Washington was understandably perplexed that a China-EU investment agreement was concluded a few weeks before the Biden administration, especially a president who has been advocating for multilateralism and the restoration of trust and an alliance with the EU.
Some analysts argue the agreement is a big win for China by breaching the transatlantic partnership, while some scholars contend that Beijing has made historical concessions to Brussels, indicating the future lucrativeness of European business in China. Both are valid to some extent, but the strategic thinking of Beijing and Brussels behind the pact may have been overlooked.
Beijing’s strategic thinking
The EU has always been the favoured target for Beijing. Despite numerous rebrandings, the Belt and Road Initiative (BRI), the admittedly core economic, infrastructure and diplomatic policy proposed by President Xi in 2013, was initially intended to connect with the EU, facilitating Eurasian economic integration. According to Hellenic Institute of Transport, there was no regular direct freight service between China and Europe in 2008, whereas in 2019, 59 Chinese cities and 49 European cities in 15 countries have been linked by the BRI.
Also, although the EU is situated within Western democratic thought, the views of EU members regarding China are diverse and relatively different from the US and other English-speaking countries. Germany and France, the key pillars of the EU, still allow the usage of Huawei, whereas the US, Australia, Canada and the UK have variably banned it. Italy is the only one to endorse the BRI in the G7, a group of major Western democracies. The summit of China and Central and Eastern European Countries, known as “17+1”, has been held since 2012, gaining certain support from some EU members, in spite of Brussels’ aversion.
Probably, in the Chinese diplomats’ perceptions, the post-Brexit EU may become much more approachable and pragmatic to China, a mysterious rising land from the East, in that European continent nations with different linguistic and cultural backgrounds have been living together for millennial generations, leading to a more diverse and pragmatic approach to Beijing.
As for compromises Beijing has made, some of them, such as various reforms of state-owned-enterprises, would have been the essential component of the Chinese economic agenda, but the intriguing point is the timing and astonishing scope of concessions. After seven years of drawn-out negotiation, Beijing suddenly started pushing this pact at the beginning of 2020, when the Covid-19 broke out globally, and the Sino-American trade war further exacerbated, leading to China’s reputation plummeting in the West.
Through Sino-American relations, I doubt that Beijing may have noticed, as Professor Susan Shirk, former Deputy Assistant Secretary of State during the Clinton administration, pointed out, that even the American business community, benefitting enormously from the Chinese market, has not really “stepped forward to defend US-China relations, much less defend China”, which is rare in bilateral history.
Recently, President Xi Jinping even wrote a letter to encourage Starbucks’ former chairman Howard Schultz to repair Sino-American relations. Having observed this, Beijing thus decided to show a high level of sincerity and openness to European business elites, not only by economic reforms but also by promising to work on labour rights. The latter may not be a priority in Beijing, but Beijing conspicuously notes the ideological concerns of EU politicians in order to win the hearts and minds of Brussels.
Brussels’ strategic thinking
As for the EU, China has unquestionably been an attractive market. Calculated by purchasing power, China’s GDP has been de facto the largest economy for years. As the only positive-growth nation in 2020 among G20 members, China has the largest middle class, signifying potent consuming ability. Recent Chinese economic reforms primarily aim to promote consumption, which is the icing on the Chinese market’s cake, and this is also embedded in European views of China and the US.
The Pew Research Center has shown that more countries in Europe viewed China rather than the US as the world’s leading economy in 2019 and 2020. Also, more residents in Germany and France regarded US power and influence as threatening than China in 2018. Even with the new Biden administration, EU leaders anticipate a renewed trans-atlantic partnership but do not expect a sudden revolution of EU-American trade war, as bilateral trade disputes are structural and beyond Trump’s presidency.
More realistically, what is one of the major external concerns EU members face today? Back in the Cold War, the western expansion of the Soviet Union deeply disturbed European security, necessitating their consistent alliance with the US.
However, as Jonathan E. Hillman, a senior fellow at Center for Strategic and International Studies, wrote: “Russia has nuclear weapons but also a one-trick economy focused on energy exports, a rusting military, and a declining population.” In particular, Russia has been increasingly challenged to maintain traditional influence in Ukraine, Belarus and Central Asia, not to mention any comprehensive aggression to EU.
Furthermore, geographically, China is distant, and the EU does not have fundamental military interests in South China Sea but rather seeks to maintain peace and freedom of navigation for their shipping and trade, notwithstanding Brussels’ political friction with Beijing. But the large-scale uncontrolled migration from Africa and the Middle East may well be the EU’s main worry. However, regardless of some Western media ostensibly branding China as a neocolonialist in Africa, China has essentially supported the African economy via the BRI investment, creating local employment and purportedly discouraging the flow of a certain amount of immigrants to Europe. So, realistically, by signing the pact, the EU may keep the door open to cooperate with China in Africa.
On the flip side, if the EU sides with the US to the exclusion of China, what will happen to the EU? Certainly, Brussels will be praised by Washington politically, while the business sphere may be a different story. The recent Sino-Australian trade disputes indicate that “in the world of international commerce, democratic and strategic friends are often the fiercest rivals”, argued Professor James Laurenceson from the University of Technology Sydney, as Chinese tariffs against Australian goods have brought opportunities to businesses in America and New Zealand. So, US corporations in China must be delighted to see business space left by the EU companies because of possible EU-China trade skirmishes.
Sensibly, the EU is adopting an independent foreign policy to maintain autonomy between China and the US. More notably, as a third party during the Sino-American power competition, having signed a deal with Beijing, Brussels may possibly request Washington to offer more, thus maximizing its geopolitical and commercial interests.
Conclusion
To conclude, both sides made pragmatic decisions to sign the pact. Professor John Mearsheimer, at the University of Chicago, argued a few years ago that liberal dreams are great delusion facing international realities. China has executed a realist foreign policy since Deng Xiaoping’s reform, and this time, the EU may have woken up, because this deal signifies that geopolitical calculation has overtaken ideological divergence.
Jon (Yuan) Jiang is a Chinese PhD student in the Digital Media Research Centre at the Queensland University of Technology, focusing on the Belt and Road Initiative. He completed his master’s degree of political science at Moscow State Institute of International Relations, and bachelor’s degree of law at Shanghai University. As a Russian speaker, he worked with ZTE Corporation as an account manager, and as a special correspondent with Asia Weekly and Pengpai News, all in Moscow. He tweets at @jiangyuan528
Comments
4 responses to “The strategic thinking behind the EU-China investment deal”
The points are well made about strategy in the article and some of the comments below; strike while the iron is hot I guess. China is in an advantageous position as the EU is a diverse community and the BRI is not a direct threat to its functioning as an entity as it seems to be in Australia. Economies in the EU are in a state of flux and recovery is necessary in order for the leaders of these western democracies to regain their authority. While a deal with China is seen as a pact with the devil for some in the commentariat e.g. ASPI and partners of the Murdoch media, having no deal with China or being locked a political and ideological stand-off with China is ultimately going to hurt many areas of the economy. China can play a strategic game. Hence New Zealand is now signing new deals. EU nations are in a similar situation. Biden has a lot of work to do to develop a China strategy. The US business community has sought to punish China for its transgressions under Trump (notably IP theft), a contrast to the 1990s when they were willing to overlook human rights to get into China! Where to from here?
Many thanks to a young commentator who is able to exopress a view on the geopolitics of US-China=EU so clearly. The US containment policy on China is proactive and China reacts thru BRI and other initiatives in EU, South Aneica and Africa. They play an interesting game of “Go”(Chinese: 围棋 wei qi). As reported The Star on 24Jan2021 (Malaysian English media AseanPlus New Karen Yeung) “As US economic clout diminishes, China and Europe work to cut dollar reliance. What seems to be happening is that regardless of who occupies the White House, we are living in a more polycentric world.
“However, as Jonathan E. Hillman, a senior fellow at Center for Strategic and International Studies, wrote: “Russia has nuclear weapons but also a one-trick economy focused on energy exports, a rusting military, and a declining population.” In particular, Russia has been increasingly challenged to maintain traditional influence in Ukraine, Belarus and Central Asia, not to mention any comprehensive aggression to EU.” This is idiotic. Its the US view of the RF as still the 1990s FSU. If his expertise is China he should stick to it. Russia is a vastly different country in 2021 to what it was in the 1990s and under the Soviets. If this is his level of awareness I would question how much he knows about China…
This contribution is about strategic thinking of the EU in making a long term deal with China. China has never been accused of not thinking strategically. As far as I can ascertain from the literature the Americans don’t seem not as proficient in long term thinking in a political or economic sense. Recent examples are the short sightedness of the Trump sanctions on America’s trade with China. America’s long term focus seems to be mainly on military hegemony, probably caused by the enduring arrogance of megalomania and the enduring pressure of the military-industrial complex to continue to use and sell as much weaponry as it can. This sort of worldly disconnect cannot be better demonstrated by the American bafflement when a functionary from the government was sent to spread the good word about America’s greatness to the Middle East (if I recall well) to find that that most people didn’t like America and what it stood for at all.
Australian governments have (seemingly unthinkingly) tied Australia’s future unquestioned to America’s international caprices, even to the extend of actually damaging Australia’s economic and political interests in the East Asian region. Any strategic thinking here does not appear to interrogate alternatives to an unseemly loyalty to the USA.