 2004: 105-106). The EU displays

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a lack of geopolitical coherence and has not yet shown signs of acting asa credible power (Lisbonne-de Vergeron 2006: 5).

While Europeans aspire for a multipolar world, they seem to endorseChinese views of a unipolar Asia, and not a multipolar Asia which alsotakes into account the growing profile of India and Japan in the region.In fact, both Japan and India will not satisfy themselves with a merebalancing of China, but they will also vigorously contest Beijing’s at-tempts at establishing its dominance in various parts of Asia. (RajaMohan 2009: 51). The romantic notion that Asia is a ‘naturally’ Sino-centric continent, Indian observers argue, should be discarded (Sahni2008: 37).

Perhaps in no other strategic partnership has Brussels invested somuch political, diplomatic and financial resources as the one with China.As a permanent member of the UN Security Council, China has all theadvantages of ‘great power exceptionalism’ (Ikenberry 2008: 32) whichIndia does not. Because of its membership of the UN Security Council,it was natural that EU-China interaction was much more significant inthe resolution of key problems, because in 2007 China had become thelargest trading partner of Iran, North Korea, and Sudan, and the second-largest of Burma and Zimbabwe.

China is perceived by most Europeans as a direct and immediatethreat to European jobs, since it is with China that the Union has thelargest bilateral trade deficit. The EU’s trade deficit with China wasrising by €15 million an hour and reached €170 billion in 2007. The PewGlobal Attitudes Survey of June 2007 noted that China’s expandingeconomic and military power was triggering considerable anxiety inWestern Europe, where the number of those with a favourable image ofChina declined in several West European countries between 2005 and2007 (Pew Global Attitude Survey June 2007: 35). In a survey of June2008, majorities in Western Europe believed that either China has al-ready replaced the United States as the world’s leading superpower orthat it will at some point replace the US (Pew Global Attitudes Project2008: 5). On the other hand, the Union’s trade with India was nearly sixtimes less than with China – €55 billion in 2007, compared to €300billion with China. India is perceived by Europeans as a latent and po-tential threat taking away service-sector jobs, though pressures will in-crease as both China and India move up the value chain.

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In recent years, many Europeans fear ‘a threat to their economic inter-ests’ by the rise of China and India. Indian officials, however, stress thatthe tendency to equate India with China in the sense that they constitutea threat to European employment structures is ‘unfair’ because the EU’strade with China is 12 per cent of its total, as compared to two per centwith India (Saran 2005: 4). Some Europeans concede that there is noempirical basis for this, but there is an unsubstantiated fear of a rapidlygrowing Indian economy having the potential of posing a danger at sometime in the future. There is also an attitudinal difference on how Chinaand India deal with the European Union. Europeans do not exactlyrelish the more vocal approach of a rising India and its confident andarticulate elite keen on gaining a position at the ‘high table’. China tendsto be generally much more subtle, making rather indirect and allusivestatements, rather than brazenly direct pronouncements that India tendsto make in the manner of Western foreign offices. In diplomatic dis-course and conduct, India has tended ‘to carry many chips on its shoul-der, almost always moralistic, needlessly arrogant, argumentative, mistak-ing such attitude as being an assertion of national pride’ (Singh 2006:276-277).

Europe is not yet central to Indian priorities which appear to be US-centric. India accords greater importance to the United States than theEU because as the principal foreign policy interlocutor, it is perceived ashaving the biggest impact on our national security environment. There isa societal bias towards the United States in terms of the importancegiven to Washington, cultural and intellectual ties with the US, and themillion-strong Indian Diaspora. The US has the capacity to act in wayswhich are more benefiting to India than long European declaratory state-ments. As an aspiring power, India is more sympathetic to the Americaneffort to ‘rework the rules of the global game’, whereas Europe is astaunch defender of the present order. Europe appears increasingly as ‘aconservative force: protectionist, in relation to markets but also muchelse, hoping to keep what it has’ (Khilnani 2006: 490-491).

A key difference between the EU and American documents on In-dia’s strategic partnership with them is that while gradual incrementalismthrough dialogue and discussion is the hallmark of the Union, there is amore practical, direct American approach, which focuses on vital issuesto India such as geopolitical balance, energy and technology (Racine2007). India also finds it comparatively easier to deal with the United

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States on a one-to-one basis which is characterized by an effective lead-ership, whereas decision-making in the EU is inherently time-consumingin an increasingly heterogeneous EU-27 driven forward by committeesand compromises. The US is making greater efforts to understand In-dia’s foreign policy priorities and strategic preferences, whereas the Eu-ropeans come with their own foreign policy preferences, expecting us toconform to them or explain why we are not.

Indian Perceptions of EU-China RelationsElites and decision-makers in India maintain that EU policy-makers havea fixation on China. For long, remarked a veteran Brussels-based Indianobserver, the EU had single-mindedly focused on China since India wasovershadowed by China, both politically and economically (Subhan 2002:51; Pant 2008). As Asia started to come together and to see how China’s‘peaceful rise’ could be kept peaceful for Asia, the EU seemed to haveabandoned its traditional focus on India to have concentrated on South-east and Northeast Asia (Shashank 2007: 23). There has also been resent-ment in many quarters that until the turn of the millennium the EUmaintained its Cold War policies of ‘equidistance’ between India andPakistan. Most stakeholders in India feel that a Sino-centric Europe hasbeen more willing to accommodate China rather than India, which, asCommissioner Mandelson said, ‘is getting there, but not quite arrived’(cited in Rao 2007). India is perceived to be in the CommonwealthGames league, whereas China is in the Olympic Games league.

Many stakeholders in India feel that there is a degree of discrimina-tion in the European Union’s interest in and treatment of democraticIndia and in favour of undemocratic China, with which the Union hasfew common political values. Thus, many in India feel that the EU hasbeen less sympathetic to and supportive of ‘a democratic secular India,one of the few countries to practice democracy in the developing coun-tries against overwhelming odds’ (Ram 2002: 5). India’s democraticpolity and shared values do not necessarily earn it any brownie points inEurope. Many Indian stakeholders wondered how EU espousal of hu-man rights and promotion of democracy reconciled with political expedi-ency to embrace military rulers responsible for ousting democratically-elected rulers in Pakistan.

The rise of India and China offers two developmental models to theworld, especially to developing countries: in China, development has

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been spearheaded by a ‘non-democracy’ or one-party state relying onpolicies associated with ‘managed’ economies; whereas economic growthin India has been effected in an open and democratic regime with a freemarket economy. Despite the imperfections of Indian democracy, it hasworked, even through more than a decade of coalition governance. Manycountries, particularly in Africa, welcome Chinese support as an alterna-tive to the Western pattern of interfering in their development. China’sspectacular growth is proof to many developing countries that reformand economic opening need not necessarily lead to democracy.

Indian policy-makers feel that Europe does not seem to be undulyperturbed by the potential security implications of a rising China, aboutits military modernization and rising defence expenditure. Most Europe-ans tend to feel that they should convince Washington that China shouldnot be regarded as ‘a strategic threat, but a crucial partner’ (Patten 2005:278). This is partly because Asian issues and nations are too distant forthem to directly impinge on its own security, partly because the EU isnot militarily present in East Asia, and unlike the United States, does notplay the role of an external balancer in Asia. It is difficult to say if mostEuropeans tend to see China as an economic threat, while India’s rise isseen as a benign and stabilizing development around the world. On theone hand, Europe tends to either regard the growing Chinese market asan economic opportunity. On the other hand, it is concerned about themounting trade deficits, which may fuel protectionist sentiments. Chinacontinues to pose difficulties in India’s immediate neighbourhood –economically, politically, and strategically. The competition is intense inMyanmar, even though Sino-Indian relations will continually see ele-ments of both competition and cooperation. It is also equally certain thatIndia will not accept a secondary role to that of China in Asia and neverwavers from its determination to emerge as an indispensable element inthe Asian balance of power (Raja Mohan 2007).

There are more numerous and deeper institutional links between theEU and China than between India and the Union. India’s interaction andinstitutional engagement with the EU is less intense, and dense in termsof visits, dialogues and consultations, than that of the Union with China.For instance, officials from the European Commission responsible forinitiating and implementing the EU’s China policy made 206 trips toChina in 2004, on average four visits per week (cited in Subhan 2005).Between 2002 and 2004, there were twelve visits to India by EU Com-

146 Rajendra K. Jain

missioners and the High Representative for CFSP Javier Solana, whereasthere were nine Commissioner visits to China alone in the first half of2004. However, in recent years with India and EU talking across theboard, the number of visits of Commissioners and officials has in-creased, but it still does not equal those to China.

Similarities in Chinese and Indian Approaches towards the EUThere are basic differences in both perceptions and interests of Chinaand India with the EU in many fields, including trade, development,globalization, and WTO negotiations, the International Criminal Court,climate change, etc. where the EU has taken a stand contradictory tothem. China and India argue that the structures of global governance(including the G8) must be more democratic, representative and legiti-mate. The two new ‘big kids on the block’ are wary of the creeping ‘regu-latory imperialism’ of the North. What they want is ‘a different set ofrules’ to safeguard the interests of their populations which constitutemore than one-third of humanity.

Both China and India have similar attitudes towards the role of theUnited Nations and multilateralism. During the UN debate on the eve ofthe Iraq war (2002-2003), the Europeans were at the forefront of ques-tioning the American attempt to oust Saddam Hussein based on a per-ceived threat of weapons of mass destruction. China and India werevehemently opposed to European aspirations to transform the UnitedNations into a supranational organization which can gain and implementa mandate to interfere in domestic affairs. Both Asian giants resent Euro-pean efforts to talk down to them from the high pedestal of post-mod-ernism. They remain acutely sensitive about their sovereignty and inter-nal autonomy against intrusive human rights issues and remain waryabout humanitarian intervention and the circumstances in which forcemay be used. Both feel that hard power is as necessary as post-modernistEurope’s fascination for and advocacy of the merits of ‘soft power’.Above all, both China and India are unanimous that the Commissionoften tends to assume a patronizing attitude – ‘Engage and we shallteach you’.

As the two most populous economies, China and India continue tohave consultations and policy coordination in multilateral trade negotia-tions. Since the Cancun Ministerial meeting (2003), the advanced indus-trialized countries are being challenged in multilateral trade negotiations

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because of effective coalition-building by emerging powers. Senior EUofficials have generally expressed a preference for and likeableness ofChina’s low profile and its general caution about assuming a leadershiprole inside the WTO in sharp contrast to the higher profile that Indiatends to occupy in multilateral trade negotiations. The greatest challenge,Trade Commissioner Mandelson recently remarked, is to have ‘a Chinesenegotiator to start talking and an Indian negotiator to stop talking’ (citedin Dutt 2007). Some European thinkers wonder why China has, ‘bi-zarrely’, allowed Brazil and India to speak for the developing world’ inthe on-going Doha Round (Grant and Valasek 2007: 30). At the Genevaministerial summit, however, the Chinese were just as vocal as India incriticising the rigid Western approach that jeopardized the future ofmillions of poor and subsistence farmers.

India and China have sought to coordinate their policies regardingclimate change, especially as the North seeks to transfer incrementallythe ecological burden of the entire planet at the door of developingcountries, despite its ‘historic responsibility’ for cumulative emissionlevels. China and India are willing to take voluntary measures to curbcarbon emissions. They are, however, unwilling to accept any mandatorycarbon emission limits because only continuous growth offers a realpossibility of lifting millions out of poverty. India argues that it is imper-ative to maintain a distinction between ‘lifestyle emissions’ of the Westand ‘survival emissions’ of developing countries. ‘Capping or reducingemission levels in India may mean that 600 million Indians, who do nothave access to electricity today, must be permanently denied this verybasic energy service’ (Saran 2008). Both Asian countries argue that it isnecessary for low emission technologies to be made available to poorercountries at a price they can afford; that technology needs to be sharedgenerously and easily without stringent constraints on intellectual prop-erty rights. Climate change is increasingly becoming the next WTO-typeof North-South divide. Neither is willing to allow the West to constraintheir autonomy in determining their developmental priorities and ensur-ing continued economic growth which is contingent on ensuring energysecurity.

ConclusionThe relentless rise of China has presented the Indian business and politi-cal communities with both an example and an opportunity to be an

148 Rajendra K. Jain

alternative, to become more collaborative and to foster their own devel-opment. There are, perhaps, three lessons which India can learn from theways in which China engages with the European Union.

Firstly, India should more intensively engage the Council and theEuropean Parliament. In the past, India concentrated almost entirely onthe European Commission in its dealings with Brussels, primarily be-cause it was the main interlocutor in dealing with trade irritants andseemed reluctant to engage more intensely with other EU institutions.For decades, New Delhi regarded the European Parliament as a mere‘talking shop’ and confined itself to fire-fighting or damage control(mostly on Kashmir). With growing appreciation of the greater profileand role of the European Parliament in the Union’s institutional architec-ture, the Indian attitude towards it seems to have changed significantly.This has been reflected in a number of recent high-profile visits, and theestablishment of a separate India Delegation (as in the case of China).

Secondly, India should emulate China in developing a more robustframework of educational exchanges and encourage Indian elites tostudy in Europe. There is a need to strengthen media relationships, aca-demic and intellectual linkages, as well as foster greater intellectual andelite interaction. The number of Indian students studying in Europe hasbeen rather limited, partly because of the limited number of courses inEnglish and because Europe does not provide a structure of post-doc-toral fellowships and employment prospects that is available in theUnited States. There is a continuing need to re-profile and reorient ourmindsets about the growing prominence of the EU as a collective entity.While India will not be able to match China in the setting up of Confu-cius Institutes across the world, the Indian Council of Cultural Relationshas established twenty India Cultural Centres around the world, of whichonly two are in Western Europe (Germany and the United Kingdom;with a third one coming up in Paris shortly). India also maintains nine-teen Chairs of Indian Studies and five Chairs of Indian studies on asemester basis, mostly for teaching of Indian languages. Of these, thereare six for Hindi in Europe (Poland, Hungary, Bulgaria, Romania, Bel-gium and Spain), one for Sanskrit (France), and one for Tamil (Poland).India has set up a Chair of Indian Economics at Sciences Po, Paris.Obviously, more needs to be done in this context.

Thirdly, and finally, a catalytic role can be played by the think-tankcommunity in Europe, which for too long have been obsessed with

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China. The number of think-tanks in Europe that are continuously en-gaged and committed to research and dissemination of information anddebate on India are far and few. There is an urgent need to develop asustained specialist and policy level dialogue between Indian and Euro-pean think-tanks.

ReferencesDutt, Vijay. 2007. ‘Banter at Kamal Nath’s book release’ in Hindustan Times (15

December 2007).Grant, Charles and Tomas Valasek. 2007. Preparing for the Multipolar World:

European Foreign and Security Policy in 2020. London: Centre for Euro-pean Reform.

Ikenberry, G. John. 2008. ‘The Rise of China and the Future of the West’ inForeign Affairs 87(1): 23-37.

Jain, Rajendra K.. 2007. India and the European Union: Building a Strategic Partner-ship. New Delhi: Radiant Publishers.

Khilnani, Sunil. 2006. ‘India and the World’ in Manmohan Malhoutra (ed.)India: The Next Decade. New Delhi: Academic Foundation.

Lisbonne-de Vergeron, Karine. 2006. Contemporary Indian Views of Europe. Lon-don: Chatham House.

Mandelson, Peter. Letter to José Manuel Barroso, President of the EuropeanCommission. Cited in Stephen Castle. 2007. ‘EU-China trade tensions startto heat up’ in International Herald Tribune (6 November 2007).

Pant, Harsh V. ‘India and the EU: A Directionless Courtship (7 October 2008).Online at http://in.rediff.com/news/2008/oct/07guest1.htm.

Patten, Chris, cited in Rashmee Z. Ahmed. 2002. ‘EU asks India to ditch nar-row view of Pakistan; in The Times of India (10 October 2002).

Patten, Christopher. 2005. Not Quite the Diplomat: Home Truths about World Af-fairs. London: Allen Lane.

Pew Global Attitudes Project, ‘Some Positive Signs for U.S. Image, GlobalEconomic Gloom – China and India Notable Exceptions, 24-Nation PewGlobal Att i tudes Survey, 12 June 2008’. Onl ine at :http://pewglobal.org/reports/pdf/260.pdf

Pew Global Attitudes Project, ‘World Publics Welcome Global Trade -- ButNot Immigration: 47-Nation Pew Global Attitudes Survey,’ 4 October2007’. Online at: http://pewglobal.org/reports/display.php?ReportID=258

Racine, Jean-Luc. 2007. ‘The India-Europe Relationship in the US Shadow’ inRajendra K. Jain (ed.), India and the European Union: Building a Strategic Partner-ship. New Delhi: Radiant Publishers: 41-62.

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Raja Mohan, C. 2009. ‘India and the Emerging Non-Proliferation Order: TheSecond Nuclear Age’ in Harsh V. Pant (ed.) Indian Foreign Policy in a UnipolarWorld. London and New Delhi: Routledge: 43-72.

Raja Mohan, C. 2002. ‘India, Europe and the United States’ in Rajendra K. Jain(ed.) India and the European Union in the 21st Century. New Delhi: RadiantPublishers: 58-69.

Raja Mohan, C. 2007. ‘Japan and India in a Rising Asia’ public lecture atFukuoka, Japan, 30 July 2007. Online at: http://www2.jiia.or.jp/pdf/kouenkai/070730-Raja_Mohan_Speech.pdf

Ram, A.N. 2002. ‘India and the European Union in the New Millennium’ inRajendra K. Jain (ed.) India and the European Union in the 21st Century. NewDelhi: Radiant Publishers: 1-24.

Rao, H.S, 2007. ‘Kamal Nath makes a point with 'fat cows'’ (14 December2007). On line at: http://www.rediff.com/money/2007/dec/14nath.htm

Ruet, Joel, Pramit Pal Chowdhury and Hari Vasudevan. 2004. ‘India’s Europe:Cultural Footprints and Conflict Resolution Processes’ in I.P. Khosla (ed.)India and the New Europe. New Delhi: Konark: 101-108.

Sahni, Varun. 2008. ‘China-India Partnership: Defining an Agenda’ in ChinaReport: 44(1): 33-39.

Saran, Shyam. 2005. The EU-India Partnership Summit 2005. New Delhi: KonradAdenaeur Foundation.

Saran, Shyam. Speech by Special Envoy of the Prime Minister, on ClimateChange at Mumbai , ( 2 1 Apri l 2008). On l ine at :http://www.meaindia.nic.in/speeches/13883

Shashank. 2007. ‘India and the European Union’ in Rajendra K. Jain (ed.) Indiaand the European Union: Building a Strategic Partnership. New Delhi: RadiantPublishers: 32-40.

Shedde, Meenakshi. 2001. ‘Indians seem to favour US because of Hollywoodmovies’ in The Times of India (24 November 2001).

Singh, Jaswant. 2006. A Call to Honour: In Service of Emergent India. New Delhi:Rupa and Co., 2006.

Subhan, Malcolm. 2002. ‘India and the European Union: A View from Brussels’in Rajendra K. Jain (ed.) India and the European Union in the 21st Century. NewDelhi: Radiant Publishers: 25-57.

Subhan, Malcolm. 2005. ‘Beneath unrest lies symbiotic harmony’ in The Finan-cial Express (9 July 2005).

1 The author would like to thank the University of Central Lancashire (UCLan) fora period of research leave during which this piece was written and the staff of theEuropean reading room Library of Congress, Washington DC for their help in locat-ing some of the sources used during a November 2008 visit.

EUROPEAN STUDIES 27 (2009): 151-166

RUSSIA’S CLOSER TIES WITH CHINA:THE GEO-POLITICS OF ENERGY

AND THE IMPLICATIONS FOR THE EUROPEAN UNION

Christopher Williams1

AbstractAgainst the background of a changing Sino-Soviet relationship, from1949 until the collapse of communism in the USSR in 1991, thischapter analyses Russo-Chinese relations in the post-Soviet period,focusing on the Yeltsin and Putin eras. It assesses the reasons forcloser ties and also examines the constraints posed by Russia’s geo-politics and energy security policies on Russo-Chinese relations in theearly 21st century and the implications for the European Union andbeyond.

IntroductionAccording to Vladimir Shlapentokh, in the post-war era the United Statesoccupied a central position in the minds of the Soviet elite (Shlapentokh2007: 2), whilst the same could be said of China after Nixon’s visit in1972 (Ferdinand 2007: 842). Whilst the US is still crucial to both Russiaand China, over the last two decades the Sino-Russian relationship hasmoved from a ‘constructive partnership’ in 1994 to a ‘strategic partner-ship’ by 1996, leading to a joint Good Neighbour, Friendship and Coop-eration Treaty in 2001 (Wilson 2004: 6). Russia’s view of China haschanged over time (Lukin 2003). After the success of the 1949 revolu-tion, China was viewed as the Soviet Union’s ‘best friend’. However,

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following Stalin’s death in 1953, and Khrushchev’s rise to power after1955, Russian perceptions changed and China was seen as Russia’s ‘en-emy’ (Westad 1998). The Sino-Soviet disputes in the 1960s, culminatingin border clashes in 1968-69, added to this negative view, and in the1970s as both Russia and China got closer to the US, they continued tosee each other as enemies (Jones and Kevill 1985). As a consequence,Shlapentokh writes: ‘In the 50 years after the victory of the Chineserevolution in 1949, Russians saw China as an ally for seven years (1949-56) and for thirty years they looked at China as a dangerous enemy(1957-87)’ (Shlapentokh 2007: 5). Russian attitudes towards China didnot soften until the 1980s, when Mikhail Gorbachev made his historicvisit to Beijing in June 1989 (Young Deng 2007: 866; see also Lowell1992 and Wishnick 2001). Changes within China itself, as a result ofDeng Xiaoping’s shift towards reform and liberalization in the sameperiod, also paved the way for a more open Chinese foreign policy facili-tating a gradual improvement in Sino-Soviet relations (Lee Nam ju 2001:49-50). So why have China and Russia moved away from an emphasison the US and shifted towards a closer relationship and potential part-nership with each other?

There are numerous reasons why this rapprochement occurred: first-ly, Russia’s weakened state in the 1990s; secondly, the fact that Russiashares a substantial border with China; thirdly, awareness that the Rus-sian Far East is facing a demographic crisis and economic problems;fourthly, global acknowledgment that China is growing in strength botheconomically and militarily; fifthly, the fact that Russia wants to be asignificant player in the Asia-Pacific region (so it is more logical to coop-erate with China, rather than oppose it); sixthly, both Russia and Chinahave common security interests in Central Asia (the threat of Islamicextremism and separatism and an uneasiness about a US military pres-ence since 2001); seventh, China urgently needs military technology aspart of its modernisation strategy (which makes it a logical partner forthe Russian military industrial complex (MIC), which is itself seekingmarkets since the USSR collapse); eighth, Chinese energy needs are highand can be partly met by the purchase of Russian gas and oil, which is inturn largely responsible for Russian economic growth this century; andfinally, although Russian overt criticism of US unipolarity has diminishedsince the tragic events of 9/11, Moscow is still uncomfortable with many

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aspects of US foreign policy, a concern shared by China. We shall nowbriefly discuss each factor in turn.

The Soviet Collapse and Sino-Russian Relations since 1991In December 1991, the USSR finally collapsed, leaving the USSR inruins and its MIC virtually redundant. This took the world, including theChinese, by surprise and left the USA as the only remaining superpowerand Russia severely weakened (Williams 2000: 248-266). From China’sperspective, although its attitude to Moscow did not change, Beijing stillfeared a possible switch of Russian allegiance to Taiwan (Kuhrt 2007:11; Vradiy 2007: 219-234) and a move to a more pro-Western stance.Russian collaboration was necessary in China’s parallel quest to maintainstability in Central Asia and also served a geopolitical function in China’songoing efforts to offset the hegemonic position of the US (Wilson2004: 10). Under Yeltsin, Russian foreign policy went in a largely West-ward direction, partly as a result of the weaknesses outlined above, whichleft Russia with little initial room for manoeuvre. A key role was playedby the integrationist Russian Foreign Minister Andrei Kozyrev, whoidentified closely with the West and was in favour of promoting Russia’sintegration into the world economy, arguing that the European securitysystem in a post Cold War world would benefit if it included Russia andif Russia was now accepted as an equal partner to West. Nevertheless,Yeltsin kept his options open because during Kozyrev’s March 1992 visitto China, Russia did not condemn China’s human rights policy but in-stead stressed the importance of economics and trade and promised towork on border demarcation issues (Kuhrt 2007: 12-13).

In overall terms, it was Western actions, the US tendency to act uni-laterally (like a rogue-state) and the fact that Moscow was not treated asa full partner by the West, which initially persuaded Moscow to shift itsforeign policy stance towards China. Clear evidence of this is the West’sintervention in Kosovo in 1999, with the US and UK totally bypassingthe UN (Williams 2001: 248-266 and Williams with Golenkova 2001:204-225). To this may be added the question of NATO’s eastward ex-pansion, incorporating some former Russian allies in its previous bufferzone. This contradicted James Baker, the Secretary of State in the Bush(Senior) Administration, who had promised to Gorbachev back in Febru-ary 1990 that apart from the incorporation of East Germany into theFederal Republic of Germany, NATO would not extend any further east.

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Similarly, the accidental bombing of the Chinese Embassy in Yugo-slavia in May 1999, US criticism of China’s human rights record and itspolicy on Taiwan, and the signing of an American-Japanese securitytreaty, inflamed China. By the time of the Russian 1998 economic crash,there was a general feeling in Moscow that Russia’s flirtation with theWashington model (liberal democracy and the market) had producednothing but pain and heartache. This led to a new direction in Russianforeign policy and resulted in Kozyrev being replaced by YevgenyPrimakov in 1997-98. This was important because Primakov wanted toforge links or build bridges between Russia and Asia (e.g. Central Asiaand China) and his appointment marked a more positive Russian stancetoward Asia (Iwashita 2007: 165-194). Primakov and other actors, suchas the communists (KPRF) and neo-fascists (LDPR) were admirers ofChina’s reforms and experience. These groups, as well as the industriallobby (MIC, heavy industry) wanted China as Russia’s ally (Lukin 2001:2-4), partly to help reverse Russia’s economic decline but also to counterUS unliteralism. At an early 1992 summit meeting between PresidentYeltsin and Jiang Zemin it was agreed that neither country would inter-vene in the domestic affairs of the other, that both would stand upagainst hegemonism, that neither country would strike the other firstwith nuclear weapons, and that it was in Russia and China’s best inter-ests to expand economic, scientific, cultural and military exchanges (LeeNam-ju 2001: 56-57; Su 2007: 93-112).

Since then, both Moscow and Beijing have stressed the primacy ofthe UN in global decision-making and the precedence of national sover-eignty over western conceptions of ‘humanitarian intervention’ and ‘lim-ited sovereignty’. Both countries aspire to a ‘multipolar’ world, in whicha few great powers (the US, Russia, the EU, China, India and Japan)make the ‘big’ decisions. Both Russia and China are opposed to theunipolar order associated with a hegemonic America. As a result, in UNGeneral General Assembly voting, Russia and China have convergedfrom 1974-2005 but diverged from the US (Ferdinand 2007: 860-862).An example is the way Russia and China blocked US attempts to reformthe UNHRC in 2005 (Yong Deng 2007: 881). To reverse US dominationMoscow and Beijing have adopted similar positions on the war againstterror, the non-proliferation of weapons of mass destruction (WMD),and international conflict management, most recently in the context ofthe Iraq war. They have also made repeated calls for ‘multipolarity’.

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Thus, according to the Russian foreign minister, Igor Ivanov, it is espe-cially important that Russia and China cooperate in key areas such asraising the authority and the role of the UN, defending the primacy ofinternational law in world affairs, maintaining strategic stability, first andforemost, preserving the ABM treaty, creating a new, just, world eco-nomic order where everyone enjoys equal rights.’ (cited in Lukin 2001: 17).

This stance coincides with what Swaine and Tellis refer to as China’s‘calculative’ security policy which contains three elements: a practical andnon-ideological approach and the maintenance of friendly internationalrelations; restraining the use of armed force while modernizing the mili-tary, and active participation in the international community (Swaine, andTellis 2000: 113-114.) But for things to proceed more smoothly, Russo-Chinese border disputes needed to be resolved first.

Border Disputes and DemarcationThe backdrop to Russia’s concerns over its border was the collapse ofthe USSR, Chechnya and its overall feeling of vulnerability as Russiashares a 4,300km common border with China (Bobo Lo 2004: 296-297).Over time the border was gradually militarized, costing the Soviets 60billion roubles in the 1960s and ‘70s alone (Wilson 2004: 49). Betweenthe years 1969-78, there were fifteen rounds of negotiations, all to noavail. The deadlock was finally broken by Gorbachev in 1987 and byOctober that year an agreement had already been reached on the Easternboundaries. This was followed in November 1989 by further discussionsregarding Soviet and Chinese border troop reductions (Wilson 2004: 43).By 1991, only the status of three islands around the Ussuri and Argunrivers remained unresolved (Wilson 2004: 44). In the period 1992-94,negotiations over the Western sector of the former Soviet border contin-ued and agreement was finally reached by June 1994, with border demar-cation completed by November 1997 (Kireev 2006; Maxwell 2007: 47-72and Wilson 2004: 44-45). Thus, there are no longer any border issues tosettle, a major step forward. As a result, in the period 2005-7 two millionRussians visited China and 700-750 million Chinese visited Russia, two-thirds in the 1,000km border zone (Larin 2008: 2).

The Russian Far East QuestionClosely linked to the border question is the vulnerability of the RussianFar East (hereafter RFE), which has suffered serious population-decline

156 Christopher Williams

2 A krai is the equivalent of a county in the Russian administrative structure.

(the young, better educated and more industrious have migrated, leavingthe elderly and infirm behind), massive Chinese immigration (of between300,000 and 2 million), a major influx of Chinese goods and a seriouseconomic depression, as result of the decline of the Soviet merchant andnaval fleet. The RFE’s plight caused clashes between the Russian Federal gov-ernment and the governors of various regions (krais)2 - most notablyKhabarovsk and Primor’e - from 1991 to 1997. These regions and theirrulers felt that the 1991 border demarcation agreement left them andRussian national security vulnerable (Rangsimaporn 2006: 132-135).Furthermore, the Russian state was also perceived to be neglecting thepressing needs of the RFE.

As a consequence, a 2005 Russian public opinion poll revealed that66% of Russians were against Chinese companies in the RFE/Siberia;71% feared an increase in the number of Chinese in Russia and 61%were in favour of restrictions on Chinese imports (cited in Shlapentokh2007: 6). In general terms, Russians think that the ‘Chinese show opencontempt for the Russians and their customs’ and that a Chinese influx‘will downgrade Russian to an insignificant nation in the world’(Shlapentokh 2007: 13). There is also a widespread Russian conceptionthat the RFE is a Chinese target and the population fear that the RFEwill soon fall under Chinese control, so defeatism is already present(Shlapentokh 2007: 12-14).

Although a 2004 survey showed that 35% of Russians in Khabarovskand 42% in Vladivostok were against the Chinese (cited in Shlapentokh2007: 14), attitudes are gradually changing as Russians realize the oppor-tunities available in terms of jobs and Chinese trade with Russia’s East-ern regions and the Trans-Baikal, which rose from US$515m in 2000 toUS$3.2 billion by 2005 (Larin 2008: 5). Furthermore, some pensionersfrom Blagoveshchensk, Russia, have been moving to Heihe, in China, totake advantage of lower apartment costs, utility fees and inflation (Larin2008: 3)

But there is still a long way to go – on the Russian side of the borderthe authorities are unable to cope with the Chinese flow, so smuggling,tax evasion and migration law violations occur. The Amur-Chinesebridge project has also made little progress since 1995 and both sides

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have different ideas and approaches towards regional development inborder areas, with the Russians vacillating and the Chinese forging ahead(Larin 2008: 7-12).

China’s RiseRussian concerns about Chinese expansionism mostly stem from fearsarising from China’s rapid rise in the late 20th-early 21st centuries. Chinahas become an economic superpower, and is now the second largesteconomy and exporter after the US (Bergsten et al 2008: 9). China hasexpanded on average by 10% per annum over the last three decades(Bergsten et al 2008: 106). For this reason, there are some groups withinthe Russian elite, government and foreign policy circles who see China asa threat. This group includes nationalists (LDPR), Westerners (Koyzrev,Gaidar), and even Putin himself at times. Thus, at a conference on thedevelopment of the RFE and the Trans-Baikal region held inBlagoveshchensk in June 2000, Putin warned: ‘I do not want to drama-tize the situation, but if we do not make every real effort, even the indig-enous Russian population will soon speak mostly Japanese, Chinese, andKorean’ (cited in Lukin 2001: 15-16).

In some US circles, too, there is also a belief that China poses a chal-lenge as an alternative model and source of support for the developingworld; as a counter-balance to US alliances in East Asia (Japan, SouthKorea, Australia, Thailand, Philippines) and as an economic competitorfor the US (Bergsten et al 2008: 227). However, there is also an acknowl-edgment within the US that China wants to improve its internationalreputation, does not seek a new Cold War, and so if the Chinese threat isexaggerated then this might reinforce Chinese suspicions about US disre-spect and intention to curb its rise as a major power (Bergsten et al 2008:228).

Nevertheless, one source states that the US must remain vigilantabout the effects of China’s rise on its domestic and international inter-ests, but Washington should not look instinctively to blame or denounceChina as a scapegoat for problems (Bergsten et al 2008: 228). The samethinking can apply to Russia. This is perhaps why there are advocates ofa more balanced Russian foreign policy that favours neither the West norChina. China’s development provides opportunities for Russia, especiallyin relation to Russian military and energy sales to China. Both are essen-tial to maintaining and strengthening Russia’s MIC and to Russia’s con-

158 Christopher Williams

tinued economic growth, but at the same time Russia could be creating amajor Chinese adversary in the long-term.

Arms and Weapons Sales: Sustaining the Russian MICBobo Lo argues that Russian official trade with China has tripled underPutin while ‘unofficial’ commerce, dominated by cross-border shuttletrade, is at an all-time high (S10 billion according to Putin) (Bobo Lo2005: 8). By May 2008, Russian Chinese trade had increased to $48billion (Factbox 2008). This trade and investment involves nuclear en-ergy, space cooperation, as well as in oil and gas projects, as we shall seelater. Military-technical cooperation is also an important feature ofRusso-Chinese relations (see Tsai 2003). China is now Russia’s biggestarms customer, accounting for 40 per cent of Russia’s arms exports.Arms exports comprise one-fifth of Russo-Chinese trade, and Russiaearns in excess of $1 billion annually from Chinese arms purchases(Smith 2003: 12). Chinese arms purchases from Russia reached $6.5billion from 1991to 1999 (Lee Nam-ju 2001: 64).

China has received 200 Su-27SK and Su-27UB trainers; 48 Su-30MKK fighter bombers; a Sukhoi-30 jet fighter, 5 Sovremennyi-classdestroyers, 8 modern Kilo-class diesel destroyers; enough S-300PMU-1ground to air missiles to equip eight divisions, now the core of the Chi-nese air defence forces and 35 Tor-M1 ground to air missiles (Lee Nam-ju 2001: 64; Smith 2003: 12). In addition, since 1991 more than 2,000Chinese officers have studied in Russia and currently around 200 Chi-nese officers are studying in Russian military academies (Smith 2003: 12).Of serious concern to Russia is the fact that the balance of power be-tween the Russian and Chinese air forces on the Sino-Russian border isnow in favour of China; whilst from a Western perspective the level ofcontacts between the Russian and Chinese armed forces has not so farmatched those between the armed forces of NATO states and Russia butcontacts are being extended at MOD and General Staff levels, so thismay be a worry for the future. On top of military trade and sales, the Shanghai Cooperation Organi-sation (SCO) has also been used to encourage military co-operationamong SCO members, to boost confidence among members and todevelop a coordinated military policy against potential threats. Thus, inOctober 2000 the first round of war games took place between Chinaand Kyrgyzstan. This was followed in April 2002 by Chinese observers

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attending the South Anti-terror exercises in Tajikistan, in July 2002 byRusso-Chinese talks about joint exercises by signals troops in InnerMongolia, and in October 2002 by a China-Kazakhstan joint anti-terrorexercise. Then in August 2003 there were an expanded set of militaryexercises which featured all members, except Uzbekistan. Thereafter, inAugust 2005 Russia and China held their own military exercises with theother SCO members, as well as Iran, India and Pakistan sending observ-ers. This was dubbed ‘Operation Peace Mission 2005' (Lanteigne 2006-7:611).

In March 2006, SCO members conducted a joint East Terror exercisein Uzbekistan, followed in April 2006 by an SCO Defence ministersmeeting in Beijing. The following year, two events took place – the first,an anti-terror exercise entitled ‘Tianshan 1' between China andKazakhstan, the second, an anti-terror military exercise in September2007 involving China and Tajikistan (Wei 2007: 19). Earlier, from 9-17August 2007, there was the SCO ‘2007 Peace Mission’ held inChelyabinsk, Russia and Northwest China’s Xinjiang Autonomous re-gion. It was the eighteenth joint military exercise between the Chineseand its partners since 2002. This one involved 6,500 military personneland eighty aircraft from the six SCO member states (Smith 2007: 5; Wei2007: 18-19). According to Wei, this particular drill enhanced securitycooperation in the SCO, strengthened China-Russia relations, improvedthe anti-terror capacity of the SCO members and accelerated the mod-ernization of their armed forces (Wei 2007: 18). Finally, Smith suggeststhat SCO members have used the Collective Security Treaty Organisa-tion (CSTO) as a means of ensuring military development of member-ship until 2010 via unified military systems - air defence, communica-tions, information and reconnaissance support (Smith 2007: 6).

Russian Geo-politics: The SCO and Central AsiaAs the evolution and development of the SCO and its role in CentralAsia has been addressed elsewhere (see Williams 2007: 215-237), onlybrief comments will be made here: as is well known, the SCO started asthe Shanghai Five in 1996 and later expanded to become the SCO in2001. It has been used by Russia and China as a way of combating theso-called three evils (terrorism, separatism and extremism), as a means ofpromoting multilateralism via emphasizing the role of the UN, and from2005 as a way of forging new alliances between Russia and China, on the

160 Christopher Williams

one hand, and India, Pakistan, Iran (Atai 2005: 102-103) and CentralAsia (Sun Zhuanghi 2004: 600-612) on the other. The SCO has also been used to challenge US hegemony in CentralAsia and the biggest coup occurred when the Uzbek government an-nounced that US troops had 180 days to pack and leave in July 2005.Gleason argues that this change in attitude means that the US has lost animportant outpost in Central Asia, the ability to act as a counterweight toRussia and China in the region and that in the short to medium term thiswill allow Russia to gain a stronger foothold (Gleason 2006: 52). By andlarge, though, the SCO lacks the material and diplomatic capabilities tochallenge directly Western interests in Central Asia (Lanteigne 2006-7:606; on the West’s view of SCO see Zaderei 2008: 48-56).

One issue of concern is the uneven distribution of power within theSCO. One view expressed in February 2008 argues that it is Russia andChina who largely determine SCO policy, followed by Kazakhstan andUzbekistan who exert ‘limited influence’, and finally by the SCO min-nows Kyrgyzstan and Tajikistan who have no clout or influence (SCO2008). However, although Russia wants the SCO to become a ‘military-political bloc’, it has no desire to re-create the Warsaw Pact or to start anew Cold War. For both Russia and China the significance of the SCO isthus far largely economic – energy supplies are the key to both countrieswith Russia focusing on oil and gas exports and China on imports (formore detail see Aris 2008). It is possible, however, that while Russia andChina will eventually compete for power in Central Asia, for the timebeing China seems content to keep a low key in the region and is unwill-ing to challenge Moscow’s pride (Merry 2003: 26).

China-EU relations and Russia’s ‘Oilopoly’The European Union (EU) was created in the 1950s, and since then ithas expanded, growing to its current size of twenty-seven member states,making the EU a major international actor, like the US and China, in2009. Diplomatic relations between the EU and China started in 1975,with the EU firmly supporting China’s transition process and keen onsustaining China’s economic and social reforms, partly through trade andcooperation agreements since 1978 (Heisbourg 2001). According toYong Deng (2007: 889), economic ties have reached a new height. Chinais now the second largest trading partner of the EU. Eurostat figuresshow that Chinese imports to the EU totalled approximately 191 billion

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Euros in 2006 representing a year on year increase of 21%, whilst EUexports to China have increased by 22.5% (China-EU trade 2009).

The EU and China also have a science and technology agreement,concluded in 1994 then renewed in 2004; maritime transport and tourismagreements (dating from 2002), a customs cooperation agreement (con-cluded in 2004), and a research agreement on the peaceful use of nuclearenergy (concluded in 2004). New agreements on property rights, compe-tition policy, textiles and enterprise are currently being negotiated. EU-China Summits have taken place annually since 1998; among the issuesdiscussed are human rights, the environment, telecommunications, en-ergy and trade. One of the ‘stumbling blocks’ is the arms embargo im-posed on Beijing after the Tiananmen Square crackdown in 1989, whichhas not been removed due to US and Japanese opposition (Yong Deng2007: 890). This partly explains why China goes to Russia to meet itsarms and weapons needs.

Energy is one of the biggest aspects of Russo-Chinese relations andperhaps the greatest threat to the EU. Russia is the world’s second larg-est oil producer and has vast reserves in East Siberia, the Komi Republic,Nenets Autonomous Okrug and the Barents region, and a great potentialfor exporting them. This has led to the development of what MarshallGoldman calls Russia’s ‘oilopoly’ under Putin (Goldman 2008). Onesource points out that Russian imports account for approximately 50%of the EU’s energy consumption, which is expected to rise to some 70%in 2030, and in the case of oil products to 90% (Energy: Let Us Over-come Our Dependence 2002: 2-3, 9).

There are, however, concerns in Western Europe that Russia may tryto use its energy exports as a political lever by threatening to ‘turn off thetaps’. In line with this view, Russia has already used oil and gas to pres-surise the policies of Belarus, Ukraine and Moldova, while the cut-offs toBelarus or the Ukraine had a knock-on effect on Polish and Germanreserves back in 2004. Such EU concerns remain real, as the early 2009energy disputes between the Ukraine (an EU applicant) and Russia dur-ing a cold winter snap show. Although the potential for Russia to cut off supplies to other coun-tries within the EU cannot be totally ruled out, this is highly unlikely asRussia realizes that EU’s demand for energy will probably grow signifi-cantly as the market is restricted. Furthermore, Russian growth is basedon high energy prices and profits and any adverse actions would possibly

162 Christopher Williams

damage Russia’s reputation and economy at a time of global recession(see Traynor 2009: 16).

Nevertheless, the EU is in fierce competition with China, India, Japanand the USA, all of whom have begun to show an active interest inRussian oil (Monaghan 2005). As a result, energy security has become amajor issue for the EU (see A Secure Europe in a Better World, 2003: 5-6). For example, the October 2005 EU-Russia summit focused on EUdependency on Russian energy; the matter was put on the agenda againat the recent January 2009 Czech Presidency of EU summit in the lightof Ukraine-Russia gas disputes and their impact on EU countries (Har-ding 2009: 2).

This makes Russo-Chinese energy relations particularly crucial. Chi-nese rapid economic growth has had a high cost in terms of resourcesand the environment, resulting in China’s increasing demand for energywhich will reach an estimated 22% of global energy demand by 2030(Bergsten et al 2008: 141, 155). Although Russia is willing to supplyenergy to China, there have been many problems, as the originalAngarsk-Daqing pipeline fell through, in favour of an Angarsk-Nakhodaroute. There have also been arduous negotiations over price and Russianfailures to make deliveries. To try and offset these problems with Russia,the Chinese were rumoured to have financed Rosneft’s purchase ofYugansknefigaz, while China also reportedly paid a $6.6bn loan for thelong-term pre-purchase of Russian oil (Monaghan 2005: 13). The Chi-nese have also looked to Kazakhstan and Turkmenistan (Ferdinand2007:852) and started cooperating with SCO members in the energy field(Frolenkov 2008: 67-82).

ConclusionsIt is evident that Russo-Chinese relations have dramatically improved inthe last few decades, moving from reconciliation in the 1980s to relativestability by 2009. This reflects Russia’s scepticism towards the West,China’s rise, more pragmatic Chinese and Russian foreign policies, andRussian vulnerability in general and in the Far East in particular. It is theoutcome of what Bobo Lo recently called the ‘Axis of convenience’(Bobo Lo 2008). There are, however, certain limitations on the future ofRusso-Chinese relations – historical suspicions, cultural prejudices andmyths, geo-political rivalries, etc, in which Russia sees China as a possi-ble long-term threat to its national security, whilst China needs Russia as

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a supplier of energy and weapons, but still realizes that Russia often usesChina to gain global influence (Anderson 1997; Garnett 2000 and BoboLo 2008).

Although China has not yet achieved superpower status, its rise isnevertheless causing some concern in Washington, Moscow, Brusselsand elsewhere. Whether or not the current close Russia-China ties aremaintained will depend on a number of factors - the course of Russianforeign policy under new President Medvedev; US-Japanese ties; theimpact of the Obama Presidency on the course of US-China and US-Russia relations; the role of the UN; the settlement of disputes over theKorean peninsula (Zhebin and Yong Ung 2008: 29-47); and finally,whether the unilaterialism of President Bush (Junior) will gradually giveway to triangularism under the new US President Barack Obama.

From a Chinese perspective, its promotion of peaceful development,harmony and strategic partnerships (such as the SCO), a relativelyproblem-free 2008 Olympics and China’s willingness to accept interna-tional aid during the May 2008 Sichuan earthquake, has partly counterednegative perceptions of China and indicated its new openness. But Tai-wan and Tibet remain serious Chinese concerns. In terms of the othermain topic addressed here, energy security will continue to be the biggestpotential obstacle to better Russo-Chinese relations for the short tomedium term, and the issue most likely to dominate EU debates withRussia as well. Thus far, Russia has - and is still - using geo-politics (seeLevgold 2007: 343-392), and energy in particular (Goldman 2008), tobalance various regional powers in areas of key interest, such as Asia, inorder to offset a perceived Chinese threat and to restore Russia’s ‘greatpower status’ on the world stage; however, this approach might wellproduce major problems in the long-term.

164 Christopher Williams

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EUROPEAN STUDIES 27 (2009): 167-185

THE EUROPEAN UNION, CHINA AND THE UNITED STATES:COMPLEX INTERDEPENDENCE AND

BI-MULTILATERALISM IN COMMERCIAL RELATIONS

Michael Smith and Huaixian Xie

AbstractThis chapter explores the emerging ‘triangle’ in commercial relationsbetween the EU, China and the United States, using the concepts of‘complex interdependence’ and ‘bi-multilateralism’ as organising andevaluative devices. The chapter argues that in the ‘triangle’ there areimportant areas of unevenness and variation reflecting differences ofpower, institutional factors and norms, but that nonetheless there canbe discerned important elements of ‘complex interdependence’ asdefined by Keohane and Nye. This can be observed in the bilateralrelationships between the three parties; at the same time, however, theEU-China-US relationship is central to power, institutions and normsin the changing multilateral commercial system, centred on the WorldTrade Organisation. This means that many of the commercial policynegotiations between the three parties are essentially ‘bi-multilateral’:on the one hand, the management of bilateral relations creates exter-nalities for the multilateral system, and on the other hand the evolu-tion of the multilateral system creates new forces shaping the man-agement of bilateral relationships. The chapter examines two cases,China’s entry into the WTO and the management of trade disputesover textiles, to illuminate the ways in which ‘bi-multilateral’ elementsenter into the EU-China-US ‘triangle’.

IntroductionBoth the European Union (EU) and the United States (US) face a com-mon challenge from the emergence onto the global commercial stage of

168 Michael Smith and Huaixian Xie

China (Grant and Barysch 2008; Zaborowski 2006a). In the context ofEU-US relations more generally, which are characterised by a fluctuatingmixture of competition and convergence (McGuire and Smith 2008), itmight be predicted that this situation would produce the same oftenuneasy combination of joint positions and action with competitive strate-gies, producing what has been termed a process of ‘competitive coopera-tion’ between the two transatlantic partners (Smith 1998a; Smith andWoolcock 1993; chapter 3). At the same time, it might be argued that the‘triangle’ of relations between the EU, the US and China would contrib-ute to the development of a ‘new trilateralism’ between the EU, the USand Asia-Pacific countries, or even a successor to the more limited tri-lateralism between the EC, the US and Japan that was widely discernedin the 1970s and 1980s (Smith 2004). But the situation is not one thatlends itself to analysis in terms of simple labels. It is clear that EU-China-US relations exist at many different levels and that they evolveagainst a changing global backdrop, in which the emergence of severalnew potential commercial ‘great powers’ and the continuing difficultiesfaced by global institutions such as the World Trade Organisation(WTO) play a key role. In this set of overlapping contexts, the bilateraland trilateral relationships between the EU, the US and China must beseen alongside the continuing development of inter-regional and globalcommercial relationships, and in turn the problems of strategy and im-plementation that confront the EU.

This chapter sets out to analyse the emerging pattern of relationsbetween the EU, China and the US, and to explore the ways in whichthis pattern impacts on the formulation and pursuit of policies, in partic-ular policies centred on negotiations in the field of commercial policy. Itdoes this in three stages. First, it looks at key areas of development inEU-China-US commercial relations, drawing attention to the growth ofwhat has been termed ‘complex interdependence’ and to the implicationsof this interdependence for strategies and their implementation. Second,it considers the ways in which these relations can be analysed, and pro-poses an analysis coupling the idea of ‘complex interdependence’ withthat of ‘bi-multilateralism’ in commercial policy negotiations. Finally, thepaper focuses on two linked case studies, dealing with China’s accessionto the World Trade Organisation (WTO) and the 2005 dispute overtrade in textiles, which are intended to sharpen the questions raised in

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the earlier parts of the argument and to suggest avenues for furtherresearch in this area.

The Development of EU-China-US Commercial RelationsOver the post-Cold War period, the commercial relations between theEU, China and the US have developed rapidly, often in ways that havesurprised policy-makers in Brussels and Washington. On the one hand,the explosive growth of the Chinese economy and its export orientationhave created very mixed reactions in the leading developed economies,with the EU and the US at the centre of the process. Whilst retailers andconsumers have welcomed access to cheap products, producers haveoften had much more mixed feelings, depending on the extent to whichthey can take advantage of production or licensing arrangements inChina itself. Both the EU and the US have developed large deficits intheir trade with China, which have led to demands in some quarters forprotection and an emphasis on the vulnerability of both the world’sleading economies to the challenge from East Asia (Crossick and Reuter2007: Part III; Freeman 2006; Zaborowski 2006b). At the same time, thegrowing availability of Chinese capital for investment in both the EUand the US has led to further mixed reactions, with the desire for newinvestment accompanied by the equal desire not to let prized assets fallinto alien hands. Both the EU and the US have developed strategies forboth ‘containing’ and taking advantage of the rise of China, involvingnot only a series of bilateral dialogues and agreements but also the use ofinter-regional and global multilateral organisations to regulate and ‘civil-ise’ the new forces to which they have been exposed (Berkofsky 2006;Crossick and Reuter 2007: 3-15; Tanca 2006; Zaborowski 2006b).

This said, the EU and the US occupy different positions in anyemerging ‘triangle’ composed of themselves and Beijing. In some ways,these different positions are similar to those occupied by the EC and theUS in the previous ‘triangle’, centred on the EC, the US and Japan dur-ing the 1980s and early 1990s. In that case, the linkages between the USand the EC, and the US and Japan, were not only strong in commercialterms but also bolstered by important security and diplomatic connec-tions that gave a strong central core to the relationships and preventedpurely commercial tensions from getting out of hand. But the relation-ship between the EC and Japan – not to mention that between the EUand Asia-Pacific more generally - was both narrower and weaker, fo-

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cused on commercial considerations above all else and with a much ‘thin-ner’ web of linkages between the two parties (Smith 1998b). In the caseof the EU-US-China ‘triangle’ some of the same qualities can be dis-cerned. The United States continues to have strong and multidimen-sional relationships with the EU, which embed the commercial relation-ship into a much broader set of linkages and networks, and which en-compass economic, diplomatic and security concerns (McGuire andSmith 2008: chapter 2). Although it does not have a highly developedalliance with China, the US does have a multi-dimensional strategicrelationship, which gives a key significance to security issues such as the‘Taiwan question’ and commits the US to a role much broader than asimple commercial one (Zaborowski 2006b). By contrast, the EU can beseen as ‘under-powered’, pursuing a strategy in which there are importantvariations between the stakes of individual Member States and in whichthere is a distinct lack of the multi-dimensional economic, diplomaticand security themes that are so powerful in US-China relations (Crossickand Reuter, 2007: 73-80). Although there are clearly elements of a ‘trian-gle’ between the EU, the US and China, it is clear that there are impor-tant areas of unevenness and (from the EU’s perspective) ‘gaps’ in theoverall structure, whilst the overall development of relations is fluid anddynamic, especially in light of the rapid development of China’s position.

This unevenness and dynamism translates into important variations instrategy between the three participants. For each of them, there are keyconsiderations: the relationship between ‘grand strategy’ and the require-ments of commercial relations, the relationship between the roles of‘partner’ and ‘competitor’, and the distribution of responsibility betweenthe different stakeholders in the overall constellation of relations. Someat least of these considerations arise as much out of how the three partic-ipants see themselves as ‘players’ in the global arena as they do out ofmaterial resources and conflicts of interest, and thus relate to norms androle-conceptions as much as they do to specific institutional arrange-ments or distributions of power.

What is clear is that the different EU, Chinese and US positions leadto markedly different responses to the demands of international life andto the demands of life within the ‘triangle’. Thus, the EU’s response hasbeen (as it has in many other areas of external policy) to focus on thebuilding of a ‘strategic partnership’ with China, centred on the principlesof multilateralism and encompassing a large number of sectoral and

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other dialogues designed to present and promote the interests of com-mercial groups in Europe (Jing Men 2007); on occasion, it has appearedthat this partnership might be designed partly as a response to the per-ceived unilateralism and coercive nature of US policy, particularly underthe George W. Bush Presidencies (Crossick and Reuter 2007: 73-80;Pollack 2003). By contrast, the US has focused much more on an ap-proach to China couched in terms of ‘grand strategy’, emphasising thelinkages between economics, diplomacy and security, and linking Chinapolicy to vital national interests in a way that is simply not available tothe EU (Zaborowski 2006b). It might also be argued that the US has asa result been sharply aware of the wider vulnerabilities that might beengendered by too great a reliance on China in commercial terms. Forthe Chinese, it seems clear that their approach to both the EU and theUS is shaped by broader considerations of China’s emergent role in theworld, and by the desire to maintain autonomy and shape a multipolardistribution of global power; but it is also clear that they feel the need toengage over a much broader front with the US than they do (at least atpresent) with the EU (Zhiyuan Cui 2004).

This discussion demonstrates that the increasing mutual entanglementof the EU, China and the US is central to the development of the globalarena, but that it reflects variations in salience, scope and sensitivity foreach of the three participants. At a very general level, they are entangledin a common situation reflecting the relative dynamism of their politicaland economic trajectories, but at the level of broad considerations ofeconomic, diplomacy and security, there are important differences amongthem. In terms of their approaches to the global commercial system andto trade issues, this means that they are likely to take different positionsnot only on specific issues and disputes but also on the broad relevanceand utility of material power, institutions and norms.

To put it simply, they are entangled with each other in a situation thathas important elements of ‘complex interdependence’ (Keohane and Nye2001): their relations have grown in range and scope, they encompass awide variety of governmental and other participants, they exhibit impor-tant linkages between issue areas and they demand a process of almostcontinuous negotiation. However, their responses to this are likely to bedifferent not only in style but also in substance; not least, as also sug-gested by Keohane and Nye, the levels of perceived ‘sensitivity’ and ‘vulner-ability’ to the consequences of growing interdependence among the three

172 Michael Smith and Huaixian Xie

parties are likely to vary, with important consequences for their ap-proaches to negotiations. The next section of the paper suggests a way inwhich the impact of ‘complex interdependence’ can be linked to theconduct of trade negotiations among the EU, China and the US.

‘Bi-Multilateralism’ and EU-China-US Commercial RelationsAs noted elsewhere, the relations between the EU and the US containimportant and coexisting elements of bilateralism and multilateralism,which create distinctive problems for negotiation and the management oftheir relationship (Smith 2005). The argument here is that this quality canalso be discerned in the EU-China-US ‘triangle’, although as we haveseen this ‘triangle’ is also subject to fluctuation and variation. To a largeextent, the EU-China-US relationship manifests the following qualities thatare also encompassed by the EU-US relationship (Smith 2005: 167-8):

Multi-level relationships with strong elements of public-private interactionas well as intergovernmental interaction.

A search for institutionalisation, for example through the New TransatlanticAgenda (NTA) and the Transatlantic Economic Partnership (TEP), orthe proposed EU-China Partnership and Cooperation Agreement, butissues about the gaps between institutional potential and institutionalperformance.

Strong linkages between what goes on at the level of the ‘triangle’ and whatgoes on at the global level in the context of institutions such as theWTO and a range of other multilateral bodies.

Intensifying integration especially in areas of the political economy, butunevenness of that integration across sectors.

A proliferation of relevant networks and dialogues, both transgovernmentaland transnational, but lack of clarity about how those networks anddialogues relate to each other and interact with each other.

Co-existing ‘languages’ of policy discourse, ranging from coercion tocoalition-building and collaboration but often in an uneasy coexistence,reflecting elements of normative consensus but equally strong areas ofnormative confusion.

Issues of choice about forums for interaction, about strategies and aboutpriorities which affect both the EU, and Chinese and US policy-makers.

As a result, a set of ‘adversarial partnerships’ or relations of ‘competitivecooperation’ emerge, which are arguably suboptimal for all concerned(but which may also serve the purposes of policy-makers on all sidesfrom time to time).

As noted above, this produces a context characterised by growing levelsof ‘complex interdependence’. Importantly for the argument here, in

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such a context one key feature is observable: that it is no longer possibleto distinguish sharply between bilateral and multilateral interactions.Such interactions are essentially co-constitutive of EU-China-US rela-tions, meaning that what is done at the bilateral level will spill over andhave effects for what goes on at the multilateral level, and vice versa.Out of this set of circumstances – which is effectively inseparable from‘complex interdependence’, as set out by Keohane and Nye - arise anumber of problems for negotiations between the participants (Smith2005: 169-74), and this is where the importance of the argument lies.

The first set of problems relates to the occurrence of negotiations,and the commitment of the parties to them: do the parties privilegebilateral over multilateral negotiations in specific contexts, and how dothey manage the linkages between the different levels and modes ofinteraction that result? A second set of problems relates to participation:how do the parties respond to the fact that they may be engaged in nego-tiations at different levels, and that different parts of their governmentalmachines may be carrying on negotiations simultaneously, with differentaims? Third, there is a set of problems relating to the agenda for interna-tional negotiations: can the three parties manage the intersecting agendascreated not only by their mutual interactions but also by the operation ofmultilateral organisations such as the WTO?

Related to this there is a fourth set of problems to do with coalitionbuilding: can we see evidence in EU-China-US negotiations of the waysin which the building of bilateral partnerships intersects with and createsproblems for multilateral negotiations? A fifth set of problems has to dowith leadership: how do the parties establish, maintain and exercise lead-ership not only within the ‘triangle’ but also within other multilateralsettings – and are these leadership pretensions mutually compatible?Sixth, there is a set of problems relating to outcomes: does the operationof bilateral relations within the ‘triangle’ facilitate or obstruct the achieve-ment of results at the multilateral level, and do multilateral negotiationsfacilitate or obstruct the achievement of results in bilateral negotiations?

Given the ways in which both bilateral and multilateral relationsbetween the EU, China and the US have developed during the past tento fifteen years, we would expect to find evidence of these implications,and also to find that such implications complicated further the conductof often delicate negotiations. The management of bilateral relationswould be expected to create externalities for the multilateral level, and by

174 Michael Smith and Huaixian Xie

the same token, the conduct of negotiations in multilateral settings couldbe expected to produce externalities for contacts at the bilateral level. Forthose involved, the key issues are those of information, decision-making,management and evaluation. These are complicated by the multi-levelnature of the context in which they are involved, but also by differencesof style and approach, which give the participants different perspectiveson power, institutions and norms within international negotiations (seeabove).

Thus, it might be expected that the EU would make every effort toconduct relations within a multilateral context, emphasising the impor-tance of multilateral rules and institutions and making their best effortsto deal with China (even on a bilateral basis) in ways that increasedBeijing’s compliance with those rules and institutions. Likewise, wemight assume that the US would adopt a far more strategic approach toChina based primarily on bilateral relations, with multilateral rules andinstitutions as a kind of backstop to the exercise of power and the use ofmaterial resources. For China, the argument would be that Beijing wouldsee the multilateral level as vital to its continued international emergence,but that there would be a fierce determination to preserve national au-tonomy and thus points of resistance to the imposition of multilateralrules in ways that were seen as undermining that autonomy.

So far, the discussion has remained rather abstract, concerned withidentifying broad patterns and problems, rather than with the day-to-dayconduct of relations between the EU, China and the US. The next sec-tion of the paper presents two brief and interconnected case studies withthe aim of illustrating how the politics of ‘bi-multilateralism’ can enterinto commercial relations between the three parties, and of identifyingsome questions for further research.

The Politics of ‘Bi-Multilateralism’: Two CasesThe first case concerns a key element in the development of the EU-China-US ‘triangle’: China’s entry into the WTO. In a way, of course,this is almost a pre-condition for other developments in the commercialrelations between the three parties, because it concerns China’s access tothe key institution for the multilateral management of international com-mercial policy. There was a lengthy ‘pre-history’ to the formal negotia-tions that took place in the late 1990s and the first year or so of the newmillennium, since the Chinese had first indicated their desire for mem-

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bership in the late 1980s. There was also a specific institutional contextfor the eventual negotiations, since the granting of WTO membershiprequires bilateral agreements with all existing member states (or groups,in the case of the EU). Given the development between the late 1980sand early 2000s of increasingly intense trade relations between the EU,China and the US (and of course, of increasing trade deficits for the EUand the US), it was to be expected that negotiations would be long andhard. The model of ‘bi-multilateralism’ would also predict that thesenegotiations would be characterised by linkages, by the coexistence ofissues between the three parties and by the emergence of an outcomethat reflected a complex set of trade-offs. It would further predict thatthere would be problems of management for all three of the parties,particularly the EU as the party with the narrowest and mostcommercially-focused set of interests and with important internal inter-ests (in the shape of the Member States) to satisfy.

Both the EU and the US were concerned above all with one keyelement in the eventual deal that might be struck with China: marketaccess, which would give them the potential to expand their commercialinterests in China not only through trade in goods but also through tradein services, intellectual property protection and potential future invest-ment. They thus set priorities for the negotiations that implied a signifi-cant market-opening process in China, and also saw as central theWTO’s role in promoting rules and norms on international commercialtransactions, including both trade and investment (Pearson 1999;Rumbaugh and Blancher 2004). The notion that China should become a‘responsible stakeholder’ in the world economy and particularly in tradewas a key underlying motivation for both the EU and the US; but it mustbe remembered that for the US, this was embedded in a wider concep-tion of China’s role in the broader world order. For the Chinese them-selves, it is clear that entry onto the WTO was seen as emblematic of abroader integration into the world order and recognition of their status –in addition, of course, the liberalisation of trade in areas such as textileswas a key material motivation. This liberalisation was a key concern forboth the EU and the US, since it threatened to expose areas of vulnera-bility in their domestic industries, as well as providing new opportunitiesfor manufacturers, retailers and consumers.

During the negotiations themselves, between 1997 and 2001, therewas thus a wide range of motivations between the three parties, as well

176 Michael Smith and Huaixian Xie

as a large number of ‘negotiating occasions’ giving opportunities forlinkages and trade-offs. For the EU, a key problem was countering thepossibility of an unequal deal in which China would gain relatively freeaccess to European markets whilst retaining significant levels of domes-tic protection. This went alongside the fact that at the same time as theEU was negotiating, the US was also negotiating its own bilateral dealwith Beijing; this meant that the EU was faced with a problem of moni-toring and influencing not only what went on in their relationship withChina, but also their relationship with the US, and in turn the US rela-tionship with China (Zimmermann 2004, 2007). The leadership roleassumed by the US in many aspects of the negotiations, whether in thebilateral context or within the ‘Quad’ group (US, EU, Japan, Canada)thus presented a challenge for the EU; should they go along with whatwere often peremptory US demands, or should they try to define a dis-tinctive position with the aim of making gains on key issues that wereimportant for them?

This position for the EU was shaped by the undeniable fact that theyplaced great importance on Chinese accession, which was seen asstrengthening the WTO system in general but also as bringing China intoa rules-based system where they would be more amenable to EU influ-ence. Not only this, but there was a further important dimension for theEU in general and for the European Commission as the negotiator: theways in which an active if not leading role in the negotiations could playinto the broader international status and recognition accorded to theUnion. For the US, as previously implied, there was a broader context of‘grand strategy’, albeit under the Clinton Administration accompanied bya commitment to enlargement of the multilateral system, and a feelingthat this was part of a strategic bargaining process as well as a need toprotect certain key interests in the commercial and financial sectors. Forthe Chinese, as already noted, the issues were not only those of materialeconomic benefit but also those of recognition within what they woulddefine as a multipolar global system.

The upshot of this complex and interconnected context was a processof manoeuvring and a focus on certain key issues in China’s claim formembership. Apart from (but linked to) market access, one key problemwas the terms under which China should enter: should it be judged as a‘developed’ or an ‘underdeveloped’ country’ (Anderson 1997)? This issuehas major implications for the ways in which a new member is allowed

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to adjust to the pressures of life in the multilateral system, and it was oneon which the EU and US positions differed, with the EU inclined toaccept that China should enter with the status of less developed country.The US position was much less accommodating than that of the EUthroughout the negotiations – reflecting no doubt the relative prioritiesplaced on membership for China per se, as well as the influence of Con-gress, which was extremely sensitive to any ‘give-away’ on the negotia-tions.

What developed for the EU was a (self-allocated) role as a kind ofintermediary between China and the US, emphasising the importance ofsensitivity to the varying levels of development in different sectors of theChinese economy and also stressing the importance of EU interests insuch areas as trade in services and the integrity of the WTO system as awhole (Eglin 1997). This implied a delicate balancing act for the Com-mission in its role as negotiator – pushing hard for Chinese accessionand stressing sensitivity to Chinese interests, but also accommodatingitself to the hard line pursued by the US and thus emphasising the needfor Chinese concessions on key areas of market access and WTO rules.It also implied acute Commission sensitivity (underlined by the watchful-ness of key commercial interests in the EU, such as financial services) towhat could be seen as unequal deals by the Chinese that would favourUS companies.

When it came to the dénouement of the negotiations as a whole, therewas a key role for timing. The EU as it transpired was the last of themajor WTO members to conclude a bilateral deal with China, and thisenabled it to push for greater concessions in some areas than the US hadalready achieved; at the same time, there was pressure on the EU toconclude a deal so that key Congressional votes in the US were notjeopardised (European Report 2000a, 2000b). As a result, the final con-clusion of the bilateral agreement with the EU was delayed until May2000 – the US having agreed in late 1999. It could be argued that thisenabled the EU to achieve some slight advantage in the deals carved outfor specific sectors, particularly for financial services. But it was alsoclear that Chinese entry (formally achieved on 1 January 2002) was onlythe beginning of the story. There remained key questions about the waysin which Chinese status within the WTO would be defined, and aboutthe impact of the concessions that had been achieved in specific sectors.

178 Michael Smith and Huaixian Xie

Among these, textiles were one of the most sensitive for all three partiesto the EU-China-US ‘triangle’.

Among the key agreements made during the entry negotiations hadbeen one on the elimination of tariffs and quotas. On their side, theChinese had agreed to eliminate quotas and other quantitative restric-tions on imports no later than 2005, thus opening up in principle a largenew market for both European and American goods (European Report2001). Not surprisingly, Chinese entry was followed by sustained pres-sure on Beijing to introduce – if not to accelerate – these changes. Butthe changes have to be seen in the broader context of the reduction ofquotas and quantitative restrictions for all countries as a result of theUruguay Round of trade negotiations that was completed in 1993.

One of these was key to both the EU and the US interest: the phasingout of the Multi-Fibre Arrangement, which had governed imports oftextile products into industrial countries for many years, and which had,at its core, a set of quota arrangements (Brambilla et al 2007). The agree-ment was due to expire on 1st January 2005, replaced by the Agreementon Textiles and Clothing, which meant that the EU as well as otherWTO members had had ten years to adjust – but the phasing out ofquotas brought about a veritable flood of imports from China (as well asa number of other developing countries, especially those in South Asia).This posed a number of questions for the EU and for the US. Mostparticularly, how would they now deal with a need for ‘crisis manage-ment’ in a particularly sensitive area of declining production and vocifer-ous domestic producer interests?

In terms of complex interdependence, it seems clear that this situa-tion moved the politics of trade in the EU and the US from a discoursecentred on ‘sensitivity’ to one centred on ‘vulnerability’, with all of theresulting calls for protection and the re-imposition of quotas that mighthave been predicted. It thus called into question some of the key under-takings that had been made by both the EU and the US when the Chi-nese entered the WTO. As a result, the effectiveness of internationalinstitutions and rules was at least potentially challenged, and the potentialfor imposition of coercive measures against the Chinese, in the form ofanti-dumping or other actions, was raised. Not only this, but the politicsof textiles set a number of different ‘domestic’ interests for both the EUand the US against each other: in each case, there were strong regionalvariations in the salience of the textiles problem, between producing and

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non-producing regions; these were accompanied by splits between pro-ducers, retailers and consumers that called into question the apparentlytechnocratic management of trade disputes and opened up the possibili-ties of broader politicisation.

The crisis, which made its initial and dramatic impact in early 2005,thus posed major problems of management for the EU and the US with-in the context of their bilateral relationships with China and of their ‘do-mestic’ constituencies; as it developed, it also produced significant prob-lems of adjustment for the Chinese, because of the need to adapt tosuccessive negotiation phases. Potentially also, it played into the wholequestion of the terms on which China had been admitted into the WTO,since it raised issues about whether the EU and the US had the right toimpose protective measures against the surge of Chinese imports, andabout whether they could use the WTO as an instrument or as a legiti-mising agent in applying whatever measures they might decide upon.Thus, although the dispute was about only a part of the trade with Chinaconducted by the EU and the US, it raised far more general questionsabout the ways in which that trade was to be managed both at the timeand in the future.

Between 2004 and 2005, Chinese exports of textiles and clothing tothe EU grew massively both in volume and in value; at the same time,average unit prices for textile products in the EU had dropped signifi-cantly. Not surprisingly, this led to protests from EU manufacturers,channelled especially through the trade association, Euratex, which iden-tified China as the key culprit and argued that there was a threat both toEU producers and to other supplying countries from Chinese domina-tion of the import market. The Commission had already identified thetextiles issue as one which might lead to major pressure for protection,and had deployed a proposed amendment of Council regulations thatwould at least in principle allow for the imposition of safeguard mea-sures (European Commission 2004, 2005). But this in itself did notprepare the EU for the dramatic flood of imports, nor for the conflictingpressures that arose from the tensions between producers, retailers andconsumers as the crisis developed. In addition to the EU-based instru-ments, there was also the possibility that measures could be taken undergeneral WTO provisions to counter market disruption. Finally, there wasalso the possibility of coordinated action with other countries or regions

180 Michael Smith and Huaixian Xie

especially affected by the import surge – the obvious candidate being theUS, which was itself confronting a crisis in this area.

The EU’s early response was to place the emphasis on self-control bythe Chinese, rather than to undertake unilateral measures, and to holdany possibility of action through the WTO very much in the background(Allen and Smith 2006). But the Commission’s hand was forced by pres-sure from Euratex to deploy safeguard measures, and by increasingevidence of concern on the part of particular Member States, especiallyItaly, Portugal and France. In effect, on this as on a number of othertrade issues, there is a North-South divide in the EU itself, and thisbecame increasingly obvious during the summer of 2005 as the retailinterests of Northern members such as Sweden and the United Kingdomran up against those of the producer countries.

As a result of these complex pressures, Peter Mandelson, the EUTrade Commissioner, produced a set of guidelines; but at the same time,in April 2005, the US announced that it was considering the impositionof safeguard measures that might include revived quota arrangements.Here, the bilateral and ‘domestic’ problem faced by the EU becamestrongly linked to the responses of the United States, in ways that exertedfurther pressure on the Commission. Arguably, this led to a hardening ofthe EU position as spring moved into summer during 2005, with thefirst mention of possible reference to the WTO. But this in itself wastrumped by the planned imposition of quotas by the US. The Commis-sion found itself between a rock and a hard place, since it was deter-mined not to jeopardise its broader relationship with China, and equallydetermined not to damage relations with a whole raft of other textileproducers, in South Asia and elsewhere, that would be disrupted by anyimposition of broad quotas. So there was a desperate search for specificmeasures that could be seen as evidence of Commission concern butwhich would not create significant harm. In this process, the threat offormal reference to the WTO played a role, by enabling the start offormal consultations with the Chinese government and an eventualagreement between the EU and China in June 2005. It was notable thatat this stage, a contrast was drawn between this agreement based onconsultation and negotiation, and the unilateral actions of the US(Bodeen 2005; Buckley 2005).

The agreement of June 2005, though, only served to create furtherproblems, partly because the mechanisms for implementation and moni-

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toring were ill-defined, thus leaving room for further increases in Chi-nese exports but also catching large numbers of textile products in a sortof limbo, trapped in European ports. It appeared that none of the vocif-erous interests involved in the crisis had actually been satisfied, and thisled to further negotiations during the Summer – eventually producing anagreement in September 2005 that dealt with the release of the ‘trapped’products and also established a system for reviewing the position in themedium term (with the intention of phasing out any quotas by late 2008)(Allen and Smith 2006).

Interestingly, the US hard line, with the implementation of quotas ona number of Chinese products, ran alongside the EU’s negotiations; theEU can partly be seen as using the US stance as a means of reinforcingits own position in negotiations and consultations, whilst the Chineseshowed at various stages that they felt the EU stance could be used toexert some leverage on Washington. There was an apparent awareness byall three participants that although the disputes were not formally linked,they intersected and that one could play off the other. Notably, althoughall of the processes described took place in the shadow of the WTO, andall parties were well aware of this, there was no formal move to open aWTO dispute, or to use the established WTO safeguard provisions.

Evaluation and ConclusionsWhat do the two cases outlined here suggest in terms of the earlier dis-cussion of complex interdependence and ‘bi-multilateralism’? A firstassessment is that both of them show signs of the impact of complexinterdependence, at least as seen from Brussels: multiple actors, multiplechannels, the impact of linkages between different sectors and differentnegotiations, and the search for negotiated solutions. But they showthese features in different ways and in different measures. Whereas thereis evidence of pressure from a wide range of public and private actors inthe case of WTO entry negotiations, this is to a degree at least mutedand kept in the background, whilst the key negotiations themselves takeplace in a largely technocratic context with areas of politicisation reflect-ing broader national or regional agendas. There is clear evidence of link-ages in the WTO entry negotiations, and of the ways in which theselinkages could be exploited by different parties, just as there is evidenceof a search for negotiated solutions in a context of linkages and possiblecoalitions.

182 Michael Smith and Huaixian Xie

In the textiles dispute, however, the picture is different: multipleactors are not just there in the background, they are in the foreground,protesting, advocating and pressing for particular solutions. At the sametime, there is a variety of channels for communicating these interests and‘voices’, and many of these channels spend a good deal of their timesearching for linkages between different concerns that might be exploitedto turn negotiations in their favour. The different stages in which at leastsome kind of resolution of the dispute was pursued also gave opportuni-ties for leverage, and enabled different interests to put pressure on theCommission in particular. These pressures also existed in the Chineseand American cases, and there is much more to be said outside the con-fines of this essay about the ways in which they interacted to produce thevarious changes in direction that were apparent during 2005.

In both cases, it appears that there were also important differences ofemphasis or style between the EU, China and the US: to put it simply,there was a greater propensity on the part of the US to adopt ‘hard line’policies and to pursue strategic bargains, whilst in the case of the EU,there seems to have been greater reliance on negotiation and persuasion,even when ‘domestic’ EU interests might have preferred a tougherstance, and, for China, the imperative seems to have been mainly that ofestablishing and maintaining their position as an important global player,leading to a relatively accommodating stance. This bears out in verygeneral terms the arguments made earlier in the essay about differentEuropean, Chinese and American approaches to the global arena.

Apart from evidence of the existence of complex interdependence,though, there is also important evidence from these two cases of theimpact of ‘bi-multilateralism’. Earlier, it was argued that this conditioncreated a number of linked consequences for negotiations; these were todo with the occurrence and timing of negotiations, with the ways inwhich agendas were set, the existence and uses of linkages, the search forcoalitions and the implementation of agreements. In the case of China’sWTO entry, there was almost an institutionalisation of ‘bi-multi-lateralism’, given the ways in which WTO entry negotiations are struc-tured and pursued; this meant that the negotiations carried out by theEU with China were linked closely to those carried out by the US, andthat this had clear effects on the kinds of strategies pursued by Brussels,including choices about timing and linkages within those negotiations. Inthe case of the textiles dispute, the impact of ‘bi-multilateralism’ was

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more unpredictable, given the ways in which the need for negotiationsoccurred, the range and intensity of the interests engaged, and the differ-ent courses chosen by the EU and the US in responding to China.

This essay has only ‘scratched the surface’ of the processes withwhich it has been concerned. As relations between the EU, China andthe US intensify, widen and deepen, we can expect the impact both ofcomplex interdependence in general and of ‘bi-multilateralism’ in particu-lar to be underlined. The essay has only dealt with this set of problems inone restricted area, that of commercial policy and more particularly thatof trade; there are important ways in which the study of such issues canbe broadened, first by dealing with the more politicised areas of commer-cial policy (such as for example the EU’s arms embargo and proposals tolift it) and second by moving away from commercial policy itself intoother areas of international negotiation, such as those dealing with envi-ronmental, energy and security issues. This would enable a more compre-hensive picture to be drawn of what is inevitably going to be one of themain axes of negotiation in the global arena for the foreseeable future.

ReferencesAllen, D. and Smith, M. 2006. ‘External Policy Developments’ in Sedelmeier,

U. and Young, A. (eds), Annual Review of the European Union, 2005/2006.Oxford: Blackwell: 155-70.

Anderson, K. 1997. ‘On the Complexities of China’s WTO Accession’ in TheWorld Economy, 20(6): 749-72.

Berkofsky, A. 2006. ‘The EU-China Strategic Partnership: Rhetoric versusReality’ in Zaborowski (2006a): 103-14.

Bodeen, C. 2005. ‘EU.Chinese Trade Negotiations Reach Settlement on Chi-nese Textile Exports’, AP Worldstream. 10 June. http://www.highbeam.com/doc/ 1P1-109846139.html

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Buckley, C. 2005. ‘China and US Hold Textile Talks’. International Herald Tribune.18 June. http://www.iht.com/articles/2005/06/17/business/textile.php#

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Eglin, M. 1997. ‘China’s Entry into the WTO with a Little Help from the EU’in International Affairs, 73(3): 489-508.

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European Report. 2000b. ‘EU/China: Beijing Talks Continue on China’s WTO Bid’.23 February 2000. http://www.highbeam.com/doc/1G1-59575387.html

European Report. 2001. ‘EU/China: EU Deal Paves the Way for China toFinally Join WTO’. 23rd June 2001. http://www.highbeam.com/doc/1G1-75824728.html

Freeman, D. 2006. ‘China’s Rise and the Global Economy: Challenges for Eu-rope’ In Zaborowski (2006a): 15-26.

Grant, C. and Barysch, K. 2008. Can Europe and China Shape a New World Order?London: Centre for European Reform.

Jing Men. 2007. ‘The EU-China Strategic Partnership: Achievements and Chal-lenges’. Policy Paper No. 12, European Studies Centre, University of Pitts-burgh.

Keohane, R. and Nye, J. 2001. Power and Interdependence. 3rd edition, Boston:Little Brown.

McGuire, S. and Smith, M. 2008. The European Union and the United States: Compe-tition and Convergence in the Global Arena. Basingstoke: Palgrave/Macmillan.

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Smith, M. 2004. ‘The European Union, the United States and Asia-Pacific:Towards a New Trilateralism?’ in Dinan, D. and Green Cowles, M. (eds),Developments in the European Union 2. Basingstoke: Palgrave/Macmillan: 237-55

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1 My thanks go to Stephane Gierts from the Archives of the Council of the EU, AnnaGuegan, at the European Institute of Asian Studies (EIAS) and the Taipei RepresentativeOffice in Brussels, for the support provided.

EUROPEAN STUDIES 27 (2009): 187-206

THE EUROPEAN UNION’S ECONOMIC TIESWITH THE REPUBLIC OF CHINA (TAIWAN)1

Paul Joseph Lim

AbstractThe Member States of the European Union (EU) maintain unofficialrelations with the Republic of China (ROC, Taiwan), in keeping withthe One China Policy. The Commission, although not a state and prin-cipally concerned with trade, maintains diplomatic relations with thePeople’s Republic of China, represented by its Delegation in Beijing,while having unofficial relations with Taiwan, represented by theEuropean Economic and Trade Office (EETO) in Taipei. However, the‘unofficial’ nature of relations has not prevented the development oftrade and investment ties between the EEC/EU and Taiwan. Never-theless, the One China Policy has had its effects on trade matters be-tween the EU and Taiwan. Politics has consequences for economics;the two cannot be separated. This chapter will look at these aspectsfrom a historical perspective, with a specific eye on archival materialscollected from the EU completed by the works of a number of Tai-wan specialists. This chapter does not cover the area of DevelopmentCooperation.

Overview: Early Politics and Trade Relations According to Chung-lih Wu (1985: 7, 9, 12-13), trade between the Re-public of China (ROC) and Europe totalled only about 7.8% of theROC’s total trade in the 1950s, with imports at about 9% and exports at6%. The ROC imported more from Europe than it exported to Europe,

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2 Press Release [1011/75 (Presse 95)]; Official Journal (OJ) of 1 September 1975.

hence there was a deficit. The EEC accounted for 90.26% of total im-ports from Europe to ROC, while the ROC’s exports to the EEC 6accounted for 98.7% of total exports to Europe. Agricultural productsand processed products constituted a large share of total ROC exports.In the 1950s, the EEC had a surplus balance of trade with Taiwan.

From 1960 to 1969 (except for 1963 and 1964), trade with Europefollowed the same overall pattern, that is, the value of imports consis-tently outweighed that of exports. However, the share of the deficitstemming from European trade showed a gradual decline, from 14% to8.7%. Until 1973, the period was one of the most successful periods inthe history of ROC foreign trade, especially with regard to exports.

After 1973, the high prices for imported raw materials, shortages insupply, insufficient demand and stiff competition, resulted in a decline inforeign trade: trade with Europe exhibited a negative growth of -3.2%for exports and -26% for imports. Specific to the EEC, Wu stated that inthe 1960s and 1970s imports of EEC goods into the ROC occupied aminimum of 87% of the total imports from Europe. In the 1960s, ROCexports to the EEC 6 accounted for 96.2% of total ROC exports toEurope. In the 1970s, ROC exports to the EEC 9 accounted for 92.8%of total ROC exports to Europe.

Taiwan was in the early phase of industrialization, when manufactur-ing exports were low, resulting in the Export Oriented Industrialization(EOI) strategy. This was promoted by Western economists and politi-cians at the World Bank, and later adopted by the Asian ‘Tiger econo-mies’. In the 1950s and 1960s, if the trade balance was in favour of theEEC, it was because Taiwan was importing capital goods to manufacturefor export.

In 1975, the EEC established diplomatic relations with the PRC. APress Release of 15 September 1975 announced the consent of the ap-pointment of Mr. Li Lien-pi, and stated that he would present his creden-tials to both the Presidents of the Council and of the Commission. TheOfficial Journal of 1 September 1975 announced the accreditation witheffect from 16 September 1975.2

These developments had been preceded by the (then) Member States,except Ireland, establishing diplomatic relations with the PRC: Francetransferred its recognition from the ROC to the PRC on 27 January

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 189

3 The relevant meeting of 6 May 1975 was recorded. 4 OJ L 43/24, 22 February 1971; cotton textiles remained relevant in the 1970s.5 See note to the Commission of 5 May 1972 [SEC(72) 1609]; COREPER, 624th

Meeting of 17 December 1971 and aide-memoire dated 24 April 1972 (01266).6 See note, of 17/05/74 on ‘China and Europe’, with initial ‘CS’ – presumably Sir

Christopher Soames.

1964, Italy on 6 November 1970, Belgium switched recognition on 26October 1971, the Netherlands granted it on 27 March 1950, Luxem-bourg recognized China on 16 November 1972 (but it never had officiallinks with the ROC), and the Federal Republic of Germany and the PRCagreed a communiqué on diplomatic relations at ambassadorial level inOctober 1972. The UK recognized the PRC in 6 January 1950, Denmarkestablished relations with China on 9 January 1950 and Ireland, on 22June 1979 (Cabestan, 2008: 85-86, 94; Mengin 2002: 137-139; Brodgaard2001: 274).

For the EEC to have ties with PRC meant it had to show it had notrade agreements with Taiwan. This was confirmed to the Chinese For-eign Minister by Sir Christopher Soames during his visit to Beijing inMay 1975.3 As a result, what trade there was with Taiwan was conductedon an autonomous basis. It is important to note that the ROC had signeda ‘Self-Limitation-Agreement’ on 1 February 1971 with the then EEC.4The agreement was to continue to function unofficially.5 Even thoughdiplomatic relations was not yet established with the PRC, the expectedbehaviour remained as it had been since the first contacts with PRCrepresentatives. Wilson (1973: 665) stated that this agreement wouldexpire in 1973. The author could not find any evidence from the archivesof any prolongation of this agreement, nor any document stating that ithad ended.

What was meant by ‘trade with Taiwan on an autonomous basis’?‘Autonomous basis’ meant notifying the official Taiwanese trading com-pany of the level of imports acceptable to the Community without theimposition of quantitative restrictions. The Community did not negotiatevoluntary restraint agreements with Taiwan.6 This means that there wereno consultations or negotiations with Taiwan in making and taking deci-sions. Rather, business with Taiwan was done via a private company,based in Rotterdam, and representing Taiwan. However, according to theTaipei Representative Office in Brussels, in 1971, the company Far East TradeService Inc. was established to take the place of the Economic Division of

190 Paul Joseph Lim

7 Van Aerssen Report: Doc. 2-1765/84, PE 94.190/def. p.12.8 SEC (71) 2681; the GSP came into force on the 1 July 1971 and applied to the

Group of 77 only within UNCTAD (Council Press Release 688/71 (Press 31). TheCouncil examined its extension to non-member countries, amongst them Taiwan.

the Embassy, which closed down on 15 October 1971, on the date Bel-gium terminated its diplomatic relations with the ROC. As far as eco-nomics and trade were concerned, this was considered the ‘contact-point’in all relevant subject-areas, including anti-dumping, until 1990. TheEmbassy of the ROC was replaced by the Chinese Cultural Centre (CentreCulturel Chinois) on 15 October 1971, and then by the Centre Culturel SunYat-sen from 24 February 1972 onwards. This was one of the effects ofthe acceptance of the One China Policy and will be analysed further at laterstages in this chapter. Chinese leaders were informed by Sir ChristopherSoames of this autonomous decision concerning the conduct of tradewith Taiwan.

Moreover, a Report, of 1 March 1985, by the European Parliament(EP), and concerning trade exchanges with Taiwan,7 revealed that Taiwanfelt it was the victim of discrimination in comparison to the other Asianstates which were its main competitors. Parliament wanted a reduction –draconian at times – in quotas imposed on textile products between 1978and 1981, as part of the Multi-Fibre Agreement (MFA). The EP docu-ment further stated that, for many years, the European Community hadprincipally exercised its action on imports by taking unilateral measureswithout either consulting Taiwan or sharing information. The EuropeanCommunity had never maintained formal trade relations with Taiwanuntil the 1980s at the earliest.

On 25 June 1971, the ROC submitted to the Community an aide-memoire, arguing that it ought to benefit from the Community’s General-ised System of Preferences (GSP). This was circulated to all Commis-sioners in a letter dated 12 July.8 From the minutes of a meeting withrepresentatives of the Chinese Embassy on 22 July 1975, a Mr. Tranclaimed that the EEC had not given Taiwan preferential treatment, ‘be-cause it did not exist’ (Mengin 2002: 140). This was confirmed in theVan Aerssen Report of 1985, already quoted above, which stated in afootnote that the Commission, having taken pragmatic measures in thecourse of unofficial contacts with diverse milieus of Taiwanese produc-tion, the discrimination was reduced, albeit marginally. From 1971 on-wards, Member States had expressed severe political reservations about

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 191

9 See, for example: Europe of 24 February 1971, p. 5.10 COREPER, 618th Meeting: Doc.: 2230/71 (RP/CRS 37).11 EC note to the Council, of 9th December 1971: I/263/71 (JUR1) (COMER 46). 12 Note to the Attention of President of COREPER (Part 2) dated 10/11/71.13 Note of the Council dated 17 January 1972, S/23/72 (COMER 8).

including Taiwan in the GSP,9 again indicating some of the effects of aOne China Policy. Taiwan as a developing country was consequently de-nied access to any trade development instruments.

The next time Taiwan ‘appeared on the radar-screens’ of the EECwas in the context of the status of the ROC in the General Agreementon Tariffs and Trade (GATT).10 Matters revolved around the question ofwhether or not to invite the ROC to the 27th session of the GATT onthe 16 November 1971 – and if so, under what status or rather invite theGovernment of the PRC. The ROC was a founding member of theGATT, on 21 May 1948, when it ratified the Protocol of ProvisionalApplication (PPA), while signing the actual GATT on 30 October 1947.It withdrew on 6 March 1950 and became an ‘Observer’ on 16 March1965. It lost its observer status on 19 November 1971 (see: Hindley1993: 4, 8-9). From 15 January 1964 onwards, the ROC had also been amember of the 1962 International Agreement on Cotton Textiles. It hadaccepted its extension in 1967 and 1970.11 Further arguments arose onthe question of inviting the ROC to the meeting of the Cotton TextilesCommittee in mid-December 1971.12

The position of the then EEC 6 was to suspend sending documentsto the Taiwanese Delegation to GATT and to discourage any representa-tion of Taiwan during the 27th Session. ROC membership of GATT wasrevoked, following UN General Assembly Resolution 2758 (XXVI,25/10/71), which expelled the Chiang Kai-shek regime. In implementingthis resolution, The GATT, in its capacity as a specialized economicagency of the UN, re-examined its decision from 1965 regarding ROCobserver status (Hindley 1993: 4; 8-9).

The ROC consequently also withdrew from the meeting of the Cot-ton Textiles Committee.13 However, while the ROC was no longer aparticipant in this agreement on cotton textiles, the agreement which ithad signed with the EEC continued to function unofficially. The ar-chives also contain an aide-memoire, recording an official meeting withROC representatives on 24 April 1972. Moreover, in the Minutes of theCOREPER’s 624th Meeting on 17 December 1971, there is a statement

192 Paul Joseph Lim

14 Notes to COREPER of 10 November 1971; S/23/72 (COMER 8), of 17 Janu-ary 1972; note [SEC(72) 1609] to the Commission of 5 May 1972; aide-memoire 01266.

15 OJ L33/7-8 and OJ L50/44-45, 73/14/EEC.16 See: ‘EEC Tariffs hurt ROC Most’, in Economic Daily News, 27 October 1988. 17 Commission Decision 20 December 1984: OJ L 033, 06/02/1985 P. 0013 -

0014; 88/211/EEC, and of 8 March 1988, OJL 095, 13/04/1988 P. 0020 - 0020.

that, in the probable case of Taiwan being excluded from the IACT, thebilateral agreement with Taiwan must be maintained and the Commis-sion must contact the representatives of Taiwan in Brussels to obtaintheir agreement.14 Hence, Taiwan, it can be argued, suffered from thestrict interpretation and application of the One China Policy.

Last, but not least, Wu (1985: 10) has stated that over the period1970-1979 ROC foreign trade accumulated a US$3,776 million surplus;a large portion of this surplus (45%, or US$1,728 million) originatedthrough the ROC’s Europe trade. Wu further claims that there wassomewhat of a disequilibrium in this trade. This situation would inevita-bly result in resistance and restrictions from trading partners, if allowedto continue over a long period. As an example of this, on 5 February1974, a first Commission Regulation (No. 300/74) subjected to officialauthorization the importation into Italy of tape-recorders from Taiwan.This was an autonomous decision by a regulation.

However, in February 1973 a first Commission Decision, on an au-tonomous basis, authorized the French Republic not to extend ‘commu-nity treatment’ to Taiwanese radio receivers, falling within the CommonCustoms Tariff (CCT). This authorization to France is recognized as adeflection of trade preventing the execution of measures of commercialpolicy taken as regards Taiwan.15

Trade in the 1980s: the ‘Autonomous Decisions’ RegimeThroughout the 1980s, while deflections continued because they bene-fited EEC consumers, the restrictions of the 1970s continued, but werealso applied to new products.16 Taiwan might not yet have developed thecapability to develop and produce higher value-added technology, butthere seemed to be a growing sophistication in the range of its products.For the first time, a number of Commission Decisions authorized intra-Community surveillance (in France), in respect of certain piezo-electricquartz-crystal electronic digital watches originating in the ROC. Similarcases in Italy concerned Taiwanese imports of slide fasteners.17 The Van

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 193

Aerssen Report (1985) is noteworthy also for a range of trade measureswhich were subsequently adopted. Three key examples of these are:

The extension of the competencies attributed to existing trade repre-sentatives of the Member States in Taiwan and of Taiwanese of-fices in the Community.

The establishment of a system of information exchange regardingnon-official contacts, as well as visits of Taiwanese representativesof trade and industrial interests to the Community and vice-versa.

An improvement of the practical modalities for visits between theMember States and Taiwan.

Ash (2002: 159, 163, 166) argued that it was only in the 1980s that Tai-wan’s search for a more ‘diversified’ pattern of trade relations led to anacceleration in its trade with more EU Member States. This was a devel-opment to which Taiwan’s increased requirements for European capital-intensive goods contributed significantly. Taiwan’s surplus trade balancefirst peaked in 1980 with US$1.26 billion. Analysts such as Ash havealso suggested that the closer economic ties between Taiwan and Euro-pean countries, especially with EU Member States, facilitated more tech-nological co-operation and the acquisition by Taiwan of key new tech-nologies and market intelligence.

Developments and Transitions in the 1990sIt is worth noting from Table 1 that both the surpluses on the balance oftrade and volume of trade fluctuated. Ash (2002: 165-167) pointed outthat the deterioration in the trade balance was not only attributable to thevagaries of financial crises; it was also due to significant fluctuations inthe exchange rate, in particular of the (then) European Currency Unit(ECU). Moreover, the trend of what may be termed Taiwan’s accelerated‘outreach activities’ towards Europe and the EU during the 1980s and1990s also played a vital role. A typical 1993 statement (1993: 32-33) byMa Ying-Jeou – who was then Vice-Chairman of the Cabinet’s MainlandAffairs Council and is now President of the ROC – pointed to anothertendency which affected the state of Taiwan-EU trade: in order to facili-tate flourishing relations, unofficial representatives in European capitals

194 Paul Joseph Lim

18 Mengin (2002:141-142, 145-146), has investigated the development of Taipei’soffices in Europe, pointing out that there was little coherence to the system, and thatBelgium led the way on issuing visas.

had been gradually replaced by semi-official ones, who were authorizedto issue official visas.18

On 23 January 1990, an Economic and Cultural Office of Taipei (OfficeEconomique et Culturel de Taïpei) was established in Brussels. It subse-quently developed into a contact point for relevant legal notificationsregarding the European Commission’s decisions, regulations and otherlegislative instruments. This office consolidated the handling of eco-nomic and trade with other issues. Hence, Far East Trade Service Incceased to be a point of contact in matters of anti-dumping. However, thelatter continued to exist legally, with taxes paid annually. Nevertheless,from 1990, it did not any more serve its former de jure function as aTaiwan-EC-EU ‘interface’. In political practice after 1990, Commissionregulations on anti-dumping, for example, were communicated via e-mail, followed by the transmission of hard copy. Individual notificationswere addressed to specific persons in charge, working in the EconomicDivision. The Office Economique et Culturel de Taïpei also replaced the CentreCulturel Sun Yat-sen. On 12 December 1995, the present Taipei Representa-tive Office in Brussels was established, which subsequently became thenew point of contact.

Table 1: Taiwan’s Trade Balance and its Volume of Trade with the EU 15 in US$bn.

Year Export Import Balance Volume

Jan-Nov’89 9,492,117,496 6,708,956,036 2,783,191,40 16,201,073,532Jan-Nov’90 10,489,794,214 7,348,452,344 2,235,233,56 17,838,246,558Jan-Nov’91 12,185,802,375 7,745,000,565 4,440,801,80 19,930,802,940Jan-Nov’92 13,258,279,443 9,402,034,746 3,856,244,67 22,660,314,189Jan-Nov’93 11,081,900,657 10,201,371,42 880,529,245 21,283,272,069Jan-Nov’94 10,930,769,420 11,821,274,31 -890,504,951 22,752,043,791Jan-Nov’95 13,276,901,224 13,835,375,27 -558,474,023 27,112,276,471Jan-Nov’96 14,343,546,153 14,250,546,82 92,999,351 28,594,092,955Jan-Nov’97 15,581,814,688 15,953,912,01 -372,097,373 31,535,726,749Jan-Nov’98 16,876,026,667 15,357,866,51 -2973028741 32,233,893,178Jan-Nov’99 17,259,721,301 13,187,163,14 4,072,558,17 30,446,884,465

Source: Directorate-General of Customs, Ministry of Finance, ROC with balances and volumededuced. The above figures include re-imports and re-exports.

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 195

The Role of InvestmentAs Table 2 reveals, the 1990s saw a growth of EU investments in Tai-wan. The Netherlands and the United Kingdom were clearly the leadersin investing in Taiwan (Cabestan 2008: 87; Ash 2002: 177). Conversely,Table 3 reveals the levels of Taiwanese investments in the EU.

Table 2: EU investments in Taiwan in the 1990’s (1 unit = US$1,000).

Year France Germany Netherlands UK EU Total1990 17 37 49 89 1941991 6 20 54 43 1241992 28 16 68 11 1241993 8 33 85 58 1861994 12 91 79 30 2141996 9 37 28 35 1111997 8 66 103,865 90 2691998 4 63 125,493 74 2681999 15,422 29 192,741 143,361 380Total 112,921 420,273 865,057 773,504 2,171,755

Source: Data provided by the Directorate-General of Customs, M. of Finance, ROC and computed.

Table 3: Taiwanese investments in the EU (1 unit = US$1,000).

Year Czech R. France Germany Netherlands UK EU Total1990 0 6 9 5 11 331991 0 1 3 6 14 261992 0 2 15 9 4 321993 0 0 5 10 237,918 2531994 0 180 1 271 16 191995 20 882 5 20 8 541996 0 243 3 217 6 101997 30 127 3 11,113 13 581998 1 6 6 8 9 321999 0 1 21 17,800 10 51Total 51 20,368 76,693 91,030 332,924 572

Source: Data provided by the Directorate-General of Customs, M. of Finance, ROC and added up.

196 Paul Joseph Lim

Even in times of the ‘Asian Financial Crisis’ of 1997/8, the overall levelsof Taiwanese investment were the second highest of the decade. In thiscontext, Ash (2002: 174-176) observed the disproportionate role playedby the UK as a destination for Taiwanese capital outflows to Europe.The Czech Republic emerged as the key target of Taiwanese investmentsamong the new Member States of the EU. Many observers have seen thepolitical situation in the country as one possible reason for this. Othershave pointed to more attractive conditions offered in connection withthe Czech Republic as a ‘stepping stone’ or ‘bridge’ for products andservices to be sold ‘westwards’. Table 4 illuminates the question ofwhether the key destination countries for Taiwanese investments alsohappen to be Taiwan’s biggest trading partners.

Table 4: Taiwanese export destinations in the EU in terms of Volume of Trade

1991 1993 1995 1997

Fra 2,310,146,387 2,150,684,765 2,776,478,529 5,126,050,004 3,173,964,125Ger 6,334,099,147 7,118,535,535 8,720,900,525 8,301,539,718 8,535,495,180Ita 1,673,494,443 1,881,706,176 2,389,863,195 2,488,291,558 2,405,583,553

Ned 2,749,623,821 2,871,832,668 4,085,796,157 5,394,066,421 5,343,207,235Swe 801,036,355 808,680,489 1,107,794,630 1,115,681,417 1,034,362,812UK 2,955,420,123 3,096,492,616 3,728,731,256 4,753,461,491 5,049,056,240

Total 19,930,802,940 21,283,272,069 27,112,276,471 31,535,726,749 30,446,884,465

Source: Data provided by the Directorate-General of Customs, Ministry of Finance, ROCand computed; basic figures included re-imports and re-exports.

The Table reveals that the UK, in spite of constituting a key target ofmajor Taiwanese investment, is not in fact the principal trading partner ofthe ROC. That role goes to Germany, followed by the Netherlands,France and Italy. The data also show that the products subjected to anti-dumping and other restrictions were those most exported to the EU ormost in demand in the Union.

Notwithstanding the wide-ranging implications of the ‘Asian FinancialCrisis’ of the 1990s, it appears that, under the regime of ‘autonomousdecision’, there were no more deflections, although anti-dumping dutiescontinued in relation to new products. Commission Regulation (EC) No2397/1999 authorized, for the first time, transfers between the import-

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 197

19 Official Journal OJL 290 , 12/11/1999 P. 0015 – 0016.20 Ash 2002: 166. 21 It had announced its intention to rejoin GATT and the IMF in 1988 (Europe,

1988/4695: 14). It was reported (Europe 1980/2893: 16) that Taiwan withdrew fromthe IMF, on the grounds that the admittance of the PRC was ‘unlawful’.

22 Doc. C/M/259, 27 October 1992, p. 4. 23 Reported in: IP/98/692.24 Examples: OJ L 267, 20.10.2000; OJ L 139, 6.6.2003; OJ L 326, 12.12.2007.

limits of textiles and clothing products originating in Taiwan.19 Overall,the 1990s became a dynamic decade in EU-ROC trade relations, owingto the kinds of goods exported to the new Single Market in an attempt ‘tocombat the effects of the Asian Crisis’.20 This period also reflected Tai-wan’s growing capacity and sophistication in the production andmarketisation of its goods.

On 1 January 1990, Taiwan formally applied for membership in theGATT. In September 1992, the GATT Council decided to set up a Work-ing Party on Chinese Taipei to examine the application (under ArticleXXXIII) in the light of ‘separate Customs Territory of Taiwan, Penghu,Kinmen and Matsu’ (Hindley 1993: 10; 16-18).21 The meeting of the GATTCouncil, from 29 September to 1 October 1992, noted that Taiwan – as‘Chinese Taipei’ – should be granted observer status.22 The minutes ofthis meeting, interestingly, speak of the Working Party as being on ‘Chi-nese Taipei’, as well as on ‘China’s status’.

Throughout these developments, the EU claimed it had facilitated thisprocess wherever possible. By the end of the decade, a Council Declara-tion of 23 July 199823 stated that the EU and Taiwan had concludedbilateral market access negotiations in regard of Taiwan’s WTO acces-sion. The significance of this for Taiwan lay in the fact that it was af-forded due recognition as a legal personality, with the status of an equalpartner. I would argue that, for trade and economic reasons, Taiwancannot be left out in the cold. Somehow, the One China Policy will, ulti-mately, have to be adapted, since trade and economics always transcendpolitical borders.

Developments in EU-Taiwan Relations from 2000-2009During the last decade of the 20th Century – and still under the ‘autono-mous decision’ regime – anti-dumping continued to be an issue; it fre-quently involved new products, and there were cases concerning alleged‘collusion’ of manufacturers across the Straits.24 Other problems sur-

198 Paul Joseph Lim

rounded, for example, anti-dumping and anti-subsidy proceedings con-cerning imports of polyethylene-terephthalate (PET). Is it fair to inferfrom this that import restrictions were placed on the most importantROC exports to the EU? A document concerning Taiwan-EU relationsby the Taipei Representative Office reproduces the following Eurostat infor-mation for 2007:

Product Groups Exports (€ Million) % Imports (€ Million) %Total 26,139 100.0 13,266 1000Agricultural products

78 0.3 740 56

Energy 140

0.5 50 4

Non-agricultural raw materials 192

0.7 110 8

Office/telecom equipment 10,672 40.8 1,509 114Power/non-electrical equipment

1,142 4.4 1,201 91

Transport equipment 1,819

7 934 71

Chemicals 665

2.5 2,071 157

Textiles and clothing 597

2.3 262 20

Iron and Steel 426

1.6 285 22

Source: Eurostat.

Accompanying this Table is a commentary. In the area of anti-dumpingrelating to Taiwanese imports, bicycles, as well as bicycle and motorcycleparts were referred to as ‘transport equipment’. It is noticeable that ex-ports of the latter, according to data from the Directorate-General ofCustoms, Ministry of Finance, ROC, grew from US$149,299,271 in 1989to US$542,767,251 in 2007. One prominent chemical which was thesubject of anti-dumping cases was PET (see above). It is clear that, interms of exports to the EU, Taiwan moved out of this labour-intensiveindustry in the 2000s. From these figures, it is possible to conclude thatanti-dumping was, by and large, applied to products in demand in theEU.

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 199

25 Pages 1 and 6, respectively.

Table 6: Trade in goods between the EU and Taiwan – billion Euro

1999 2000 2001 2002 2003 2004 2005 2006 2007EU exports toTaiwan 12.0 15.1 13.4 11.9 11.0 12.9 13.1 13.2 133Annual Growthrate +25.8 -11.3 -11.2 -7.6 +16.8 +1.3 +1.3 +0.8

EU importsfrom Taiwan 21.3 28.3 26.0 23.2 22.6 23.9 24.1 26.7 261Annual Growthrate +32.9 -8.1 -10.8 -3.4 +5.7 +0.9 +10.7 -22Total 33.3 43.4 39.4 35.1 33.7 36.8 37.2 39.9 394Annual Growthrate +30.3 -9.2 -10.9 -5.1 +9.2 +1.1 +7.3 -13Balance for theEU -9.3 -13.2 -12.5 -11.3 -11.6 -11.0 -11.0 -13.5 -128

Source: Eurostat (billion euro) – EU25 until 2002; EU-27 from 2003 onwards(growth rates for 2003 are based on EU-25 figures); extracted from European Economicand Trade Office (EETO): EU-Taiwan Trade / Investment Factfile 2008: 4.

As regards the state of both the balance and volume of trade, Table 6allows some pertinent conclusions: there are considerable discrepanciesbetween Eurostat trade statistics and Taiwan’s own customs statistics.These can be said to be due, among other things, to variations in ex-change rates and changes from one year to another, as new MemberStates were added to the EU. Those figures speak for themselves: if theEU in 2007 was able to maintain the same level of exports to Taiwan,this was mainly thanks to the sustained performance in machinery andelectrical equipment, iron, steel, and chemicals.

On the other hand, the low level of EU exports explained the EU’ssustained deficit, but also accounted for the decline in Taiwan’s positionamong the major trade partners of the EU. The documents, Relationsbetween Taiwan and the EU and EU-Taiwan Trade and Investment Factfile2008, issued by the European Economic and Trade Office (EETO)25 bothemphasized ROC-PRC trade and production relations as a key factor inraising Taiwanese trade flows. Both Ash (2002: 166-167) and Schucher

200 Paul Joseph Lim

26 EU-Taiwan Trade and Investment Factfile 2008, Taiwan's Bureau of ForeignTrade /CNA, 20 January 2008, pp. 2, 3, 4, 6.

(2007: 32) pointed out that Taiwan’s merchandise trade surplus attainedrecord levels in 2000, but declined until 2002 by 22%, as a result of inter-national factors, and owing to Taiwan’s own economic crisis. Is it, there-fore, possible to assume that, whatever decline in ROC exports to the EUthere is, will be ‘made up’ by Taiwan’s contribution to China’s exports tothe EU?

In 2007, Taiwan was the EU’s thirteenth largest trading partner, be-cause of Romania joining the EU. This was ‘one step up’ from 2006.Taiwan was, overall, the EU’s fifth most important partner in the wholeof Asia. Conversely, the EU was Taiwan’s fourth largest trading partner,accounting for around 10% of Taiwan’s external trade. Moreover, Taiwanwas in 2007 the EU’s twelfth largest import partner and twenty-secondlargest export partner.26 Table 7 concerns the services aspect of EU-Tai-wan trade. The figures of the European Economic and Trade Office (EETO)speak of trade in services as a growing part of bilateral trade, which wasequivalent to about 13% of trade in goods. 2003 and 2004 were de-scribed as years of rapid growth, followed by a pause and no moregrowth after that. Services trade with the ROC still amount to a smallfraction only of EU total external trade in services: only 0.7% in 2006. At€1bn since 2004, this surplus was far from sufficient to compensate forthe more than €10bn deficit on trade in goods.

Table 7: Trade in Services between the EU and Taiwan

2001 2002 2003 2004 2005 2006EU exportsto Taiwan 2.0 2.0 2.4 3.2 3.1 31EU importsto Taiwan 1.8 1.8 201 2.1 2.1 21Total 3.8 3.8 4.5 5.3 5.2 52Balance forthe EU 0.2 0.2 0.3 1.1 1.0 10

Source: Eurostat (billion euro) – EU-15 until 2003; EU-27 from 2004 onwards.

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 201

Table 8: Taiwanese export destinations in the EU in terms of volume of trade for alternativeyears of the 2000’s (1 unit = US$1,000)

Jan-Nov ‘00 Jan-Nov ‘02 Jan-Nov ‘04 Jan-Nov ‘06 Jan-Nov ‘08

Belgium 1,290,192,811 1,018,009,114 1,396,577,432 1,359,769,691 1,667,777,254

Finland 674,406,898 460,876,448 994,401,930 1,101,621,350 1,380,690,329

France 3,157,355,115 2,443,563,135 3,287,895,451 3,441,268,166 3,759,292,931

Germany 9,596,488,188 7,549,755,210 9,500,401,508 10,218,101,792 12,376,517,789

Italy 2,665,388,620 2,129,801,520 2,805,356,249 3,377,184,484 3,830,488,109

Netherlands 6,491,198,280 4,868,093,885 6,335,350,180 6,072,256,214 6,563,012,885

Spain 1,055,380,890 86,656,998 1,215,090,092 1,340,805,262 2,230,824,389

Sweden 1,131,010,212 756,006,531 1,045,975,589 987,399,374 1,169,469,485

UK 5,896,441,833 3,978,850,745 4,710,102,709 4,826,631,566 5,190,454,441

Source: Extracted for this table from: Directorate-General of Customs, Ministry of Finance,ROC; the basic figures included re-imports and re-exports.

From the above Tables, it is possible to infer a certain level of continuityas regards the major destinations of Taiwanese exports: Germany, Neth-erlands, the United Kingdom, France and Italy are the principal destina-tions. However, in 2008, Italy overtook France. With regard to the invest-ments of EU and ROC in one another’s territories, Tables 9 and 10 arequite instructive (1 unit = US$1,000):

Table 9: Taiwan’s Investments in the EU

Year CzechRepublic France Germany Netherlands United King-

dom EU Total2000 1,669 8,878 3,245 31,250 452001 2,502 47 5,297 5,797 29,218 422002 614 17,066 56,421 43.028 1172003 8,886 2,008 10,860 15,137 25,257 6212004 567 7,822 22,781 8,146 17,931 572005 10,503 465 6,262 256,750 10,789 2842006 10,974 335 9,719 383,044 9,167 4132392007 5,750 132 7,976 399,933 2,671 416Total 39,182 13,092 88,839 1,128,473 169,311 1,997,897

Source: Taipei Representative Office; totals computed.

202 Paul Joseph Lim

27 Taipei Representative Office, Relations between EU and Taiwan, 2008, p. 4.28 EU-Taiwan Trade and Investment Factfile 2008 of the EETO, p. 14.

It is possible to conclude that Taiwan invested more than US$2.4 billionin Europe. Taiwanese investment in the ‘old’ EU countries fluctuates,with France having the lowest level of Taiwanese investment. It is weakerin that respect than the Czech Republic. The latter, of course, is still arelatively new Member State, enjoying special attention from Taiwan. Itseems that many Taiwanese investors see new EU Member States as a‘springboard’ into the wider EU market.27 Taiwanese investment in theNetherlands represents 95% of all its investment in Europe. It can alsobe noted that, with the exception of the Czech Republic (see above), thekey destinations of Taiwanese investment in the EU are also the coun-tries which are the biggest trading partners of Taiwan.

What does the picture look like in respect of overall EU investment inTaiwan? Table 11 contains some interesting clues, indicating that all the‘old’ EU Member States made strong investments in Taiwan. In 2007,US$7 billion accounted for half of all incoming EU investments in Tai-wan. This is explained by a surge in Dutch investments and was precededby similar developments in 2006. The EU stock of all foreign directinvestment (FDI) in Taiwan rose to US$24 billion, accounting for 26%of all foreign investment into Taiwan, putting it ahead of the USA (19%)and Japan (16%). At the end of 2006, the EU held 21% of Taiwan’s totalFDI stocks.28

Table 10: EU Investments in Taiwan

Year CzechRepublic France Germany Netherlands United

Kingdom EU Total

2000 28,091 96,979 310,965 683,597 1,119,6322001 33,374 56,522 525,563 245,393 8602002 19,296 56,364 306,680 189,083 5712003 14 5,510 299,486 274,818 33,757 6132004 203,844 102,274 328,882 192,992 8272005 21,473 53,999 406,381 140,636 6222006 11,878 434,158 5,417,195 1,505,955 7,369,1862007 18,802 56,931 6,313,591 651,386 7,040,710Total 14 342,268 1,156,713 13,884,075 3,642,799 19,025,869

Source: Taipei Representative Office in the EU and Belgium; totals computed.

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 203

29 Details: IP/01/1289; EP Resolution A5-0367/2001, of 25 October 2001.30 IP/03/347. 31 See the ‘References’ section, below, for a few examples of relevant Resolutions.32 Also: Europe, No. 6464, of 20 April 1995 and No. 5951, of 31 March 1993.

WTO Accession and the Politics of RepresentationOn 19 September 2001, the European Commission approved the termsof accession of the People’s Republic of China (PRC) and the Republicof China (ROC) on Taiwan to the WTO. This was subject to separateCommission declarations.29 The accession terms for the ROC includedPenghu, Kinmen and Matsu. The PRC accepted Taiwan’s membership ofGATT as ‘Chinese Taipei’. Once again, complex issues of the inter-connectedness of economics, diplomacy and politics can be seen to havearisen through these developments.

The European Commission subsequently opened its European Economicand Trade Office (EETO) in Taipei on 10 March 2003. Lan (2004: 129-130)argued that, from the Commission’s point of view, WTO membership ofthe ROC had been a pre-requisite for any future representative office inTaipei. The Office mainly covers economic and trade relations, as well ascultural and information activities. As seen above, and in line with theOne China Policy, the Office is not to be engaged in relations of a diplo-matic or political nature.30 However, even if the EETO professes to be‘non-political’ and ‘not a diplomatic mission’, all the other activities it isinvolved in are identical to those of all other EC Delegations globally.Moreover, it seems almost inconceivable not to ‘talk politics’ in meetingswith government officials – even on the sidelines. One could ask whetherthis situation constitutes the recognition of de facto diplomatic relations. Inan October 2008 interview, for example, a European official in Taipeistated that his Office, while being ‘un-official’, certainly has politicalrelations and monitors the political scene. This seems to be a situationsecond-best only to having full-blown diplomatic relations with Taiwan.

Moreover, it has to be noted, that the European Parliament repeatedlycalled for an EU Representative Office in Taipei.31 An office such as this onehad been late in coming. At least one former Commissioner, it was said,played a key role in pushing for it, and the situation therefore becameappropriate for it to be inaugurated (Lan, Yuchun 2004: 129-130).32

But what were the real reasons for such a long delay? Did they reallylie in the issues connected with WTO membership? Observers such asMengin (2002: 136, 140-143, 145) and Cabestan (2008: 88-89) examined

204 Paul Joseph Lim

33 Council Document, 13 January 1987, p. 8.34 Europe, No. 5951, of 31 March 1993: 15.

the establishment, throughout the 1980s, of ‘unofficial offices’ in Taipeiby several European countries, including those in Eastern and CentralEurope. They claimed that, from time to time, growing economic ex-changes between Europe and Taiwan had, in fact, exceeded the limitsimplicitly or explicitly set by the PRC. In parallel with this, political exten-sions to economic ties had multiplied. This was interpreted as a sign ofthe ROC’s claim to statehood. However, no European country opposed,in the long term, Beijing’s One China Policy. What this meant was that, bynow, the European Commission was able to communicate its autono-mous decisions in anti-dumping and other cases to the Taiwanese gov-ernment through its European Economic and Trade Office (EETO) in Taipei– apart from also liaising with the Taipei Representative Office in Brusselsfrom 12 December 1995 onwards.

Conclusions and Aspects of a Future Research AgendaCould all of these events and developments be interpreted as grantingTaiwan some kind of recognition close to statehood, or a legal personal-ity? Do they amount to de facto diplomatic relations on the level of trade?In terms of developments between 1971 and 1990, the archival materialavailable, and which has been consulted for this study, allows the follow-ing conclusions to be drawn:

On textile products, a ‘new regime’ became applicable from 1 January1987. In exchange, community exports (wine, tobacco and alcohol) toTaiwan were not subjected to discriminatory treatment. The Commissionwould propose the textile quantities for 1987 at their normal level.33 Thisseems to demonstrate quite clearly that some kind of compromise dealemerged between the EEC and the ‘non-state’ of Taiwan. The ‘autono-mous decision’ principle existed, but seems to have left space for negotia-tions of both an official and unofficial nature.

Events such as a 1992 meeting between the Commission services andTaiwan, or the visit of the then Commissioner Martin Bangemann to theisland,34 can provide further clues to this effect. Small steps were thustaken more frequently than is traditionally acknowledged to move awaygradually from the rather rigid doctrines of the One China Policy.

THE EU’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA 205

In addition to this, observers such as Ash (2002: 164-165) and Lan(2004: 123), as well as the websites of the Commission and of the Euro-pean Economic and Trade Office (EETO), point to annual consultations be-tween the Commission and the ROC, which took place in Brussels be-tween 1981 and 2008. This format covered issues as wide-ranging asresearch and technology, the information society, fisheries, environment,intellectual property rights, and standards and norms.

Can these and similar consultations be seen as confirmation of defacto statehood recognition of the ROC by the EU? Are they indicativeof the fact that Taiwan is given recognition, officially or unofficially, andbeing seen as an equal partner? To which degree is it possible to dis-engage political and economic considerations from one another? Many such questions are still open and will form the agenda of futureresearch in this area. Among them is the issue of the legal basis of theseconsultations, especially in the 1980’s and 1990’s. The 1998 WTO agree-ment with the EU may be a legitimate starting point for such arguments,but consultations have expanded beyond the trade agenda, as can be seenfrom the many areas of cooperation which have emerged in contempo-rary EU-ROC relations.

In conclusion, it seems fair to say that, at least on the level of theWTO, Taiwan has found its place on the international scene. Whetherthis comes close to a more ‘formal’ statehood-recognition, is not, at pres-ent, an issue for which there can be any clear-cut answers. Therefore,EU-Taiwan relations continue to be conducted in an area characterisedby shades of grey. For the time being, this may well be the best possiblesolution. It affords both sides the space to be creative and to make thebest of the developing relations. Each participant can thus have their owninterpretation of the nature and extent of the One China Policy. The PRCmay, in the future, want to commit the EU further – to pin it down,perhaps. A new EU-PRC Partnership and Cooperation Agreement will bea welcome occasion for much-needed further dialogue in this area.

206 Paul Joseph Lim

ReferencesN.B.: a detailed list of archival materials from the Council and European Com-mission, supplementing the resources cited below, and relating to EU-China-Taiwan issues, is available from the author upon request.Ash, Robert.2002. Economic Relations between Taiwan and Europe. in The

China Quarterly, No. 69, Special Issue: ‘China and Europe since 1978: A EuropeanPerspective’, March 2002.

Brodgaard, Kjeld Erik. 2001. ‘China and Denmark: Relations since 1674’, inKjeld Erik Brodgaard & Mads Kirkkebaek (eds), NIAS Press.

Cabestan, Jean Pierre. 2008. ‘The Taiwan issue in Europe-China relations’ inShambaugh, David; Sandschneider, Eberhard; Zhou Hong (eds.)China–Europe Relations: Perceptions, Policies and Prospects, London: Routledge.

European Parliament Resolutions (Selection):On CFSP: Resolution A5-0340/2000 (30 November 2000)On Taiwan B5-0347, 0356, 0372 and 0388/2000 (13 April 2000)On EU External Services in Southeast Asia: A5-0199/2001 (14 June 2001)On China Policy: C5-0098/2001-2001/2045 (COS) A5-0076/2002.

EETO’s EU-Taiwan Trade and Investment Factfile, EETO: 2008.Hak Choi. 1983. The Analysis of the German-Taiwanese Trade and the European Eco-

nomic Community-Taiwanese Trade – Theory and Econometric Analysis, BonnHindley, Michael. 1993. Report of the Committee on External Economic Relations on the

Inclusion of China and Taiwan in the General Agreement on Tariffs and Trade, 19March 1993 (Source: A3-0092/93, PE 203.426/fin).

Kaspereit G. 1977. Report on Economic and Trade Relations between the EuropeanCommunity and the PRC (Source: European Parliament, 5 May 1977, Doc.76/77, PE 47.759/fin).

Lan, Yuchun. 2004. ‘The European Parliament (EP) and the China-TaiwanIssue: An Empirical Approach’ in European Foreign Affairs Review 9, KluwerLaw International.

Ma Ying-Jeou. 1993. ‘Taipei-Beijing relation and East Asian stability: Implica-tions for Europe’ in NATO Review (April 1993).

Mengin, Françoise. 2002. ‘A Functional Relationship: Political Extensions toEurope-Taiwan Economic Ties’ in The China Quarterly, No. 169, Special Issue:China and Europe since 1978: A European Perspective (March 2002).

Schucher Gunter. 2007. ‘The EU’s policy toward Taiwan’ in Issues and Studies43(3).

Taipei Representative Office, Brussels. 2008. Relations between Taiwan and the EUVan Aerssen, Jochen. 1985. On Trade Exchanges with Taiwan (Source: Doc. 2-

1765/84, PE 94.190/def: 12). Wilson, Dick. 1973. ‘China and the European Community’ in The China Quarterly

(56) October-December.Wu Chung-lih. 1985. ‘Trade Relations between the ROC and European Coun-

tries in the Twentieth Century’ in Industry of Free China, LXIV(6), December1985.

ISSUES – POLICIES – PERCEPTIONS

EUROPEAN STUDIES 27 (2009): 209-224

CHINA, NEWS MEDIA FREEDOM AND THE WEST:PRESENT AND FUTURE PERSPECTIVES

Peter J. Anderson

AbstractOne of the most frequently made European criticisms of China undercommunist rule has been of the continuing restrictions that the gov-ernment places upon the freedom of expression of citizens and jour-nalists. This study analyses Chinese journalism within an evolvingpolitical system, penetrated increasingly by Western ideas and criti-cisms as a result of globalisation, the opening up of the Chinese econ-omy and the education of significant numbers of Chinese students inthe West. It examines formal and informal restrictions on journalists’freedom of expression in China. It discusses the modest expansion intheir freedom of manoeuvre, as the media has been opened to marketforces, and limited forms of criticism have been permitted. The studyfurther explores Chinese views on media control in the context ofboth historically-rooted concerns about social stability and Commu-nist Party ideology. The analysis concludes by discussing possiblepaths forward for Chinese journalism, bearing in mind the fact thatthe internet is likely to become increasingly difficult for the authori-ties to control, with both user numbers, and technological advances,increasing significantly.

IntroductionThe criticisms and debates concerning China’s attitude towards bothChinese and foreign journalists and the news they report are well re-hearsed and have formed already the subject matter of numerous bookchapters, articles in academic journals, news items and blog commentar-ies (Herbert 2003, Shoemaker and Cohen, 2006, Yuezhi, 2000). The

210 Peter J. Anderson

1 See also the chapter by David Askew in this volume.

intention here is to review some of the most relevant developments andto open up some new perspectives on contemporary and possible futureChinese attitudes towards the news media.

This study will do two things: first, the situation relating to the free-dom of speech of the Chinese news media during the Olympic year of2008 will be examined in terms of both the historical context, and itsimplications for the immediate future of Chinese journalism. The posi-tion of the foreign media in China during and after the games will beexamined too.

Second, given that the detailed inner workings of the highest levels ofpolicy making within China are not accessible to those outside the Com-munist Party’s inner circle, an attempt will be made to portray mediafreedom from the government’s perspective via ‘informed scenario analy-sis’. It is highly likely that pressures – generated by criticisms from someof China’s key trading partners, the education of large numbers of Chi-nese students at Western universities, and the knowledge that the diffi-culties involved in ‘keeping the lid’ on the internet are likely to increasesubstantially over the next few years as technology progresses – haveforced Beijing to think through the extent to which they might have littlechoice ultimately but to increase press freedom, including the conse-quences of so doing. Various options, which policy makers are likely tohave looked at, are outlined, therefore, from a specifically Chinese pointof view. Finally, some informed thoughts on where Chinese journalism islikely to go over the next few years will be offered.

China’s Olympic Year, its Aftermath and Press Freedom1

Apart from the Olympics and the global spotlight that the games threwon everything Chinese, 2008 was notable for three things with regard tothe news media. First, the preparedness of the Chinese authorities toallow their domestic media to cover more fully than previously a majornatural disaster: the Sichuan earthquake (Branigan 2008b). Second, thepartial, but not insubstantial, fulfilment of the promise by the Chinesegovernment to allow foreign journalists to report and to access the webwithin China, without restrictions, for the duration of the games. A well-published tussle ensued between the authorities and journalists over theimplementation of this promise. Moreover, reports appeared afterwards,

CHINA, NEWS MEDIA FREEDOM AND THE WEST 211

2 This is a point also made by former CBS journalist, Robert Beers, for example.

suggesting that the ‘opening up’ was in a number of respects beingclosed down again, as the memory of the games began to fade (Branigan,2008a, Branigan and Kiss, 2009). Third, the continuing imprisonment ofChinese journalists for straying beyond the boundaries of what isdeemed politically acceptable to report and what is not (Reporters SansFrontières 2008a and 2008b).

The underlying causes of each of these trends within Chinese officialattitudes towards the news media during 2008 have both overlappingand distinctive dimensions. The coverage of significant natural disastershad to be opened up more than previously, because the scale of suchevents as the Sichuan earthquake – when combined with the growth ofthe internet and the ability of some to get around government net con-trols – has made it impractical to try and conceal their occurrence, or thescale and effectiveness of the government’s response. Despite Beijing’smassive attempts to control what its people access on the internet,through its own and proxy controls (Bandurski 2007, Branigan and Kiss2009, Kiss 2008), the fact that Chinese citizens with enough technicalknowledge, guile and courage can still use it to disseminate ‘forbidden’news, means that there is now no hiding place with regard to the effec-tiveness of government reactions to disasters. From the Beijing leader-ship’s point of view, it now makes much more sense to allow detailedcoverage and to use its glare to suggest and highlight both the depth ofthe leadership’s concern for and sympathy with the plight of its citizensand the rapidity and appropriateness of its response. This latter concernin turn creates an incentive to pull out all the stops to try and meet disas-ters with proportionate rescue and relief operations. However, it shouldbe noticed that the authorities did start to rein in the ability of the main-stream media to cover the aftermath of the earthquake when some of thereporting began to reveal more of a critical nature than they were com-fortable with (Branigan 2008b).

Furthermore, informed China watchers have noted that it is mucheasier for journalists from parts of China other than the provinces af-fected by particular disasters to report on them and that the same is truewith issues such as provincial corruption (Yuezhi 2000: 590-591).2 Thesupposition is as follows: because negative factors contributing to theimpact of disasters (such as negligent construction) can be caused by

212 Peter J. Anderson

interests connected with provincial officials, and on account of possiblelinkages between provincial corruption and some regional Party people,there are frequently likely to be strong pressures on journalists from theprovinces concerned to leave such issues alone. However, such pressuresoften do not apply to the same extent to journalists from other prov-inces.

The government also had little choice but to provide a greater degreeof freedom, openness and access to foreign journalists during the games,because a failure to do so would in effect have meant that they had com-pletely reneged on the international understanding on which the award ofthe 2008 games had depended. The negative publicity that would havefollowed would have seriously damaged China’s attempt to use theOlympics to portray itself as a progressive state and an economic power-house coming of age. The Government could hardly risk antagonisingany more than was already the case the very people from the world’smedia upon whom the success of this propaganda exercise depended. Anumber of Western news organisations were already complaining, beforethe games actually began, about continuing restrictions on media free-dom for their journalists (Reporters Sans Frontières 2008a).

That there should be some claw-back of freedoms granted after theconclusion of the games (Branigan 2008a) is hardly a surprise. While thiswould be guaranteed to produce some criticism in the world’s media, thiswould be low on the global public’s radar, given its status as one storyamong many fighting for attention in the post Olympics period. Had thespotlight still been on China, then such ‘reinvigorated’ obstructing ofjournalists would have been highlighted automatically, as part of the‘wider China story’, and the political damage to China’s reputation wouldhave been more significant.

The granting ultimately of more ‘officially recognised’ freedom toforeign news media, and the prominent coverage of this in some of theWestern news media, arguably also had the effect of reducing the nega-tive impact of both the number of domestic journalists still languishingin prison during the games, and of further oppressive measures againstChinese nationals stepping beyond permitted boundaries of free speech.The partial relaxation of controls not only conveyed an image of Chinaas a state that was finally beginning to open up to, at least some, keyWestern ideas on freedom and human rights, albeit under considerablepressure; it also gave credence to Chinese claims that press freedoms

CHINA, NEWS MEDIA FREEDOM AND THE WEST 213

would come gradually. It is often pointed out by Beijing’s elite that Com-munist China is still a relatively ‘new’ state and hasn’t had the hundredsof years that it took countries like Britain to evolve notions of freespeech and press freedom (Organgrinder 2008).

The opening up and the initial tussle over the degree to which itwould be implemented also allowed Western media to do what often itlikes most, i.e. talk about itself. In making themselves the story for awhile, BBC and other journalists inadvertently left less time and spacefor the coverage of stories relating to China’s continuing repression of itsmore ‘adventurous’ domestic reporters. Again, once the brief Olympicsand post-Olympics media spotlights were gone, the Chinese were able tocontinue this policy in the relatively low level glare of the everyday globalnews environment – an environment in which the repressive aspects oftheir policies would have to fight with huge volumes of other negativenews stories all over the world to get onto mainstream television or radionews bulletins, or into news websites or papers. Even if they make itonto the agenda of a particular news programme at the moment of writ-ing, pieces about them still have to fight for time and space againststrong stories whose subject matter ranges from cholera in Mugabe’sbankrupt Zimbabwe, to atrocities and conflicts in the Middle East, Af-rica and Asia.

So, if the story of 2008 was to be summarised, in so far as it relates tothe Chinese regulation of the news media, it might most easily be de-picted as two steps forward and one step backward. There does seem tobe a recognition in the centre that some of the things which previouslywere tightly controlled in terms of reporting, now have to be treated in aslightly looser manner, if only for pragmatic reasons. They include natu-ral disasters, following on from the earlier loosening up of controls onreporting corruption, as long as stories concerning them do not implycriticism of the Beijing leadership. However, the timing of such reportscan still be affected by the government’s perception of when the leastdamaging moment for their release is.

This was neatly illustrated by the fact that the reporting of the scandalrelating to the contamination of milk with melamine was delayed as longas possible within China (Branigan 2008b). This was done in order tominimise the damage caused to the positive image that the leadershiphad been projecting to the outside world via the Olympic Games. Aspointed out earlier, it was also claimed that some of the previously loos-

214 Peter J. Anderson

ened controls concerning what could be reported about the Sichuanearthquake were subsequently re-tightened (Branigan 2008b).

Foreign journalists were given considerably greater ‘officially recog-nised’ freedom to report within China than previously had been the case,although some of this was, once again, withdrawn after the conclusion ofthe games. The situation seems to vary from province to province ac-cording to the attitudes and numbers of ‘skeletons in the cupboards’ oflocal officials (Branigan 2008a). However, for those Chinese journalistsworking at the edge of media freedoms, and most particularly those whoare trying to push the boundaries back further, theirs remains a riskyprofession. The boundary lines are not as clearly drawn as is sometimessuggested. Moreover, what would have seemed to have become permis-sible one week, can potentially cost a journalist their job when attemptedagain the next. Penalties can vary from not being allowed to practise as ajournalist to imprisonment.

Overall, Chinese governmental attitudes towards freedom of thenews media remain pragmatic. Some leeway is given where this can beseen to fulfil useful goals or to be unavoidable. On account of thegrowth of the internet, this can, firstly, mean a degree of ‘bowing to theinevitable’. It is, for example, now simply impractical to suppress allinconvenient coverage during natural disasters. Secondly, granting lim-ited license to the media to expose local corruption or incompetence –while simultaneously showing the determination of the central authoritiesto deal with it – helps maintain or improve the image of the Party. Athird case is the facilitation of beneficial economic relations with capital-ist democracies, through the making of small, but visible, steps towardsgreater press freedoms. Whether this situation is likely to change in fa-vour of significant improvements in the news media’s freedom to reportcan best be understood by considering the lessons of the past (as Chinainterprets them), together with present and emerging perceived threats tothe Chinese political system, and then assessing how the government islikely to see the connection between all of these and press freedom in thefuture.

With regard to the past, as has been pointed out many times before(see, for example, Heren et. al. 1973), Chinese leaderships tend to re-member the weakness and chaos of China when it lost the central con-trol of the most effective of the Emperors to the damaging rivalries ofcompeting warlords. During the twentieth century they remember the

CHINA, NEWS MEDIA FREEDOM AND THE WEST 215

3 The word ‘relative’ is important, bearing in mind such tumultuous events as theCultural Revolution.

4 In the view of an authoritative Party source.

civil war and the Japanese invasions and massacres that preceded therelative calm and political stability,3 resulting from the establishment ofthe People’s Republic of China (PRC) in 1949. They do not wish to riskthe danger of such rivalries and weakness arising again by means of theemergence of a new, competing, effective opposition. One way of help-ing to ensure that this does not occur is through exerting overall controlwith regard to what can and cannot be said on Chinese news media and,where possible, on the world-wide-web. Within the present, the greatestpotential for instability is seen as resulting from the massive disparity ofwealth that still exists between the cities and the countryside.4 Just as theCommunist Party originally turned the peasants into an effective fightingforce that enabled them to take over the government, they now fear theemergence of new political movements that might be able to rally thepeasants once again, this time against them. Once more, the ‘manage-ment’ of what goes in the country’s news media is seen as important inthe control of views that could provoke or enable the organisation of anopposition with the potential to attempt a rebellion. The best way oftrying to understand how the government sees the issue of press freedomin the future is through the device of scenario construction, as the nextsection explains.

Understanding News Media Freedom from the Chinese Government’s PerspectiveThe Chinese government is aware, most particularly through the exampleof Singapore, that embracing liberal economics does not inevitably entailthe need to embrace liberal politics, with its accompanying press free-doms. As has been pointed out frequently (BBC 2009 for example), whatthey seem to be offering their people at the moment is a deal very muchin line with the ‘Asian values’ concept long expounded by theSingaporean government (Wiessala 2006: 33): in return for the govern-ment delivering economic prosperity it is required that people relinquishambitions for Western style democratic pluralism and for freedom ofspeech.

Tiananmen Square and the collapse of Communism in the USSR andEastern Europe reminded the leadership of the fact that liberal democ-racy is an idea that potentially could be a potent rallying point for oppo-

216 Peter J. Anderson

sition to its rule. While the Beijing demonstrators back in 1989 werebrutally suppressed with military force, this is an option that now hashigher costs, given the massive extent to which China has become linkedin to the global economy. Among other things, China’s leaders will haveobserved that Russia’s last use of military power (in its ‘near abroad’)caused a flight of foreign investment from Moscow. The use of militaryforce, both at home and abroad, can have serious economic conse-quences for the user within the globalized capitalist system if investorsjudge it to be destabilising of the economy/society of the user, or of theregion within which it used. Being aware of this, it is likely that, sinceTiananmen Square, Chinese policy makers have evaluated a variety ofscenarios relating to situations in which pressures for greater freedom ofspeech once again arise (it is quite probable that the scenarios investi-gated by conservative and more liberal factions differ in range and con-tent). They would be unwise not to have done this, given the followingthree developments.

Firstly, in 1989, at least initially, the leadership were caught withoutappropriate scenarios in place in the face of a public democratic chal-lenge; it showed signs of being temporarily paralysed as a result. Sec-ondly, the Chinese government has taken risks, by allowing large num-bers of Chinese students to study courses in Western universities, manyof which are politically ‘sensitive’ for Chinese domestic society. Return-ing students will have been exposed to Western ideas and values and willhave noted criticisms of their own government’s record on human rights.Many will, no doubt, be happy to ignore these on their return home ifthe ‘Asian values’ economic deal continues to be delivered. But equally,should this prove difficult as a result of a major global recession, orother factors, they are a potential ‘time-bomb’ at the heart of all of themajor cities. Each one of them has seen at first hand alternative ways ofdoing politics and many, if faced with a Communist promise that isundelivered in the face of a sustained economic downturn, may, at somestage, demand democratic pluralism and greater freedom of speech. Theknowledge that Party minders are likely to be among their fellow stu-dents may well caution what students say while in the West, but thatknowledge cannot control their thoughts. A government that had notassessed the risks of allowing China’s young people to study abroad, andthe costs and benefits of different ways of dealing with them, ultimately

CHINA, NEWS MEDIA FREEDOM AND THE WEST 217

would be a government unprepared in terms of possible responses – aswas the case in 1989.

Thirdly, it is becoming increasingly difficult to ‘gate-keep’ the inter-net, even with the formidable army of access blockers employed by theChinese government. The leadership knows that, at some point, it maycease to be able to ‘keep the lid’ on internet criticism of its policies (itcannot stop everything even as matters stand) and of the very idea of aone Party state. It is unlikely that it hasn’t weighed up possible responseswhen this day arrives – there are already holes in the ‘Great Firewall ofChina’.

So what might these scenarios look like, presuming, as seems proba-ble, that at least some of them have been considered, or at least are likelyto be considered, should the pressure for greater freedom start to growsignificantly? In the following analysis, we will sample a selection of themost likely scenarios from a Chinese viewpoint. Given that there is verylimited space here for examining relevant options and given also that theinternet is the challenge most likely to force a rethink of how the Chinesegovernment handles the news media, it would seem most sensible tolook at net related scenarios.

By means of this analysis, can gain a much deeper understanding ofthe options facing the Chinese Communist Party and government asChina becomes more and more integrated into a global system, withinwhich the influence of democracy is not likely to go away, even as thepower of some Western powers wanes, due to the compensatory rise ofdemocratic India. However, it is important to remember that these sce-narios will be viewed differently by conservative and liberal wings of theCCP. The extent to which these policies might ever be implemented willdepend upon the balance of power between the various factions withinthe Party at relevant points in time.

Scenario One: The ‘Big Bang’. Many argue that this is the least likely ofeventualities, bearing in mind the strength of feeling among Party con-servatives and their reaction to Chinese media coverage followingTiananmen Square (Herbert 2003: 126). In this scenario, the Chinesegovernment agrees to remove all foreign and domestic media restric-tions, other than those relating to libel, slander and ‘national security’ asunderstood in its narrower, Western sense. Outside of any BBC-equiva-lent ‘impartial’ public service news organisations that the government

218 Peter J. Anderson

might decide to set up, there would be no requirement to produce bal-anced journalism; news organisations, journalists and bloggers would beleft to decide on their own reporting. This would only become an optionwhere the value to the government of trying to block access to criticismof its policies and leaders had disappeared. This would be the case where‘gate keeping’ the web had become impractical for technical reasons, andwhere internet usage across China – and the accessing of alternativenews media on the web – had become so widespread as to make contin-uing efforts to censor the mainstream media an ineffective means ofcontrolling the information flow to the mass of the population. Anycontinuing attempt to censor news reporting within China would be bothincreasingly obsolete (unless, as in Burma, it was decided effectively toshut the internet down within its borders) and counterproductive, in sofar as it would confirm some of the criticisms of the regime that bloggersand others make. Such a dramatic liberation of news reporting would putthe predominant position of the CCP under strain, unless measures werekept in place to prevent the formation of an effective opposition Party.However, such restraints would become difficult to maintain if the inter-net was no longer controllable and journalists and bloggers were givenfull freedom to report and comment on the views of those who advocatealternatives to the current Chinese political system. Even the old Partystalwarts in the media might prove unreliable if given their freedom, asthe reporting of the People’s Daily and the Central Television Station in thebrief, heady days of 1989 suggested (Herbert 2003: 126). Should alterna-tive ideas start to become popular, they may, eventually, be held by somany people that it would be difficult to suppress them. In theory, thePeople’s Liberation Army (PLA) could always be brought in, as hap-pened in the case of Tiananmen Square. But the soldiers that were sum-moned in 1989 had been given only filtered information. If media con-trols had been abandoned then the PLA would be free to form their ownviews. And if opposition ideas spread into the army as a result, the out-come of any attempt to use military force could be civil war and thecollapse of an effective governmental system within China.

Scenario Two: A Smaller ‘Bang’. This scenario would be prompted by thesame basic cause and involves an extension of press freedoms to includethe full reporting of criticism of the central government with regard to itspolicies and legislative initiatives, with the exception of a narrow band of

CHINA, NEWS MEDIA FREEDOM AND THE WEST 219

‘national security matters’ relating to counter-terrorism, the intelligenceservices and military defence. Such criticism would be reported onlywithin a balanced context in all of the media which Beijing could still regu-late. Should this be permitted it would not be the result of any ‘Dama-scene conversion’ to the values of impartial reporting, but of a hard-headed political calculation: this would simply be the least damaging wayof extending press freedom, if forced to do so by the pressure of circum-stances. The government would be given as much space to put its viewacross as its detractors. This would allow it to respond to unregulatedinternet criticism by showing that it was no longer censoring the freepresentation of views, while keeping the right for its political and eco-nomic arguments to be heard in full. Should sufficient numbers of theChinese people still rely primarily on the regulated mainstream media atthe time of this policy’s introduction and should the government win theargument in such an open presentation of competing views often enoughto stay in power, then the problems created by freely available access tocriticisms of its policies would be solved to a significant degree. How-ever, should the government ‘lose’ the debate consistently, or should toomany people ‘switch their allegiance’ from mainstream, regulated, newsreporting to the unregulated criticism on the internet and decide that aone Party state was no longer desirable – then the situation would bevery different. The government would have to choose whether to brazenthings out, to agree to popular demands for change, or to suppress dis-sent. As with the first scenario above, if dissent had spread into the PLA,the risks of trying to use force could be high, since not all of the armyhas a ‘stake’ in the economic system established by Deng and his succes-sors.

Scenario Three. This scenario is nearly the same as the previous one,above. In contrast to it, however, reporting is ‘balanced to one side’: thegovernment is afforded notably more space to put their views across than are its critics.On the surface, this might seem a safer option than the previous two,given an ‘inbuilt debating advantage’ from the government’s point ofview, at least with regard to the media it could still regulate. In practice,however, it could prove ineffective. A media debate, so obviouslyweighted in favour of views and policies that many find unacceptable,might prompt a large number of people to migrate to unregulated report-

220 Peter J. Anderson

ing on the internet. From that, they might develop political ideas thatprompt widespread demands for effective opposition parties.

Scenario Four. This case would, in many respects, echo scenario two,above. The difference in this scenario is that, within all of the Chinesenews media that could still be regulated, it would be required that criti-cism should be presented in the manner and style which the Daily Mailnewspaper in the UK uses to present the opinions of the Labour Party. Itdoes so by representing the latter’s views as being inferior in quality, logic andpracticality to those of the Party that the paper prefers. The risks would besimilar to those in scenario three, above.

Scenario Five. This scenario involves an extension of press freedom thatincludes allowing the reporting of criticism of the central governmentwith regard to a specific and narrow range of ‘sensitive’ policies and legisla-tive initiatives, but which does not extend that freedom to allow criticismof the President – and which requires that such criticisms be presentedwithin a balanced context in which the government is given as muchspace to put its view as its critics. This might become an option where itwas still possible to prevent access to the majority of negative postingson the internet, but enough criticism was nevertheless evading officialcontrols to make it necessary to acknowledge some of its most populistdimensions and show a willingness to deal with it. To allow balancedmainstream reporting of such criticism in this context would be to tryand ‘take the initiative away’ from the bloggers and counteract it byimproving the credibility of the regulated ‘authoritative’ mainstreamnews media. It would give the government a chance to be seen as listen-ing to, and engaging with, its critics in ‘an open and positive debate’ onsome issues of popular concern. Should the government lose the debate,in terms of the reactions of the people, then the president, who wouldhave remained aloof from it and un-criticised within the media, wouldhave the opportunity to remain politically ‘unscathed’. The Party couldattempt to re-establish its legitimacy through him stepping forward as thepeople’s champion to re-shape the unpopular policies, thereby ‘correctingthe consequences of bad advice’ given to him, or other leading figures,by ‘other isolated and ill-informed members of the government’, in amanner that would be covered by the mainstream media.

CHINA, NEWS MEDIA FREEDOM AND THE WEST 221

Scenario Six. This possibility would be similar to scenario five, above,except with reporting that was ‘balanced to one side’ in so far as thegovernment would be given significantly more space to put their view than their critics.As with scenario three, this could backfire and, rather than help build thecredibility of the mainstream news media, it could undermine it further.

Scenario Seven: this eventuality has most of the characteristics of scenariofive, except that such criticism would be presented in the manner thatthe Daily Mail newspaper in the UK would present the views of theLabour Party, as described in scenario four. From the government’spoint of view, much would depend on the skill with which this propa-ganda (in the Western sense of the word) exercise was carried throughand the receptivity of sufficient numbers of the disaffected public to it.Should it fall short of the mark then it could be just as ineffective as a‘misfiring’ scenario six.

Scenario Eight: The Burmese option. The history of the People’s Republic ofChina has been one of power and influence, shifting back and to fromconservative to more liberal factions within the Communist Party. Theconservatives remain, as always, a force to be reckoned with. Should theinternet get completely out of control at a time when the Party was feel-ing increasingly insecure as a result of economic or other reasons, and if,simultaneously, the conservatives were in a dominant position, there isalways the possibility of the internet being ‘shut down’ within China.This could be done with the hope of both silencing ‘destabilising’ dissentand re-establishing the government’s ability to control the flow of infor-mation to the people through a closely controlled mainstream newsmedia. In an age where the internet, and free and open participation in it,is seen as being one of the key ingredients of advanced societies, such amove would be likely to be seen externally as an indication that Chinawas taking a step back developmentally and that the position of thegovernment was now so fragile that the only way it could keep hold ofpower was through a draconian close down of a communication facilitythat other advanced nations regard as fundamental. Such a statement ofthe fear of instability could also frighten away crucial external investors.The ‘Burmese option’ could be costly both in economic terms and interms of loss of China’s external reputation as a modern state and soci-ety.

222 Peter J. Anderson

ConclusionsAt the present moment, the collective intelligence of the leadership issufficient for it to realise that issues like corruption, which discredit theParty in the eyes of the people need to be addressed and that the newsmedia can have a useful role in helping to deal with that. It has realisedtoo, that natural disasters like the Sichuan earthquake have to be more‘fully’ covered in the internet age, and that the same is true of unnaturaldisasters, such as the contamination of milk with melamine during 2008.The consequence has been a further degree of opening up of mediafreedom. However, anything hinting at criticism of the Beijing leader-ship, or of the authority of Party rule is still as much forbidden as beforeand journalists who cross the line can find themselves out of a job, or inprison. The above scenarios have suggested that the world-wide web hasthe potential to grow completely out of the government’s control, anddifferent ways of exploiting it continue to develop at breakneck speed.The leadership cannot assume that the degree of censorship that pertainscurrently will be viable into the future. If it is not simply to be the pris-oner of developments it has to evaluate a variety of scenarios for dealingwith such possibilities as the internet escaping from its grasp. It has beenthe task of this discussion to show what some of those might look like.

Overall, as far as the above sample scenarios are concerned, severalthings are clear. Firstly, the extent to which the Party would be preparedto risk implementing any of the media policy options covered withinthese scenarios would be dependent on how it felt each related to itsfundamental desire to minimise the threats to its continued rule at agiven moment in time. This calculation in turn would be affected signifi-cantly by the balance of conservative and liberal forces within the Partyat that time.

Secondly, it would bear in mind also the likelihood of its ‘last resort’,the People’s Liberation Army, being able to recover the situation throughthe effective use of force, should the outcome of the implementation ofpolicy options contained within particular scenarios turn out to be nega-tive, and should this threaten the Party’s continuation in power. Signifi-cantly, key army personnel have become serious economic players duringthe Deng and post-Deng periods, and it is very much in their intereststhat the stability from which they benefit economically should be pre-served. However, as has been pointed out, should a freeing up of thenews media lead to the spreading of opposition ideas among significant

CHINA, NEWS MEDIA FREEDOM AND THE WEST 223

numbers of the ranks, the overall reliability of the army might becomequestionable in some circumstances.

Thirdly, and finally, it should be noted that, as far as the internet isconcerned, the picture is more complex than it has been possible torepresent adequately here. A lot depends on the extent to which Chineseusers decide to access the web to look for ‘alternative’ political news andcomment should it in future become ‘un-blockable’. One of the thingsthat research has shown so far is that in ‘internet rich’, ‘free’, societies,such as the United States for example, very few people go to politicalblogs. Those users who access the internet regularly for political newsremain very much in the minority (Pew 2005 and 2006; Anderson andWard 2007: 269-70). Should Chinese net-accessing patterns turn out tomirror or even accentuate these trends towards low ‘political’ usage, theChinese authorities might conclude that the internet provides them withfewer worries than they feared, and with less of a reason for significantlychanging policies towards mainstream-media controls.

ReferencesAnderson, P.J. and Ward, G. 2007. The Future of Journalism in the Advanced Democ-

racies Aldershot: Ashgate.Bandurski, D. 2007. Pulling the Strings of China’s Internet. Far Eastern Economic

Review. Accessed at: www.feer.com/essays/2007/december/ pulling-the-strings-of-China’s-internet?sea...

BBC Ten O’Clock News. 2009 (2nd February).Branigan, T. 2008a. Belgian Reporters Assaulted and Robbed in China. Ac-

cessed at: www.guardian.co.uk/media/2008/dec/01journalists-assault-china-aids-activists/

– 2008b. China Tells State Media to Report Bad News. Accessed at:www.guardian.co.uk/media/2008/nov/20/china-media-freedom/print

Branigan, T. and Kiss, J. 2009. China Closes 90 Websites as Internet Crack-down intensifies. Accessed at: www.guardian.co.uk/media/2009/jem/13/China-internet-censorhsip/print

Bristow, M. 2008. Stories China’s Media Could Not Write. BBC Online. Ac-cessed at http://news.bbc.co.uk/1/hi/world/asia-pacific/7171648.stm

Herbert, J. 2003. Practising Global Journalism. Oxford: Focal.Heren, L., Fitzgerald, C.P. et al. 1973. China’s Three Thousand Years. London:

Times Newspapers Ltd.

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Kiss, J. 2008. China Defends Latest Web Censorship. Accessed at:www.guardian.co.uk/media/2008/dec/16/china-defends-latest-web-censorship

Organgrinder Blog. 2008. The Coverage for the Olympics – Has it HelpedPress Freedoms in China? Accessed at: www.guardian.co.uk/media/organgrinder/ 2008/nov/20/events-television1/print

Pew Internet and American Life Project (2005), ‘How Women and Men use theInternet’, Pew Research Center. Accessed at: http://www.pewinternet.org.pdfs/PIP_Women_and_Men_online.pdf

Pew Internet and American Life Project (2006), ‘Bloggers: A portrait of theInternet’s new storytellers’, Pew Research Center. Accessed at:http://www.internet.org/PPF/r/186_display.asp

Reporters Sans Frontières. 2008a. China – Annual Report 2008. Accessed atwww.rsf.org/article.php3?id_article=25650

– 2008b. Political Essayist Gets Three Years in Prison for Three ArticlesPosted Online. Accessed at: www.rsf.org/article.php3?id_article=29384

Reynolds, J. 2008. A Cup of Tea with China’s Police. BBC Online. Accessed at:http://www.bbc.co.uk/blogs/the reporters/james reynolds/2008/08/a-cup-of-tea-with...

Shoemaker, P.J. and A.A.Cohen. 2006. News Around the World: Content, Practitio-ners and the Public. New York: Routledge.

Wiessala, G. 2006. Re-Orienting the Fundamentals. Human Rights and New Connec-tions in EU-Asia Relations. Aldershot: Ashgate.

Williams, H. 2008. New Press Clamp-Down By China? Accessed at:http://news.sky.com/skynews/Home/World-News/Press-Freedom-In-C hi na -Ne w-Ru l e s -Al l ow i ng -Greater-Freedom-May -Not -Be -Extended/Article/200810315122997

Yuezhi, Z. 2000. Watchdogs on Party Leashes? Contexts and implications ofinvestigative journalism in post-Deng China. Journalism Studies. 1, 2, 577-597.

EUROPEAN STUDIES 27 (2009): 225-240

TRADE AND INVESTMENT IN THE RELATIONS BETWEENTHE EUROPEAN UNION AND

THE PEOPLE’S REPUBLIC OF CHINA

Carlo Filippini

AbstractServices are the fastest growing component of the import-exportflows of developed countries. At the same time, they are the sourceof many disputes because of their nature, being often intangible, andnon-excludable, with high value added. This is the case for serviceflows between China and the European Union (EU): they are relevantbut the EU is concerned about the need to ‘level the playing field’.China’s WTO accession has eased some problems, but not solvedthem. The most relevant EU requests concern the intellectual prop-erty rights, counterfeit and pirated goods, and technology transfer. Inaddition to this, China has not yet implemented all its WTO acces-sion obligations, e.g. in the financial sector. What follows is a detaileddata analysis on service flows. It will comprise of, in particular,China-EU exchanges compared to world totals. Moreover, data overtime, by EU country, and by sub-sector, will be analysed. Inward FDIhas been liberalized in steps; it is amongst the main export drivers. Itis an important vehicle for the technological upgrading of industrialsectors. The strict conditions imposed on foreign corporations haveallowed China to acquire nearly up-to-date technologies, acting as amonopsonist with many suppliers. On FDI, the EU is further stress-ing a lack of reciprocity. Recently, Chinese outward FDI has beengrowing, due to very large Chinese foreign reserves, even thoughinvestment towards the EU remains modest. Last but not least, thechapter examines relevant data relating to European FDI in China –and Chinese FDI in the EU – over time, by EU country of origin,and by sector.

226 Carlo Filippini

Introduction Trade relations between Europe and China have a long history. Mercan-tile delegations, diplomatic embassies, and religious missions alreadywere exchanged between China and the Roman Empire more than 2000years ago (cf. Innes Miller 1969). In fact, the Ancient Romans were ‘infatu-ated’ with Chinese silk and paid huge amounts of gold to acquire it.Later on, these relations stayed stagnant because China became moredeveloped than Europe and thought that no external goods were worthimporting. After a long decline of the Chinese economy, the last decadeshave seen its strong and rapid revival; EU–China trade relations are nowquite important: China is the second biggest trade partner of the EU, itsfirst market for imports and its fourth for exports (as of 2007). Thischapter investigates the evolution of EU–China relations and agree-ments; furthermore, it presents data to quantify trade structures andraises some critical points relating to views in the EU and China; finallythe chapter offers a number of tentative conclusions.

Globalization: China’s and the EU’s ChoicesThe sixty years from the birth of the People’s Republic of China (PRC)can be divided almost evenly into two periods: the first is characterizedby quite rigid plans that covered foreign trade flows too. Exports andimports were not linked to relative prices or to comparative advantage.After 1978, China changed its economic policy and began a slow, butstraightforward, process of reforms that included deeper integration intothe world economy.

A few features of this transformation are worth noting: the coexis-tence of liberalization in the economy and continuity (that is a monopolyof power by the Communist Party) in politics and gradualism in theprocess: reforms were initially carried out in limited areas, or sectors, andlater on extended on an ever larger scale if successful. In the end one canspeak of a socialist market economy in a communist state.

The international environment was gradually becoming more open or‘globalized’, because of the general agreements sponsored by the GATTand WTO and on account of the many more bilateral Free Trade Areaaccords. At the same time, innovation and technical progress, togetherwith the ICT, drastically cut costs in transport and communications. Oneof the results was the birth of production networks or fragmentation.

TRADE AND INVESTMENT BETWEEN THE EU AND THE PRC 227

China was very skilful in exploiting its low-cost labour and the (po-tential) size of its market attracting FDI and asking foreign enterprises tobring in state-of-art technologies, not the ones dismissed in the countryof origin. By the mid-1980s, China was already a major production cen-tre for many foreign firms. The sanctions following on the heels of thegovernment crackdown of the Tiananmen protests (1989) simply slowedthe process. Exports have been an important driving factor of Chineseeconomic growth, and the country’s 2001 WTO accession was the occa-sion of further real and promised openings. As one can imagine, liberal-ization in merchandize trade has been generally greater than in the ser-vice sectors. Chinese exports are covering a wide range of products andseem to defy the traditional theory of comparative advantage. One theone hand, factor endowments can be modified by economic policiesthrough expenditures in education, research and technology imports; onthe other hand, quite often only parts of the final high-tech goods thatare exported are produced in China, due to production fragmentation.

The European Union (EU) has adopted a positive attitude towardsChina from the beginning and on many occasions has stated its widerobjectives: to support China’s transition to a pluralist society based uponthe rule of law and respect for human rights, and to encourage its trans-formation into an open market economy, integrated into the world bymeans of the broadening and deepening of both bilateral and multilateraldialogue.

While in the years up to the beginning of this millennium the EU hasbeen accommodating towards China because of the latter’s ‘developingcountry’ status and the high expectations of gains from trade and FDI,more recently a number of disappointments have emerged: to the EUChina is not only an opportunity but a threat too. At the same time it isquite difficult to speak of a coherent ‘European’ policy towards China,because there are many voices and actors, not always coordinated andtoo often conflicting.

Key Steps and Documents in EU–China Economic RelationsAfter the recognition of the People’s Republic of China (PRC) as thelegitimate government of China (October 25, 1971) by the UN GeneralAssembly and the establishment of diplomatic relations between thePRC and most EU member states in the following years, on May 6 1975the European Union too established diplomatic relations with the PRC.

228 Carlo Filippini

On May 2, 1978 a Trade Agreement was signed and the EU-China JointCommittee was established, the first meeting of which was held inBrussels 15 months later. On July 18, 1979, the first agreement, on tex-tile trade, was reached. Ten years after the resumption of diplomatic ties,on May 21, the 1985 EC-China Trade and Cooperation Agreement(EEC-China, 1985) was signed in order to promote and intensify tradeand to encourage a steady expansion of economic cooperation betweenthe two actors. This agreement is still the main legal framework foreconomic relations with China; it was extended twice, in order to coverpolitical issues (in 1994 and 2002). Economics and politics are inter-twined in complex ways because of the different moral principles, cul-tural traditions, and historical legacies of the two entities. Two mainturning points must be mentioned: firstly, the Tiananmen Square protestsin December 1989, after which the EU imposed an arms embargo, and,secondly, China’s accession to the WTO twelve years later.

A new, and more general, Partnership and Cooperation Agreementhas been under negotiation for some years, in order to take into accountthe new realities and to update the 1985 treaty. Over the past decade orso the EU has produced a range of key documents on EU-China rela-tions; just to mention a few: the 1995 Communication on A Long-termPolicy for China-Europe Relations, the 1998 one on Building a Compre-hensive Partnership with China, the 2003 policy paper on A MaturingPartnership: Shared Interests and Challenges in EU-China Relations. In2006, a set of Council Conclusions (EU Council 2006), the Communica-tion Closer Partner, Growing Responsibilities and the related workingdocument on Competition and Partnership marked a clear (even if inef-fectual) break with the previous – generally optimistic – EU position:these documents emphasise China’s increased responsibilities, stemmingfrom her economic growth and global influence, and stress the need fora ‘level field’ in solving trade and investment frictions.

In addition to regular political, trade, and economic dialogue meet-ings, there are many other, sector-specific (‘sectoral’), dialogues andagreements covering many aspects. A representative list of these sector-specific dialogues is represented in table 1, below:

TRADE AND INVESTMENT BETWEEN THE EU AND THE PRC 229

Table 1: Sector-specific EU-China Dialogues

Agricultural dialogueCivil AviationCompetition Policy Consumer Product SafetyCustoms Co-operationEducation and CultureEmployment and Social AffairsEnergyEnvironmentFood SafetyGlobal Satellite Navigation ServicesInformation Society

Intellectual Property Rights (IPR) Macro-economic Policy and theRegulation of Financial MarketsMaritime TransportRegional PolicyRegulatory and Industrial PolicySanitary and Phyto-sanitary IssuesScience and TechnologySpace Co-operationTextile Trade DialogueTrade Policy DialogueTransport (in general)

A more recent (April 2008), and Chinese-inspired, initiative is the EU-China High Level Economic and Trade Dialogue (HLM), modelled onthe US-China Strategic Economic Dialogue, to support and complementthe existing dialogues. In the recent past, there have been informal talksand negotiations (since January 2007) about a new Partnership and Co-operation Agreement, to update and upgrade the 1985 Agreement: theEuropean and Chinese negotiating positions are, however, quite distant,and the latter’s decision to postpone, with only a few days’ notice, the11th EU-China Summit, scheduled for December 1, 2008, because of ameeting between the French President Sarkozy and the Dalai Lama is aclear evidence of existing frictions. Other cooperation programmes havebeen going on for many years, covering various areas, in order to supportChina’s development efforts (EU Comm, 2008).

Merchandise TradeEU-China merchandise trade has been growing rapidly for years; in theyears 1999-2007, EU-25 imports increased four times in value – from52.41 to 230.31 billion EUR – and from 7 to 16.1 % as a share; exportsshowed a similar pattern in value – from 19.62 to 71.67 billion EUR –and from 2.8 to 5.6 %; this implies a larger and larger deficit (excludingintra-EU trade). In 2007, China has been the second biggest EU-27 tradepartner after the USA (11.4 %), but the 1st import (16.2 %) and the 4thexport (5.8 %) partner. Conversely, EU-27 has been the biggest tradepartner for China (17.3 %), being in 2nd place for imports (12.7 %), afterJapan, and in 1st place for exports (20.6 %). The EU-27 is exporting to

230 Carlo Filippini

China mainly manufactured products, machinery, transport equipment,and chemicals; primary products are not relevant here. This structure is,broadly speaking, similar to European exports to the world (see table 2).

Table 2: EU27 Exports to China, 2007 (EUR million)Products (Sitc Sections) by order of importance % % total EU imports

TOTAL 71,757 100 58Machinery and transport equipment 34,398 47.9 80

Manuf. goods classified chiefly by material 8,639 12.0 52

Chemicals and related products, n.e.s. 6,923 9.6 37

Crude materials inedible, except fuels 5,148 7.2 193

Miscellaneous manuf. articles 3,957 5.5 32

Commodities and transactions, n.e.c. 902 1.3 26

Food and live animals 758 1.1 18

Beverages and tobacco 413 0.6 21

Mineral fuels, lubricants and related materials 101 0.1 2Animal and vegetable oils, fats and waxes 36 .. 14

Source: Eurostat

The EU-27 imports from China manufactured products, machinery andtextiles, plus clothing; primary products are negligible (see table 3).

Table 3: EU27 Imports from China, 2007 (EUR million)Products (Sitc Sections) by order of impor-tance % % total EU im-

portsTOTAL 231,516 100 162Miscellaneous manuf. Articles 64,475 27.8 367Machinery and transport equipment 61,952 26.8 230Manuf. goods classified chiefly by material 34,867 15.1 192Chemicals and related products, n.e.s. 6,934 3.0 61Food and live animals 2,417 1.0 38Crude materials inedible, except fuels 2,264 1.0 37Mineral fuels lubricants and rel. Materials 673 0.3 2Commodities and transactions, n.e.c. 510 0.2 16Animal and vegetable oils, fats and waxes 83 .. 14Beverages and tobacco 76 .. 11

Source: Eurostat

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Table 4: EU-27 Trade with China, by Member State, 2007 (EUR million)

Exports Imports

Share inExtra-EUexports

Share inExtra-EUimports

Balance

Extra-EU 71,757 231,516 100% 100% -159,759Belgium 3,344 12,526 4.7% 5.4% -9,182Bulgaria 70 608 0.1% 0.3% -538Czech Rep. 504 4,340 0.7% 1.9% -3,836Denmark 1,282 3,892 1.8% 1.7% -2,61Germany 29,874 47,877 41.6% 20.7% -18,003Estonia 65 299 0.1% 0.1% -235Ireland 1,284 2,013 1.8% 0.9% -730Greece 111 2,795 0.2% 1.2% -2,684Spain 1,980 15,737 2.8% 6.8% -13,758France 9,032 18,000 12.6% 7.8% -8,968Italy 6,311 21,764 8.8% 9.4% -15,453Cyprus 8 333 0.0% 0.1% -325Latvia 17 257 0.0% 0.1% -240Lithuania 15 498 0.0% 0.2% -483Luxembourg 194 3,413 0.3% 1.5% -3,219Hungary 752 5,394 1.0% 2.3% -4,642Malta 27 92 0.0% 0.0% -65Netherlands 3,724 37,746 5.2% 16.3% -34,022Austria 1,666 2,928 2.3% 1.3% -1,262Poland 724 5,050 1.0% 2.2% -4,326Portugal 181 1,063 0.3% 0.5% -882Romania 157 1,667 0.2% 0.7% -1,51Slovenia 69 447 0.1% 0.2% -378Slovakia 321 1,569 0.4% 0.7% -1,248Finland 2,161 3,296 3.0% 1.4% -1,135Sweden 2,396 4,703 3.3% 2.0% -2,307

UK 5,489 33,207 7.6% 14.3% -27,719

Source: Eurostat

232 Carlo Filippini

Almost half of the EU’s trade deficit with the PRC is due to machinery,mechanical appliances and electrical equipment; other important itemsare textiles, base metals and articles in base metals, as well as miscella-neous articles. As far as individual member states are concerned the mostimportant exports partners are Germany (more than 40 % of the EU-27total), France, Italy, and UK; for imports Germany, Netherlands, andUK are in the top positions; the Netherlands, the UK, and Germanyshow the highest deficits. The substantial figures for Netherlands are ofcourse due to the function of Rotterdam as a key entry point (see table 4).

Trade in ServicesIn 2007, the extra-EU trade in services shows an EU-25 surplus. Thecredit side is worth 1,166 billion EUR and the debit side 1,026 billionEUR, with a net positive balance of 140 billion EUR. As is well-known,many heterogeneous items are included under the ‘service’ heading.China and Hong Kong represent a small share of the total, just over 2%on both sides of the accounts. In the past few years, China almost dou-bled its flows, while Hong Kong nearly balanced its exchanges thanks torising exports to the EU-25 (see table 5).

Table 5: EU-25 Trade in Services (EUR million)

Credit Debit NetExtra-EU 2004 874,341 799,428 74,9132005 956,851 869,054 87,7972006 1,057,862 943,776 114,0862007 1,165,855 1,026,073 139,782China 2004 9,105 7,370 1,7352005 12,419 9,392 3,0272006 13,329 11,860 1,4692007 17,742 13,722 4,02Hong Kong 2004 7,124 5,211 1,9132005 8,402 5,648 2,7542006 6,998 6,602 3962007 8,225 8,122 103

Source: Eurostat

TRADE AND INVESTMENT BETWEEN THE EU AND THE PRC 233

1 [editors’ note] see also the chapters by D. Askew and G. Wiessala in this volume.

The positive service balance sheet of the EU-25 with China alone repre-sents less than one-fortieth of the negative trade balance. The EU isestimating potential losses in the order of billions or euros, because ofChinese unfair practices. The credit side is worth 17.74 billion EUR andthe debit one 13.72 billion EUR, giving as a result a net figure of justover 4 billion EUR; the figures are showing an upwards trend in the pastdecade in particular after the WTO accession in 2001 (see table 6). How-ever the EU performance in service trade with China is difficult to fullyevaluate, because the flows are, to some extent, indirect and goingthrough Hong Kong.

Table 6: EU-25 Trade in services with China, 2007 (EUR million)

Credit Debit NetCHINA total 17,742 13,722 4,02Royalties 1,179 120 1,059Financial services 453 181 272Insurance 109 281 -172Transportation 5,501 6,561 -1,06Travel 1,877 2,893 -1,016

Source: Eurostat

EU Linkages between Economic and Non-economic IssuesFrom the very beginning, the EU has stressed the importance of democ-racy and human rights in its relations with China1. This appears quitetypical of its cultural traditions and values: democracy, freedom, and therule of law are all the foundations of a state. One of the aims of EU-China contact was thus to support China’s transition to a more opensociety. In the past, however, a greater weight was given to the processrather than to the actual results. In addition to this, the possibility ofgains from the opening of such a huge market played a role. Throughoutthe current decade, rapid Chinese growth, both in economic and politicalterms, and the perception of a challenge rather than a chance, havechanged the EU’s position (Holslag 2006).

Moreover, Chinese policies in Tibet, with regards to political dissi-dents or simply internet users, have been increasingly subject to severe

234 Carlo Filippini

criticism in Europe. If one adds environmental issues, and China’s re-fusal to be bound by international protocols, it is easy to understand whyrelations are, at times, turning sour. China maintains that trade issuesmust be discussed independently from other problems, some of whichare seen as domestic (Tibet, e.g.), not international. Of course, the Chinepower elite is reluctant to give up its status and role; it perceives toomuch openness as a threat; the collapse of the Soviet Union and itsCommunist Party is a clear reminder of what might happen in China too,if democratic reforms are introduced.

The EU’s Trade Deficit with China The EU has been running a trade deficit with the rest of the world foryears; in 2007, the negative balance amounts to over EUR 186 billion –about 15% of total exports. Over the past decade this percentage almostdoubled. The trade deficit with China is just less than EUR 160 billion.This amounts to more than twice the value of EU exports to that coun-try, and is equal to EUR 72 billion (2007). It would, of course, be naïveto say that the EU’s deficit is caused by China alone; it would be evenmore naïve to claim that eliminating the deficit would, somehow, solveall problems. However, the size, growth, and circumstances of the deficitare disquieting for many in the EU.

A first point to be made pertains to the undervaluation of the Chinesecurrency. It is quite difficult to tell the ‘right’ level of any currency, inparticular, in relation to another one (Frankel 2009). A number of schol-ars are, however, arguing for a substantial revaluation of the renmimbiversus the US dollar and the Euro. This opinion is often raised in theUSA, even by the new Obama administration; the ‘Big Mac index’, a veryrough and oversimplified PPP version, shows a 40% undervaluation(The Economist, Jan 22, 2009). In addition, as we shall see later, manygroups and firms are complaining of unfair practices, and of obstacles toboth EU goods and investment. Last but not least, the trade surplus isone of the sources of Chinese official reserves, the biggest in the world,used also to finance the sovereign funds.

On the other side of the coin, one has to consider that a large part ofChinese exports (to the EU and to the world) are due to European orother foreign direct investment; moreover they incorporate a substantialshare of imports. Koopmans R., Zhi Wang, and Shang-Jin Wei (2008)estimate that the share of foreign content in China’s exports is at about

TRADE AND INVESTMENT BETWEEN THE EU AND THE PRC 235

50%; in some high-tech sectors, it can be as high as 80%. This, however,does not decrease the EU deficit. In other words, China imports capitalintermediate goods and re-exports them. Globalization pressures, theincreasing relevance of FTAs and similar arrangements, and innovationsin the transport and communication sectors, have all boosted productionnetworks across the world, and more specifically in China.

EU Concerns and EU Complaints While acknowledging that some progress is being made in these matters,the EU has long been complaining about Chinese behaviours which, theUnion alleges, are unfair, in regard to trade and investment. A list of theprincipal problems can be seen in table 7, below.

Table 7: Obstacles to trade and investment

Obstacles to market-access TariffsNon-tariff barriersGovernment procurementTransparency and administrative coordinationDiscrimination of foreign operatorsInvestment restriction

Conditions of competitionIPR and legal rightsForced technology transfersExport subsidies (and taxes)Environmental, social and safety conditionsMarket for global trade in natural resources distortion

Source: EU Comm, 2006 and EUCCC, 2008

While China has substantially lowered its tariffs after WTO accession,from about 35% to 9% for non-agricultural products (and 15% for agri-cultural ones), there still are some tariff peaks on goods of particularimportance to European firms. Quite recently, for example, the WTOAppellate Body has ruled in favour of the EU (plus USA and Canada)about surcharges over car parts. More relevant are the non-tariff barriersin the form of product certification (a compulsory system covering morethan 100 items), labelling standards (for instance for pre-packaged food),

236 Carlo Filippini

import approval requirements, and custom clearance delays. Agriculturaland pharmaceutical goods and cosmetics are subject to strict andgroundless requirements; there are often more severe than those requiredfor domestic goods, in contrast to WTO rules. Moreover, Chinese stan-dards are sometimes appreciably different from international ones. Thisresults in additional costs, of both monetary and non-monetary nature,affecting, in particular, many EU small and medium-sized enterprises.The application of laws and regulations is often not uniform acrossprovinces and local authorities in China. Administrative discretion isquite large, and foreign firms are discriminated against. There appears aneed for more active and timely official interpretations of administrativeregulations. The prosecution in bribery cases is quite erratic, obscure,and rather exceptional. Even if public calls for comments from the Gov-ernment on proposed legislation are becoming more frequent, there isinadequate time to analyse the bills and provide constructive feedback.The value of public procurements is not easily calculated, but certainlyquite large. In 2007, it was over EUR 38 billion according to the ChineseMinistry of Finance; however, given the figures for the total of fixedasset investments, it ought to be much higher; the economic measuresannounced at the end of 2008, in order to overcome the effects of theworld financial crisis, will certainly increase this. China must accede tothe WTO Government Procurement Agreement, but the initial proposal madein 2007 was judged quite unsatisfactory by the European officials andfirms. In too many areas foreign (and of course, European) firms arediscriminated against, in policy or practice, as a result of a ‘China first’approach. The same grievance applies to FDI, because of over- stringentrequirements imposed on non-Chinese companies.

Intellectual Property Rights (IPR) are one of the most contentioustopics in EU–China trade relations (see Shi 2008 for a detailed analysis);on the one hand, European firms are upgrading their productions: bothgoods and services have an increasingly high-tech character; on the otherhand, counterfeiting is becoming more and more widespread (and notonly in China). Despite improvements, it is still quite difficult to get areal protection in Chinese courts, and, if protection should be reached, itis often unduly complex to implement decisions. Too much confidentialinformation is required in applications for technical and regulatory ap-proval for products, and this information is not adequately protected.Local firms not only copy EU products, and often sell them under the

TRADE AND INVESTMENT BETWEEN THE EU AND THE PRC 237

name of the EU firm, but increasingly apply for patents regarding identi-cal or near-identical products. At the same time, filing for trademarks cantake as long as three years in case of opposition.

Last but not least, significant subsidies, or preferential access tocredit, are afforded to companies destined to become national or regionalchampions. The taxation system is granting tax preferences, contingenton the use of local content or export performance. Export subsidies haveeffects similar to currency devaluation, while export taxes (also quitecommon in China) contribute to currency revaluation. Recent cases ofdangerous products originating from China – from toothpaste and pow-dered milk, to toys – have hardened the European stance, underminedconsumers’ confidence, and frequently turned public opinion against the‘made in China’ label.

Chinese Perceptions and ObjectionsChina too is expressing concerns about those EU policies and decisionsseen to be unfair or restrictive for Chinese firms. It has already beenmentioned that China views the EU nexus between human rights andtrade issues as an example of interference in China’s internal affairs.Additional problems are the question of market economy status (MES),the EU’s technical barriers to trade and its agricultural policy, EU peaktariffs on some products, and, last but not least, the arms embargoagainst China.

China maintains that MES is not being granted, in order to put afurther constraint on its growth, and that it is discriminated against,pointing out that Russia was given this status in 2002, even though atthat time it was not (and still is not) a member of WTO. There is a for-mal reputation aspect not to be played down, because harmony and ‘notlosing face’ is paramount in any Confucian culture. However, the widerconsequences of this status are much more important: MES would ren-der it very difficult for the EU to open anti-dumping (AD) cases againstChinese firms – this is the essence of the problem. Upon joining theWTO, China accepted to be treated as a non-market economy for 15years but quite soon, in June 2003, it asked the EU to be granted MES.Over the past few years, the EU has opened many AD cases and usedsafeguards against Chinese exports; in relation to trade value China is thebiggest target. In order to avoid a full confrontation, the EU has given it

238 Carlo Filippini

the status of ‘transition economy’. That, however, does not carry muchweight.

More fundamentally, the EU argues that China is, in fact, not fulfill-ing most of the five criteria required for a market economy. These are:

A degree of government influence over the decisions of firms;Existence and implementation of a transparent and non-discrimina-

tory company law; Similarly, a set of laws ensuring the respect of property rights;Existence of a genuine financial sector independent from the state;Absence of some state-induced distortions in the operation of pri-

vatized firms.

Only the last criterion is met, at least according to the EU. The EU hasrather strict technical standards due to its citizens’ concern about health,safety, work conditions, and the environment, and many of them appear,to China, unreasonable and discriminatory (e.g., in the area of chemicalproducts). The increasing number of dangerous products originatingfrom China is not inducing the EU to be more accommodating – quitethe contrary appears to be true.

The arm embargo was imposed in the aftermath of the Tiananmenrepression in 1989; this problem too has two aspects: a face-saving and apractical one. China is seeing it as an offence to its status as a worldpower, and as an obstacle to its efforts to modernize the armed forces.After many decades of low profile in military matters China is now up-grading weapons and equipment, in order to be able to play a morevisible role. The transformation, for instance, of its navy, from a brown-water to a blue-water force, is quite telling.

Conclusions and OutlookIn conclusion, it may be said that the EU has been investing enormouspolitical, diplomatic, and financial resources into expanding its relationswith China for many years. It has done so with a number of aims inmind: to support change towards a democratic society and an openmarket-economy; to lower tensions in an increasingly strategic region;and to enter a rapidly growing, very large, and potentially profitable,market. Over the years, the Union suffered some disappointments, butthese were overcome because of China’s status as a developing country.

TRADE AND INVESTMENT BETWEEN THE EU AND THE PRC 239

In 2006 however, the EU realized that most of its hopes were unfulfilledand changed its political mood, asking China to deliver its part of thebargain (Berkofsky, 2008 and Scott, 2007). The EU ought now to set itspriorities clearly, speak with one voice, and build up a credible stock ofhuman capital. European objectives are many and encompass other areasthan just economics: international security and politics, human rights, aidand cooperation, cultural exchanges count amongst those. What is clearlylacking is a coherent and open ranking with relative weights for anytrade-off or compromise solution. This may be due to the fact that com-petences are fragmented and the EU’s bodies and Member States havetheir own aims and policies. The EU Commission has exclusive compe-tence over trade matters, but is not always in tune with the EU Council;the Lisbon Treaty, if and when ratified and implemented, may solvesome problems, at least partially. But national interests are often in con-flict, and there is no ‘clearing room’ for finding a synthesis. Throughout2004 and 2005 for example, conflicting signals over the arms embargo,and surcharges on Chinese (and Vietnamese) shoes and clothing, servedto prove this point.

It seems that people working with China frequently have little or noknowledge of its language or culture. Assignments rotate every few yearsand there is no incentive or time to acquire information and knowledge.Also, to many scholars and experts the solution appears quite simple: theEU ought to separate human rights and trade, give China the MES, andtake a long-term view about IPR and similar problems (Messerlin andWang, 2008, among others). However, it is not evident what the EUwould gain from this compliant policy, given the past history of EU-China relations. The present world crisis is an additional obstacle, be-cause economic nationalism and protectionism are making a come-back(Dreyer and Erixon, 2008 and Erixon and Sally 2009). A compromisesolution will have to be found, because a breakdown is very unlikely andcontrary to everybody’s interests: as major political and economic actorson the world stage, the EU and China are far too big to engage in longand costly confrontations.

240 Carlo Filippini

ReferencesBerkofsky Axel. 2008. EU-China Relations: Rhetoric versus Reality. ISPI, Milan,

Policy Brief 12/2008.Dreyer, Iana and Fredrik Erixon. 2008. An EU-China Dialogue: A New Policy

Framework to Contain Deteriorating Trade Relations. ECIPE, Brussels, PolicyBrief 03/3008.

Erixon Fredrik and Razeen Sally. 2009. Fighting the Urge for Protectionism.Far Eastern Economic Review, January

EEC-China. 1985. Agreement on Trade and Economic Cooperation between the Euro-pean Economic Community and the People’s Republic of China. Brussels, OJ L250,19.09.1985.

EU Comm. 2006. European Commission. Competition and Partnership. Brussels,24.10.2006, COM(2006)632 final.

EU Comm. 2008. China Country Strategy Paper 2007-2013. Brussels (draft down-loaded on Jan 21, 2009).

EUCCC. 2008. European Union Chamber of Commerce in China. PositionPaper 2008-2009. Beijing.

EU Council. 2006. Council’s Conclusions on the EU-China Strategic Partnership.Brussels, 11-12.12.2006, 16291/06.

Frankel, J.A.. 2009. New Estimation of China’s Exchange Rate Regime. NBER wp14700.

Holslag, J. 2006. The European Union and China: The Great Disillusion. Euro-pean Foreign Affairs Review, 555-580.

Innes-Miller, J. 1969. The Spice Trade of the Roman Empire, 29 BC - Ad 641, Ox-ford, Clarendon Press, Oxford University Press.

Koopman R., Zhi Wang, and Shang-Jin Wei. 2008. How Much of Chinese Exportsis Really Made in China? Assessing Value-Added When Processing Trade is Pervasive.NBER wp 14109.

Messerlin, P. and Jinghui Wang. 2008. Redesigning the European Union’s TradePolicy strategy towards China. ECIPE-GEM wp 04/2008

Scott, D. 2007. China-EU convergence 1957-2003: towards a ‘strategic partner-ship’. Asia Europe Journal, 217-233.

Shi, Wei. 2008. Intellectual Property in the Global Trading System: EU-China Perspec-tive. Springer, Berlin.

1 According to the IMF/OECD definition, FDI is investment in a foreign com-pany where the investor owns at least 10 percent of the ordinary shares, undertakenwith the objective of establishing a lasting interest in the country, a long-term relation-ship and a significant influence on the management of the firm (IMF 1993; OECD1996).

EUROPEAN STUDIES 27 (2009): 241-258

EU-CHINA FOREIGN DIRECT INVESTMENT:A DOUBLE-SIDED PERSPECTIVE

Valeria Gattai

AbstractThis chapter analyzes the EU-China Foreign Direct Investment (FDI)relationship, through a double-sided perspective that considers thetwo partners in the mutual roles of ‘host’ and ‘home’ economies.Although many have traditionally identified China as a low-cost man-ufacturing location, the country has recently turned out to be an im-portant home for multinational activity. Since internationalization ofChinese companies represents a very recent chapter in the country’slong history, this chapter first provides a brief historical overview tohighlight the main steps along China open up path and clarify the roleof government intervention in accelerating its global engagement.Based on recent data, the relative importance of China and the EU inthe respective FDI outflows is then examined, so as to delineate therelevant trends, discuss the main findings and evaluate future per-spectives.

Introduction Many analysts regard Foreign Direct Investment (FDI) as a privilegedentry mode into a foreign market.1 The upward trend in FDI that beganin 2004 accelerated further in 2007, at a pace that varied greatly across

242 Valeria Gattai

industries and regions (UNCTAD 2008). The sector pattern has beenexperiencing a steady shift towards services: while Foreign Direct Invest-ment has significantly increased in the last 30 years in all major sectors,the shares of primary and manufacturing activities have declined sharply.The geographical pattern has changed as well, with new countries emerg-ing as significant host and home economies. Inflows into developedcountries reached 1248 billion USD in 2007, with the United States (US)in a leading position as a recipient, followed by the United Kingdom(UK), France, Canada and the Netherlands. The European Union (EU)turned out to be the largest host region, attracting two thirds of totalFDI inflows into industrialized economies (UNCTAD 2008).

As far as developing countries are concerned, FDI inflows reachedtheir highest level ever in 2007 (550 billion USD), with an increase of21% over the previous year. Moreover, developing countries started togain importance as a source of Foreign Direct Investment, mainly be-cause of overseas expansion by Asian Multinational Enterprises (MNEs).Even though any observers have traditionally considered Asia as a hostfor Foreign Direct Investment, it has recently turned out to be an impor-tant home for multinational activity. China, in particular, has consoli-dated its position as a global investor, challenging the dominance of theAsian new industrialized economies as the main source of FDI outflowsfrom the East (UNCTAD 2007).

In December 2004, the Lenovo Group, China’s largest computer manu-facturer, successfully acquired the global PC business of IMB, through adeal worth 1.25 billion USD. At the same time, the China Minmetal Groupwas negotiating a 100% acquisition of the Canadian nickel and coppermining giant Norand. The Shanghai Automotive Industry Corporation wasconsidering injecting up to one billion pound sterling into a joint-venturepartnership with MG Rover, Britain’s carmaker. In fact, since the early1980s, China has been able to surprise global observers through a num-ber of record performances, from steady economic growth to FDI attrac-tion, from trade expansion to the emergence of a large and relativelyaffluent middle class.

However, the one aspect of China’s rising power that is most noticednowadays, with a mixture of enthusiasm and concern, is the dramaticgrowth of its outward FDI, moving from virtually zero in 1978 to therecord stock of 95799 millions USD in 2007 (UNCTAD 2008). Withlower restrictions on outward investment, and an increase in government

EU CHINA FOREIGN DIRECT INVESTMENT 243

2 [editors’ note]: see also the chapter by Nicholas Rees in this volume.

efforts to promote global expansion, many expect China’s role as a majorinvestor to keep on growing in the future (Zhang Y. 2005).

Given these impressive figures, it soon becomes clear that China andthe European Union have become two major players in the global arena,holding a leading position both as foreign investors and as recipients.Hence, going beyond any bias, this paper aims at providing a fresh pic-ture of the EU-China FDI relationship, through a double-sided perspec-tive that considers the two partners in the mutual roles of host and homeeconomies. Is the EU a privileged destination for Chinese investment?What share of European FDI is oriented to the Chinese market? Whatare the sectors involved? What are the key issues and future perspec-tives?

This chapter aims to answer the previous questions, by means of adetailed empirical analysis. Based on recent data, the relative importanceof China and the EU in the respective FDI outflows will be described,highlighting the relevant trends and discuss the main findings. Thedouble-sided perspective adopted here represents the main novelty ofthis analysis, compared to the traditional view of trade and investmentflowing one direction from developed to developing countries. At thesame time, it is obvious that the Chinese global strategy represents a veryrecent chapter in the country’s long history.

This is the reason also, why I provide a brief historical overview first,in order to stress the main steps in China’s process of opening-up, andwith a view to clarifying the role of government intervention in accelerat-ing its global engagement. After delineating the historical background,much attention is devoted to the empirical analysis through a number ofdetailed statistics on European and Chinese outward FDI. Some con-cluding remarks then close the paper and suggest future lines of research.

The Historical SettingHaving remained aside from the international arena for a long time,China has emerged as a global economic power since the 1980s.2 Thishas resulted from important economic reforms that accelerated the tran-sition from a planned towards a market system. The so called ‘OpenDoor Policy’ (jingji gaige), promoted by Deng Xiaoping in 1978, initiateda new era of modernization and growth: fast development, structural

244 Valeria Gattai

3 For more details see Li and Li (1999).

changes and lifestyle improvements have made the country one of themain Asian players and an important FDI platform. China’s governmentintervention has been a leading ingredient beyond the whole moderniza-tion process, and a key force in first attracting, and later promoting ForeignDirect Investment, as a privileged gateway to capital and technology.

The contribution of the Open Door Policy to inward FDI roughlyfalls in two major phases, from 1978 to 1990 and from 1990 to the pres-ent.3 The year 1978 proved to be an important threshold-date betweenthe past, characterized by autarchy, socialism and planned economy, andthe present, made by trade, internationalization and market structure.Through a gradual approach, the reform – launched at first in few Spe-cial Economic Zones (SEZs) – subsequently extended to coastal regions,where the SEZs were the theatre of a massive modernization effort,which subsequently spread from agriculture to manufacturing and fromthe army to the political system. In 1979, the Law on Equity Joint-Ven-ture legitimised Inward FDI. It provided the legal base for (partial) for-eign ownership of Chinese enterprises. However, one has to wait until1986 for wholly foreign-owned FDI to be formally accepted. Due toeconomic and legislative reforms, Western multinationals started totarget the Chinese market, locating along the coastal regions were condi-tions to inward investment were more favourable.

Some observers suggest (e.g., Li and Li 1999), that the year 1990 wasa second critical threshold along the Chinese path of opening up. If thegovernment objective during the 1980s was to modernize and interna-tionalize as many regions as possible, the new goal in the 1990s is todeepen reforms, adding contents rather than territories. Therefore, incen-tives to inward FDI were increased and foreign penetration to the West-ern Chinese provinces was encouraged under the ‘Go West’ policy. It isduring this phase that outward FDI started to grow and cross-borderacquisitions by Chinese companies captured international attention forthe first time, even if Beijing had been formulating its going out strategysince the early 1980s, as a critical component of the larger ‘Open DoorPolicy’ (Wu 2005).

The outward internationalization of Chinese enterprises has evolvedin stages, moving from experimental and highly regulated flows duringthe 1980s, to rapid spread of overseas affiliates one decade later, and

EU CHINA FOREIGN DIRECT INVESTMENT 245

hyperbolic growth of multinational activity nowadays (Cai 1999; Tseng1994; Warner et al. 2004). While it was a part of the overall design of anumber of policies to help companies to invest abroad, the main motiva-tions for the Chinese government in supporting multinational expansionlay in the three categories of access to overseas natural resources, geo-political positioning and increase of national competitiveness throughadvanced technology and business experience (Schuller and Turner2005).

Broadly speaking, government policy on outward direct investmentcan be classified into five stages, corresponding to the years 1979-1983,1984-1992, 1993-1998, 1999-2002, 2003-present (Zhang K. 2005). It ispossible to characterize the first period (1979-1993) as a process of case-by-case approvals. At this stage, only state-owned trading companies andmunicipal-based economic and technological cooperation enterprisescould legitimately invest abroad. The State Council was the only author-ity to examine and approve outward FDI and there was no regulationspecific on this issue. The second period (1984-1992) saw the standard-ization of the approval procedures. In particular, the liberalization ofrestrictive policies allowed more enterprises, including non state-ownedones, to establish subsidiaries abroad.

However, one has to wait until 1993-1998 for a stricter screening anda more rigorous monitoring process, induced by a surge of state assetlosses in Hong Kong real estate and stock markets. As a result, severalnew measures helped to regularize FDI outflows. They also ensured thatinvestors placed Chinese capital abroad properly, i.e. for productionpurposes. Many analysts consider the fourth period (1999-2002) as thestarting point for Chinese enterprises to go global, by encouraging over-seas projects in processing trade. The government specifically urgedenterprises producing textiles, machinery and electrical equipment toestablish manufacturing subsidiaries abroad, in order to process rawmaterials.

To favour international involvement, export tax rebates, foreignexchange assistance and financial support were granted to Chinese com-panies using own raw materials or made parts and machineries. Finally,in the course of the Sixteenth Party Congress of the Chinese CommunistParty (CPP) in 2002, the new leadership advocated the so-called ‘GoGlobal’ strategy (zhou chu qu) to improve overall levels of the opening-upof the economy. Therefore, during the fifth stage, outward Foreign Di-

246 Valeria Gattai

4 For more details, see Zhang Y. (2005).

rect Investment received a great boost from government intervention increating incentive policy, streamlining administrative procedures, easingcapital controls, providing information and guidance and reducing in-vestment risks.4 Because of its relatively late start, Chinese outward FDIis still quite small by world standards, but it is accelerating fast. To ana-lyze it in detail, the next section describes the EU-China Foreign DirectInvestment relationship, through recent data and comparative statistics.

Empirical Evidence: FDI from the EU to ChinaBy the end of 2006, total FDI outflows from the European Unionamounted to 260.2 billion EUR, against 157.1 billion EUR of inflowsduring the same year (EUROSTAT 2008a). Figure 1 shows the geo-graphical distribution of outward flows to stress the relative importanceof Asia in general, and China in particular, as a destination of Europeanoverseas operations. Based on EUROSTAT (2008a) data, North Amer-ica received the largest share (40%) in 2006, followed by Europeancountries not included in the Union (26%), Latin America (15%) andAsia (11%). Hence, EU multinationals showed a clear tendency to locatetheir overseas affiliates in high-income developed countries and to targettransition economies with minor emphasis. Asia as a whole accountedfor a limited 11% of outflows, however almost half of these were ori-ented towards China that turned out to be the major recipient of theregion.

Figure 2 details the geographical distribution of Foreign Direct In-vestment from the EU to East Asia, organised by host economy, in theyears 2002-2006. Empirical evidence shows that China was a privilegedhost over the whole period, with a peak in 2004. Nowadays, almost 50%of the accumulated outward stock of FDI in East Asia emerges fromChina, along a steep ascending path begun in 2005.

EU CHINA FOREIGN DIRECT INVESTMENT 247

Figure 1: EU FDI outflows by destination, 2006

Source: abstracted statistics from: Eurostat (2008a)

Figure 2: EU FDI to East Asia, by country (million EUR), 2002-2006

Source: abstracted statistics from: Eurostat (2008a)

Other Asian countries

8%

Other European countries

26%

Latin America15%

North America40%

Oceania3%Africa

5%

China (incl. HK)3%

-2500

-500

1500

3500

5500

7500

9500

11500

13500

15500

2002 2003 2004 2005 2006

India

Thailand

Malaysia

Indonesia

Singapore

Philippins

China (incl. HK)

South Korea

Taiw an

248 Valeria Gattai

A number of purposes can drive the decision to operate in China, fromthe huge market dimension to the low cost labour force, from the needto avoid thigh competition or constrictive laws at home, to the wish toestablish a commercial platform in Asia. According to recent studies onEuropean FDI in China, market-seeking considerations tend to play themajor role, followed by the low cost labour force. This issue correlateswith the destination of the goods produced in China. In a comparativestudy of Swiss, Spanish and Italian operations in China, I have shownearlier (Gattai 2008) that Swiss firms export most of their production(87%), Spanish companies mainly attempt to satisfy local demand (57%),and Italian enterprises are located mid-way between the two extremes,both producing for the Chinese market (48%) and to export abroad(52%).

It is clear that market-seeking considerations are crucial for horizontalFDI, aimed at serving the host market, while asset-seeking motivationsare of major importance in the case of vertical operations, driven byproduction efficiency considerations (Markusen and Maskus 2001). Ifone analyses the entire sample of European direct investments in China,one can see that manufacturing activities are represented most signifi-cantly (48%), as taking advantage of the low cost labour force; however,services (37%) are also gaining in importance, because of the country’smodernization process and technology advance. As many authors sug-gest (see, among others, Zhang Y. 2005) China is no longer a low costmanufacturing location or; at least this not the only view of a countrywith almost 800 foreign R&D centres dotted all around its territory

Looking at EU Member States, it transpires that their propensity toinvest in China is not homogenous, but it varies greatly across the Un-ion. For instance, UK multinationals showed a strong tendency to oper-ate in China, to make the country the most important home for EUoutward FDI in 2007, followed by Germany, France and Spain (seeFigure 3). Italy, Belgium, Sweden and Luxembourg complemented thepicture of outward direct investment, but their accumulated stock in2007 appeared less pronounced.

Many studies (e.g., Guopei 1999; Chapel 1998; Luo, 2000; Harris andMoran 1996) provide documentary evidence of the perception that Chinais still perceived as a very complex and distant destination for Europeancompanies, this distance being not only physical, but also psychological,which makes it extremely hard for foreigners (especially Western) towork there and achieve success. Market players sometimes feel frustratedor even indignant about their experiences in China: they take part in

EU CHINA FOREIGN DIRECT INVESTMENT 249

lengthy negotiations, they write letters and send catalogues that fail toevoke responses and they make journeys to and from China, all withoutdefinite results. Following closely my earlier findings (Gattai 2008), Iwould re-emphasise that cultural distance, linguistic difficulties, lack ofgood infrastructure and the absence of a clear and transparent legalsystem are among the main complaints of European investors in China.This made many of them opt for joint ventures, rather than whollyowned subsidiaries.

Figure 3: EU outward FDI stock to China, by member state, 2007

Source: abstracted statistics from: Eurostat (2008a)

The reasons to engage in a partnership range from the sharing of risksand costs to achieving an optimal size, from enhancing skills and com-petitive position to gaining local support, with the last motivation beingon top of European priorities. Indeed, many observers still considerfinding a partner who is acquainted with the domestic context, able tonegotiate with Chinese suppliers and customers, and skilful in engagingthe local authorities, as a privileged gateway into the country. AmongEuropean MNEs that established wholly owned subsidiaries in China,the largest majority chose this entry mode in order to achieve strongcontrol over technology transfer and high flexibility standards in lines

Belgium4,1%

France19,2%

Germany24,7%

UK37,7%

Spain8,6%

Italy4,3%

Luxembourg0,3%

Sw eden1,0%

250 Valeria Gattai

5 For a survey, see Markusen 1995, Barba Navaretti and Venables 2004, Saggi 2000.6 Similar results hold when we look at the accumulated FDI stock.

with the theoretical expectations.5 Especially high tech companies arevery reluctant to invest in developing countries since they do not want toshare intangible assets, such as technology, human capital and reputation,with a lower skilled partner. Wholly owned subsidiaries seem the mostnatural way to avoid this risk, as MNEs simply work alone and they donot need to consult with a local counterpart on management decisions.Having described European outward investment to China, this chapternow turns to what may be termed the opposite side of the story: Chineseoutward investment to the EU.

Empirical Evidence: FDI from China to the EUBy the end of 2007, nearly 7000 Chinese firms have established morethan 10000 overseas subsidiaries, spreading in almost 200 countriesworldwide (MOFCOM 2008). The accumulated outward FDI stockaccounted for 95799 million USD and outflows reached 22469 millionUSD. Figure 4 shows the geographical distribution of Chinese FDIoutflows by destination country, in the period 2005-2007. Based on thesedata, Asia is attracting the largest share of Chinese overseas operations,with increasing importance over the years 2005, 2006, 2007. One canregard Latin America as a leading destination too, but its weight hasdecreased over time, while Africa, North America, Oceania and the EUaccounted only for a limited percentage of Chinese FDI, even if theirrole as recipients is larger today compared with the 2005 figures.6

Some authors suggest (see, for instance, Kumar 1998), that ChineseMNEs exhibit a strong investment-concentration on a small number ofdestinations. Some of them are high-income and developed countries.These differ from transition economy multinationals, which target onlysimilar markets. As far as the European Union is concerned, its percent-age of total Chinese FDI outflows in 2007 amounts to nearly 4%, reach-ing 1044.12 million USD. This amount is unequally distributed acrossEU Member States. The UK is the largest recipient, with more than50%, followed by Germany (23%), the Netherlands (10%) and Sweden(7%), while Italy, France, Poland, Romania, Spain and Hungary areamong destination countries as well, but they account for very limitedpercentages.

EU CHINA FOREIGN DIRECT INVESTMENT 251

Figure 4: Chinese FDI outflows by destination country (non-financial), 2005-2007

Source: abstracted information from: MOFCOM (2008)

There exists a close relationship between the sector and geographicaldistribution of Chinese outward investments: Chinese investors tend totarget Africa and Latin America for their abundance of natural resources,whereas they are accessing Europe and North America primarily becauseof market and asset-seeking considerations (Nicolas and Thomsen 2008).Chinese firms are motivated to internationalize their operations througha variety of ‘push’ and ‘pull’ factors. It is possible to group these intofour main categories: the security of raw materials and natural resources,the support for export and access to new markets, the acquisition ofadvanced technology, know how and well-known brands, and the estab-lishment of local distribution networks to compensate for overcapacity inthe domestic economy (Wu 2005; Zhang K. 2005; Deng 2007).

While early protagonists of Chinese internationalization were state-owned enterprises, operating in a highly regulated policy environment,and motivated by the first class of reasons, new actors are now appearingin the international arena, driven by global ambitions and strategic con-siderations, rather than hunt for natural resources (Child and Rodrigues

0%

10%

20%

30%

40%

50%

60%

70%

A s ia A f ric a EU OtherEuropeanc ountr ies

LatinA meric a

NorthA mer ic a

Oc eania

2 00 52 00 62 00 7

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2005). This is the reason why Nicolas and Thomsen (2008) argue that,while China’s ‘Go Global’ policy is no doubt fuelling outward FDI, it ismandatory to keep the importance of the state in perspective. Althoughsome investments are still aiming to secure raw materials, and involvestate-owned enterprises, the drivers for the vast majority of the projectsare now international and domestic competition.

Put another way, Chinese firms are encouraged to go abroad to ac-quire those skills and technologies that inward flows were not able todeliver. This is particular evident in the EU, where localization is dic-tated by purely opportunistic considerations. In fact, Chinese investorstend to select the sectors for which a given country has a particularstrength; therefore, they invest in machinery in Germany, in automobilein the UK and in design in Italy, to capture externalities created by hostcountry intangible asset clusters (UNCTAD 2004).

A number of authors (e.g. Child and Rodrigues 2005; Nolan 2001;Boisot 2004), argue that the Chinese example is calling for a creativereconsideration of mainstream theory concerning FDI and internationalexpansion. While traditional investment patterns, based on Dunning’sOLI paradigm (Dunning 1993), were explained by resource transfer to ahost country (see, for instance, Caves 1996), strategic asset seeking-FDIis undertaken in order to access intangible resources and gain new capa-bilities in a host country. This is particularly true for Chinese MNEsbecause, as latecomers, they urgently need to engage in Foreign DirectInvestment to address their competitive disadvantages and improve theirglobal competitiveness. Notice that competitive disadvantages include anumber of critical issues such as regional protectionism, limited access tocapital, lack of developed intellectual property rights, under-provision oftraining and education, poor local infrastructure and fragmentation ofregional markets (Child and Rodrigues 2005).

Figure 5 displays the composition of Chinese FDI outflows in 2007,by economic activity. Based on these data, wholesale and retail sale ac-count for the largest percentage of Chinese overseas operations (25%),followed by leasing and business services (21%), mining (15%), transport(15%) and manufacturing (8%). This is not surprising, since China hasstill a comparative advantage in terms of production efficiency, by meansof cheap inputs and low labour costs. There is, therefore, a tendency toperform manufacturing activities domestically, rather than off-shored.

EU CHINA FOREIGN DIRECT INVESTMENT 253

Figure 5: Chinese FDI outflows by economic activity (non-financial), 2007

Source: abstracted information from: MOFCOM (2008)

In line with the previous discussion, it is possible to offer a rough taxon-omy of Chinese internationalization strategies, based on their asset-seek-ing motivations. While developed countries multinationals are primarilyinterested in protecting their intangible resources when expanding abroad,Chinese MNEs try to access those resources, and they select their entrymodes accordingly. As a result, they operate abroad mainly throughacquisitions of foreign enterprises with certain characteristics. Followingclosely the arguments of Schuller and Turner (2005), Chinese acquirerstend to select overseas companies because of their distribution network,brand name and technology. Ailing or financially distressed firms, com-petitive niche producers, former partners or contractors are among thenumber one targets: indeed Chinese firms contribute financial strength,but they lack technical expertise, whereas European firms have financialdifficulties, but they are able to supply know how. Hence, a perfectmatching results when they decide to partner. Although acquisition of anexisting facility is the most common entry mode in Europe, some Chi-nese multinationals have built new plants from scratch, under a green-field investment scheme. This often consists of the establishment ofheadquarters, subsidiaries, trade representative offices, trading companies

m ining15 %

manufac tury8 %

trans port15%

wholes ale & reta il2 6%

financ e6%

leas in g & bus ines s servic es

2 1%

agricu lt ure, fores try , fis hery

1%

oth er8%

254 Valeria Gattai

and R&D centres, in order to facilitate Chinese access to the Europeanmarket and to help with the customization of products to meet localconsumers’ needs (Deng 2007).

Before concluding this analysis, it is worth mentioning that China isas large as a whole continent. This makes it challenging to explore itsglobal involvement at the provincial level. Such an analysis would help toevaluate whether internationalization is a widespread phenomenon, orconfined to a limited number of regions. As can be seen from Figure 6,Guangdong is the most important home for FDI outflows in 2007(18%), followed by Shenzen (15%), Shanghai (8%), Jiangsu (8%) andZheijiang (6%). In fact, the promotion of Foreign Direct Investment isnot equal throughout the country; rather, it shows clusters in a fewcoastal regions, which are also the main recipients of FDI inflows.

Figure 6: Chinese FDI outflows by province (non-financial), 2007

Source: abstracted information from: MOFCOM (2008)

Shenzhen15%

Sichuan5%

Jiangsu8%

Zhejiang6%

Shanghai8%Other

28%

Fujian6%

Shandong3%

Guangdong18%

Xiam en3%

EU CHINA FOREIGN DIRECT INVESTMENT 255

ConclusionThis chapter has provided a brief overview of the FDI dimension of theEU-China relationship. It has done so by means of a double-sided per-spective, since both regions are now acting as both investor and invest-ment recipient on the world’s stage. This reflects the new view of thePeople’s Republic of China becoming a major source of multinationalactivity rather than a magnet (Deng 2007; Schuller and Turner 2005).European observers frequently greet this idea with a mixture of enthusi-asm and concern. What then, is the relative importance of China for EUoutward investment? What share of Chinese FDI is oriented to Europe?

Based on the empirical evidence reviewed in this chapter, two distinctresults are worth mentioning: firstly, EU-China Foreign Direct Invest-ment is still a limited phenomenon, both in terms of flows and stocks;secondly, it involves a growing number of firms, therefore it is likely toraise some questions about the impact of cross-countries operations onthe domestic market. While the influence of Foreign Direct Investmenton China’s growth has been widely documented in the past (e.g., Guopei1999), it has been the particular concern of this study, to explore ‘theother side of the story’; that is to say, the effect – if any – of Chineseoperations in Europe.

For the time being, Chinese investment in EU has had but little im-pact. This, however, continues to depend on a number of specific rea-sons, none of which is set in stone. Firstly, Chinese investment repre-sents a small share of total inward FDI into the EU. Most of it arrivedonly recently; secondly, many acquisitions have not yet succeeded inrestoring ailing European firms to health; thirdly, investment is seldomtargeted towards labour-intensive sectors in which the impacts of unem-ployment could be anticipated; and fourthly, European firms have al-ready transferred a large share of production to China.

The author believes that a number of these issues deserve more atten-tion in the future, as they provide precious clues for future discussion.Schuller and Turner (2005) point out that acquisitions of Western com-panies by Chinese multinationals and green-field-operations have fre-quently resulted in unsuccessful stories, casting doubt on the effectivesustainability of what may be termed ‘the dragon’s surge’. Failures inacquisitions, in turn, often depend on overly optimistic market expecta-tions and synergy estimations, poor merger integration and excessivepricing in competitive tender offers (Copeland et al. 2000). These prob-

256 Valeria Gattai

7 See the empirical section about FDI from the EU to China.

lems stand for domestic as well as for foreign operations, but it is likelythat the international scenario exacerbates the relationship between theacquired and the acquiring firms.

While there is a considerable amount of literature that emphasizes thedifficulties encountered by Western multinationals in China7, culturaldistance and different negotiation styles can also affect Chinese cross-border mergers. Another common fear, among European firms, relatesto the bad reputation of China’s state-owned enterprises. These stillrepresent a significant share of overseas investors. Indeed, Chinese par-ticipating affiliates appear to be afraid of being tainted by poor manage-ment practices, low productivity and a lack of transparency from theirparent companies. Adding to this, in some sectors, Chinese investorsrepresent a competitive threat to European firms, especially as they be-come more adept at managing brands and at meeting local tastes.

Finally, China’s hunt for natural resources raises the alarm of nationaleconomic security in some of the countries being ‘targeted’ (Zhang K.2005), once environmental degradation and sustainable developmenthave become urgent issues in the political agenda. A number of analystspoint out (e.g., Zhang Y. 2005), that political and social turmoil, highpublic debt and social inequality are among the most serious ‘drawbacks’of China’s multifaceted story, adding to the astounding economicgrowth.

Having described some potential risks of Chinese FDI for Europeanfirms, I would conclude by pointing to some benefits eventually impliedby China’s ‘Go Global’ attitude. As Nicolas and Thomsen (2008) sug-gest, Chinese operations may contribute to industrial resurgence, throughacquisition of some ailing local firms, and they are likely to providedirect access to Asian markets by exploiting established links with over-seas multi-national enterprises. Moreover, it is noticeable that many fearsabout the so-called ‘dragon’s surge’ relate to a limited awareness of Chi-nese outward investment, since it is a relatively new phenomenon. Thereis still a considerable lack of in-depth research in this area.

While this chapter represents a first attempt at critically examiningEU-China investment relations, I believe that further research is needed,based on firm-level data, in order to delineate a neater picture, and witha view to evaluating some future perspectives in detail. The way in which

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Chinese firms adjust to, and learn from, global markets will not onlyaffect the economic future of the People’s Republic of China, but mayinfluence its relations with other regions of the world – first among themthe European Union.

ReferencesBarba Navaretti, Giorgio and Antony J. Venables. 2004. Multinational Firms in

the World Economy. Princeton University Press.Boisot, Max. 2004. Notes on the Internationalization of Chinese Firms. Mimeo, Open

University of Catalonia, Barcelona, Spain.Cai, Kevin G. 1999. ‘Outward Foreign Direct Investment: A Novel Dimension

of China’s Integration into the Regional and Global Economy’ in ChinaQuarterly 160:856-880.

Caves, Richard E. 1996. Multinational Enterprise and Economic Analysis. CambridgeUK: Cambridge University Press, Second Edition.

Chapel, William B. 1998. ‘Effective Management Communication for China’ inSelmer, John (ed.) International Management in China. London: Routlegde: 169-181.

Child, John and Suzanna B. Rodrigues. 2005. ‘The Internationalization of Chi-nese Firms: A case for Theoretical Extension?’ in Management and Organiza-tion Review 1(3): 381-410.

Copeland, Tom, Tim Koller and Jack Murrin. 2000. Unternehmenwert. Frankfurt:Campus Verlag.

Deng, Ping. 2007. ‘Investing for Strategic Resources and its Rationale: the Caseof Outward FDI from Chinese Companies’ in Business Horizons 50: 71-81.

Dunning, John H. 1993. Multinational Enterprises and the Global Economy. Mass:Addison Wesley.

EUROSTAT. 2008a. European Union Foreign Direct Investment Yearbook 2008.Data 2001-2006. Brussels: European Commission at www.europa.eu

– 2008b. Eurostat Statistics in Focus 64 at www.europa.euGattai, Valeria. 2008. ‘A Tale of Three Countries: Italian, Spanish and Swiss

manufacturing Operations in China’ in World Economy 31(8): 969-992.Guopai Gao. 1999. ‘International Business in China’ in Kelley, Lerner and

Oded Shenka (eds.) International Business in China. London: Routledge: 224-232.

Harris, Peter R. and Robert T. Moran. 1996. Managing Cultural Differences. Hous-ton, TX: Gulf Publishing Company.

IMF. 1993. Balance of Payments Compilation Guide. Washington, DC: InternationalMonetary Fund.

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Kumar, Neil (ed.). 1998. Globalization, Foreign Direct Investment and TechnologyTransfers: Impacts on and Prospects for Developing Countries. New York: Routledge.

Li, Feng and Jing Li. 1999. Foreign Direct Investment in China. London: Macmillan.Luo, Yang. 2000. Partnering with Chinese Firms. Aldershot: Ashgate Publishing

Company.Markusen, James R. 1995. ‘The Boundaries of Multinational Enterprises and

the Theory of International Trade’ in Journal of Economic Perspectives 9: 169-189.

Markusen, James R. and Keith Maskus. 2001. ‘General Equilibrium Approachesto the Multinational Firm: A Review of Theory and Evidence’, in NBERWorking Paper Series 8334.

MOFCOM. 2008. Statistical Bulletin of China’s Outward Foreign Direct Investment atwww.mofcom.gov.cn

Nicolas, Francoise and Stephen Thomsen. 2008. ‘The Rise of Chinese Firms inEurope: Motives, Strategies and Implications’. Paper presented at a Re-search Workshop on Chinese Investment in Europe (Chatham House,London, 17 September 2008).

Nolan, Peter. 2001. China and the Global Economy. London: Palgrave Macmillan.OECD. 1996. OECD Benchmark Definition of Foreign Direct Investment. Paris:

Organization for Economic Co-Operation and Development, Third Edi-tion.

Saggi, Kamal. 2000. ‘Trade, Foreign Direct Investment, and International Tech-nology Transfer. A Survey’, World Bank Policy Research Working Paper2329.

Schuller, Margot and Anke Turner. 2005. ‘Global Ambitions: Chinese Compa-nies Spread their Wings’ in China Aktuell-Journal of Current Chinese Affairs 4:3-14.

Tseng, Choo S. 1994. ‘The Process of Internationalization of PRC Multination-als’ in Schultte, Herald (ed.) The Global Competitiveness of the Asian Firm.Basingstoke, UK: Macmillan.

UNCTAD. 2008. World Investment Report. Geneva at www.unctad.org– 2007. World Investment Report. Geneva at www.unctad.org– 2004. World Investment Report. Geneva at www.unctad.orgWarner, Malcom, Sek H. Ng and Xiaojun Xu. 2004. ‘Late Development Expe-

rience and the Evolution of Transnational Firms in the People’s Republic ofChina’ in Asia Pacific Business Review 10: 324.345.

Wu, Friedrich. 2005. ‘The Globalization of Corporate China’ in NBR Analysis16(3).

Zhang, Yongjin. 2005. China Goes Global. London: The Foreign Policy Centre.Zhang, Kenny. 2005. ‘The Why, Where and How of Chinese Companies’ Out-

ward Investment Intentions’ in Asia Pacific Foundation of Canada 5.

EUROPEAN STUDIES 27 (2009): 259-273

CHINA’S SEARCH FOR ENERGY SECURITYAND EU-CHINA RELATIONS

Pradeep Taneja

AbstractThis chapter focuses on China’s search for energy security, especiallyin the oil and gas sector, and on the impact of this search on China’srelations with the European Union (EU). It places the Chinese energysecurity strategy within the context of the country’s economic reformprogram by examining the political dynamics behind developments inthe energy sector. The study outlines some key initiatives China hastaken to ensure regular and cost-effective oil and gas supplies. Itsurveys China’s energy security policy and the institutional structurewhich supports it. China’s search for energy security has led the PRCto develop closer political and military ties with a number of coun-tries in Africa, the Middle East and Central Asia; Chinese state-ownedoil and gas companies have invested billions of dollars in the devel-opment of energy assets there. These efforts have been backed up byChinese civilian and military aid flows to some strife-torn countries inAfrica. This is seen by many European politicians and EU officials as‘undermining’ their efforts to improve quality of governance andrespect for human rights in those countries. This chapter examinesthe differences between the European Union and China over thesituation in the Darfur region of Sudan, a country in which China hasmade significant investments in nearly all aspects of the oil industry.

260 Pradeep Taneja

1 See, for example, Drew Thompson, ‘Beijing’s GDP numerology’. Online at:http://www.foreignpolicy.com/story/cms.php?story_id=4747 (consulted 01.06.2009).

2 ‘Premier Wen Jiabao: China’s economic challenges’. Online at: http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2009/03/premier_wen_jia.html (consulted 03.06.2009).

Introduction Since the beginning of China’s economic reform program in 1978, theChinese Communist Party (CCP) has pursued three basic goals: nationalunity, economic prosperity and social and political stability. With thereturn of Hong Kong and Macau to Chinese sovereignty in 1997 and1999 respectively, the first goal has been partially met, although it willnot be considered to have been fully achieved until Taiwan is reunitedwith the mainland. The second goal has also been partially achieved asreformist policies have delivered an average annual rate of 9 per centeconomic growth over the past 30 years, catapulting China into theleague of leading economies of the world. On the third goal, a precariousbalance has been maintained, especially since the events of TiananmenSquare in May-June 1989, in the form of an unwritten social compactbetween the government and the Chinese people, ensuring social stabilityin return for continuing improvements in living standards.

Indeed, the three goals are interrelated, although maintaining socialand political stability is regarded by the CCP leadership to be paramount.China’s leaders regard an annual increase of eight per cent in GrossDomestic Product (GDP) as essential for keeping employment up andthe possibility of social and political unrest down.1 The ongoing globalfinancial crisis prompted the Chinese government, in November 2008, tounveil a massive stimulus package of nearly US$600 billion to ensureGDP growth stays above 8 per cent. As an additional measure to stimu-late the domestic economy, in his report to the National People’s Con-gress (NPC) in March 2009, Premier Wen Jiabao projected a fiscal deficitof 950 billion yuan (US$139 billion) for 2009, the highest deficit in sixdecades. At the same time, he also committed to improving ‘the earlywarning system for social stability to actively prevent and properly han-dle all types of mass incidents,’ using the official code for protests andriots that might threaten the stability of the regime.2

It is, therefore, clear that maintaining a high GDP growth trajectory iscrucial to preserving social and political stability in China. One of thecritical factors behind China’s enviable record of economic growth over

CHINA’S SEARCH FOR ENERGY SECURITY 261

3 ‘China oil dependence sparks concern’, Radio Free Europe, 5 January 2009.4 The United States and some other Western countries now believe that it would

be helpful if China joined the IEA. In May 2008, Daniel Sullivan, the then US Assis-tant Secretary of State, said in Beijing: ‘China should consider a declaration that itplans to pursue membership in the IEA. This could help ameliorate the anxiety ex-pressed in some quarters over its intentions as it pursues greater energy security’ (ShaiOster 2008).

the past three decades has been its relatively easy access to global energyand mineral resources. China is now focused on developing a compre-hensive energy policy that will underpin its future economic growth.

Given the importance of energy to China’s future economic growthand political stability, this chapter focuses on China’s search for energysecurity, especially in the oil and gas sector, and its implications for itsrelations with the European Union. It begins by describing China’s en-ergy policy within the context of its domestic economic reform programbefore outlining some of the key global initiatives China has undertakento ensure regular and cost-effective supplies of oil and gas to fuel thecontinuation of its economic boom. The chapter then looks at areas ofconcern insofar as the impact of these initiatives on China’s relationswith the European Union is concerned. It concludes by highlighting thepotential for cooperation between the two sides in areas where they sharecommon interests and goals, such as clean coal and alternative sources ofenergy to deal with the impact of climate change.

Energy Security: BackgroundChina’s rapid economic growth over the past three decades has led to asharp increase in energy consumption, especially coal, oil and gas. It isalready the world’s second largest oil consumer after the United States,accounting for over 10 per cent of the world’s total oil consumption. In2008, China crossed an important energy milestone as its oil importsequalled domestic production for the first time, making it the third larg-est importer of oil, relying on imports for fifty per cent of its domesticdemand of 7.6 million barrels per day3. However, unlike other major oilimporting countries, China is not a member of the International EnergyAgency (IEA), set up after the oil shocks of the 1970s to help developedcountries manage oil supplies.4 It largely relies on its own efforts tosecure and manage oil supplies to meet its current and future energyneeds, although it has also begun to work with other countries to pro-mote energy cooperation, as will be discussed later in this chapter.

262 Pradeep Taneja

5 See also the chapters by Keyuan Zou and Christopher Williams in this volume.

Ever since China became a net importer of oil in 1993, the country’sleadership has intensified its efforts to ensure that its continued eco-nomic growth will not be short-circuited by energy shortages. In additionto inviting foreign oil companies to invest in oil and gas exploration onChinese territory beginning in the early 1980s, the Chinese governmenthas also encouraged its state-owned oil and gas companies to look forand acquire valuable oil and gas assets in other parts of the world as partof its ‘go out’ policy. As Daniel Yergin (2005) points out, ‘China is par-ticipating in partnerships, acquiring oil reserves, contracting for futuresupplies of liquefied natural gas, selling oil field services, developingprojects around the world, and buying lots of oil.’

Before discussing China’s international efforts to achieve energysecurity, however, it would be useful to discuss the domestic politicalcontext in which the country’s reform and energy security policies areformulated. While international politics has always been at the centre ofthe global energy security debate, often little attention is paid to theinternal political dynamics in individual countries in relation to theirenergy policies5. Doing so in this case would allow us to visualise thedomestic context in which China seeks to secure energy supplies for itsfuture economic development. While the Chinese state has retreatedfrom some sectors of the economy, its policy of ‘grasping the large,letting go of the small’ means that it continues to maintain a firm grip ona number of important industrial sectors, including the oil and gas indus-try, despite many institutional changes over the past thirty years. Themanagement and control of the energy sector has been the subject ofintense discussion both in official channels as well as in the growingnumber of semi-official publications and internet discussion forums inChina.

Economic Reform and Energy PolicyTo understand China’s energy security initiatives it is necessary to firstexamine the political dynamics behind China’s economic reform pro-gram. As has been noted by Peter Nolan (2001), China’s effort to sup-port the growth of ‘national team’ of large firms, which are globallycompetitive was against the prevailing global trend of liberalization andprivatization. By contrast, the neoclassical economic orthodoxy which

CHINA’S SEARCH FOR ENERGY SECURITY 263

guided the industrial reform in Russia and other former Soviet-bloccountries emphasised the role of small- and medium-sized enterprisesand downplayed that of larger firms. It also had a ‘highly idealised’ viewof the workings of advanced capitalism and an ardent faith in the correc-tive mechanisms of the market.

China’s gradualist approach to economic reform, encapsulated in thesaying mozhe shitou guohe or ‘crossing the river by feeling the stones,’ rep-resented a break from the old-style central planning but without totallyabandoning it at once. It also represented an evolving political consensuswithin the CCP in favour of market-oriented economic reform. In con-trast to Eastern Europe, industrial policy in China has drawn from non-mainstream economic theory and considerations of ‘national pride andpower’ (Nolan 2001: 5). A look at the institutional structure of China’soil and gas industry and the incentives for individual bureaucrats andmanagers also provides meaningful insights into China’s current politicaland economic system. As Philip Andrews-Speed (2004: 364) has argued,‘the major political questions relevant to the energy sector concern therole of the Communist Party and the authority of the central govern-ment’.

In fact, the two issues are interconnected. In spite of the perceiveddecline in the legitimacy and controlling power of the Party, the CCPremains a strong institution. Its membership has grown steadily over thepast decade and now numbers around 73 million as many private entre-preneurs and corporate leaders are welcomed into the Party. Accordingto some estimates, less than hundred of the one thousand richest peoplein China are not linked to the CCP (Lee 2009). It must be acknowledged,however, that economic decentralisation has resulted in some decline inthe ability of the Party and the central government to control events atlocal and enterprise level. But petroleum companies are major enterprisesand the majority of their leaders are senior party members who mustfollow the guidance of the Party leadership if they are to survive withinthe system. The Chinese government is the controlling shareholder in allthe major oil and gas companies in China even though most are nowlisted companies.

However, with the exception of a short-lived and ineffective Ministryof Energy that existed between 1988 and 1993, China has not had asignificant and powerful coordinating agency charged with oversight ofthe oil and gas industry, although several ministries and other govern-

264 Pradeep Taneja

6 The real issue here is the ability of the Party and central government to adapt to achanging economic environment, which brings forth new types of market participantsand creates the need for new modes of corporate governance.

ment agencies have overarching authority across the industry. Theseagencies include the National Development and Reform Commission(NDRC), Ministry of Commerce, State Asset Supervisory and Adminis-tration Commission, and the State Environmental Protection Administra-tion. In March 2003, an Energy Bureau was set up by bringing togetherthe energy components of a number of departments within the NDRC,except the pricing department. But the bureau had fewer than one hun-dred employees – nowhere near enough to provide coordinated policycertainty to the sector. In 1988, when the now-defunct ministry of energywas created, the Ministry of Petroleum was abolished and its assets weredivided between two newly-created companies: China National Petro-leum Corporation (CNPC) and the China National Petrochemical Corpo-ration (Sinopec) with responsibilities for upstream and downstreamactivities respectively. Together with a third company - the China Na-tional Offshore Oil Corporation (CNOOC) - these companies controlthe bulk of China’s oil and gas assets at home and abroad.

Because of the dominance of large companies, the petroleum industryremains highly centralised; at least in comparison with the coal industrywhere close to 50 per cent of the output comes from locally-controlledcoal mines. In spite of this, the Party and central government sometimesfind it difficult to exercise adequate control and supervision over thesecompanies or to hold them accountable for their actions. While thesecompanies are responsive to the central government’s requirements forenergy security, as publicly-listed companies on Chinese and foreignstock markets, they are also accountable to their other shareholders. Thisoften presents serious dilemma for the managers of these companies.6

The much-publicised but ultimately failed attempt by CNOOC totake over California-based Unocal in 2005 highlights some of the politi-cal complexities inherent in the current system. As a public listed com-pany, the CNOOC board consisted of eight directors, including fourforeigners who sat on the board as non-executive members. However,the board members were apparently not even informed about the plan bythe company’s chief executive officer, Fu Chengyu, until the negotiationswere already well underway with Unocal management. The four foreigndirectors of the company found this unacceptable and refused to support

CHINA’S SEARCH FOR ENERGY SECURITY 265

7 This concept is developed by Steven L Solnick (1996).

the plan until the details of the plan were professionally examined(Powell 2005). What is unknown here is the role, if any, played by thesenior leaders of the central government and the CCP in this audaciousbid by CNOOC to takeover America’s 9th largest oil company at thetime. Was it a purely corporate decision by the company’s chief executiveor was he instructed by the Party and government leaders to pursue thisoption? It is very difficult to determine the facts in this matter. In an-swering a question about the role of the Chinese government in his bidto takeover Unocal, Fu Chengyu later claimed:

The only thing we needed permission from the Central Government was totake such a sizeable amount of money out of the country. That’s all. Wereceived that permission from the appropriate financial authorities, andthat’s been the extent of government involvement. (Time Asia 2005)

However, given the level of secrecy maintained by Fu before revealingthe plan to his company’s board, it seems likely that the plan must havebeen at least discussed at the highest level of government and Partyhierarchy. The code used for the acquisition plan – ‘operation treasureship’— is also revealing of its importance for restoring China’s nationalpride. ‘Treasure Ship’ (baochuan) was the name of the flagships used bythe Ming Dynasty seafarer Zheng He who led seven massive fleets to theWestern Pacific and the Indian Ocean between 1405 and 1433. Theacquisition of a major American company by a Chinese firm would havesymbolised China’s arrival as a major power in the world economy.

One of the potential obstacles to China’s realisation of the three basicgoals discussed at the beginning of this chapter is energy. Severe electric-ity shortages since 2002 and soaring oil prices and demand have high-lighted the ineffectiveness of China’s dysfunctional energy bureaucracy.As a result, the State Council, China’s cabinet, has appointed a newenergy coordination taskforce under the leadership of Premier WenJiabao. It has also established an Office of Energy which will reportdirectly to the taskforce.

The creation of the new Office of Energy under the State Council canbe explained as an attempt to halt the breakdown of hierarchies7 in theface of soaring demand for energy and highly volatile oil prices. Thismove is not dissimilar to the creation by the Party of the Central Finan-cial Work Commission (CFWC) in the aftermath of the Asian Financial

266 Pradeep Taneja

8 “Chinese Business leader ‘corrupt’”, BBC News, 25 January 2008.

Crisis in 1997. As argued by Heilmann (2005), the purpose of this com-mission was also to prevent the breakdown of hierarchies and to reassertcentral policy decisiveness in financial affairs.

The CCP leadership has shown time and again that the Leninistmeans of control, in particular its nomenclatural system, provides thebasis for upholding a precarious balance between economic decentralisa-tion and political coherence. As Heilmann (2005) has demonstrated,under the Zhu Rongji government, Party supervision in the financialindustry was exercised mainly through appointment, performance ap-praisal and ‘discipline inspection’ of company cadres. It is not uncom-mon in China today for officials to move between corporate and bureau-cratic positions at the behest of the Party leadership. A case in point isthe appointment of Ma Fucai as a deputy head of the Energy Office. Mawas General Manager of China National Petroleum Corporation (CNPC)when 243 people died in an oil well explosion in Chongqing in Decem-ber 2003. He later took moral responsibility for the accident and resignedfrom the position. His appointment to the Energy Office post signalledhis return to public office after having spent some time in political andcorporate wilderness. The Party’s right to appoint, transfer or sack seniorcorporate executives of state-owned firms, means that it is able to con-trol their corporate and political behaviour to a large extent. In anotherexample, Chen Tonghai, the head of Sinopec, the largest oil refiningcompany in Asia, resigned from his position in June 2007 for what wasthen described as ‘personal reasons’. But it was later revealed that he wasremoved because of corruption and ‘decadent behaviour’.8 He was alsoexpelled from the Party. His replacement was an executive ofPetroChina, a subsidiary of CNPC, another state-owned oil company.

Energy Security: International InitiativesEver since it began its economic reform program, the Chinese govern-ment has made concerted efforts to ensure its economic growth pros-pects are not curtailed by a lack of energy resources or interruptions toenergy supplies. It has taken a number of steps in this direction, includ-ing supply diversification, the build-up of a strategic oil reserve, moreefficient fuel use, maximizing domestic oil and gas production and sub-

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stitution. It has also begun working with other countries – both produc-ers and consumers of oil and gas – to promote energy cooperation.

As a sign of its willingness to cooperate with other countries and toallay fears about the negative implications of its global energy invest-ments, China has established regular dialogue mechanisms with both theEuropean Union and the United States on energy-related issues. In June2004, it hosted a meeting of the twenty-two member Asia CooperationDialogue (ACD) which focused on energy cooperation. This meetingissued a framework agreement on energy cooperation in Asia. Known asthe Qingdao Initiative, this document was aimed at developing long-termpolicies to promote energy security in the wider Asian region (Hu 2004).Speaking at the Qingdao ministerial meeting, Premier Wen Jiabao saidthat the Chinese government stands for ‘accommodating the interests ofothers while safeguarding a country’s own interests’ (Hu 2004).

Not surprisingly, protecting China’s own energy interests has been atthe forefront of China’s new energy security strategy. The most impor-tant plank of this strategy has been the acquisition of offshore energyassets in different parts of the world. Chinese oil companies have beenwilling to pay premium prices for oil and gas assets in jurisdictions wheremany multinational oil companies are reluctant to go because of higherlevels of economic and political risks or because these countries arelisted as ‘rogue’ states by the United States. Major Chinese oil companiessuch as CNPC frequently outbid foreign oil companies, some of themfrom other energy-hungry developing nations like India, in acquiringminority or controlling stakes in overseas oil and gas projects (Rashidand Saywell 1998).

Oil and gas security considerations have led China to reach out tocountries in Africa, the Middle East, South America as well as its neigh-bour Russia and the Central Asian states, some of whom have rich oiland gas reserves. With an eye on their energy resources, China has devel-oped closer political and military ties with a number of these countries.Chinese state-owned oil and gas companies have invested tens of billionsof dollars in the development of energy assets in these countries. Thefirst shipments of crude oil from Chinese-owned oil fields locatedabroad arrived in China from Kazakhstan and Peru in late 1997, markingthe beginning of this new energy strategy in Beijing (Rashid and Saywell1998). This strategy entails locking in energy supplies by buying drillingrights and oil fields or signing loans-for-oil deals with governments

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9 Jeroen van der Veer, ‘What is the international oil company of the future going tolook like?’ Online at: http://www-static.shell.com/static/media/downloads/speeches/jvdv_oilsummb.pdf.

across the world and shipping the crude back home to meet rising do-mestic demand.

When crude oil price reached a record level of US$147 a barrel inJuly 2008 before falling to a low of US$33 a barrel in February 2009,Chinese oil companies escalated their acquisition of foreign oil fields anddrilling rights with the help of Chinese state-owned banks. As many oil-rich countries lack financial resources to develop new oil fields or otherrelated infrastructure, China has been offering loans on favourable termsto these governments or government-owned companies in return for oilon long-term contracts. Between February and May 2009, China commit-ted more than US$50 billion in loans-for-oil agreements with Russia,Kazakhstan, Venezuela and Brazil (Richardson 2009).

The Chinese strategy of owning oil fields and forging strategic rela-tionships with oil-producing countries seeks to bypass the world marketas much as possible, which many developed countries want to strengthenand better regulate. In 2006, the former Australian Treasurer, PeterCostello, told a gathering of G-20 finance ministers in Melbourne, ‘Ibelieve that true energy security is not possible without effective energymarkets, strong regional cooperation, and sound policy and regulatoryframeworks’ (Uren 2006). He added that his vision was ‘the creation ofan energy freeway linking energy suppliers and consumers across theAsia-Pacific region for the benefit of all’. This is a view shared by anumber of oil industry experts and scholars in the West who believe thatChina’s strategy is unlikely to succeed. Citing the experience of France inthe 1980s with Iran, Amy Myers Jaffe (quoted in Uren 2006) warns that‘Hard lessons have been learnt in the West about the ineffectiveness ofstrategic bilateral relationships with key oil exporting countries to safe-guard energy supply’. Even some Chinese experts warn that the potentialpolitical and economic risks of overseas investments need to be carefullyassessed (He and Qin 2006: 102). Others argue that International OilCompanies (IOC) such as Shell or Exxon offer better technology andmore experience to resource-owning countries than national oil compa-nies from China. In a speech to an oil industry meeting in Paris in April2005, Shell CEO Jeroen van der Veer argued that there are advantagesfor resource holders in working with IOCs.9 Whereas national oil com-

CHINA’S SEARCH FOR ENERGY SECURITY 269

10 The Failed States Index is published jointly by the Fund for Peace and the ForeignPolicy magazine. Online at: http://www.fundforpeace.org/web/

panies such as CNPC or SINOPEC ‘will be driven by the interests oftheir government and that can make relationships with other govern-ments more complicated’, our agenda, he argued, is ‘simply to deliver’ byrunning our business more efficiently and keeping costs under control. Itis perhaps too early to judge the success or failure of the Chinese strategyas Chinese oil companies remain undeterred by the criticisms of theirforeign business rivals or other experts.

Chinese investments in oil-rich countries are also supported by con-siderable increases in Chinese civilian and military aid flows to thesecountries, although exact figures on Chinese foreign aid and militaryassistance are hard to come by. China’s commerce ministry and the Na-tional Development and Reform Commission have published a list ofcountries and resources, and Chinese companies which invest in themare eligible for state subsidies (Zweig and Bi 2005: 27). One of the big-gest destinations for Chinese overseas investments in the energy sector isSudan, Africa’s largest country and ranked as the second most politicallyunstable country in the world by the Failed States Index in 2008.10

China’s CNPC owns the largest share (40 per cent) in the Greater NilePetroleum Operating Corporation (GNPOC) – a consortium that domi-nates Sudan’s oil fields in partnership with national oil companies fromMalaysia and India. The consortium’s Heglig and Unity oil fields wereproducing 350,000 barrels of oil per day in 2004 (Goodman 2004). Inaddition to its investment in GNPOC, CNPC separately owns most ofan oil field in the Darfur region. Chinese oil companies have also builtoil pipelines, storage facilities and a major oil refinery in Sudan. In short,China is heavily involved in the production, storage and transportationof oil in Sudan. The Chinese share of the oil produced in Sudan isshipped back to China via the Red Sea. In addition to Sudan, Chinese oilcompanies are involved in oil exploration and production in a number ofother African countries. Investment relations are fortified with diplo-matic visits at the highest level. China’s foreign minister traditionallystarts the year with a tour of Africa to underscore the strong relationshipwith the continent’s major energy suppliers.

270 Pradeep Taneja

11 Aegis Fund4Darfur. See: http://www.fund4darfur.org/darfur.html

Implications for EU-China RelationsRegardless of the political and economic risks to China of investing inunstable and dangerous environments, the Chinese strategy of locking inoil and gas supplies across the world has raised some serious concerns inEurope. These concerns centre less on China’s reasons for aggressivelypursuing this strategy and more on where Chinese oil companies makethese investments (Jakobson and Zha 2006: 65). Sudan has been subjectto American and European sanctions for many years now because of thealleged atrocities committed on the African people of the Darfur regionby its military and the Arab Janjaweed militia supported by the govern-ment. It is said that the crisis in Darfur has already killed more than200,000 people and displaced more than 2.4 million.11 A number ofEuropean non-governmental organizations have campaigned for years topressure European and other foreign governments to move decisivelyagainst the government of Sudan to put an end to these atrocities. Butthe combined pressure from the EU and the United States has so farfailed to persuade the Sudanese government to respond convincingly tothese demands.

It has long been believed that China, as Sudan’s most importantinvestment and trading partner and supplier of military equipment, hasthe necessary influence with the Sudanese government to stop theseatrocities but chooses not to use it. China’s usual approach in dealingwith such issues is to claim that it pursues a policy of ‘non-interference’in the internal affairs of other countries. However, in the lead up to theBeijing Olympics, and facing the threat of a boycott of the games bysome countries, China appointed a special envoy to Darfur, Liu Guijin,and took a number of other steps to allay the concerns of European andother foreign governments and human rights groups. It also becamemore active in trying to persuade the Khartoum regime to support theinternational community in dealing with the Darfur crisis. During a visitto Sudan in February 2007, President Hu Jintao is believed to have pres-sured Sudanese President Omar Hassan al-Bashir to pursue a peacesettlement. He also urged President Bashir to cooperate with the UnitedNations. Sudan subsequently agreed to allow a joint African Union-United Nations peacekeeping force in Darfur. China also agreed to pro-vide 315 peacekeepers for Darfur in addition to the 800 it had already

CHINA’S SEARCH FOR ENERGY SECURITY 271

12 ‘Europe comment on Sino-African ties rebuffed’. Online at: http://www.chinadaily.net/china/2008-04/24/content_6642341.htm.

13 ‘China ‘deaf’ and ‘blind’ to human rights in Darfur – Osman’. Online at:http://www.europarl.europa.eu/news/public/story_page/015-44395-350-12-51-902-20081212STO44317-2008-15-12-2008/default_en.htm.

sent to Southern Sudan (Grant and Barysch 2008: 87). In the end, a lackof cooperation from the Khartoum regime meant that most of the peace-keeping force had failed to deploy. In the meantime, despite early fearsthat some foreign leaders might stay away from the opening ceremony ofthe Beijing Olympics, the ceremony and the games passed off smoothlyand were judged to be a great success for the Chinese organizers. Thepressure had been lifted from the shoulders of China’s leaders.

China’s search for energy security and its investments in Africa, par-ticularly in Sudan, have added to the already long list of differencesbetween the European Union and China. Although the Commission hasadopted a softer and more diplomatic approach in dealing with thesedifferences, the European Parliament (EP) has been much more stridentin its criticism of China – criticism which is strongly rejected by theChinese. It passed a resolution in April 2008 expressing concern aboutChina’s growing influence in Africa at a time when European influencewas declining. The Chinese government called such criticism ‘irresponsi-ble’ and ‘totally unfounded’, telling the European Parliament to stop its‘confrontationist and provocative’ activities.12 A month earlier, the EPhad decided to disinvest in PetroChina/CNPC in protest against Chinesesupport for the Sudanese government (Sengupta 2008). This followedrevelations that its members’ pension funds continued to be invested inthe Chinese company. In 2007, its Sakharov Prize was awarded to SalihMahmoud Osman, a leading human rights activist from Darfur, who hasbeen very critical of China’s role in Sudan. In December 2008, Osmanaccused China of ‘undermining the lives of millions of people of Darfurfor a long time by siding with the Sudanese government and throughaerial bombardments caused by Chinese helicopter gunships’.13

In an article published in a Chinese newspaper, the EU High Repre-sentative for Common Foreign and Security Policy, Javier Solana (2007),stressed that the EU and China have a common responsibility and inter-est in dealing with the challenges of poverty, instability and war in Af-rica. Pointing to the agreement reached at the Helsinki EU-China sum-mit in 2006 to establish a senior official level dialogue on Africa, Solana

272 Pradeep Taneja

14 ‘China outwits the EU in Africa’. Online at: http://www.atimes.com/atimes/China/IL13Ad01.html.

called for better and more exchanges of information so that ‘our effortsdo not cut across each other as they sometimes have in the past’ (Solana2007). Citing a long list of areas in which the EU is actively engaged inpromoting cooperation with African countries, including good gover-nance, fight against AIDS and regional integration, Solana said that thereis ‘positive correlation’ between EU and Chinese strategies in Africa.While the tone of this article was clearly upbeat, the underlying messageseemed to be that the EU has spent a long time trying to persuade Afri-can governments to comply with certain governance benchmarks anddoes do not wish China to undermine European long-term efforts.

ConclusionChina’s arrival on the world stage as a major player has forced othermajor powers to rethink their own strategies in dealing with internationalissues of critical importance to their citizens. Its ambitious energy secu-rity agenda and its push into Africa have obliged the EU to come upwith creative ways to engage with this rapidly growing power. While theEU may feel that China’s so-called ‘win-win’ approach in Africa might beundermining EU efforts to improve governance standards on the conti-nent, African governments seem happy to deal with China, albeit notwithout driving hard bargains. As Bernt Berger recently pointed out,‘China has increasingly regarded Africa as an opportunity, while Europehas long regarded the continent as a burden’.14 The EU will now have tolearn to work with China (and other emerging powers) in seeking theopportunities in Africa.

As China continues its search for energy security, it will also have towork with other countries in dealing with the huge challenge of climatechange and environmental degradation. The problems are likely to bemore severe for China and could seriously hamper its efforts to improveliving standards. But a joint and cooperative approach is more likely tobring about better outcomes for all. It is heartening to see that the EUand China have already taken the first steps on this long journey. At eachof the past several EU-China summits a plethora of agreements havebeen signed to promote bilateral cooperation in areas relevant to energyconservation, clean energy and scientific and technological collaboration.

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ReferencesAndrews-Speed, Philip. 2004. Energy Policy and Regulation in the People’s Republic of

China. The Hague: Kluwer Law International.Goodman, Peter S. 2004. ‘China Invests Heavily in Sudan’s Oil Industry’ in

Washington Post (23 December 2004).Grant, Charles and Katinka Barysch. 2008. Can Europe and China Shape a New

World Order? London: Centre for European Reform.He, Fan and Donghai Qin. 2006. ‘China’s Energy Strategy in the Twenty-First

Century’ in China and World Economy 14(2): 93-104.Heilmann, Sebastian. 2005. ‘Regulatory Innovation by Leninist Means: Commu-

nist Party Supervision in China’s Financial Industry’ in China Quarterly 181:1-21.

Hu, Qihua. 2004. ‘ACD Nations Issue Energy Strategy’ in China Daily (22 June2004).

Jakobson, Linda and Daojiong Zha. 2006. ‘China and the Worldwide Search forOil Security’ in Asia-Pacific Review 13(2): 60-73.

Lee, John. 2009. ‘Democracy’s Long March to China’ in The Australian (3 June2009).

Nolan, Peter. 2001. China and the Global Economy: National Champions, IndustrialPolicy and the Big Business Revolution. Houndmills and New York, N.Y.:Palgrave.

Oster, Shai. 2008. ‘US Wants to Get China to Come Inside the InternationalEnergy Tent’ in The Australian (22 May 2008).

Powell, Bill. 2005. ‘Uncharted Waters’ in Time Asia (11 July 2005).Rashid, Ahmed and Trish Saywell. 1998. ‘Beijing Gusher’ in Far Eastern Eco-

nomic Review (26 February 1998): 46-48.Richardson, Michael. 2009. ‘China Closing Energy Deals While Oil is Cheap’ in

Japan Times (29 May 2009).Sengupta, Kim. 2008. ‘EU Boycotts China Oil Firm Over Funding of Darfur

Regime’ in The Independent (17 March 2008).Solana, Javier. 2007. ‘Challenges for EU-China Cooperation in Africa’ in China

Daily (7 February 2007).Solnick, Steven L. 1996. ‘The Breakdown of Hierarchies in the Soviet Union

and China: A Neoinstitutional Perspective’ in World Politics 48(2): 209-238.Time Asia. 2005. Interview with Fu Chengyu in Time Asia (11 July 2005).Uren, David. 2006. ‘Securing Energy Supply Lines’ in The Australian (30 March

2006).Yergin, Daniel. 2005. ‘Over a Barrel’ in Fortune (16 May 2005).Zweig, David and Jianhai Bi. 2005. ‘China’s Global Hunt for Energy’ in Foreign

Affairs 84(5): 25-38.

EUROPEAN STUDIES 27 (2009): 275-289

RECENT CHINESE PRACTICE IN THE MAINTENANCEOF MARITIME SECURITY

AND THE EUROPEAN EXPERIENCE

Zou Keyuan

AbstractOn an international scale, maritime security is a highly relevant, ‘hot’,issue which frequently attracts the attention of the world community.China is a big coastal and shipping country; maritime security is,therefore, critical to its economic growth, national security and inter-national responsibilities. This chapter surveys and assesses recentdevelopments in regard to China’s practice in this area, includingChina’s recent maritime legislation, its supportive actions for the EastChina Sea, South China Sea and the Malacca Straits, and its responseto the global actions of maritime security, particularly in connectionwith the fight against terrorism and sea piracy under the frameworkof the United Nations. Some comparisons between the EU and Chinawill be made throughout the chapter.

IntroductionChina as a big coastal and shipping country; maritime security is, there-fore, critical to its economic growth, national security and internationalresponsibility. It has long coastlines and borders on the Yellow Sea, theEast China Sea and the South China Sea, where there are abundant natu-ral resources and various shipping routes. On the one hand, and in termsof its shipping capacity, China ranked fourth in the shipping world bythe end of 2007.

By July 2008, China had ranked first in the port cargo and in the ‘con-tainer throughput’ sections for five consecutive years. On the other hand,rapid economic development in China continues to be accompanied by

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1 CCH Asia China E-News Alert, No.43, February 2004.2 NK"http://www.people.com.cn/GB/shizheng/1027/3082005.html"http://

www.people.com.cn/GB/shizheng/1027/3082005.html

China’s increasing demand for energy. Experts predicted that Chinawould import more than 500 million tons of oil and over 100 billioncubic meters of natural gas in 2020, owing to its rapid economic growthand demand for energy resources.1 The demand for energy and increasedenergy consumption will definitely make China more actively involved inoil and gas exploration and exploitation in its adjacent sea areas, and insecuring the oil supply routes at sea.

This chapter will assess recent developments in China’s practice inthis area, including China’s recent maritime legislation, its supportiveactivities for the East China Sea, South China Sea and the MalaccaStraits, and its response to the global actions of maritime security, partic-ularly in connection to the fight against terrorism and sea piracy underthe framework of the United Nations. Some comparisons between theEU and China will be made.

Maintaining the Security of Sea LanesAfter the collapse of the Soviet communist bloc, China gradually revisedits security concept, in response to the changed situation for the postCold War era. A new security concept was formulated in the 1990s andhas been reflected in China’s White Papers on defence. The 1998 WhitePaper was the first to put forward this new concept. The 2000 White Paperprovided more detail, by adding four core components: mutual trust,mutual benefit, equality and cooperation.2 Maritime security is a majorconcern in the development of China’s perception of national security.

It is reported that 80 per cent of China’s oil for consumption areimported from overseas by sea routes (Zhu 2004: 19). With the increaseof its energy demand, China is ever more concerned with the security ofthe sea lanes in its adjacent seas and the Straits of Malacca. According tothe 1982 United Nations Convention on the Law of the Sea (LOS Con-vention), all States enjoy freedom of navigation on the high seas and inexclusive economic zones of coastal States. For straits used for interna-tional navigation, all states enjoy transit passage. Thus, ships of all na-tions have the right to the freedom of navigation in the South China Seaand transit passage in the Straits of Malacca and Singapore. However,after the September 11 terrorist attacks, maritime security has become a

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3 Report: IMO Doc. MSC.4/Circ.32, 17 April 2003.

serious international concern, in particular the existing and potentialthreats posed by sea piracy and maritime terrorism.

It is widely known that piracy is found in the Straits of Malacca andthe South China Sea. In 2000, figures showed that piracy in the regionaccounted for 65% of the worldwide total. The incidents in the SouthChina Sea increased from 120 in 2001 to 140 in 2002.3 Although theprominence of piracy has been shifted from Southeast Asia to the Somaliwaters, vigilance is still badly needed to prevent and suppress piracy andpossible maritime terrorism in the South China Sea and the Straits ofMalacca.

International law has established an obligation on states to cooperatein the suppression of piracy. It grants states certain rights to seize pirateships and suspected criminals. The LOS Convention constitutes a majoranti-piracy treaty, providing that ‘All states shall cooperate to the fullestpossible extent in the repression of piracy on the high seas or in anyother place outside the jurisdiction of any state’, and should seize pirateships and criminals. Another important international treaty governing thesuppression of piracy and maritime terrorism is the 1988 Convention forthe Suppression of Unlawful Acts against the Safety of Maritime Naviga-tion (SUA Convention), which authorizes its contracting state parties tohandle maritime violent crimes and threats. According to Chinese Crimi-nal Law, the crime of piracy is punished as robbery, murder, larceny, orkidnapping, since there is no specific, legal, definition of piracy in theChinese legal system. China can also exercise universal jurisdiction per-mitted by international law to bring piracy cases to trial as internationalcrimes.

In recent legal practice, China tried several piracy cases including thevessels Tenyu, Cheung Son, Marine Fortuner and Xanxai. One can take theCheung Son as an example of how the relevant Chinese departments dealtwith piracy: on 12 November 1998, the Cheung Son, which belonged to aHong Kong shipping company, disappeared in the South China Sea onthe way to Malaysia from Shanghai Harbour. Several days into the voy-age, some bodies of crew members of that ship floated in the sea adja-cent to Guangdong Province. The Public Security Department of theprovince began to investigate the case and found that this was a case ofmaritime hijacking, planned by an Indonesian with some Chinese collab-

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4 http://www.imo.org/includes/blastDataOnly.asp/data_id%3D1880/984.pdf

orators. The perpetrators killed all 23 crew members and robbed thewhole ship. As of 8 August 1999, China arrested all suspected pirates. InJanuary 2000, 13 pirates, including one Indonesian and 12 Chinese,received the death penalty for crimes of robbery and murder. The re-maining 24 pirates were also punished.

While China’s legal system does not contain the precise terminologyfor ‘piracy’, China has accepted the term ‘robbery at sea’ in its legislation.A regulation issued in 1993, governing the safety of navigation andfishery activities in the East China Sea, adopted the above term. This isin line with the new terminology created by the International MaritimeOrganization (IMO), i.e., ‘piracy and armed robbery against ships’. Theconcept embraces piracy on the high seas, as well as acts of piracy inports or national waters.4 The regulation requires the coastal regions andgovernmental departments concerned to pay close attention to the safetyof navigation. The Department of Public Security is charged with re-sponsibility for combating criminal activities, including robbery at sea(Wang 1994: 786).

In terms of other legislation concerning maritime security, Chinapromulgated several important laws and regulations including the 1992Law on the Territorial Sea and the Contiguous Zone, the 1998 Law onthe Exclusive Economic Zone and the Continental Shelf, the 1983 Lawon the Maritime Traffic Safety and the 1992 Regulations on the Manage-ment of Maritime Navigational Warnings and Navigational Notices. Onthe international level, China acceded to the LOS and SUA Conventions(see above) and participates in meetings in the United Nations and IMO.

China has realized that, it cannot combat piracy in its adjacent watersall by herself. Therefore, regional cooperation is necessary to reach thegoal of effectiveness. For that purpose, China signed the Joint Declara-tion on Cooperation in the Field of Non-Traditional Security Issues withthe Association of Southeast Asian Nations (ASEAN) in November2002. This initiated full cooperation between ASEAN and China in thefield of non-traditional security issues and listed various priorities andforms of cooperation. The priorities include ‘combating trafficking inillegal drugs, people-smuggling including trafficking in women and chil-dren, sea piracy, terrorism, arms-smuggling, money-laundering, interna-

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5 http://www.aseansec.org/13185.htm6 http://www.recaap.org/about/pdf/ReCAAP%20Agreement.pdf

tional economic crime and cyber crime’. As to the envisaged multilateraland bilateral cooperation, the Declaration aims to:

Strengthen the exchange of information personnel and trainingEnhance capacity building;Strengthen practical cooperation on non-traditional security issues;Strengthen joint research on non-traditional security issues;Explore other areas and modalities of cooperation.5

In addition, the 2002 Declaration on the Conduct of the Parties in theSouth China Sea also mentions the suppression of piracy and armedrobbery at sea. Based on the above declaration, China sponsored severalworkshops and conferences on non-traditional security issues, includingsea piracy and maritime security. For example, the China National Insti-tute for South China Sea Studies ran a training workshop on maritimesecurity in the Straits of Malacca in December 2007 for governmentalofficials from Southeast Asia.

In April 2000, heads of coast guard agencies from 16 countries andone region (ten ASEAN countries, India, Sri Lanka, Bangladesh, SouthKorea, China, Hong Kong and Japan), attended the first regional confer-ence on maritime security where three key documents were adopted. In astatement entitled ‘Asia Anti-Piracy Challenge 2000', the participantsexpressed their intention to reinforce mutual cooperation in combatingpiracy and armed robbery against ships. The ‘Tokyo Appeal’ calls for theestablishment of contact points, for information exchange among rele-vant authorities and for the drafting of a national anti-piracy action plan.The Model Action Plan suggests specific countermeasures based on theTokyo Appeal.

Regional efforts reached their climax in the conclusion of, arguably,the most significant regional treaty on anti-piracy: the Regional Coopera-tion Agreement on Combating Piracy and Armed Robbery against Shipsin Asia (ReCAAP) in November 2004, agreed between the above Asianstates. It entered into force on 4 September 2006. The agreement obligesthe contracting states to:6

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7 http://www.mofa.go.jp/policy/un/disarmament/arms/psi/exercise-2.html

Prevent and suppress piracy and armed robbery against ships; Arrest pirates or persons who have committed armed robbery against

ships; Seize ships or aircraft used for committing piracy or armed robbery

against ships; Rescue victim ships and victims of piracy or armed robbery against

ships (see Article 3). The contracting states further pledge to implement the agreement, in-cluding preventing and suppressing piracy and armed robbery againstships ‘to the fullest extent possible’, ‘in accordance with their respectivenational laws and regulations, and subject to their available resources orcapabilities’ (see Article 2.1). For cooperation purposes, the contractingparties endeavour to render one another mutual legal assistance, as wellas conduct extradition of suspects for piracy suppression and punish-ment. The other significant development contained in the agreement isthe institutional arrangement to establish an Information Sharing Center(ISC) for the cooperation of intelligence sharing among contractingstates. The ISC was officially launched in November 2007. It is locatedin Singapore. ReCAAP is thus the first specific international treaty con-cerning the prevention and suppression of piracy. Because of this, itbecomes a model of law for other regional legal arrangements. It is re-ported that a similar agreement will be concluded for the Western IndianOcean.

China’s Attitude towards the Proliferation Security InitiativeRelated to the suppression of piracy is a recent scheme for maritimesecurity initiated by the United States: the Proliferation Security Initiative(PSI). The PSI represents an effort to consider possible collective mea-sures among the participating countries, in accordance with national legalauthorities and relevant international law and frameworks, in order toprevent the proliferation of so-called weapons of mass destruction(WMD), missiles and their related materials that pose threats to the peaceand stability of the international community. The PSI is administered bya ‘core group’ of eleven countries (Japan, US, UK, Italy, the Netherlands,Australia, France, Germany, Spain, Poland, Portugal).7 Another four

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8 http://www.state.gov/t/np/rls/prsrl/23764.htm

countries joined at a later stage (Canada, Singapore, Russia and Norway).Forty-six other countries support it as well (Roach, 2006, 352). The coreelement in the PSI is ‘interdiction at sea’. The US developed a number ofprinciples guiding the activities of the states participating in the PSI. Indetail, these are designed to:8

Undertake effective measures, either alone or in concert with otherstates, for the interdicting of the transfer, or transport, of WMD,delivery systems and related materials, to and from states and non-state actors of ‘proliferation-concern’.

Adopt more ‘streamlined’ procedures for the rapid exchange of rele-vant information concerning suspected proliferation activity.

Review and strengthen relevant national legal authorities where nec-essary.

Take specific actions in support of interdiction efforts regarding car-goes of WMD, their delivery systems or related materials.

Although the PSI does not target any particular country, countries ofconcern include North Korea, Iran and Syria. The PSI raises a number ofissues in international law. In the maritime domain, the LOS Conventiongrants exclusive jurisdiction and control of vessels to the Flag State onthe high seas. Any search or visit is thus subject to the permission of theFlag State. Exceptions do exist, but they are limited to the suppression ofpiracy, transport of slaves, illicit traffic in narcotic drugs, or unauthorizedbroadcasting. Besides, a warship, having reasonable grounds, may visit aship without nationality. Since there is no specific rule in internationallaw regarding the interdiction of ships suspected of carrying WMD,Chinese scholars perceive such interdiction on the high seas as a gravede-valuation of the international legal system and a great downgrade ofthe solemnity of international law (Gao and Sun 2004: 170). Because ofthe controversial issues existing in regard to the PSI, many demand itsimprovement, through institutionalization (Garvey 2005: 125-147).

China’s feelings towards the PSI are complex: China needs the safetyof navigation in the Straits of Malacca. Most of China’s imported oilreaches the country through this strait. However, China is also concernedabout a possible American intervention in the Straits, about possible

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9 http://news.163.com/2004w09/12686/2004w09_1096092272435.html

blockages to China’s oil transportation, and about a concomitant deterio-ration in Sino-US bilateral relations, owing to some dispute over, forinstance, the Taiwan issue. For that reason, China has long been consid-ering the construction of an oil pipeline from Myanmar to China toreduce its dependence on shipping oil imports through the Strait ofMalacca. Furthermore, a key Chinese diplomat stated that maritimesecurity is of vital importance for the welfare and economic developmentof the region and that regional cooperation is indispensable for maritimesecurity (Zhao Jianhua, 2004). However, China has some real doubtsover whether principles embodied in international law including the UNCharter ‘would be or could be strictly observed in real actions againstmaritime threats. Extreme care and sensitiveness is thus needed when itcomes to military involvement (Zhao Jianhua, 2004). In a word, Chinaprefers a regional rather than an international arrangement of maritimesecurity for the Straits of Malacca.

In addition to this, China has some previous, bitter, experience re-garding interdiction at sea, as the following example illustrates: on 7 July1993, the Chinese freighter Milky Way (yinhe) departed from Tianjin tothe Middle East with the destination of the port of Kuwait. On 23 July,the United States accused China of sending chemical materials to Iran(thiodiglycol and thionyl chloride). These were, allegedly, to be used forthe production of chemical weapons. The American side thus demandedan on-board inspection of the vessel. From 1 August onward, severalAmerican warships followed the Milky Way, monitoring its movementand taking photos so that the Chinese ship could not sail normally. Dueto these American pressures, the Milky Way was refused anchorage inport; it remained on the high seas until late August. Finally, on 29 Au-gust, China agreed to check the containers on board together with theSaudi Arabian representative and some American experts. The investiga-tion proved that there were no chemical materials as the United Stateshad alleged. As a consequence of this incident, the Chinese ForeignMinistry issued a statement on 4 September 1993, condemning theAmerican ‘hegemonic’ attitude and its ‘groundless’ accusations.9

Chinese legal scholars accused the United States of having violatedinternational law, including the freedom of the high seas. They de-manded the US bear legal liability to compensate for the economic loss

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10 http://www.fmprc.gov.cn/eng/xwfw/s2510/t169072.htm11 See: UN Doc. S/RES/1540 (2004).

suffered by the Chinese freighter (Zhao Lihai 1996: 237-244). Judgingfrom this episode, it may become clearer that China is very averse, in-deed, to the PSI as far as military interdiction at sea is involved. Thisattitude also can also be detected in China’s basic policy regarding theSouth China Sea: China has always reiterated that it will maintain thefreedom of navigation, and of over-flight, in the South China Sea. It hasnever interfered in such free passage and will not do so in future. As forthe issue of the PSI, China expressed its position through one of herForeign Ministry spokespersons, who made the following statement: ‘weagree with the objective of PSI. But the Chinese side thinks that relevantmeasures under PSI should be taken within the reign of international lawin accordance with relevant principles of the UN Charter. We hold reser-vations in regard to the possibility of the PSI, of taking coercive intercep-tion beyond the reign of international law’. At the same time, China didnot close its door to the PSI, by stating further, that ‘we would like toexchange views with relevant countries on this point’.10 On the otherhand, for a number of reasons, China might support military interdictionor naval inspection in future. The US-sponsored PSI, once fully imple-mented in East Asia, may more justifiably give China rights of inspectionand of performing the same control actions towards American vessels.

The PSI has been gradually gaining ground in international law as ithas developed. The first significant document which gives the PSI somekind of legal support was United Nations Security Council Resolution1540, adopted on 28 April 2004. The Resolution stipulated that, ‘allstates shall refrain from providing any form of support to non-stateactors which attempt to develop, acquire, manufacture, possess, trans-port, transfer or use nuclear, chemical or biological weapons and theirmeans of delivery’. The Security Council further called ‘upon all states, inaccordance with their national legal authorities and legislation, and con-sistent with international law, to take cooperative action to prevent illicittrafficking in nuclear, chemical or biological weapons, their means ofdelivery, and related materials’.11 It must be noted, however, that theResolution only mentions ‘non-state actors’ - by which it most likelymeans terrorist groups. However, the PSI appears also to target some so-called ‘rogue states’, based on the perceptions of the US.

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12 http://www.imo.org/Conventions/

While it is debated whether Resolution 1540 has provided legalground for the PSI, the amendments made, in October 2005, to the SUAConvention have clearly shown the legalization process in respect of thePSI. There are two major revisions/additions: first, a Protocol expandsthe coverage of the unlawful acts under Article 3 of the SUA Conven-tion. It does so by adding new provisions. These rules cover, in particu-lar, the following potential scenarios:12

The use against, or on, a ship, or discharging from a ship, of anyexplosive, radioactive, biological, chemical, or nuclear materials orweapons, in a manner which causes, or is likely to cause, death orserious injury or damage.

The discharging, from a ship, of oil, liquefied natural gas, or otherhazardous or noxious substances, in such quantity or concentra-tion, which causes, or is likely to cause, death or serious injury ordamage.

The use of a ship in a manner, which causes death or serious injuryor damage; the transport on board ship, of any explosive or radio-active material, knowing that it is intended to be used to cause, orused in a threat to cause, death or serious injury or damage for thepurpose of intimidating a population, or compelling a governmentor an international organization to do, or to abstain from doingany act.

The transportation, on board a ship, of any biological, chemical ornuclear weapon, in the knowledge that such a weapon is on board.

The carriage of any source material, special fissionable material, orequipment or material especially designed or prepared for theprocessing, use or production of special fissionable material,knowing that it is intended to be used in a nuclear explosive activ-ity or in any other nuclear activity not under safeguards pursuantto an IAEA comprehensive safeguards agreement.

The transportation, on board a ship, of any equipment, material orsoftware, or of related technology, which significantly contributesto the design, manufacture or delivery of a BCN weapon, with theintention that it will be used for such purpose.

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Another major development is the ship boarding regime. According toArticle 8bis of the 2005 Protocol, co-operation and procedures areneeded if a any party from a state desires to board a ship flying the flagof another state party, when the requesting Party has reasonable groundsto suspect that the ship or a person on board the ship is, has been, or isabout to be involved in, the commission of an offence under the Con-vention. The authorization and co-operation of the Flag State is requiredbefore such a boarding. A state party may notify the IMO Secretary-General that it would allow authorization to board and search a shipflying its flag, its cargo and the persons on board, if there is no responsefrom the Flag State within four hours. A state party can also give notifi-cation that it authorizes a requesting party to board and search the ship,its cargo and persons on board, and to question the persons on board, inorder to determine whether an offence has been, or is about to be, com-mitted. The Protocol limits the use of force and includes importantsafeguarding measures when a state party takes action against a ship.Through the above amendments, the controversial boarding regimeembodied in the PSI scheme has been legalized under international law.A number of significant modifications and additions of safeguardingmeasures were enacted, in order to ensure that there is no abuse of thisboarding right.

European Experience: An Example for China?It is Columbus, a European who is said to have ‘discovered’ the NewWorld. Other Europeans, including the British, Dutch, French, Portu-guese and Spanish explorers, merchants, missionaries and navigators,dominated the Asian sea-routes for centuries. The law of the sea, theoldest branch of international law, emerged in Europe. It emerged fromthe debate between the concepts of mare clausum and mare liberum in the17th Century (Johnston 2008: 51-52). More recently, the European Un-ion (EU) has exerted great efforts to develop a more concerted maritimepolicy among its Member States. In 2006, the European Commissionadopted a Green Paper entitled Towards a Future Maritime Policy forthe Union. In 2007 the Union also adopted a document on IntegratedMaritime Policy for the European Union. According to this paper, it isbelieved that ‘an Integrated Maritime Policy will enhance Europe's ca-pacity to face the challenges of globalisation and competitiveness, cli-mate change, degradation of the marine environment, maritime safety

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13 http://eur-ex.europa.eu/ 14 http://www.un.org/Depts/los/convention_agreements/convention_declarations.htm 15 http://www.emsa.europa.eu/end179d002.html16 DG Maritime Affairs and Fisheries, non-paper on Surveillance, 13 October

2008:5.

and security, and energy security and sustainability’.13 According to theTreaty of the European Union, EU members have to agree to cede someof their sovereign rights to the EU and let the organization exercise themon behalf of its members. This arrangement also concerns matters ofmaritime security. When the European Community acceded to the LOSConvention, it made a declaration, stating that certain competences havebeen transferred from its Member States to the organization, includingthose in the protection and preservation of the marine environment,commercial and customs policy, conservation and management of seafishing resources.14

For the implementation of a unified policy in maritime security, theEuropean Maritime Safety Agency (EMSA) was created, with a brief tocontribute to the enhancement of the overall maritime safety system inthe Community. Its goals are to reduce the risk of maritime accidents,marine pollution from ships and the loss of human lives at sea.15 In orderto prevent safety and security threats by goods brought into or out of thecustoms territory of the EU, electronic pre-arrival and pre-departuredeclarations, with data elements harmonised on an EU-wide scale, willbecome mandatory as of 1 July 2009, for all modes of transport includ-ing the maritime sector.16 Law enforcement agencies in the EU MemberStates, as well as Europol, have taken coordinated and concerted actionsagainst illegal immigration from Africa and maritime narcotics traffick-ing. In June 2008, the EU issued further Guidelines for an integratedapproach to maritime policy and it is expected that under a unified EUmaritime policy, more state power of EU members in maritime securitywill be transferred to the EU.

In comparison to this, it seems that China has not yet formulated aunified maritime policy, and maritime law enforcement is fragmentedamong different governmental agencies. The existing institutional ar-rangements in China show that the State Oceanic Administration isresponsible for ocean affairs in general. Other governmental departmentsare also in charge of maritime matters such as the Ministry of Agricul-

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17 US Maritime Security Patrol Area (MSPA) in the Gulf of Aden; for the EU:http://www.abc.net.au/news/stories/2008/11/11/2415866.htm

ture, responsible for the management of marine fisheries, the Ministry ofTransport for the management of maritime transportation, and the Min-istry of Public Security for maintaining maritime public order and secu-rity. Some roles are overlapping: for example, while the Ministry of Pub-lic Security has the mandate to maintain security and order at sea, theState Oceanic Administration and the Ministry of Agriculture also havemaritime law enforcement facilities and personnel in this regard. It istherefore suggested that China should establish a more centralized andcomprehensive administrative agency for the management of oceanaffairs and that, moreover, the country needs a coastguard for maritimelaw enforcement. The EU process of endeavouring the formulation of aunified maritime policy deserves further, careful, study and scrutiny bythe Chinese.

The persistent issue of Somali piracy reflects the attitudes of the EUand China towards the crackdown on piracy in the Somali waters. InJune 2008 the United Nations Security Council passed a resolution oncombating acts of piracy and armed robbery off Somalia’s coast (Resolu-tion 1816). It authorizes UN Member States to enter the territorial watersof Somalia for the purpose of repressing acts of piracy and armed rob-bery at sea, in a manner consistent with such action permitted on thehigh seas with respect to piracy under relevant international law. Follow-ing the resolution, relevant states, especially a number of EU countries,Canada, Russia and the United States, have taken individual and/orcollective actions against piracy in the waters off Somalia.17 The EUestablished its first naval task force called Op Atalanta in December 2008to protect vessels of the World Food Programme delivering food aid toSomalia and other vulnerable shipping off Somalia, as well as to providedeterrence towards acts of piracy, by means of presence and surveillance.Op Atalanta involved six warships and three surveillance aircraft contrib-uted by the UK, France, Greece, Spain, and Germany, with the UKRoyal Navy in charge.

In contrast to the more ‘pro-active’ attitude of the EU, China’s ap-proach is noticeably more cautious. It may be recalled that, during thediscussion of the draft UN Resolution, China expressed the view that thefacilitation initiated by the Council of international assistance in combat-

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18 http://www.nanhai.org.cn/news/news_info.asp?ArticleID=1847

ing piracy should not produce any negative consequences, that, more-over, such assistance must comply with the Law of the Sea Convention,and must not constitute a conflict with existing international legislation.It appears that China is reluctant to send its military forces overseas.However, it seems that Chinese attitudes changed somewhat after itsvessels were kidnapped by Somali pirates. In this case, the ambassador ofthe Somali government to Beijing expressed his welcome of the Chinesenavy to the Somali waters. At a special conference sponsored by the UNin December 2008, the Chinese representative expressed China’s willing-ness to cooperate with other countries to suppress piracy in accordancewith international law and the UN Security Council resolutions.18 Withthis in mind, it is not known when and how China would be involved ona more practical level in the crackdown on Somali piracy. Once Chinadetermines to become involved in military actions against piracy in theSomali waters, the necessary cooperation and coordination betweenChina and EU can be well perceived.

ConclusionAfter the Cold War, non-traditional security issues became much morecomplicated and salient in the context of a wider human security. Thisconcept includes piracy and maritime terrorism. In recent years, Chinahas considerably strengthened her capacity in maintaining maritime secu-rity in its adjacent seas, as well as, seeking to work towards regional andworld peace and security in cooperation with the international commu-nity, including the EU. While there are some opportunities for China andEU to cooperate in the maintenance of maritime security, China is moreimmediately concerned with her surrounding areas and has concluded anumber of pertinent legal and political arrangements with neighbouringcountries. It is certain that such a policy will continue. On the otherhand, as a rising power, China may be more willing to contribute itsefforts globally over time.

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ReferencesGao, Ying and Sun Bo (2004), ‘The United States’ Proliferation Security Initia-

tive’, in China Association of Arms Control and Disarmament (ed.). 2004.Report on International Arms Control and Disarmament, Beijing: World Knowl-edge Press)(in Chinese), 170.

Garvey, Jack I. 2005. ‘The International Institutional Imperative for Counteringthe Spread of Weapons of Mass Destruction: Assessing the ProliferationSecurity Initiative’ in Journal of Conflict and Security Law, Vol.10 (2): 125-147.

Johnston, Douglas M. 2008. The Historical Foundations of World Order: The Towerand the Arena, Boston/Leiden: Martinus Nijhoff.

Roach, J. Ashley. 2006. ‘Proliferation Security Initiative (PSI): CounteringProliferation by Sea’ in Myron H. Nordquist, John N. Moore and Kuen-chen Fu (eds.) Recent Developments in the Law of the Sea and China, Leiden:Martinus Nijhoff: 352.

Wang, Huai’an et al (eds.)(1994), Compendium of Laws of the People’s Republic ofChina, Supplementary Volume, Jilin: Jilin People’s Publishing House (in Chi-nese): 786.

Zhao, Jianhua. 2004. ‘The Straits of Malacca and Challenges Ahead: China’sPerspective’ (Paper presented to the Conference on ‘Straits of Malacca:Building a Comprehensive Security Environment’, 11-13 October 2004,Kuala Lumpur.

Zhao, Lihai (1996), Studies on the Law of the Sea Issues, Beijing: Peking UniversityPress (in Chinese).

Zhu, Huayou (2004), ‘Energy Diplomacy in the South China Sea and Its Sur-roundings’, in Zhu Huayou et al (eds.), Collected Conference Papers on the SouthChina Sea and China’s Energy Security, Hainan, China: National Institute forSouth China Sea Studies (in Chinese): 19.

EUROPEAN STUDIES 27 (2009): 291-295

CONCLUSIONS: TOWARDS AN EU-CHINARESEARCH-AGENDA 2010

Georg Wiessala, Pradeep Taneja, John Wilson

We believe that the diverse contributions in this volume have demon-strated the growth and evolution not only of the multi-faceted area ofEU-China relations, but also of a concomitant agenda of study, enquiryand research which appears as thorough as it is branched-out and com-plex The chapters in this volume represent not more than a fleetingglimpse of the state of affairs of research into EU-China relations as ofmid-2009. They were compiled at a time when the relationship has be-come, arguably, one of most significant and multi-layered foreign policyarenas of the European Union (EU).

In our view, the chapters in this collection offer both critical assess-ment and theoretical debate regarding a number of sides of EU-Chinarelations which have hitherto been largely under-researched, for exampleon matters of energy security, maritime safety, the construction of identi-ties, and sports and politics. In other areas, such as human rights, eco-nomics and foreign policy analysis, we hope that the preceding chapterswill have done their part to stimulate the debate and to take the academicanalysis of EU-China contacts into new areas and directions. We believethat a number of important strands and themes have emerged which notonly represent some of the key conclusions to be drawn from this exami-nation, but which will also, we hope, point interested China watchers inthe direction of some future analytical focal points and, perhaps, towardsan Agenda for 2010 and beyond.

Against this backdrop, Rajendra Jain, in the conclusion to his chapterfor this volume, has offered what is, perhaps, one of the most pertinentobservations, albeit in a more specific context: “there is a continuing

292 Georg Wiessala, Pradeep Taneja, John Wilson

need to re-profile and re-orient our mindsets about the growing promi-nence of the EU as a collective entity”. The nature and development ofEU ‘actor-ship’ – in foreign policy in general, and in the context of Sino-EU interaction in particular - does, indeed, emerge as one of the princi-pal concerns in all of the preceding sections. This appears to hold trueespecially, when seen against the background of the search for that ‘elu-sive’, unified, European Union China Policy on the one hand, and of the– frequently conflicting – attitudes and interests in the Member States onthe other hand. Speaking una voce with the PRC, it appears, is still diffi-cult for the aspiring global player that is the EU.

With regard to the People’s Republic of China (PRC), it has almostbecome a commonplace to state that this vast country is currently livingthrough times of unprecedented change, the pace of which seems to beever-quickening. In our view, this book has thrown into relief two as-pects, in particular, of that change: first, it is possible to conclude fromthe findings of several chapters offered here, that the immediate futureof China, and of China-EU relations, will be shaped by the evolvingrelationship between Party and regime stability, and national interest, onthe one hand, and questions of openness, democratisation, rule of law,(media) freedom and internet access on the other hand. Secondly, interms of Chinese politics and China-EU relations, the role of Chinesediscursive narratives, identity-constructions and symbolic landscapes inbuilding political meanings, legitimacy, national prestige, patriotic senti-ment and international relations must not be underrated.

This moves into the foreground a third and related aspect: ‘ideationalvalues’, perceptions (and mis-perceptions) – as gaps in mutual under-standing in the China-EU ‘asymmetrical’ relationship – all continue toimpinge on the conduct of the contemporary diplomacy; in many cases,bilateral EU-China negotiations are still suffering from underlying, un-seen, issues, which threaten to derail progress if wilfully or inadvertentlyneglected. We have termed those the ‘iceberg-issues’ of China-Europe.These are also the areas where the chequered history of China-Europecontacts continues to have a significant bearing on the present.

If there is, then, a pressing need for more mutual reaching-out andinteraction, many chapters in this book have pointed to areas in whichbridges can be built and common interests can be pursued.

In a wider context of the network of influence that is internationalrelations, we think that it is possible to conclude that China’s relations

CONCLUSIONS 293

with the EU, through engaging a variety of EU institutions, processesand decision-makers, and by means of employing a so-called ‘sector-spe-cific’ dialogue, contain a wealth of potential lessons for other countries,regional organisations and dialogue-mechanisms, such as India, Russia,the Shanghai Cooperation Organisation (SCO), the South Asian Associa-tion for Regional Co-operation (SAARC) and the Asia-Europe Meeting(ASEM). However, our examination has also demonstrated that there isnow a wider choice of potential interlocutors and partners for China inmany areas and regions of geo-political competition, for example on theAfrican Continent and in Central Asia. China’s growing engagement withthese regions will test the validity of many of the EU’s ‘value-based’,ideological, foundations in areas such as human rights, ‘conditional’ aidand development.

Some of the contributions in this issue have emphasised the continu-ing importance of China-US relations for the EU-China dialogue in amulti-polar world order. Among the important points highlighted by thewriters of the preceding chapters have been, for example, the sometimesdivergent US and EU approaches to the PRC, and the way negotiationsare conducted, and differences amongst partners exploited, in the questfor political positioning in the global arena. Here, as in other areas, theconcepts of national, regional and inter-regional ‘interests’ and ‘identities’have once again proved indispensable touchstones for analysis.

Regarding the further evolution and future contours of the dynamicEU-China relationship, we argue that one of the principal conclusions ofthis volume surrounds China’s responses to globalization, as evidencedthrough increasingly confident Chinese foreign and economic policies,investment relations and in other areas such as sport and identity-projec-tion. Given China's growing contribution to international trade, as wellas its growing technological confidence, we believe that a number ofchapters in this collection have demonstrated that the EU will have tonegotiate much more carefully in the future, in order to ensure thatgreater balance is achieved in such matters as cross-regional trade, tech-nology-transfer and investment.

We further conclude that the EU-China relations of the next decadewill be largely determined by the question of how successful both sidesare in striking a complex and inter-related, three-fold, balance: firstly,what will have to be attained is a balance of views; many of the old (‘Dino-saur’) views, long held in mutuality, will have to be re-visited and ad-

294 Georg Wiessala, Pradeep Taneja, John Wilson

justed. In areas ranging from human rights to Taiwan, from the one-China-Policy to development, EU-China dialogue is in need of beingdeveloped past the stage of a mere ‘laundry-list’ of formal, sector-spe-cific, (dis-)agreements, towards a much deeper understanding, in anattempt to overcome procrastination where it exists. This widening anddeepening of EU-China contacts will be the more successful, the more itembraces aspects of culture, language, and of what is sometimes euphe-mistically-termed ‘people-to-people-dialogue’. In order for it to have amore enduring impact, the evolving discourse revolving around EU-China must encompass a more comprehensive critical scrutiny of suchconcerns as grass-roots and NGO dialogues, élite-perceptions, think-tank-dialogue, cultural distance, educational exchanges, dialogue of civili-sations, human capital, inter-faith dialogue, intellectual linkages andrelated areas. ‘Dialogue’ thus becomes the watchword of EU-Chinarelations.

Secondly, and in close relation to the first point, in EU-China rela-tions, we think that most – if not all – of the chapters in this volumehave shown that more ‘equilibrium’ is required in adjusting the balancebetween trade and economic matters and other areas. The interaction,which is, at present, heavily skewed towards material interests and com-mercial dialogue, will need to embrace also – and much more whole-heartedly – many of the broader issues hinted at in this book, such asideas and values. It transpires from this volume that a deeper and moremeaningful, ‘holistic’, China-EU exchange is needed, encompassing arage of issues that are – sometimes mistakenly – claimed to be ‘binary’ incharacter, such as ‘development and democracy’, ‘tradition and moder-nity’, ‘equity and growth’ and ‘human rights and political stability’. Fur-thermore, we both conclude and predict that one of the main directionsa future EU-China research-agenda will take is a social-constructivist-informed approach, to international relations in general, and to the edu-cational, intellectual and ideational dimensions of Asia-Europe relationsin particular. Thus, a more comprehensive future research programme onChina-EU interaction, could – and ought to – extend to key themes likepolitical strategy and ‘declaratory diplomacy’, ‘identity’ and ‘text’, linguis-tics and ‘meaning’, seeking to employ, where relevant, some of the toolsof disciplines such as discourse-analysis.

The third kind of balance to be addressed – and re-dressed – in theEU-China relations of the future surrounds those new ‘hinge-issues’ of

CONCLUSIONS 295

the relations, which have been analysed in several of the preceding chap-ters, and which have such significant potential to shape – and distort –the relations of the future. It is both conceivable and desirable, thatfuture research foci are thus placed on subject-areas like evolving multi-polar ‘developmentalism’, the environment, global governance, energy-security, maritime terrorism and a new transcontinental (Asia-Europe)infrastructure. Human rights too fall into this latter category. The re-search assembled for this volume allows us to draw the conclusion thathuman rights are very definitely in the process of being ‘de-emphasised’in the context of EU-China relations. This is not only careless from thepoint of view of political pragmatism; it also ignores the fact that humanrights are a multi-dimensional issue, underlying all areas of the EU-Chinadialogue. More constructive – perhaps ‘constructivist’ – ways must,therefore, be found to ‘connect’ debates about human rights more cre-atively with other discussions about rights to development, regionalism,democracy, tolerance and control, dialogue and respect, responses toglobalization and contributions to human civilisation.