The European Union and China: Interests and Dilemmas

EUROPEAN STUDIES

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EUROPEAN STUDIES An Interdisciplinary Series in European Culture, History and Politics

Executive Editor

Menno Spiering, University of Amsterdam [email protected] Series Editors Robert Harmsen, The Queen’s University of Belfast Joep Leerssen, University of Amsterdam Menno Spiering, University of Amsterdam Thomas M. Wilson, Binghamton University, State University of New York

EUROPEAN STUDIES An 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 dedicated to 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. The Editorial board welcomes suggestions for other future projects to be produced by guest editors. In particular, European Studies may provide a vehicle for the publication of thematically focused conference and colloquium proceedings. Editorial enquiries may be directed to the series executive editor. Subscription details and a list of back issues are available from the publisher’s web site: www.rodopi.nl.

CONTENTS

Authors in this volume PRADEEP TANEJA, GEORG WIESSALA AND JOHN WILSON Introduction

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THE CONTEXT OF EU-CHINA RELATIONS AND THE HUMAN RIGHTS DILEMMA NICHOLAS REES EU-China Relations: Historical and Contemporary Perspectives 31 FRASER CAMERON The Development of EU-China Relations

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NATEE VICHITSORATSATRA The EU and China in the Context of Inter-Regionalism

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GEORG WIESSALA Duality - Dialogue - Discourse: Some Perspectives on Human Rights in EU-China Relations

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DAVID ASKEW Sport and Politics: The 2008 Beijing Olympic Games

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ASPECTS OF THE GEO-POLITICAL SETTING OF EU-CHINA INTERACTION JENNY CLEGG China Views Europe: A Multi-Polar Perspective

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RAJENDRA K. JAIN The European Union and China: Indian Perceptions and Perspectives

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CHRISTOPHER WILLIAMS Russia’s Closer Ties with China: The Geo-politics of Energy and the Implications for The European Union

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MICHAEL SMITH AND HUAIXIAN XIE The European Union, China and The United States: Complex Interdependence and Bi-Multilateralism in Commercial Relations

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PAUL JOSEPH LIM The European Union’s Economic Ties with The Republic of China (Taiwan)

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ISSUES – POLICIES – PERCEPTIONS PETER J. ANDERSON China, News Media Freedom and the West: Present and Future Perspectives

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CARLO FILIPPINI Trade and Investment in the Relations between the European Union and the People’s Republic of China

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VALERIA GATTAI EU-China Foreign Direct Investment: A Double-Sided Perspective 241 PRADEEP TANEJA China’s Search for Energy Security and EU-China Relations

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ZOU KEYUAN Recent Chinese Practice in the Maintenance of Maritime Security and the European Experience

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GEORG WIESSALA, PRADEEP TANEJA, JOHN WILSON Conclusions: Towards an EU-China Research-Agenda 2010

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AUTHORS IN THIS VOLUME PETER J. ANDERSON is a Reader in News Media and the Journalism Research Coordinator at the University of Central Lancashire. He has published a variety of books, articles and book chapters on both communication and politics, including (with Geoff Ward, eds.) (2007) The Future of Journalism in the Advanced Democracies, Aldershot: Ashgate; (with Anthony Weymouth) (1999) Insulting the Public? The British Press and the European Union, Harlow: Longman; (with Christopher Williams and 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 September 2007 volume of European Studies dedicated to EU-Asia relations. He taught previously at the universities of Lancaster and Southampton and runs a small consultancy on the EU, the news media and the citizenry. ([email protected]) DAVID ASKEW is an Associate Professor of Law in the Faculty of Asia Pacific 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. David teaches various legal courses. His main research interests include Legal Theory, Human Rights, Intellectual History, and the Sino-Japanese War (1937-1945). Amongst his recent writings is a piece on ‘Nankin Atoroshiti Kenkyû no Genjô to Dôkô – Gurôbaru na Giron no Shosô o Chûshin to shite’ (The Current Situation in and Movements in Research of the Nanjing Atrocities: An Examination of Global Perspectives) (Ritsumeikan Gengo Bunka Kenkyû, vol. 18, 2007). His latest book publications include, in addition to (with Paul Close and Xu Xin), The Beijing 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 Nanking Atrocity, 1937-8: Complicating the Picture (Berghahn, 2007. He is currently working on an edited volume on Japan’s Jury System, 1928-1943 and various books on Nanjing, 1937-1938. ([email protected].) FRASER CAMERON is Director of the EU-Russia Centre, Senior Advisor to the European Policy Centre (EPC) and to the European Institute for Asian Studies (EIAS), all in Brussels. He is also Director of ECAN, an academic and think tank network linking European and Chinese researchers and scholars. He is a Visiting Professor at the Hertie School

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of Governance in Berlin, at the Europa College in Bruges and at a number of other universities in Europe, the US, Canada and Asia. A former academic and diplomat, Dr Cameron was an adviser in the European Commission for more than a decade and served at the EU’s delegation in Washington DC. Dr Cameron was Director of Studies at the European Policy Centre from 2002-2005. He is the author of several of books and articles on European and international affairs. His most recent books include ÚS Foreign Policy after the Cold War (2005) and An Introduction to European Foreign Policy (2007). He is a well-known commentator on international affairs and moderator of conferences and workshops. He has extensive experience of working with the corporate world in Europe and elsewhere. ([email protected]) JENNY CLEGG is a Senior Lecturer at the University of Central Lancashire and course leader for the B.A. Hons Degree programme in Asia Pacific Studies in the School of Languages and International Studies. She is involved in teaching modules on Asia Pacific development and international relations as well as on China and Globalisation at undergraduate and postgraduate levels. Her current research interests mainly focus on China’s development and its implications for the world order. Her new book China’s Global Strategy: towards a multipolar world was published by Pluto Press in January 2009. In recent years, she has also carried out research on management and ownership reforms in China’s rural enterprises, and has published her results in the form of book chapters and journal articles. Her other main publications include Fu Manchu and the ‘Yellow Peril’: the making of a racist myth (Trentham Press). She has a Ph.D. from the University of Manchester. ([email protected]) CARLO FILIPPINI was awarded a Professorship in Economics at Bocconi University in Milan in 1981. He is currently the director of ISESAO, a Research Centre devoted to East Asian economic and social studies. He graduated in Economics and Management at Bocconi University in 1969 and spent two years at the University of Cambridge, UK as a research student. He has visited East Asian countries many times and given short courses, seminars or contributed with papers to conferences in Universities and research centres of the region, in particular Japan, Thailand, and Vietnam. His research interests presently focus on regional integration and trade relations between East Asian economies and the rest of the world. In 1993–2002 he was the Director of the Master in Economics

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programme at Bocconi University and in 2002-2004 the European Coordinator of the European Studies Programme Vietnam. In 2004 he was awarded the Japanese Order of the Rising Sun, 3rd class. ([email protected]) VALERIA GATTAI was awarded a PhD in Economics from Bocconi University in 2007 with a thesis on the boundaries of multinational enterprises. Her research interests move within the fields of International Economics (Foreign Direct Investment, Multinational Firms, Internationalisation) and Asian Studies (Chinese Economy). She is author of a number of publications on FDI, and she has been invited to many international conferences on the topic. Valeria Gattai is currently a post-doctoral researcher at Bologna University and a lecturer in Micro- and Macroeconomics at Bocconi University. ([email protected]) HUAIXIAN XIE is a Phd candidate at Loughborough University. Her thesis on EU-China trade relations will be submitted in late 2009. ([email protected]) RAJENDRA K. JAIN is Professor of European Studies and Chairperson, Centre for European Studies, School of International Studies, Jawaharlal Nehru University, New Delhi. He has been Visiting Professor at Freiburg, Leipzig, and Tübingen Universities and at the Maison des Sciences de l'Homme, Paris. He is the author/editor of 30 books and has published 80 articles/chapters in books. He has most recently published India and the European Union: Building a Strategic Partnership (2007) (editor). ([email protected]) PAUL LIM has been a Senior Academic Adviser at the European Institute for Asian Studies (EIAS) from October 2007 onwards. He was one of the EIAS co-founders in 1989. He was the Research Coordinator and Senior Research Fellow at the EIAS before his departure in 2002 to the Universiti Sains Malaysia in Penang, Malaysia, where he set up and ran a new Master in International Studies (European Studies). His latest publications in 2008 have been ‘European Studies: Any sense in Malaysia’ and ‘Living in Two/Three Cultures’. His other forthcoming publication will be ‘European Perspectives of Taiwan’ which he will co-edit with Assistant Prof. Jens Damm from the Institute of East Asian Studies at Freie Universität, Berlin. His chapter in his own co-edited book has the provisional title of ‘The European Union’s Relations with the Republic of

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China (Taiwan)’ which he co-writes with Ms. Sigrid Winkler, a PhD researcher. ([email protected]) NICHOLAS REES is Professor of International Politics and Head of the Department of Politics and History at Liverpool Hope University. He was formerly Vice President for Research, National College of Ireland, and Dean of the Graduate School and Jean Monnet Professor, University of Limerick. His teaching and research interests include EU institutions and policy-making, EU external relations, EU-Asian relations, regional integration, international relations and UN peacekeeping. He is co-author of The Poor Relation: Irish Foreign Policy Towards the Third World (Gill and Macmillan, 1993), United Nations Peacekeeping in the Post-Cold War Era (Frank Cass, 2005), EU Enlargement and MultiLevel Governance in Public Policy-Making (eds.) (Ashgate, 2006), as well as the author of numerous book chapters and journal articles. ([email protected]) MICHAEL SMITH is Professor of European Politics and Jean Monnet Chair in the Department of Politics, International Relations and European Studies at Loughborough University. His principal areas of research are transatlantic relations, relations between the EU, the US and Asia, the making of EU external policies and the role of the EU in post-Cold War Europe, as well as more general issues of international political economy and international relations. Among his recent books are Europe's Experimental Union: Rethinking Integration (2000, with Brigid Laffan and Rory O'Donnell); The State of the European Union, Volume 5: Risks, Reforms, Resistance and Revival (2000, edited with Maria Green Cowles); International Relations and the European Union (2005, edited with Christopher Hill); and The European Union’s Roles in international Politics: Concepts and Analysis (2006, edited with Ole Elgström). He is currently working on the early stages of a project dealing with the European Union and international regimes, and has just published (with Steven McGuire): The European Union and the United States: Competition and Convergence in the Global Arena. Basingstoke: Palgrave/Macmillan, 2008. ([email protected]) PRADEEP TANEJA lectures on Chinese politics, political economy and international relations in the School of Social and Political Sciences at the University of Melbourne, Australia. He lived and worked in China for many years and is a fluent Mandarin speaker. His current research interests include China’s energy security policy, the rise of China as a regional

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and global power and government-business relations in China. He also works on China’s relations with the European Union and India. Pradeep earned his PhD in Chinese political economy at Griffith University, Brisbane and his MA at Jawaharlal Nehru University, New Delhi. He is the 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 the People’s Republic of China (Routledge, 1998), Encyclopedia of Modern China (Charles Scribner’s Sons, 2009) and many other publications. ([email protected]) NATEE VICHITSORASATRA is a diplomatic officer at the Department of European Affairs in the Thai Ministry of Foreign Affairs. He recently completed a doctoral research project at Loughborough University under the supervision of Professor Michael H. Smith. His thesis was focused towards 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 at Chulalongkorn University ( Thailand ) and completed a MA in International Political Economy at Warwick University in 1999. Natee also worked as a journalist for The Nation newspaper (Thailand) where he specialised in politics, corruption, technology, and social issues. He continues to contribute to The Nation as a guest columnist on a regular basis. His wider academic research interests include international political economy theory, the global information society, and external relations of the EU. ([email protected]) GEORG WIESSALA is a Professor of International Relations in the School of Education and Social Science of the University of Central Lancashire in Preston, UK. He is the Research Co-ordinator for UCLan’s Faculty of Arts, Humanities and Social Sciences (AHSS). Georg has co-edited The European Union: Annual Review, from 1999 to 2003, and acted as a Committee member of UACES, the University Association for Contemporary European Studies in London. He teaches on European Studies, International Criminology and International Relations courses in both the Asia-Pacific and Europe, and is holding visiting teaching positions in the European Institute for Asian Studies in Brussels and the Centre for European Studies of Chulalongkorn University in Bangkok. His main research interests revolve around European Union Foreign Policy, Hu-

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man Rights, EU Relations with the Asia-Pacific, Australia and New Zealand, and the Asia-Europe Meeting. His most recent book publications include: The European Union and Asian Countries (UACES/Sheffield Academic Press, 2002), Re-Orienting the Fundamentals: Human Rights and New Connections in EU-Asia Relations (Ashgate, 2006) and Reflections and Reorientations: EU-Asia Dialogue in the New Millennium (Rodopi, October 2007). He is currently working on a single-authored book on the role of educational exchange and knowledge-transfer in the East-West dialogue. ([email protected]) CHRISTOPHER WILLIAMS is currently Head of Politics in the Department of Education and Social Science, University of Central Lancashire, having previously worked at the Universities of Amsterdam, 1988; Helsinki, 1988-89 and Cork, 1989-91. In the year 2000, he was awarded an Honorary Degree in Political Science by the Institute of Socio-Political Research, RAN and made a member of the Russian Academy of Political Science, Moscow. He has served as Secretary of the British Association for Slavonic and East European Studies from 1998-2001. He has published articles in Revolutionary Russia; Sociology of Health and Illness and the Journal of Communist Studies and Transition Politics. His recent books include Youth, Risk and Russian Modernity (Ashgate 2003); (ed.), Sotsial’naia politika: Istoriia i sovremenost´(Social Policy: Past and Present) (Udmurtskii gosudarstvennyi universitet, Izhevsk, 2005) and Casualties of Change: The rise and fall of the Russian welfare State (Ashgate, forthcoming 2010). His other works include ‘The Modernisation of Russian health care: Challenges, policy, constraints’ in J.R. Smith (Birmingham) and M. Kangaspuro (Helsinki) (ed.), Modernisation in Russia since 1900, (SKS Helsinki, Studia Fennica Historia 12 2006), pp. 206220; with Zoya Baranova, ‘Zashchita prav detei i profilaktika sotsial’nogo sirotsva v postprestroechnoi Rossiii’ (The protection of child welfare and the fate of social orphanages in post-Soviet Russia) Vestnik Udmurtskogo universiteta: Seria Psikologoya I sotsial’naya pedagogika 2007 and with E. Luchinskaya), ‘Developing and sustaining social work education and training in Russia – Lessons from a Tempus project in Udmurtia’ in Matthias Bürgel and Andreas Umland (ed.), Higher Education in the Humanities and Social Sciences in Eastern Europe III: Transition and Stagnation at Post-Soviet Universities (Frankfurt am Main: Peter Lang, 2007). ([email protected])

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JOHN WILSON is A Professor of Strategy in the Management School OF THE University of Liverpool. He has also worked at the Universities in Manchester (where he was awarded his PhD in 1980), Leeds, Belfast, Nottingham and Central Lancashire, as well as being an Adjunct Professor of Copenhagen Business School. His main interests are strategy and structure in international business, knowledge transfer issues, management education and training, and international management and business history. Apart from being executive co-editor of Business History, he has published extensively in these fields, including the two leading textbooks in management and business history, as well as a series of other books and 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, which aims to compare strategy, structure and performance across this Continent. ([email protected]) ZOU KEYUAN is Harris Professor of International Law at the Lancashire Law School of the University of Central Lancashire (UCLan), United Kingdom. He specializes in international law, in particular law of the sea and international environmental law. Before joining UCLan, he worked in Dalhousie University (Canada), Peking University (China), University of Hannover (Germany) and National University of Singapore. He has published over 50 referred English papers in more than 20 international journals and his recent books include Law of the Sea in East Asia: Issues and Prospects (London/New York: Routledge, 2005), China’s Marine Legal 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 Editorial Boards of the International Journal of Marine and Coastal Law (Martinus Nijhoff), Ocean Development and International Law (Taylor & Francis), Journal of International Wildlife Law and Policy(Taylor & Francis), and Chinese Journal of International Law (Oxford University Press), and Advisory Board of the Chinese Oceans Law Review (Hong Kong: China Review Culture Limited). ([email protected])

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, some differentiated, 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 the European Union (EU) and the People’s Republic of China (PRC). Perhaps the best way to encapsulate this phenomenon is by reference to the concepts of ‘contradiction’ and ‘duality’, ‘challenge and opportunity’ - of being, at the same time, fundamentally the same, and yet essentially different. On the one hand, views on China, more often than not, fall prey to headline-grabbing, media hype, as witnessed in the discussions about the European Parliament’s 2008 Sakharov Prize award to Hu Jia, a Chinese human rights activist. Other, more recent, issues have concerned, for example, the humanitarian and political fallout from the 2008 Sichuan earthquake, the cancellation of the 2008 EU-China summit and the problem of unsafe Chinese consumer products. At times, the glare of publicity has been focused on matters as diverse as anti-dumping taxes on Chinese candles, ‘cyber-wars’ and virtual ghost-networks allegedly attacking the West, Dalai Lama visits and German students throwing shoes at the Chinese PM in Cambridge1 – the list of incidents and issues could easily be extended. At the same time though, there is much more than just detail: the EU-China relationship – although at times on rocky roads – is the most 1

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

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wide-ranging and complex among all EU dialogues with Asian partners; it certainly receives the most foreign-policy emphasis from the EU. Behind this lie some wider, equally binary, processes and perceptions. Some of them can be explained by the mixture of admiration and revulsion so emblematic of many European views of China in former ages. Others lie in the way in which subject-matters such as freedom and democracy, human rights, political sovereignty and religion can act as both accelerators and brakes in EU-China relations. Others still reflect different paths to modernity, law, values and wealth. Behind most of them, we argue, lies a deeper enigma shaping contemporary EU-China relations. This is brought to the surface by exactly such issues as are discussed in the pages of this book: rights to development, economics, regionalism, democracy, tolerance and control, dialogue and respect, contributions to civilisations and interference in domestic matters. The crux lies in the two almost diagonally opposing ‘DinosaurViews’2 of China, which are still in currency at the moment and – if they persist – are in danger of obscuring the commonalities between Europe and China. Fundamentally, both these views choose to assume a strong bias, emphasising, respectively, elements of ‘sameness’ and ‘commonality’ and aspects of ‘difference’ and ‘strangeness’ between China and Europe. Mindful of the dangers of over-simplification, the first view can be described to be wholeheartedly embracing China’s right to finding her future place in world affairs, through a method of ‘peaceful rise’. Seen through this analytical prism, the PRC becomes a uniquely successful, and increasingly assertive, muscle-flexing,3 example of a non-liberaldemocratic, authoritarian state under one-party rule; a ‘socialism-withlocal-flavour’ system; a country, which achieves staggering economic development, and superpower-status, in a short time, while retaining state-control; a paradigm for other developing countries around the world, especially on the African continent. In spite of – perhaps just because of – promoting wealth-creation and socio-economic and cultural rights over and ahead of civil and political ones, the country has pulled millions of its citizens out of poverty and introduced significant legal and institutional reform in an increasingly wealthy society. Within this soci2

Phrase borrowed from: Times Higher Education magazine, 22 January 2009: 26/7. 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. 3

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ety, the forces of the ‘New Left’ and the ‘New-Right’ are vying for intellectual supremacy, influence and political predominance, over issues, welfare the environment, the rule of law and the scope and optimum pace of reform (Leonard 2008). In stark contrast to this, the proponents of an alternative view frequently point to the China-threat: in this perspective, the PRC has mutated into ‘angry China’: an ‘accidental empire’4 and an aggressive pariahstate threatening both Taiwan and world peace; a country whose defence expenditure rose by 17.6 per cent in 2008,5 which props up ‘rogue-regimes’ in Sudan, North Korea and Burma6 and insists, unreasonably, on its ‘developing-nation-status’; a violator of human and personal integrity rights on a massive scale, which silences human rights advocates, ‘plays on’ colonial guilt, hides behind the ‘Olympic’ spirit and ‘Asian’ values to suppress dissent and democracy.7 In this view China is a state which eradicates autochthonous cultures in Tibet and elsewhere, stifles religious freedoms and seeks to censure the internet (Ching 2008). While many aspects of both these points of view can, at times, be ideologically-motivated, and may be, at times, insufficiently backed-up by data, they remain, more often than not, influential and persistent bones of contention, as well as background issues. A substantial proportion of the theory and political practice of current EU-China relations is linked to the various interpretations of these disparate views. Concomitantly with this, there is a resurgence of interest in the academic study of matters relating to Europe’s China strategy; throughout 2008/09, both new Confucius Institutes and Chairs of EU-China Relations have been cropping up on an ongoing basis, while the subject has been debated at Academic Symposia around the globe.8 And, increasingly, European (and western) debates about how to ‘engage’, ‘socialise’, ‘contain’ and ‘tie-in’ China are echoed in a Chinese mirror-discourse on

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B. Emmott: ‘Opinion’, The Times, 22 May 2009; 34. A. Willis, EU-Observer, 17 March 2009 (http://www.euobserver.com). 6 The ‘trial’ of Aung San Suu Kyi, in May 2009, over-shadowed the 2009 EU-China Summit, see: http://euobserver.com/9/28135?print=1 7 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 in Bristol in May 2009 (Europe’s China Strategy) and Groningen in December 2009 (Concord or Conflict?). 5

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how best to ‘manage’ the ‘decline’ of the West and shape the world in an Asian mould (Mahbubani 2007; Leonard 2008). These perceptions are, of course, ultimately connected to wider discourses about new ‘Great Games’: what kind of superpower is China becoming? Can the PRC perceive the EU as more than a mere counterbalance in its relations with the United States of America?9 What is China’s and the European Union’s rightful place in global affairs? Which lessons can be learned from the global economic downturn, and can China lead on putting them into practice?10 How important are ‘culture’ and ‘rights’ in the debates about politics and human rights? Who will this century – and the next one – ‘belong’ to? What is the most appropriate way for the European Union to shape its relations with the PRC? The attempts to resolve these questions, in turn, unfold against a background of swift, unprecedented, change in China, characterised by voracious demands for energy, the Chinese wish for market-economystatus, an increasing population imbalance, persistent wealth disparities between coastal and inland provinces, the emergence of a new – largely conservative – middle-class, the Chinese anti-secession legislation of 2005, an unprecedented expansion of higher education and progressive environmental degradation – to name but a few developments recently commented on (e.g.: O’Callaghan 2004; Gungwu and Wong 2007; Crossick and Reuter 2007; Shambaugh et al 2008; Leonard 2008; Ching 2008). The Chapters in this Book On the one hand, Europe should not listen to Europeans who assume Europe has 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 Chinese conservatives who believe that China is so different that it can only learn from within. China is and does need to go through a process of enlightenment-style thinking to underpin its future political, economic and social trajectory and to rationalize the current contradictions of Marxist-Leninist thought with a freewheeling economy (Gary Hallsworth in Crossick and Reuter. 2007: 221) 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; World Affairs 2001 (Special Issue).

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It is with these general comments and developments in mind that this present volume seeks to gather the best of contemporary research on EU-China relations, in order to offer both an overview of the current intellectual landscape of the relationship, and to point to some of the key strands which are set to shape future interaction between the two partners. It can be read in conjunction with a predecessor-volume on EUAsia Relations in this same series (Anderson and Wiessala 2007), and it seeks to add to the academic analysis of EU-Asia relations in general. The book is divided into three sections. The principal content and purpose of the first section is evident from its title: the Background of EUChina Relations and the Human Rights Dilemma. In the first chapter of this book, Nicholas Rees provides a historical overview of China’s relations with three of the EU’s biggest powers – Germany, Britain and France – before examining the impact of those encounters on contemporary relations. He gives particular attention to understanding how China and its EU partners view each other and what this means for the contemporary relationship. While he demonstrates clearly that the relationship between the EU and China is a multifaceted one, covering a whole gamut of areas and interests, he also reminds us of the challenges that lie ahead. In the subsequent chapter, Fraser Cameron surveys the evolving status of EU-China relations by examining the contents of the various policy papers or communications of the European Commission focusing on China. He also assesses the impact and influence of the other EU institutions in shaping the EU-China relationship. In doing so, Cameron reveals an important shift in EU policy over the past two decades, which has been evolving from assisting China in its development and reform process to a focus on dealing with the challenges posed by its rise. His chapter further examines the views of the European Parliament, which frequently takes a more strident position than the Commission or the Member States on issues such as human rights or arms sales to China. In a broad analysis of the material, institutional, and ideational elements of the EU-China partnership, Natee Vichitsorasatra argues in the third chapter that the EU has consistently opted for a bilateral strategy with a priority on material interests in its relationship with China. Using the Asia-Europe Meeting (ASEM) as an example, he finds that there is little evidence to suggest that the EU has pursued a multilateral strategy with China. Describing the ASEM process as passive multilateralism,

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Vichitsorasatra nevertheless cautions that ASEM should not be considered a failure since its role has always been to stimulate and sustain growth in bilateral interactions. The chapter by Georg Wiessala offers seven diverse perspectives on what may well be the ‘thorniest’ issue in contemporary EU-China relations: the human rights question. The chapter examines the fundamental ambiguities in Sino-European relations and points to the legacies of past civilisational encounters. It proceeds to discuss how EU-China relations can be conceptualised from the point of view of international relations theory and intellectual discourse in China and Europe. It subsequently analyses the role of ‘ideas’, ‘identity-politics’ and ‘perceptions’ in EUChina human rights discussions, and it examines how EU China foreign policy can be understood to be constructed around some ‘key’ elements and frameworks. The chapter closes by emphasising the roles of intellectual exchange and knowledge-based co-operation and by offering a brief assessment of the likely future course of EU-China debates over human rights. Finally, in the first section of this book, David Askew’s chapter is not so much a tale of EU-China relations, more a critical examination of the relationship between politics, sports and human rights. In China, where sport has long been mobilized to construct narratives of national identity, the nationalistic pride generated by sporting success has become increasingly important to the Party-state. Askew also reminds us that until the mid-1970s, the European Commission saw economic development as a precondition for the realization of human rights, rather than the current position, which is to see the guarantee of human rights as a precondition for development. This attempt by the EU to recreate itself as a normative power means that its relationship with China has been a troubled one because Beijing’s official position today shares much in common with the pre-mid-1970s European Commission. The second section of this book, The Geopolitical Setting of EU-China Interaction, deals with a number of important, global, facets of the contemporary EU-China relationship. It introduces into the frame of this book the concepts of multi-polarity, complex inter-dependence, bi-multipolarity, and an in-depth analysis of a number of international partners other than the European Union, whose relations with the People’s Republic of China, nevertheless, constitute an important frame of reference for Sino-EU contacts, such as India, Russia and the US.

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The main theme of Jennifer Clegg’s chapter is how, in developing its views and policies as regards the EU, China has developed a wider, multi-polar, approach to international relations. One of the biggest threats to this approach, of course, have been the unilateralist policies of previous US administrations, while the widening trade gap between China and the EU is a cause of major concern especially in a period of acute economic difficulty. Above all, China has been trying to use the EU as a buffer with the USA, demonstrating how the multi-polar policy works in practice. Rajendra K. Jain provides a fascinating insight into Indian perceptions of the evolving relationship between the EU and China. Starting with an overview of Indian attitudes towards both the EU and China, the chapter reveals the country’s concern about the US-orientation that currently dominates international relations. Jain also makes it clear that India fears being marginalized by both this trend and the EU’s apparent closeness to China. He then develops a series of policy-recommendations for overcoming these threats, focusing especially on closer links between India and the EU in the areas of trade relations, education and research. In the subsequent chapter, Christopher Williams assesses how Russia’s links with the EU and China can be improved. Given the substantial border between Russia and China, as well as issues arising from energy and arms trading, it is clear from this chapter that extensive efforts have been made since the 1980s to devise effective channels of communication. While these efforts have to a large extent been successful, Williams also warns of potential future problems that could interrupt the relationship. This reveals the constant fluidity in international relations, a theme that runs effectively throughout many other chapters in this book. In this vein, and using the concepts of ‘complex interdependence’ and ‘bi-multilateralism’ as organising and evaluative analytical devices, Michael Smith and Huaixian Xie assess the complex relationships between China, the EU and the US. The chapter focuses on two linked case studies, dealing with China’s accession to the World Trade Organisation (WTO) and the 2005 dispute over trade in textiles, demonstrating clearly how these complexities create a major challenge for policy-makers. In particular, the conclusion reveals that the concepts can also be applied to many other areas, including arms embargoes, other security issues and the environmental debate.

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Last but not least, for this second section of the book, Paul Lim assesses in some detail the place of Taiwan in the EU’s thinking, and in EU-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 on trade and investment between Taiwan and the EU, Lim demonstrates that the Union has made every attempt to obviate the One China Policy, without offending China. Indeed, Lim claims that, working through its links with the EU, Taiwan has found a place on the international stage, anticipating further progress in the near-future through further negotiations. The third, and final, segment of this book aims to ‘home in’ on a number of key topics which have been selected for their potential to give shape to contemporary EU-China relations, and to determine its immediate future. The section is entitled Issues, Policies and Perceptions in EU-China Dialogue, a choice of title which is meant to hint at the potential of the subject-areas chosen, not only to be the practical drivers of EU-China dialogue, but also to function as important indicators of how the two partners 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 and perceptions in EU-China relations. However, it enlarges the scope of the investigation, in order to embrace some of the ways in which present and future EU-China co-operation is rooted in a range of developments pertaining to economics, law, security, energy, crime, media freedom and maritime matters, to name only a few. The section begins with an essay by Peter Anderson, revolving around the situation of Chinese journalism, its freedom of manoeuvre and the limitations imposed upon it in contemporary China. It places a particular emphasis on the pressures generated by the impact of the Internet, and on attempts by the Chinese leadership to police it, in the year of the Beijing Olympics. In 2009, the year which marks the 20th Anniversary of the Tiananmen Square crackdown, Anderson investigates the Chinese Government’s perspective on media control and ‘gate-keeping’, with reference to national security, stability, political liberty and education of Chinese students abroad. He offers a range of speculative political scenarios on the future course and possible extension of journalistic freedoms in the PRC. In some areas, this chapter can be read in

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conjunction with the chapters about human rights, the Olympic Games and the context of EU-China relations. The following two chapters add to the analysis of the state of China by means of economic evaluation. In the first chapter, Carlo Filippini, following a thorough examination of the development of economic relations between the EU and China, focuses mainly on Merchandise Trade and the Trade in Services. Fillipini relates his analysis, on the one hand, to the EU’s trade deficit with China, and, on the other hand, to issues of democratic reform in the PRC. He investigates both EU concerns over competition, corruption, regulation and product safety in China, and analyses Chinese views on the question of Market-EconomyStatus (MES), protectionism and the EU nexus between economic matters and human rights developments. Moreover, Filippini calls for a more open ‘ranking’ in the EU’s aims for its economic China policy, for the clarification of competencies, and for a fuller understanding of issues of language and culture when dealing with China. This latter view relates to an overall theme of this volume, and it is echoed throughout a number of other contributions. The second chapter focusing on economics, by Valeria Gattai, builds on the previous economic analysis, through her detailed analysis of the impact of Foreign Direct Investment (FDI) patterns in EU-China interaction. 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, by a comprehensive analysis of the outward internationalisation of Chinese enterprises since Deng’s 1978 Open-Door approach, and with the ‘goglobal’ policies implemented by successive Chinese leaderships. On the other hand, her key concern lies with the physical, normative and psychological hurdles European firms often face when seeking to invest in the PRC. Gattai, furthermore, seeks to point to other factors, such as skills, intangible resources and capabilities. In pointing to the challenge, for example, of ‘cultural distance’ Gattai’s chapter relates to the arguments also put forward by other authors in this volume, among them by Fraser Cameron, Carlo Fillipini and Nicholas Rees. The final two chapters in this last section of the book are concerned with different aspects of ‘security’ in China-EU relations, particularly in the areas of energy and maritime security. These chapters have been included, not only because there appears to be a significant dearth of

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analyses of these matters in contemporary EU-China research, but also on account of their significance for the mid-term future of the EU-China relationship. The first chapter, by Pradeep Taneja, offers an extension of the analytical frame of EU-China relations, by means of an analysis of the role of energy security. The focus of his chapter is on China’s search for energy security and its impact on China’s relations with the European Union. The author outlines the key initiatives China has taken to ensure regular and cost-effective supplies of oil and gas. Taneja argues that China’s search for energy security has led it to develop closer political and military ties with a number of countries in Africa, which have traditionally relied on Europe for investment and development assistance. This is seen by many European politicians and EU officials as undermining their long-term efforts to improve the quality of governance and the respect for human rights in those countries. While China’s search for energy security does cause some difficulties in EU-China relations, Taneja suggests that this also provides an opportunity for the two sides to engage in a constructive dialogue on climate change and alternative sources of energy. The final chapter in the section on Issues Policies and Perceptions stays within the area of security relations and highlights the issue of maritime security in the East and regions of high strategic importance, such as the East and South China Seas and the Straits of Malacca. The author, Keyuan Zou, offers a comprehensive analysis of the maritime legal instruments and policies in this area. He is one of the first observers to connect these to China’s relations with the EU, examining which lessons the two world players can learn from one another. Keyuan Zou relates his investigation to questions of energy demand and terrorism, security of the sea lanes and trade, criminal law, weapons of mass destruction and piracy, all of which were newly-resurgent issues in 2009. His examination is embedded in the wider contexts of the Association of South East Asian Nations (ASEAN) and of relevant EU experience in maritime security. The author offers some in-depth case-studies, contributing to a perspective which is informed by international law, practical examples and the details of Chinese policy-formation in this field. In looking at the issue of sovereignty and the perceptions of EU, US and Chinese maritime diplomacy, Keyuan Zou continues the analysis of an important strand of thought which is appearing throughout this volume.

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Taken together, the fifteen chapters in this collection offer a large variety of contemporary approaches to the critical examination of EUChina relations in 2009. By the time we were putting the ‘finishing touches’ to this collection, the 4th June 2009 had ‘crept up’ on us, and with it, the 20th Anniversary of the Tiananmen Square crackdown in 1989. It is with the victims and continuing implications of that act of violence in mind that we offer for further scrutiny and development, the diverse findings of the researchers assembled in this volume. Around this poignant anniversary, the world was, once again, mindful of the awesome power of China, then as now, and of the challenges facing both her current leaders and the EU. In summer 2009, the media and the academic debate alike, in both China and Europe were thus newly alive with speculation about whether, and in what ways, China had changed since then, and where the country would be heading in the space of the next twenty years. Although it is, of course, difficult to provide precise answers to these questions, the editors of this volume hope that the chapters which follow will provide some of the viewpoints and tools required by present and future observers to understand the ever-more dynamic, fascinating and challenging relationship between the People’s Republic of China and the European Union. References Anderson, Peter and Wiessala, Georg (eds) 2007. The European Union and Asia – Reflections and Re-orientations. Series European Studies, Vol. 25. Amsterdam/New York: Rodopi. Andreosso-O’Callaghan, B. et al. 2004. ‘Economic Change and Political Development 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. London: 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 Affairs Wang, 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 AND THE HUMAN RIGHTS DILEMMA

EUROPEAN STUDIES 27 (2009): 31-46

EU-CHINA RELATIONS: HISTORICAL AND CONTEMPORARY PERSPECTIVES Nicholas Rees Abstract This chapter offers and in-depth examination of the origins and the development of EU-China relations, in the context of the EU-China ‘Strategic Partnership’. The chapter looks at how contemporary, bilateral, Member State relations have formed the background to the emergence of EU policies with regard to the PRC. It places a particular focus on offering a contribution which can help in our understanding of how the actors in the EU and in China view each other. The chapter examines how perceptions which shape the contemporary EU-China relationship have been influenced by the legacies of past encounters. Introduction The rise of China and its growing role in international affairs provides both challenges and opportunities for the European Union and its Member States. The challenges for the EU lie in understanding and working with China. Economic relations, reflecting trade and European investments in China, tend to dominate the contemporary relationship, although other issues are increasingly on the agenda. The economic relationship also makes it more difficult for the EU to develop a coherent policy towards China, as those EU Member States with significant economic interests in China are unlikely to agree to a more comprehensive EU policy towards China that may damage their economic relations. The challenge for China is to maintain its strong economic and trading relationship with the EU and its Member States while ensuring that any potentially divisive issues such as human rights, Tibet and Taiwan do not

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damage the development of these relations. It appears that China would like to have a closer relationship with the EU, especially if it had the effect of dividing Europe and the United States and provided a means of balancing US interests. The US and the EU have been supportive of integrating China into the global system, hoping that this will ensure its commitment to international institutions and bring about domestic political and social change in China (Shambaugh 2005a: 58). Early Engagements and Contemporary Bilateral Member State Relations The fascination with China is not a new phenomenon in Europe and reflects a past that has included many encounters with China, some of which shape the contemporary relationship. Europe and China have been intermittently engaged in relations since as early as 1514, when the Portuguese first arrived in China via Macau (Yahuda 2008: 13). The following analysis focuses only on the German, British and French experiences, highlighting how past relations have influenced recent bilateral relations and what this means for the development of the EU-China relationship. Sino-German Relations German involvement in China dates back to the 1700s, and its commercial relations today reflect those early experiences and encounters with China. Germany is also China’s largest trading partner in the EU and its economic interests in China are considerable with most of the larger German companies such as Siemens and Volkswagen present in China. In its earlier involvement, Germany, like Britain and France in the midnineteenth century, saw opportunities to advance trade and territory in China. 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 the Deutsch-Asiatische Bank was established and by the end of the 1890s Germany had gained considerably in economic importance. In 1897 Germany invaded Qingdao and established the Jiaozhou Bay colony (Kiautschou Bay), thereby providing a naval base and opening up economic opportunities. The intensity of Sino-German relations between the Boxer Rebellion (1900-1901) and World War I varied, although German influences and interests were apparent in China. In 1917 China declared war on Germany and was able to regain some of its earlier concessions that had been forced on it in 1897. Following the Treaty of Versailles,

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and during the 1920s, Sino-German trade grew with a number of German armament companies establishing links in China. This was reinforced and intensified following the rise to power of the Nazi Party in 1933, with Germany concluding a treaty with China in 1934 ‘On the Exchange of Chinese Raw Materials and Agricultural Products for German Industrial and Other Products’. The relationship, however, faltered following the outbreak of second Sino-Japanese war in 1937 and the increasing pro-Japanese line followed by Germany. In 1941, following the attack on Pearl Harbour, China joined forces with the allies and declared war on Germany. The ensuing legacy of the earlier period and the division of Germany after World War II meant that China’s relations with Germany have always been relatively good with less ‘baggage’ from the past impacting on the relationship. Germany (then the German Federal Republic) established diplomatic relations with China in 1972 with the aim of underpinning its commercial relations and supporting German companies doing business in China. This involved an increasing range of bilateral visits, including annual visits by the German Chancellor to China, as well as the development of further systematic cooperation. As with the other EU states, relations between Germany and China ‘dipped’ after Tiananmen Square, but were quickly placed back on track reflecting the importance of the commercial relationship (Stumbaum 2007: 60). Germany, along with France, has been a strong advocate of removing the EU arms embargo on China. It has also been cautious about criticising China’s record on human rights, supporting the EU’s approach of constructive engagement. The relationship between China and Germany hit rocky waters following a ‘private’ meeting between the German Chancellor Angela Merkel and the Dalai Lama in September 2007. This was in marked contrast to the visit by the Chancellor to China the previous August, where she was warmly welcomed. The meeting with the Dalai Lama annoyed the Chinese, temporarily leading to a ‘drop to almost freezing point’ in relations and the cancellation of a number of meetings.1 It also led to criticism from within Germany by a powerful German industrial lobby led by Jürgen Thumann. The Social Democrats (SPD) and Christian Democrats (CDU), including the German Foreign Minister Frank-Walter Stein1 ‘Pressure Growing on Merkel to Fix Squabble with China’, Spiegelonline, 27/11/07 http://www.spiegel.de (accessed 28/01/09)

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meier (SPD) were also critical of the Chancellor’s actions. This incident serves to highlight the dilemma for states such as Germany, who find it difficult to balance economic interests with issues such as Tibet and human rights. Sino-British Relations Britain is the fourth largest exporter of goods to China in Europe and second in terms of imports from China (Stumbaum 2007: 66). The importance of China to Britain today reflects not only recent developments but also a considerable history of relations dating back as early as 1637 when Captain John Wendell arrived in Macau and attempted to establish trading relations with China. These early attempts failed in the face of opposition from both the Portuguese and the Ming Dynasty (13881644). During the Qing Dynasty (1644-1911), British trade developed with China, although the relationship was often considered highly unequal. The Treaty of Nanjing, signed in August 1842, brought to an end the first Opium War (1939-42), and led to the acquisition of Hong Kong as a crown colony. This was a highly significant development and one that has had a considerable impact on the development of British relations with China. Foreign involvement in China later led to the Boxer rebellion, once again prompting foreign military intervention and suppression of the rising by a coalition of states, which included Britain. On the Chinese side this left a lasting impact, with many considering it as imperial aggression and national shame that has continued to impact on the development of Chinese foreign policy. Following successful military cooperation during World War II, where British and Chinese troops fought together against Japan, 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 government of China, which led to the reestablishment of diplomatic relations during 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 London (1954). It was, however, only in 1972 that full diplomatic relations were established. As early as 1950 trade matters were of growing importance to British companies leading them to form the Group of 48 (companies), which is now the China-Britain Business Council and the SinoBritish Trade Council (1954).

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It could be argued that it was not until 1984, with the Sino-British Joint Declaration, which led to the return of Hong Kong to Chinese sovereignty in 1997 that the injustices of the past were addressed and that relations with China were placed on a better footing. The importance that Britain attaches to its relations with China is reflected in the fact that the UK government established in November 2003 a China Task Force, which is chaired by the Chancellor of the Exchequer. The task force covers seven areas of possible cooperation and includes among its members a mix of business leaders, academics, and politicians.2 Relations between Britain and China intensified after May 2004, when Prime Minister Blair and Premier Wen Jiabao signed a statement on the establishment of a comprehensive strategic partnership and agreed to hold annual summits.3 This has been exemplified in the intensity of diplomatic visits, with the visit of Premier Wen Jiabao to Britain in September 2006 and both the British Prime Minister and Foreign Secretary each making two visits to China in 2008. It is also evident in the range of institutional channels for communication, which include the summit meetings and task forces, as well as the UK-China Economic and Financial Dialogue, sector specific dialogues, and the UK-China Human Rights Dialogue. These are mirrored on the Chinese side by bodies such as the UK Task Force. Most recently, in 2009, the UK Government published a new strategy document on ‘The UK and China: A Framework for Engagement’ in which it identifies why China matters, the key challenges and the UK response. It is suggested that China matters to the UK in a number of areas, including in terms of British prosperity, globalisation, climate change, development, international security and the international system. The document identified three key elements of British foreign policy towards China: getting the best for the UK from China’s growth, fostering China’s emergence as a responsible global player, and promoting sustainable development, modernisation and internal reform in China. In respect to each of these areas, the paper outlines more detailed targets and deliverables. In seeking to achieve these targets the UK has 2

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

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developed a strong diplomatic presence in China, including an embassy in Beijing, Consulates General in Shanghai, Chongqing, Guangzhou and Hong Kong plus offices of the China-Britain Business Council. In addition to an array of high-level bilateral meetings, the UK also works through the EU, UN and with the USA. The new strategy document does refer to the EU and other partners in the EU, although the focus is largely on the UK response to China reflecting the importance of China to the UK and its continuing pursuit of its own commercial interests. Sino-French Relations French engagement in China followed a similar pattern to that of other European states, with early interest in and fascination with China in the 1600s and 1700s being replaced in the nineteenth century by a desire to gain overseas colonies and territories. By 1844, with the Treaty of Whampoa, France won from China the same type of concessions as their British counterparts. It later seized Guanzhouwan as a treaty port and gained concessions in Shanghai. As with Britain, France gained further concessions and engaged in military endeavours during the second Opium War, the Sino-French War and in French Indo-China. These engagements left both a colonial legacy, as well as a deeper understanding of China, thereby providing the basis for the development of contemporary Sino-French relations. In the post-World War II era, France was one of the first European states to establish diplomatic relations with the People’s Republic of China in January 1964, arising out of de Gaulle’s recognition of the PRC. The relationship, however, was at times tempestuous, with various incidents leading to confrontations with China. In particular, the sale of military weapons (Mirage 2000-5s and La Fayette-class frigates) to Taiwan in the 1990s, angered the Chinese government and led to the temporary closure of the French Consulate-General in Guangzhou. In 1997, France sought to establish a strategic partnership with China in an attempt to ramp-up its relations and develop further commercial opportunities. France is the second largest EU exporter of goods to China, as well as being the fourth largest EU investor in China, so it has a considerable stake in developing and building on this relationship. It has also sought to promote a greater understanding of China in France, through events such as in 2004 a year of Chinese culture, as well as high-level diplomatic visits to and from China, including the French President and the Chinese Premier.The predominant

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focus of many of these activities and visits has been on developing economic relations and trade. Notable examples of major contracts awarded to French companies include the sale of Airbus planes to China and cooperation in areas such as energy and information technology. The relationship, however, has also had its problems. In early 2008 there were significant public protests in Paris during the Olympic torch relay about human rights in China and the issue of Tibet. This led to protests in China, including a campaign by the Chinese to boycott the French hypermarket Carrefour, as well as warnings from the Chinese government that Sino-French relations could be damaged by such incidents. In response to this situation, both the French and Chinese governments sought to calm the situation. An indication of how seriously the French government took the situation was that President Sarkozy wrote a letter of sympathy to the Chinese athlete who had carried the Olympic torch in Paris, which was delivered in person by the President of the French Senate. However, Sarkozy’s own meeting with the Dalai Lama in December 2008 had detrimental effects on Sino-French relations, with the Chinese cancelling the EU-China summit that France was meant to have hosted as part of its EU Presidency. The EU and China: Developing a Multi-Faceted Relationship The EU and China are now engaged in cooperation on a number of levels, including on international and bilateral issues, reflecting the growing complexity and density of the relations. This reflects the EU’s objective of trying to move away from a relationship largely based on economic and commercial interests, towards a more strategic partnership based on a comprehensive set of relations between the EU and China. The partnership has also been increasingly institutionalised and formalised, ensuring a continuous dialogue and stream of visitors between China and the European Union (Men 2008). It has been variously described as a ‘long-term relationship’, ‘a comprehensive partnership’, ‘a maturing partnership’, ‘a strategic and enduring relationship’ and ‘closer partners’ (Dai 2007). Since the late 1990s, there has been a profusion of new strategy papers and communications published by the European Commission, reflecting the increasing levels of EU-China engagement and activity (see Chapter by Cameron). The titles of these papers are important as they indicate how the relationship has been evolving, at least from the European Commission’s viewpoint.

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The overall theme has been one of engagement, linked to development of a strategic partnership that is maturing based on shared interests and challenges. On the Chinese side, the Ministry of Foreign Affairs in response to the 2003 Commission paper published its own strategy paper, ‘China’s EU Policy Paper’, in October 2003. The paper identified the EU as ‘a major force in the world’ and one that will ‘play an increasingly important role in both regional and international affairs’ (MFA 2003, 1). It suggests that the two sides share some common interests, including support for a strong multi-lateral (or multi-polar) international system. The paper identifies the objectives of China’s EU strategy as being: closer political ties with the EU, continuing economic cooperation and integration with the EU, and more people to people exchanges to increase learning from each other. It notes, however, given the ‘differences in historical background, cultural heritage, political system and economic development level, it is natural that the two sides have different views or even disagree on some issues’. The EU and China are increasingly engaged in a multi-faceted relationship across areas that include trade and aid, human rights, security and international cooperation. It is, however, trade that dominates the relationship, with other issues arising on a periodic basis and providing the basis for dialogue and progress.4 In trade terms, the European Union is China’s largest market and China is the EU’s fourth largest market. In 2007, the EU imported €231 billion worth of goods from China, while it only exported €72 billion in goods to it.5 In this trading relationship, the EU is the primary supplier of technology and goods to China in comparison to the USA. Arising out of nature of this relationship, the EU has suffered a significant trade deficit with China amounting to €159 billion in 2007. In 2007, European companies invested €1.8 billion in China, considerably less than in 2006 (€6.2 billion), with Germany being the largest investor followed by the Netherlands, the UK and France. This investment is not simply in manufacturing but also includes R&D, highlighting the importance of China to large European companies. However, China is also investing in Europe by directly manufacturing prod4 The EU is also a significant provider of development assistance in China, which is administered 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… (accessed 28/01/2009)

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ucts close to the market, especially in Central and Eastern Europe (Verganon 2007: 14). Underlying these statistics, however, is a somewhat more complicated trade relationship in which a small number of the larger EU states are the prime traders with China as discussed earlier. The trade deficit has been the subject of increasing high-level discussions between the EU and China (Vergeron 2007: 7). European companies have encountered trade barriers in trying to access Chinese markets (especially services) and have found it difficult to overcome these barriers (Godement 2008). As a result, China is the subject of a significant number of trade defence investigations and the EU has a large number of anti-dumping measures in force against Chinese imports. Similarly, there have been claims by Chinese companies that the EU has been protectionist toward Chinese goods and investments. Outside of trade, the issue of human rights has been a continuing problem in the EU-China relationship, as well as more broadly for the EU in Asia (Anderson and Wiessala 2007).6 The EU has a strong commitment in its foreign policy outlook to upholding human rights, as reflected in its enlargement negotiations with accession states, third party agreements and broadly in its European Security Strategy. In its 1995 China Strategy Paper the EU Commission stated that human rights were integral to EU foreign policy. The EU has previously condemned regimes that have a poor record of upholding human rights, as well as imposing sanctions against a number of countries known to be violating human rights, such as Myanmar and Zimbabwe. In the case of China, however, the EU has changed its position from one of being openly critical of China, as typified in the annual support for a resolution against China in the UN Human Right Commission, to one of trying to engage China on this difficult issue. In part the change of position represents a broader EU engagement with China, in a belief that this is more likely to achieve change through a human rights dialogue, as well as recognition that some of the larger Member States prefer to pursue human rights issues on a bilateral basis. The issue of human rights also provides an interesting example of where the European Parliament has been more critical of China than the EU’s own Member States.

6

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

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In terms of ‘traditional’ security matters, there is a limited degree of direct cooperation between the EU and China, which is hardly surprising given their geographical distance and different foreign policy orientations. It does not feature as an aspect of the EU Country Strategy Paper, although EU and Chinese leaders at their summit meetings have discussed security issues. For example, following the seventh EU-China summit (2004), a joint declaration on non-proliferation and arms control was issued with the two powers committing to work together to strengthen the international non-proliferation regime (Men 2008: 9). It does, however, also underlie some of the discussions in other forums where the EU and China meet including at the United Nations, and through regional cooperation, such as in the ASEAN Regional Forum and the Asia-Europe Meeting (ASEM) (Rees 2008). The partners also meet in other regional bodies, such as the Council for Security and Cooperation in Asia Pacific (CSCAP). In these various organisations and forums both traditional and non-traditional security issues are discussed and some common actions agreed. In the areas of soft security, which includes issues of particular concern to the EU such as illegal immigration, transnational crime, contagious diseases, energy, environment and sustainable development, there are possibilities for cooperation (Shambaugh 2005a: 15). In practice, there are also instances of bilateral security cooperation between China and states such as Germany, France and the UK, including exchanges of military personnel, high level visits and some joint military exercises. A major limitation in this relationship remains the 1989 Arms Embargo, which limits the sale of military equipment by European firms to China. The lifting of this embargo, which has been advocated by France and Germany, has been opposed by states such as Denmark and Sweden.7 The possible lifting of any such embargo is also likely to anger the United States and Japan, which continue to see China’s military growth as a threat, especially to Taiwan. This ongoing issue is a cause of concern in China and limits the possibilities for further developing cooperation in the security arena.

7 The lifting of the arms embargo has also been opposed by the European Parliament.

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EU and Chinese Views of Each Other The relationship between the European Union and China has been shaped by past historical encounters, the contemporary nature of the two political systems and their interests in the international system. This is reflected in their complex views of each other that influence the potential for the development of a further comprehensive relationship. The European Union’s vision of its role in the world is very much as a post-modern actor committed to supporting the development of democracy, good governance, the rule of law and respect for human rights. In its 2003 ‘European Security Strategy’ the EU made a commitment to developing strategic partnerships with a number of states, including China, reflecting its desire to strengthen its role in international affairs.8 The dilemma for the EU is that, while the European Security Strategy aims to position the EU as a global player, much of the EU’s foreign policy is focused on the states that border the European Union. China is physically distant from Europe and is not an immediate security consideration. This means that there is a tendency for the EU to view China largely in economic terms, given that much of the day-to-day relationship concerns trade matters. This view is reinforced by the nature of the EU as an actor with the Commission leading in the economic arena. It is more likely that political and security matters concerning China will be handled by the EU Council of Ministers (and its Secretariat), which means that some of the more thorny and sensitive issues in the EUChina relationship are subject to the machinations of member state discussions. The challenge lies in the fact that the EU’s Member States are likely to pursue their own particular national economic interests in China. The EU’s Member States are well aware that aside from supporting the development of commercial relations, they must also be seen by their own citizens to be addressing some of the broader issues of concern, such as Tibet, treatment of ethnic minorities, the use of the death penalty in China, state control of the media and freedom of expression. The discussion of such issues in the public realm in EU Member States may satisfy domestic opinion, but it tends to alienate the Chinese authorities, who often feel misunderstood and have engaged in retaliatory measures when offended. At elite political and officials levels there are clearly 8 The other states indicated as strategic partners in this document included Canada, India, Japan, and Russia.

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individuals who are well informed and knowledgeable about the EU and China respectively (Algieri 2008: 67-69). However, public knowledge and understanding of China is relatively limited, reflecting the geographical and cultural distances that exist between Europe and China (Crossick and Reuer 2007). The effectiveness of the EU as an actor is also questionable and the Chinese authorities are well aware of this. At the EU level, the Member States do engage in cooperation by sharing information and coordinating action and in most instances the EU as a group has more influence than a single member state (Keukeleire and MacNaughton 2008). Individual states do, of course, pursue their own economic interests and commercial relations with China. This is inevitable given the importance of the Chinese market, which has a huge potential for European companies and which cannot be ignored. This is always likely to make it difficult to develop a more comprehensive EU view and policy towards China and makes it easy for the Chinese authorities to exert pressure on particular Member States when they feel it is to their advantage and when they want to reward/sanction behaviour. Nevertheless, as indicated later in this chapter and elsewhere in this book (see Chapter by Cameron), the EU Member States have coordinated their actions and agreed common approaches towards China on very specific issues. For example, the issue of intellectual property theft is a major concern for many European companies and a coordinated EU approach is more likely to achieve results in China. It is also the type of issue which the EU through the Commission can pursue in the WTO and through bilateral links with China. As a result, in January 2009 the EU and China signed an agreement on intellectual property rights, highlighting the success of a unified EU approach to China. The Chinese view (or views) of Europe needs to be placed and understood in the broader context of China’s growing role in international affairs. In the international system China is striving to establish its position as a major international player or great power. It aims to do this through a policy of cooperative engagement and the use of soft power within the international economic system (Narramore 2008: 90; also Gill and Huang 2006).9 On its immediate borders it has to contend with 9 This initially began under Deng Xiaoping, with the Five Principles of Peaceful Co-existence, and was then replaced by the new Security Concept, which emphasised cooperation as an alternative to the Cold War environment.

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Russia, India and other East Asian states, while its relationship with the United States still remains problematic especially in relation to Taiwan. Against this backdrop, the European Union is seen as relatively benign and a potential partner in international relations (Crossick and Reuter 2007: 4). In this context, Chinese political leaders and intellectuals have diverse views and understandings of Europe (Leonard 2008). They are, however, engaged in trying to more fully understand Europe and, at the same time, build an understanding in Europe and elsewhere of China (Gill and Huang 2008). There are clearly possibilities for cooperation with the EU and Chinese leaders often find the EU’s approach to international relations more acceptable than that of the United States or Russia. Equally, however, there is recognition that the EU and United States do work in close cooperation in organisations such as NATO and on issues such as international terrorism. China has also drawn some lessons from the EU experience with regional cooperation and has committed itself to closer regional cooperation in Asia through organisations such as the Shanghai Cooperation Organisation and ASEAN, including ASEAN + 1 (China), ASEAN + 3 (China, Japan and South Korea), the ASEAN Regional Forum and ASEM (see Shambaugh 2005b). Chinese political leaders have a good understanding of how the European Union works and the role of its Member States than perhaps it is given credit by many ‘Europeans’ (Sandschneider 2002: 44). Conclusion In looking to the future, the challenge for the EU and China is to try to develop a more long term strategic partnership that enables them to work more closely together in the international system. There are undoubtedly some similarities between China and the European Union with both committed to some form of multilateralism, the rule of law, supportive of regional cooperation and the pursuit of economic and political objectives by peaceful means. But there are also significant challenges. First, as is evident from this analysis, the EU is far from a composite international actor with a clear focus on what it wants to achieve in its relations with China. China and the EU are very different types of actors, coming from differing political and ideological traditions that may make cooperation more difficult to achieve (Scott 2008). Second, the EU’s own Member States are committed to pursuing their own

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economic interests in China, reflecting national priorities and domestic considerations (Heron 2007). As suggested, this can in some cases lead to competition for contracts and limit the willingness of states to commit to developing a stronger EU China policy. Third, China views Europe as economically important, but still politically (and militarily) weak and as an international actor that lacks a strong longer-term vision (Vergeron 2007). The failure of the EU to reach agreement on lifting the arms embargo against China highlighted the inability of the EU to develop a common position and the continuing influence of the United States and Japan, who lobbied against lifting the embargo. Finally, China as an emergent or rising power is committed to developing its relations with its immediate neighbours through peaceful cooperation. All of this militates against an emergent China-Europe axis and any attempt by the EU and China to balance the United States and work more closely together on international issues such as Iraq, Sudan and Climate change (Shambaugh 2005a; Narramore 2008). It also points to the continuing importance of the US-EU relationship, where there are greater similarities in values, cultural and historical backgrounds, political traditions and bilateral relations (Men 2008: 17).

References Algieri, Franco. 2008. ‘It’s the system that matters: institutionalization and making of EU policy toward China’ in Shambaugh, David, Eberhard Sandschneider 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: Reflection and Reorientation. Amsterdam and New York, NY: Rodopi. Balm, Richard. 2008. ‘A European Strategy towards China? The Limits of Integration in European Foreign Policy Making’ in Balme, Richard and Brian Bridges (eds.), Europe-Asia Relations: Building Multilateralisms. Houndmills: Palgrave Macmillan: 125-44. Balme, Richard and Brian Bridges, (eds.). 2008. Europe-Asia Relations: Building Multilateralisms. Houndmills: Palgrave Macmillan. Barysch, Katinka with Charles Grant and Mark Leonard. 2005. Embracing the Dragon: The EU’s Partnership with China. London: Centre for European Reform. Casarini, Nicola and Costanza Musu, (eds.). 2007. European Foreign Policy in an Evolving 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 Uncertain Partnership in the Making’. Paper presented at the 57th PSA Annual Conference, 11-13 April. Foreign and Commonwealth Office (FCO). 2009. The UK and China: A Framework for Engagement. London: Foreign and Commonwealth Office. Gill, Bates and Yanzhong Huang. 2006. ‘Sources and Limits of Chinese ‘Soft Power’ in Survival 48(2): 17-36. Godement, François. 2008. ‘The EU and China: A Necessary Partnership’ in Grevi, Giovanni and Álvaro de Vasconcelos (eds.) Partnerships for Effective Multilateralism: EU Relations with Brazil, China, India and Russia. Paris: EU Institute for Security Studies, Chaillot Paper No. 109, May: 59-76 Grant, Charles with Katinka Barysch. 2008. Can Europe and China Shape a New World Order? London: Centre for European Reform. Grevi, Giovanni and Álvaro de Vasconcelos (eds.). 2008. Partnerships for Effective Multilateralism: EU Relations with Brazil, China, India and Russia. Paris: EU Institute for Security Studies, Chaillot Paper No. 109, May. Heron, Tony. 2007. ‘European Trade Diplomacy and the Politics of Global Development: Reflections on the EU-China ‘Bra Wars’ Dispute’ in Government and Opposition 42(2): 190-214. Keukeleire and Jennifer MacNaughtan. 2008. The Foreign Policy of the European Union. Houndmills: Palgrave Macmillan. Leonard, Mark. 2008. What does China Think? London: Fourth Estate. Men, Jing. 2008. EU-China Relations: From Engagement to Marriage? Brugge: College 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-First Century?’ in International Relations 21(1): 23-45. Sandschneider, Eberhard. 2002. ‘China’s Diplomatic Relations with the States of 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 European Reactions to China’s Rise’ in The Washington Quarterly 28(3): 7-25. Shambaugh, David. 2005b. ‘China’s New Diplomacy in Asia’ in Foreign Service Journal May.

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Stumbaum, May-Britt. 2007. ‘Engaging China, Uniting Europe? EU Foreign Policy Towards China’ in Casarini, Nicola and Costanza Musu (eds.) European Foreign Policy in an Evolving International System. Houndmills: Palgrave: 5775. Vergeron, Karine Lisbonne-de. 2007. Contemporary Chinese Views of Europe. London: Chatham House/Foundation Robert Schuman. Yahuda, Michael. 2008. ‘The Sino-European Encounter: Historical Influence on Contemporary Relations’ in Shambaugh, David; Eberhard Sandschneider and 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 Abstract The EU and China have both undergone dramatic changes in the past 20 years. With 480 million citizens, a single currency and the largest GDP in the world the EU has become an important actor on the international stage. China, with over 1.3 billion citizens, has undergone dramatic reforms and enjoyed unprecedented economic growth that has also led to a greatly increased world role. Both the EU and China 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 the dramatic rise of China and to forge closer ties with it’. But what do Brussels and Beijing mean when they talk of a ‘strategic partnership’? To what extent do they share the same conceptual ideas and principles? The EU proclaims it stands for a values-based foreign policy with the emphasis on ‘effective multilateralism’. China asserts that its peaceful rise is aimed at developing a ‘harmonious world’. But often the two sides seem to talk past each other. In recent years there has been a flurry of EU policy papers on China. In contrast, China published just one paper in 2003 which was highly appreciative of the EU. This chapter reviews the EU approach to China, assesses the thinking behind the various communications and examines the main challenges the EU is facing in forging a new strategic partnership with China. Introduction Relations between the European Union (EU) and the People’s Republic of China (PRC) have developed remarkably fast over the past decade.

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The two very different actors now engage in a large number of dialogues covering issues ranging from trade and development to climate change and global governance. Both sides are negotiating a new partnership and cooperation agreement (PCA). The EU side has been prolific in terms of policy papers about China with the European Commission issuing several Communications which have provoked debate in the European Parliament and decisions in the Council. Several research institutes, academics and NGOs in Europe have also produced policy papers and reports on China. In contrast, China has published only one major document about the EU, in 2003, but there is a growing interest about the EU in China reflected in the fact that more and more academic institutions and think tanks are studying the EU (Grant 2008). Although relations between the EU and China have developed rapidly in recent years, there are several contentious areas concerning issues such as human rights, the arms embargo, the trade imbalance, market economy status (MES), currency levels and intellectual property rights (IPR). Increased contact has, no doubt, led to greater understanding between both sides but there remain considerable misperceptions on both sides. This could be witnessed during the disputes over Tibet in the spring of 2008 and in the subsequent divisions within the EU about whether to attend the Olympic Games.1 Differences over the then EU President Sarkozy’s announcement in early November that he would meet with the Dalai Lama led to the cancellation of the EU-China summit in December 2008. This move was a blow to those who argued that EU-China relations were on a continuous upward trajectory, although China stressed that the matter should be seen more as a bilateral dispute with France, rather than with the EU itself. This chapter reviews the development of EU-China relations since the establishment of diplomatic relations in 1984. It focuses on the various China Communications of the European Commission and seeks to assess the impact and influence of the other EU institutions on the development of the relationship. It does not cover bilateral relations of EU Member States with China, reviewed elsewhere in this volume. The chapter highlights how EU policy has changed during the past two decades evolving from a focus on assisting China’s development and re1 In the end, most EU leaders did attend the Olympics, which were widely regarded as a major success, and which marked China’s ‘coming-out-party’.

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form process to a focus on dealing with the challenges posed by the rise of China. The Legal Framework of EU-China Relations The 1985 EC-China Trade and Economic Co-operation Agreement continues to be the main legal framework for EU-China relations. It was complemented, in 1994 and 2002, by means of exchanges of letters establishing a broad EU-China political dialogue. Both sides signed a Textiles Agreement in 1979 while the following year the EU agreed to include China in the general system of preferences (GSP). The development of the relationship was not without its problems during the early period, with China’s rapid economic rise leading to calls for EU protectionism. Similarly, the issue of human rights in China has also risen up the agenda and is highly contentious among the EU Member States, epitomised by the controversy surrounding attempts to lift the arms embargo. The relationship has also been beset by competition between EU Member States, which, spurred on by economic interests, have often sought to develop their own bilateral relations with China. By the 1990s, the EU-China relationship had significantly altered and expanded with a broader set of dialogues being developed, including through the establishment of the first Joint Working Group on Economic and Trade Matters (1993), the establishment of regular meetings between the EU troika2 and Chinese ministers and annual EU-China summits since 1998. Negotiations on a more comprehensive Partnership and Co-operation Agreement (PCA) started in January 2007 and are still on-going, having reached the half-way stage in January 2009. In 2008, a new High Level Economic and Trade Dialogue (ETD) format was launched, following a similar Sino-US model. The EU and China have also concluded a number 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)

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

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• The ‘Approved Destination Status’ tourism agreement (October 2003) • 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 also recently been inaugurated. They concern diverse areas, such as Intellectual Property Rights (IPR), Competition Policy, Enterprise Policy, Textiles, Macroeconomic and Financial issues, Civil Aviation, Labour and Social 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 for China EU Relations, praised China’s unrivalled progress since 1945. It tiptoed around the ‘1989 Tiananmen Square events’, arguing that, ‘the time has come to redefine the EU’s relationship with China.’ Europe’s relations with China were bound to be a cornerstone in Europe’s external relations, both with Asia and globally. Europe needed an ‘action-oriented, not a merely declaratory policy’, to strengthen that relationship. The Communication concluded that the EU should encourage China to become fully integrated in the international community, to widen the political dialogue to include all issues of common interest and global significance, to support China’s WTO membership, to contribute to reform inside China, to pursue EU concerns on human rights, to promote economic and social reform, and to improve the business environment 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 entitled Building a Comprehensive Partnership with China. The blueprint, once again, drew attention to China’s economic transformation. It further noted that this ‘has been accompanied by a significant evolution in China’s civil society, even if the full respect for universal standards in the field of human rights remains incomplete’. The paper stated that most of the initiatives proposed in 1995 were already under way, while others had yet to mature. 3

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

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The analytical foundations of the 1995 Communication still held true but a number of significant developments occurred, which would lead the EU to further ‘upgrade’ the relationship. These included China’s unambiguous commitment to a market economy at the 15th Chinese Communist Party Congress in 1997; China’s at once more assertive and more responsible foreign policy, as epitomized by China’s role in promoting peace in Cambodia as well as the smooth and successful handover of Hong Kong to Chinese sovereignty in July 1997. The EU was also on the threshold of a single currency and enlargement eastwards, and with the Treaty of Amsterdam had equipped itself with new means to assert itself on the world stage. Such developments, the Commission argued, called both for longterm vision and for active engagement. In the words of the paper, ‘engaging’ China’s emerging economic and political power as well as integrating the country into the international community, ‘may prove one of the most important external policy challenges facing Europe and other partners in the 21st century’. The new EU-China partnership was aimed at engaging China further, ‘through an upgraded political dialogue; supporting China’s transition to an open society based upon the rule of law and the respect for human rights; integrating China further in the world economy and by supporting the process of economic and social reform underway in the country’. The paper also called for an increase in EU visibility in China, as well as, for measures being taken to make EU funding ‘go further’.4 Consolidation: The Commission’s 2001 and 2003 China Strategies The 2001 Commission Communication on the PRC bore the title: EU Strategy towards China: Implementation of the 1998 Communication and Future Steps for a More Effective EU Policy. In explaining the need for yet another Communication, the Commission stated that this policy paper aimed at, ‘defining concrete and practical short and medium term action points’ for EU policy, in order to progress more effectively towards the long-term aims defined in 1998. The paper’s principle suggestions included: • Engaging China further by strengthening the political dialogue to ensure greater coherence and continuity in discussions at all levels. 4

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

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• Supporting China’s transition to an open society through a more focused and results-oriented human rights dialogue, working with China to support relevant reforms under way; implementing and preparing human rights-related assistance programmes. • Integrating China further in the world economy by finalising China’s WTO accession, monitoring the implementation of its WTO commitments, and strengthening the sector-specific dialogues and agreements in key areas (information society, environment, energy, science and technology). By developing new areas of co-operation (enterprise policy, industrial standards and certification, customs, maritime transport, 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 Communication on A Maturing Partnership – Shared Interests and Challenges in EUChina Relations (Updating the European Commission’s Communications on EUChina Relations of 1998 and 2001) was largely self-explanatory. The Commission defended the publication of yet another policy paper by insisting that, ‘much has changed in Europe, China and the world since 2001’. These changes included the advent of the euro, the imminent enlargement of the EU, new responsibilities in justice and home affairs (JHA). China had also entered a new and challenging phase in its social and economic reform process, had become increasingly involved in world affairs, and was rapidly emerging as a major player in the world economy thanks to its dynamic growth and accession to the WTO. Moreover, a new generation of leaders had recently assumed power in Beijing and would be engaging the EU at the highest level for the first time at the EU-China summit in late October 2003. At the same time, both sides had to adapt to a fast moving international scene, with terrorism, weapons proliferation and other concerns, such as the threat of SARS, rising to the top of the agenda. The sluggish world economy and concomitant negative trends in protectionism and regionalism also loomed as potential threats to global trade and development. 5 EU Strategy towards China: Implementation of the 1998 Communication and Future Steps for a More Effective EU Policy (15.5.2001); COM (2001) 265.

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Against this background, the EU and China were seen to have an ever-greater interest to work together as strategic partners to safeguard and promote sustainable development, peace and stability. Europe had a major political and economic stake in supporting China’s successful transition to, ‘a stable, prosperous and open country that fully embraces democracy, free market principles and the rule of law.’ The paper hence argued that, ‘the EU has much to offer here, stemming in part from its own experience in integrating accession countries from East and Central Europe’. The communication proceeded to an assessment of progress since 2001 and to making recommendations for the future. In the terms of the latter the political dialogue should be improved ‘by systematically addressing global and regional governance and security issues.’ Moreover, the paper demanded that the dialogue on illegal migration should be more result-oriented, and that an agreement on the readmission of illegal migrants ‘should be concluded soon’. Anticipated measures to improve human rights dialogue included, ‘greater focus on key issues, stronger continuity and follow-through on issues and individual cases, maximising synergies with existing bilateral Member State efforts, and raising the visibility and transparency of the dialogue.’ In promoting China’s economic opening at home and abroad, priorities were to work together to ensure success of the Doha Development Agenda, monitor and assist China’s compliance with its WTO commitments, and monitor new regional agreements to ensure WTO-compatibility. Support for China’s reform process and sectoral co-operation was to be strengthened through: the launch of new dialogues and co-operation in the fields of intellectual property rights, sanitary standards, competition policy, industrial policy and human resource development; furthermore, through the reinforcement of existing dialogues and agreements on the regulation of industrial products, information society, environment, energy and scientific & technological co-operation. New agreements, covering co-operation in research and related peaceful use of nuclear energy, and in regard to the EU Galileo programme, were also envisaged. The 2003 Commission blueprint proposed that the steering role of the EC-China Joint Committee be reinforced, not only as regards trade and co-operation, but also for the various sector-specific dialogues. Last, but not least, new measures aiming at raising EU visibility in China were

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proposed. These were to embrace better understanding of the Chinese audience, the use of a few targeted messages and closer collaboration with EU Member States. The paper concluded that, ‘the course ahead is long and challenging and if it is to be successfully navigated, it is essential that there is full and lasting commitment from all players. On the EU side, close co-ordination of Union and Member State policies will be required and China will have to ensure that all branches and levels of its administration are on board’.6 New Horizons: The 2006 EU China Strategy The 2006 Communication ‘EU – China: Closer Partners, Growing Responsibilities’ marked a significant change in EU attitudes towards China. It stated that China had re-emerged as a major power in the last decade. It had become the world’s fourth largest economy and third exporter, but also an increasingly important political power. China's economic growth had thrown weight behind a significantly more active and sophisticated Chinese foreign policy. China’s desire to grow and seek a place in the world commensurate with its political and economic power was a central tenet of its policy. Given China’s size and phenomenal growth, these changes would have a profound impact on global politics and trade. With what may well amount to a touch of hubris, the paper asserted that the EU was capable of exerting a progressive influence well beyond its borders and Europe needed to respond effectively to China’s renewed strength. This meant factoring the China dimension into the full range of EU policies, external and internal. It also meant close coordination inside the EU to ensure an overall and coherent approach. The lament about the failure to coordinate policy on China between the Member States was a familiar critique. In the words of the Commission’s 2006 China Communication, the EU’s fundamental political approach towards China remains, ‘one of engagement and partnership’. This means that both sides are collaborating, in order to promote a ‘strong and effective multilateral system.’ In a rebuff to those calling for a more protectionist stance, the paper stated that closing Europe’s doors to Chinese competition was not the answer. Adjusting to the competitive challenge and driving a fair bargain with 6 A Maturing Partnership: Shared Interests and Challenges in EU-China Relations (10.9.2003); COM (2003) 533.

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China would be the central challenge of EU trade policy in the decade to come. This key issue was set out in more detail in a trade policy paper entitled Competition and Partnership, which accompanied the Communication.7 The Commission’s policy paper subsequently touched on China’s internal stability which remained the key driver for Chinese policy. China’s high growth had resulted in the steepest recorded drop in poverty in world history, and the emergence of a large middle class, better educated and with rising purchasing power and choices. But the story of this phenomenal growth masked uncertainties and fragility. The Chinese leadership faced a range of important challenges including a growing wealth gap, social, regional and gender imbalances, plus a huge stress on healthcare and education systems. Furthermore, China was already facing significant demographic shifts and the challenges of a rapidly ageing population. The Commission then opined that conditions for stability would improve as the Party and State relaxed control. A more independent judiciary, a stronger civil society, a freer press would ultimately encourage stability, providing necessary checks and balances. The document further welcomed the decision at the 9th EU-China Summit to launch negotiations on a new, extended PCA. This new agreement would provide a single framework, ‘covering the full range and complexity of our relationship. At the same time, it should be ‘forwardlooking and reflect the priorities outlined in this Communication.’ The communication also called for the EU to help strengthen the rule of law and the development of healthy and independent civil society in China. On matters of energy, the EU priorities should be to ensure China’s integration into world energy markets and multilateral governance mechanisms and institutions, and to encourage China to become an active and responsible energy partner. Both sides should build on the climate change partnership, reinforcing bilateral cooperation, and strengthening international co-operation, meeting shared international responsibilities under the Climate Change Convention and Kyoto Protocol and engaging actively in the dialogues on international climate change co-operation post-2012. The 2006 policy-blueprint went on to call for improved exchanges on employment and social issues such as health and safety at work, decent 7

COM (2006) 0632 of 24.10.06.

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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 structured dialogue on Africa's sustainable development. There should be transparency on the activity and priorities of both sides, and support for regional efforts to improve governance in Africa. As regards matters of economics and trade, the Commission’s 2006 China strategy noted that China had become a source of growth for the EU and the world, but China's current growth model was also the source of important imbalances in EU China trade. Policies which would lead to a reduction of its current account surplus would increase China’s control of its economy and contain risks of overheating, and at the same time meet China’s shared responsibility to ensure a stable and balanced world economy. The EU was China’s largest trading partner, representing more than 19 per cent of China’s external trade. An economically strong China was in Europe’s interest. But there were doubts about China’s implementation of its WTO commitments, especially on protection of intellectual property, and new bureaucratic barriers to market access were preventing a genuinely reciprocal trading relationship. There were also restrictions in the service sector and protection of ‘strategic’ industries. The 2006 policy document subsequently assessed the numerous bilateral agreements and sector-specific dialogues, describing them as ‘successful and positive’. But more had to be done, according to this assessment, in order to focus co-operation and ensure balance and mutual benefit in all areas. The paper called for increased co-operation in science and technology, migration issues, people-to-people links, and more effective bilateral structures. In terms of international relations, the policy document called on the EU and China to cooperate more closely in regard to areas such as the Middle East, Africa and East Asia, and with reference to ‘cross-cutting’ challenges such as terrorism and non-proliferation. The communication noted China’s central role in tackling proliferation on the Korean peninsula and stated that, ‘continued Chinese support will be crucial to progress on the Iranian nuclear issue.’ On the Taiwan issue8, the communication affirmed that the EU should better explain its One China Policy to

8

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

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both sides. Regarding the rather sensitive issue of the arms embargo the paper avowed that ‘further work will be necessary by both sides.’9 A review of these Commission communications reveals a major change in EU concerns. For most of the 1990s, China was tarred with the Tiananmen-Square brush. The EU was willing to assist China in joining international bodies such as the WTO but closer cooperation would 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 concerns now surrounded economic and trade issues, especially protecting EU jobs from alleged unfair Chinese competition. The Commission does not produce policy papers in a vacuum. It consults regularly with Member States about their interests and concerns. The resulting communications are thus a balancing act between what is politically 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 Council The European Parliament (EP) has traditionally taken a much more critical approach to China than the European Commission or, indeed, most of the Member States. While approving the various Commission Communications outlined above, Parliament often added Resolutions critical of China’s human rights record. One example of this was an EP Resolution of February 2001 when Parliament called on China to guarantee the constitutional right to freedom of religion and belief, together with the exercise of the associated rights of freedom of conscience, freedom 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 until there was a significant improvement in human rights.11 Moreover, in April 2005, the European Parliament adopted a Resolution stating that strategic partnerships with third countries must be based on the sharing and promotion of ‘common values’. It regretted that relations with China had made progress only in the trade and economic fields, without any substantial achievement as regards human rights and 9

EU-China: Closer Partners, Growing Responsibilities (24/10/06); COM (2006) 631. Official Journal of the European Communities (OJ) (01.10.2001); C276/279. 11 P5_TA(2003)0599. 10

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democracy. It supported Taiwan as ‘as a model of democracy for the whole of China’ and expressed its ‘deepest concern at the large number of missiles in southern China aimed across the Taiwan Straits.’ It condemned the so-called ‘Anti-Secession Law’, which, in its view, ‘in an unjustified way aggravates the situation across the Straits.’ It called on Beijing and Taipei to resume political talks on the basis of mutual understanding and recognition in order to promote stability, democracy, human rights and the rule of law in East Asia’.12 In October 2005, Parliament debated economic issues and adopted a further Resolution on trade relations between the EU and China. This critical resolution covered WTO accession, unfair trade practices, and social and environmental issues.13 In September 2006, Parliament urged the Council and the Commission ‘to formulate a consistent and coherent policy towards China.’ It deplored that increased trade and economic relations with China had brought about no substantial progress in the field of democracy, human rights and the rule of law, which were seen as basic components of the political dialogue between China and the EU.14 By April 2008, Parliament had adopted a further critical Resolution following demonstrations in Tibet. In October 2008, it went one step further, by awarding the Sakharov Prize to the human rights activist, Hu Jia – a move that infuriated the Chinese authorities. The Council of the European Union has only given occasional attention to China. Most of the Communications cited above were adopted by the Council without any serious debate, although they were usually subject of extensive consultations with Member States. Overall, the Council’s conclusions have tended to reflect the balance that has to be struck between the 27 Member States. For example, in December 2004, it issued the following statement, in relation to the arms embargo: The European Council confirmed that EU-China relations have developed significantly in all aspects in the past years. It is looking forward to further progress in all areas of this relationship as referred to in the EU-China Joint Statement, in particular the ratification of the International Covenant on civil and political rights. In this context the European Council reaffirmed the political will to continue to work towards lifting the arms embargo. It invited the next Presidency to finalise the well-advanced work in order to allow for a decision. It underlined that the result of any decision should not be an increase of arms exports from 12

P6_TA(2005)0132. P6_TA(2005)0381. 14 P6_TA(2006)0346. 13

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

Within months of these Council conclusions, the politics within the EU changed, partly under pressure from the US, Japan and Taiwan. Thus, by June 2005, there was no more mention of lifting the arms embargo in the relevant European Council conclusions: The European Council welcomes the 30th anniversary of the establishment of diplomatic relations between the EU and China. It reiterates its determination to develop the strategic partnership with China by intensifying the dialogue in all areas, whether of an economic or political nature, and by working towards a rapid solution to its trade dispute. It asks the Council and the Commission to speed up the proceedings on a new framework agreement.16

Another pertinent document to be considered in this study was contained in the ‘East Asia Policy Guidelines’, agreed by the Council in December 2007.17 The Guidelines emphasised the importance of integrating China into the global system, with the aim of tackling issues ranging from climate change and nuclear proliferation, to trade and regional security, especially in the case of Africa. An Overview of Chinese Views The Chinese authorities have been much less prolific about producing policy papers on the EU. The only Chinese paper so far, specifically focusing on the EU, appeared in 2003. It was compiled by the Chinese Ministry of Foreign Affairs (MFA) and reflected a glowing picture of the EU, 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 conflict of interest between China and the EU and neither side posed a threat to the other. However, given their differences in historical background, cultural heritage, political system and economic development level, it was seen as natural that the two sides would have different views or even disagreed over some issues. Nevertheless, according to this paper, the

15

Brussels Council Conclusions, No. 16238/1/04 REV1, 16-17 December 2004. European Council, Brussels European Council Conclusions, No. 10255/1/05/ REV1, 16-17 June 2005. 17 Council: Press Release of 20.12.07. 16

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common ground between China and the EU outweighed any disagreements by far. The Chinese EU policy paper did not omit the sensitive issues in the relationship. 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 with the autonomous region subject to full respect of China's laws and regulations.’ The Chinese side requested the EU side not to have any contact with the ‘Tibetan government in exile’ or provide facilities to the separatist activities of the ‘Dalai clique’. On human rights, the strategy noted that there was both consensus and disagreements between China and the EU. The Chinese side appreciated the non-confrontational approach but reminded the EU that there were social, economic and cultural rights to be protected. The paper emphasized that the proper handling of the Taiwan question was essential for a steady growth of China-EU relations. China appreciated the EU commitment to the one-China principle and hoped that the EU would continue to respect China's major concerns over the Taiwan question, guard against Taiwan authorities' attempt to create ‘two Chinas’ or ‘one China, one Taiwan’ and prudently handle Taiwan-related issues. EU exchanges with Taiwan must be strictly unofficial and non-governmental. In terms of economics, the Chinese document demanded that the EU should grant China full market economy status at an early date, reduce and abolish anti-dumping and other discriminatory policies and practices against China. The EU should also lift its ban on arms sales to China at an early date so as to remove barriers to greater bilateral cooperation on defence industry and technologies. China’s 2003 EU policy paper represented the apex, so far, of the PRC’s assessment of the EU. Over subsequent years, China became more frustrated with the EU over a range of issues, including the failure to lift the arms embargo, to receive market economy status, a plethora of anti-dumping cases, the perceived European support for the ‘Dalai Clique’, and European threats to boycott the 2008 Olympics. Chinese resentment over some of these matters led to the cancellation of the EUChina summit in December 2008. It remains to be seen to what extent these 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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resolve its institutional crisis (Lisbon Treaty) reduced its standing in Chinese eyes.18 Conclusion and Assessment In any assessment of the official approach to EU-China relations, one is struck by the disparity in policy papers produced by both sides. The Commission has produced at least six (major) strategy-blueprints, compared to one from the Chinese. This may be due to bureaucratic influences and interests, but it also reflects the EU’s growing fascination with China and its attempts to fathom the right policy-mix. President Barroso took no less than nine Commissioners to visit China in June 2008. The astonishing growth rates in China during the past decade, and the successful Beijing Olympics, have also given the Chinese authorities a new self-confidence in dealing with the EU (Crossick and Reuter 2007; Shambaugh 2008). This is reflected in the current PCA and related trade negotiations which are proving very difficult to achieve progress. Some experts regard the PCA as more of a laundry list of dialogues and agreements rather than a genuine strategic partnership (Wacker 2006). Hopes of a free trade area have receded into the distance. However, in spite of a plethora of China-EU meetings, fora and dialogues, misperceptions of one another’s motives seem to be rising, rather than diminishing. China, in particular, resents the continuation of the arms embargo which places it in a category alongside Zimbabwe and Myanmar (Zhou and Wu 2004). PRC leaders were shocked by some European reactions to the troubles in Tibet in spring 2008, and by the demands to boycott the 2008 Olympics. China also complains about the EU’s refusal to grant it market economy status and its obsession with anti-dumping. There was little understanding in the PRC, of former Trade Commissioner Peter Mandelson’s description of China as ‘an out of control juggernaut’ and ‘the biggest challenge for EU trade policy’. On the 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 Chinese competition are unfounded, pointing to the huge profits of European firms operating in China.

18

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

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The EU, by comparison, has spoken of China as a major partner in a globalised world; however, it appears to also be suspicious of China’s motives in Africa and other parts of the world (Gill 2007; Holslag 2007; Stumbaum 2007). The Union is, furthermore, critical of the Chinese authorities’ failure to implement, rather than just pass, legislation concerning issues such as intellectual property rights. The Union, last, but not least, maintains that China operates many barriers to investment in the services sector. It thus seems clear that there are still major gaps in mutual understanding. The only way to bridge these gaps is by means of a much greater expansion of contacts at all levels. Some useful steps have already been taken, including the launch of the new High-Level Economic and Trade Dialogue, and the visible EU support for various Business Schools and EU Institutes in China. Should it prove to be possible to finally agree on the new Partnership and Cooperation Agreement (PCA), at the State Council level on China’s side, the quality of the political and cooperation dialogue across the board can be expected to be greatly enhanced. The limited contacts between EU and Chinese think tanks are in dire need of a substantial, and meaningful, expansion. There also need to be more exchanges, and a greater commitment on each side, to studying the politics, economics and culture of the other. EU China relations will continue to develop and there will be an ever-expanding agenda. But without a greater degree of mutual understanding the relationship will not be able to flourish and benefit both parties as it could. It must also be recognised that there are some fundamental asymmetries in the relationship, in terms of political systems, economic development, history and culture (Grant 2008; Zabarowski 2006). China is a far cry from the post-modern, sovereignty-sharing EU. Unlike the US, which views the rise of China in geopolitical terms, the EU has regarded China’s growth as an opportunity and a challenge. In recent years the emphasis has been on the aspect of challenge; some commentators are even talking of threats. In the early Commission communications consulted for this chapter, there was much emphasis on the promotion of democracy and human rights with the EU seen as being able to play a significant role in the internal reform process in China.

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But by the time of the 2006 Communication, the emphasis had switched away from democracy and human rights to meeting the challenges posed by China, especially in the economic field. Although there have been differences at the highest political level, there has been an expansion in sector-specific dialogues (see annex below). Many of these have achieved progress without having to take into account the overall political relationship, especially as regards sensitive questions of democracy, political reform and human rights. Seen from Brussels, EU-China relations have made significant progress over the past decade. China and the EU have moved closer on a number of global issues, from climate change to the need to strengthen the multilateral institutions of global governance. The key question for the future is how the EU can best tailor its strategy towards China to achieve its political, security and economic interests. If the past decade is typical, then the European Commission will not find it easy to navigate through the competing, and sometimes contradictory, approaches of the Member States, even though the adoption of the Lisbon Treaty may help. At the same time, it can confidently be predicted that Chinese representatives will continue to seek to exploit these differences to their advantage. China appears as a tough and stubborn negotiating partner, and the EU has few bargaining chips although they are not altogether negligible. For example, faced with the prospect of global recession, China is anxious to ensure continued access to the EU Single Market for its exports. As in other policy areas, the EU will best be able to defend and promote its interests when it speaks with one voice.

References Crossick, 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 and Prospects. London: Routledge. Stumbaum, May-Britt. 2007. ‘Opportunities and Limits of EU-China Security Cooperation’ in International Spectator, No. 42 Wacker, Gudrun (ed.). 2006. China’s Rise: The Return of Geopolitics. SWP Working Paper, 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 and Limits. Beijing: China Social Science Press.

Annex: Sector-Specific (‘Sectoral’) Dialogues in EU-China Relations The EU and China are involved in many sector-specific dialogues: Information society Agricultural dialogue Intellectual property rights (IPR) Civil aviation Macro-economic policy and the regCompetition policy ulation of financial markets Consumer product safety Maritime transport Customs cooperation Regional policy Education and culture Regulatory and industrial policy Employment and social affairs Science and technology Energy Space cooperation Environment Trade policy dialogue Food safety- Sanitary and Textile trade dialogue phyto-sanitary issues Transport (in general) Global satellite navigation services These take place at various hierarchical levels, from working level to ministerial level. A variety of participants may be involved, including officials, politicians, business organisations, and private companies. Proceedings are organised in a flexible way and take the form of working groups, conferences, annual formal meetings or simply informal exchanges. Most of the dialogues have been established over the past two to three years, and they reflect the massive growth in activity which defines the relationship. Sectoral dialogues & agreements are expected to play an increasingly important role in building a privileged EUChina relationship with important benefits for both sides. Further Details: http://ec.europa.eu/external_relations/china/sectoraldialogue_en.htm European Commission: Rapid Database: IP 09/212

EUROPEAN STUDIES 27 (2009): 65-82

THE EU AND CHINA IN THE CONTEXT OF INTER-REGIONALISM Natee Vichitsoratsatra

Abstract This chapter focuses on the analysis of cooperation between the EC/EU1 and China using an eclectic approach which proposes that the fluctuation between bilateral and multilateral interregional cooperation process is influenced by actors’ strategic choices in pursuing a material, institutional or ideational focus in their interaction. The chapter conducts a broad analysis of the material, institutional and ideational elements of the EC-China inter-regional partnership. It contends that, in its relationship with China, the EU appeared to consistently opt for a bilateral strategy, with a priority on material interests. Using the Asia-Europe Meeting (ASEM) as the main multilateral forum for engagement between Europe and Asia, there is little evidence to suggest that the EU pursued a multilateral strategy with China. The first part analyses the EC’s motivations for inter-regionalism. The second part observes the material, institutional and ideational influences in the EC-China bilateral and multilateral partnerships. The final part argues that active bilateralism has taken precedence in the EC’s dealings with China, while passive multilateralism remains an option for future engagement between the two.

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 the EU’, where the focus is on economic, social, and environmental aspects of SinoEuropean relations. Where the analysis extends to the CFSP or Police and Judicial Cooperation, the chapter employs the terms the ‘EU Member States’ or ‘EU’.

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Introduction: The EU in Regionalism and Inter-regionalism Today, regionalism is said to be in its ‘third generation’ in which the institutional environment to handle external regional policies is more apparent and powerful. Regions are also becoming more proactive and can involve themselves in inter-regional arrangements and agreements that can have an impact on partnerships at the global level. (Soderbaum et al. 2005: 257) note that third generation regionalism is clearly different from second generation regionalism (an example being the EU) in that third generation regionalism is focused more externally and towards shaping governments while second generation regionalism2 mainly concentrated on maximising economic and political processes. The increasing presence of regional actors also created a demand for intermediaries which link global and regional systems (at the top end of the international system) as well as regional and national policy-making levels (at the bottom end of the international system). It is suggested that the need for intermediaries at the upper end of the international system resulted in two forms of inter-regionalism, bilateral inter-regionalism and transregionalism (Rüland 2001: 5). There have been calls for inter-regionalism to be analysed in its own right and not just within the framework in which regionalism is studied. This would, Soderbaum et al. (2005: 378) argue, allow for research on how regionalism and inter-regionalism relate and impact on one another. They further explain how inter-regionalism has an effect on both bilateralism and multilateralism, with inter-regionalism becoming an alternative to classical, Westphalian, multilateralism. In the meantime, bilateralism and inter-regionalism can either compete or exist side by side while actually mutually reinforcing each other (Soderbaum et al. 2005: 379). The EC has, indeed, been prolific as a global actor, and this has extended to its involvement in proliferating regionalism and inter-regionalism. One of the clearest reflections of relevant EC activity has been its pursuit of regional and inter-regional partnerships, which include attempts to speak with a single voice in multilateral fora, such as the WTO, through its European Neighbourhood Policy (ENP) and in its ties with the developing world, as well as through unified strategies in creating global regimes (Langenhove and Costea 2005: 12). In similar fashion, 2 Second generation regionalism has been labelled ‘new regionalism’ due to its multi-faceted nature and the fact that it refers to a much wider number of policies (Langenhove and Costea 2005: 4)

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the EU is able to reach agreements with other states (bilateralism), act within the UN and WTO framework (multilateralism) and also engage in ‘constructing’ inter-regionalism (Soderbaum et al. 2005: 379). The EC has completed negotiations for Preferential Trade Agreements (PTA) with South Africa, Mexico, Chile, Croatia, Former Yugoslav Republic of Macedonia (FYROM) and a selection of Mediterranean partners. The EC is also currently in negotiations with MERCOSUR, Syria, India, the Republic of Korea (South Korea, ROK) and the Gulf Cooperation Council (GCC) member countries (Lamy 2002; Doctor 2007).3 Arguments have been made that inter-regional efforts are influenced by a complex set of factors, although economic factors continue to play one of the most important roles and are reflected in the contents of preferential agreements (Tharakan 2002: 1396). Current literature on regionalism shows that a variety of theoretical approaches ranging from realism to liberal institutionalism and social constructivism are useful in explaining EU inter-regionalism (Soderbaum et al. 2005: 368). The explanations for the EU’s inter-regional efforts include the its desire to promote liberal internationalism, to build ‘EU identity’ as a global actor and to promote EU power and competitiveness (Soderbaum et al. 2005: 368377). Alecu de Fleurs and Regelsberger (2005) note that the EU’s interregional policy relations can be explained by a combination of its ‘Eurocentric approach’, as well as its desire to ‘counterbalance’ US influence in Latin America (2005), a strategy which combines institutional as well as neorealist roots. Making similar use of a number of traditions in international relations and comparative literature, Aggarwal and Fogarty (2003: 6-16) put forward four hypotheses concerning the origins of EU interregional trade strategies. They argue that EU trade strategies are variously determined by the influence of specific interest groups within Europe, by bureaucratic attempts to maximise influence in the European policy-making arena, by international systemic constraints and opportunities and by the need to forge a common European identity. These varied explanations are by no means the only description of the EC’s motivations for inter-regionalism. In an assessment of the EU’s inter-regional policy towards Africa, Farrell (2005: 263) argues that the underlying EU motivation is in furthering goals of economic liberaliza3

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

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tion rather than democratization, and proclaims the possibility of ‘a triumph of realism over idealism’. With Mercosur, for example, the EU has been found to provide support for institution-building and regionbuilding in its attempt to increase EU legitimacy and its role as a global actor through political dialogue, cooperation, and trade (Santander 2005). The idea that the EU is actively pursuing inter-regionalism has also been proposed by other scholars who explain that EU foreign policy strategy in promoting inter-regionalism could act as an alternative model of world order to the unipolar pax americana (Hettne 2001). Institutionbuilding and region-building to enhance the EU’s influence as a global actor have both been evident in the creation of ASEM (Forster 2000: 796). Gilson (2005: 326) adopts a social constructivist stance and sees ASEM as embedded with ‘Western’ norms, contending that the EU has utilized inter-regionalism as a means to manage economic and political relations with a region that it is increasingly distant from and unfamiliar with. These popular explanations of the EC’s inter-regionalism efforts reflect a mix of motivations implicit in mainstream international political economy (IPE) theories. The material desire to maximise the EC’s economic power and influence, for example, could be explained by neorealism and neo-mercantilism, while the desire to promote liberal internationalism reflects the ideas of neo-liberal institutionalism. Social constructivism would explain the EC’s desire to create a common European identity, particularly through the promotion of European ideas, norms and codes of conduct. The issues of material interest, institutions and ideas are used to explain the EC’s interaction with China in the following sections. The EC-China Bilateral Partnership: Materialism in Focus One of the main features which distinguished the EC-China partnership from, for instance, the EC-Japan and the EC-ROK partnerships, was the way in which the EC and China were able to establish an early dialogue without direct involvement by the Americans. The 1954 Geneva Conference may have proven to be one of the major landmarks which had a positive impact on the relationship between China and Europe. During a period when China urgently needed a number of goods which the Soviet Union was unable to provide, the West Europeans, on the whole, were

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seen to hold a friendlier attitude towards the Chinese than the Americans. This positive attitude the Europeans appeared to offer might have been critical in improving subsequent commercial and political relationships. The French and the British sincerely believed that China could have a role in maintaining peace and stability in Indochina. Following the Geneva conference, trade quickly increased between China and the West European countries with (West) Germany, Britain and France being the largest traders with China (Shambaugh 1996: 5). At this stage, the USA had already terminated all commercial ties with China after Mao’s accession to power. The USA also tried to influence its Western allies to restrict the export of strategically sensitive products to communist countries through the Paris Co-ordinating Committee (COCOM) (Dent 1999: 129). The 1960s Sino-Soviet split provided the next crucial period in the European’s early relationship with the People’s Republic of China (PRC). When China and the Soviet Union parted ways, China found itself increasingly dependent on West European commerce. In 1964, French President Charles de Gaulle gave diplomatic recognition to the PRC. Kapur describes a ‘three-pronged policy’ whereby in the early 1960s the Chinese under the leadership of Liu Shaoqi and Deng Xiaoping used public relations, economic initiatives and diplomacy to improve the country’s relationship with the West Europeans, particularly the members of the then EEC (1986: 8-15). The years between 1971 and 1985 proved a critical time, both for Chinese domestic reform and in terms of China’s interaction with the international community. To begin with, this was a period when China finally became fully accepted by the international community and the Western blockade against China ended. This was also a period when Deng Xiaoping’s market reforms started to take place, thus enabling China to enter the international trading arena with renewed vigour. Finally, this was the period when the international trading community realized the possible impact the Chinese trading capacity could have on their own economies, and this was marked by increased signs of protectionism against Chinese products. By the time the ‘Cultural Revolution’ ended in 1969, the opportunity arose for moderates in the Chinese Communist Party (CCP) to have a larger role in the domestic policy making process. It is assumed that Mao

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Zedong’s assent to separate foreign affairs from internal issues might have been the key to China’s friendlier attitude towards the world community (Kapur 1986: 23), and this opened up the opportunity for the West to engage China in a friendlier manner. The PRC government was officially admitted to the United Nations in October 1971 and this was followed by the normalization of Sino-US relations, highlighted by President Nixon’s visit to China in February 1972. The resumption of normal ties between the Americans and the Chinese meant that China’s foreign relations with other countries would also be altered accordingly. China welcomed EC enlargement in 1973 because it allowed a challenge to the bipolar status quo, even though Beijing recognized that the grouping would wield more economic power than political power in the global arena (Dent 1999: 132). It appears that due to the EEC’s leveraging of the bipolar status quo, the group’s autonomy from the US, the possibility of military autonomy, and the general lack of any controversial conflicts with China, the EEC had become one of the most attractive partners for China as it looked outwards (Kapur 1986: 24-25). This put the EEC in perfect position to extend recognition to China in 1975, while China also became the first communist country to recognize the EEC (Shambaugh 1996: 12). Kapur (1986: 26-30) describes a transition from ‘communicatory diplomacy’ between China and the EC to ‘exploratory diplomacy’ and ‘operational diplomacy’. These were a series of developments which started from favourable communications between the two partners, which later developed into high-level meetings, and further down the track led to full-fledged cooperation starting with the European Commission Vice-President Sir Christopher Soames’ visit to Beijing in 1973 (Kapur 1986: 26-30). The fruits of this quick transition in the relationship between China and the EC were soon visible. As bilateral trade agreements between individual member states and China were due to end in 1974, the European Commission was given the responsibility of conducting future trade negotiations with China in accordance with the EC’s Common Commercial Policy (CCP). This assignment of competence to the EC yielded a quick progression in the formalized relationship and resulted in the EC’s first bilateral trade agreement with an Asian country. The 1978 ECChina Trade Agreement subsequently became the first agreement that the EC had agreed with a non-market economy (NME) and the most institutionalized component of the EC’s interaction with China (Wong

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2005: 5). It is noteworthy that constant political problems between China and individual EC states convinced the EC states to give their support to the Trade Commissioner in order to improve their economic leverage as a powerful trading force in the Chinese market (Wong 2005: 6). The 1978 framework was later extended to the hotly-debated 1979 Textile Agreement. After the talks between the Americans and the Chinese on textiles had broken down, the Chinese, who were very eager to reach some sort of agreement, backed down and accepted a quota for 40,000 tons of textile. This was down from the 60,000 tons the Chinese had insisted on from the EC in the beginning stages of negotiation (Kapur 1986: 62-63). The fact that the EC and China managed to reach an agreement where the Americans had failed is an indication of a high degree of willingness to cooperate between the Chinese and the Europeans. By the 1980s, the EC was beginning to feel the pressure from China’s rising economic power and a number of protectionist measures were being put into place. According to Dent (1999: 134), China attracted an average of two Anti-Dumping duties per year from the EC, considered to be a rather high number in relation to its other trading partners. Safeguard measures were also being used against low-cost Chinese exports considered to have ‘injurious competition’ effects against industries in the EC. China’s export to the EC had increased from Ecu 628 million in 1975 to Ecu 1786 million in 1980, and Ecu 3936 million in 1975 (Dent 1999: 134). The 1978 Trade Agreement showed early signs of protectionism against Chinese imports by the EC (CEC 1978). It included a safeguarding clause, allowing the EC to take unilateral action against sudden influxes of Chinese imports, a restrictive Most-Favoured-Nation (MFN) treatment clause, whereby the Chinese were not given the same treatment as the GATT countries, and a clause which protected against Chinese sales at low prices (CEC 1978; Kapur 1986: 47-48). The content of the 1985 revision to this agreement remained essentially the same (CEC 1985), which is not surprising considering the extent of China’s economic growth during the period spanning the two agreements. While these were critical times for the relationship between the EC and China, it was clear that the institutionalization of the relationship as well as established dialogue between the partners were already at a mature 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 the 1985 framework agreement. When the EC issued its 1995 Communication (see the chapter by Cameron in this volume for details), China was already making positive moves to liberalize its economy. According to Kokko (2002: 25), China had made several unilateral import tariff cuts since the early 1990s, and other reforms were resulting in an increased degree of current account convertibility of the renminbi. The EC’s vociferous support for China’s early entry in the WTO may have been another milestone in the EC-China relationship. The EC supported China’s entry as a developing nation, and these offered far more preferential entry terms than the Americans were willing to concede. This was reaffirmed in the Commission’s 1995 Communication which acknowledged that China was ‘yet to become a developed economy’ (CEC 1995). In March 1994, the European Commission and China initiated bilateral discussions under the GATT Working Party on China to encourage reduction of non-tariff barriers (NTB) and changes to what was considered to be a monopolistic foreign trade regime in China (Shambaugh 1996: 23). The EC clearly saw itself as having a major part in facilitating China’s entry to the WTO, indicating that the ‘EC consistently sought to accelerate progress towards a decision on Chinese membership’ 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). This has also been reflected in bilateral trade discussions since 1992 which, according to the Commission, have promoted China’s economic and trade reforms, helped China’s entry into the multilateral trading system and achieved better market access for European goods and services (1995). In 1996, the EC made the critical proposal that China be given transition periods to implement certain WTO obligations after its accession. This was eventually accepted by the WTO members. In 1997, China agreed to phase out its trading monopolies and give full trading rights to all Chinese and foreign individuals within three years of accession. China also agreed to fully implement the WTO TRIPs agreement upon accession. This was followed by China’s announcement that it would carry out an overall restructuring of the state enterprise sector, as well as implement some measures of privatization. Given the clear intentions of the European Commission, it was to be expected that some sort of breakthrough would be achieved soon. In

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October 1997, the European Commission referred to a ‘conceptual breakthrough’ in its bilateral accession negotiations with China, and a provisional deadline of December 1998 was set for China’s WTO accession (Dent 1999: 147). During this critical period, the first two EC-China Summits were held in 1998 and 1999, bringing along an expansion of the political as well as the economic dialogue. The actual signing took place in May 2000, allowing China to accede to the WTO. It should be noted, however, that the US had already concluded its own bilateral agreement with China in 1999. While the maturing of relations and dialogue between China and the EC continued between 1995 and 2000, the EC trade deficit continued to grow. EC imports increased from Ecu 26.4 billion in 1995 to Ecu 69.6 billion in 2000, while EC exports to China only added up to Ecu 14.6 billion in 1995 and Ecu 25.4 billion in 2000. This meant that the EC Member States’ trade deficit with China had quadrupled from Ecu 11.6 billion in 1995 to a staggering Ecu 44.6 billion in just five years (Allen 2002). In 2003, China had become the EC’s second largest trading partner after the US, but by this stage the EC had already amassed its biggest bilateral 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 making considerable efforts to keep up its WTO accession commitments, but it also highlighted substantial concerns including the lack of transparency of economic governance, restrictive regimes in certain sectors and introduction of new NTBs. The EC clearly stated that a year and a half after China’s WTO accession, it continues to encounter problems with market access, services, the enforcement of intellectual property rights and compliance with international standards (CEC 2003: 15-16). If a single feature were to mark the difference between the EC-China partnership against others such as the EC-Japan and EC- Republic of Korea partnerships, it would be the manner in which the EC-China partnership has witnessed continuous cooperation right from the beginning of the EC’s history. Issues of exogenous against endogenous effects and patterns of interaction and communication continue to play extremely important roles in the EC-China cooperation process, but in this particular case, progress appears to have resulted from familiarity and

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continuous dialogue rather than from conflict as was the case with the EC’s partnerships with Japan and the ROK. The first principal feature of the EC-China partnership is based on exogenous effects, and focused mainly on the lack of US involvement in the partnership. The US’s refusal to engage with China after World War II provided the Europeans with a unique opportunity to engage with the Chinese. This was not the case with Japan and the ROK where the US had considerable sway over its East Asian allies. West Europeans were quick to engage with the Chinese during this period of US hostility against the Chinese, which provided them with the opportunity to engage in a healthy trade relationship with China. Eventually, it appears that the EC-China trade partnership has become based on this long and steady cooperative relationship which began in the 1950s. When the US finally re-established direct trade with China, it had an important impact in reducing the EC’s trade share with China, but the cooperation remained and the examples in this chapter have shown how EC-China differences were resolved quickly, perhaps due to the familiarity and long-standing engagement between the two sides. The second key feature of the interaction is the manner in which endogenous effects appear to have been handled in a far more cautious manner by the Europeans. Endogenous effects, particularly China’s opening of its economy since 1978, has resulted in a widening trade gap between the EC and China. The EC’s trade deficit with China has continued to grow. On the European side, the Commission’s collective action in dealing with the Chinese on trade matters has proven to be effective, with most of the European countries preferring to hand over competency to the Commission. This positive trend has broadly continued, apart from perhaps a minor incident involving textiles exports to the EC in 2005 (commonly referred to as the ‘bra wars’) which was later resolved amicably. The third main feature of the EC-China relationship relates directly to the first and second features and demonstrates how a long history of interaction and communication has resulted in an optimistic and cooperative attitude between the partners. Numerous Communications by the Commission also mark an exceptionally cooperative and patient undertone.

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Multilateral Inter-regionalism: Trends and Trajectories A close look at the inter-regional ASEM process and the global economic environment surrounding it reveals three distinct stages in multilateral cooperation between China and the EU. They provide some important insights into the nature of cooperation and answer some interesting questions posed by inter-regionalism. The trends and trajectories witnessed in the ASEM process also provide some useful insights into the reasons partners may choose to shift between bilateral and multilateral strategies. The first stage covers the period leading up to the 1990s, when both sides appeared uninterested in developing a multilateral relationship in any sense and all interactions were predominantly bilateral. This is, once again, clear evidence of the priority of states as the main actors in the EC-East Asian partnerships. Key European member states were at best indifferent towards East Asia, including Japan, the Republic of Korea and China. At worst, they were distrustful of what were then perceived to be Japan’s neo-mercantilist policies. The East Asian states, some victims of trade barriers, began to perceive the EC as a fortress. This created a feeling of mutual distrust which may have resulted in a low level of cooperation between the Europeans and the East Asians. Before long, the mutual distrust began to take its toll, particularly on Europe. The lack of a formal, multilateral, dialogue with the East Asian nations meant there was no collective mechanism for dealing with East Asia as a whole. During this period, the East Asian economies grew speedily and the European trade deficit against the East Asian economies mirrored this growth. There also appeared to be a cooling of enthusiasm in the bilateral cooperation process between the EC and East Asian states. This was made more obvious by the enhanced American presence within the region in the form of Asia Pacific Economic Cooperation (APEC), which the EC was not part of. Asia similarly lacked the access to EC markets that other groupings, such as the ACP, were enjoying. By this time, a formal multilateral relationship between the EC and East Asia appeared to be long overdue. The second stage began with the EU 1994 New Asia Strategy, which was the beginning of signs that the EC was interested in engaging Asia as a whole, and possibly through multilateral channels (CEC 1994). The Asian economies were booming and the official declaration issued at the end 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 dynamics of the international political economy not changed the following year, it is perhaps possible that cooperation between the European and Asian members of ASEM would have continued fruitfully according to the guidelines set by the Bangkok Declaration. The period leading up to the Bangkok Declaration can undeniably be described as the most promising period in the evolution of EU-Asia cooperation. This stage provides some important insights into inter-regionalism but it also raises some additional questions. It appears that the EC’s strategy was to begin institutionalizing the process and to sidetrack the role of states as much as possible through the process. The strategy of ‘mirroring’ of the EC’s own institutions and the use of institutions to create stability was used actively to draw in the East Asians (Smith and Vichitsorasatra 2008). The onset of the Asian Financial Crisis from July 1997 saw a shift in the cooperation scenario and the beginning of the third phase of collaboration. The balance of trade between the EC and Asia, already in Asia’s favour, tripled as Asian currencies devalued. Since the establishment of ASEM, trade between the EC and Asia had already increased substantially, although the EC did not view this as particularly helpful due to the increased trade deficit. The third phase of the evolution of cooperation in the ASEM process highlights several important facts about the entire relationship. It shows that ASEM clearly has the potential to succeed as an alternative method to bilateralism and global multilateralism in conducting a multilateral relationship between the two regions. Despite the informality of the process and its non-binding nature, there is clear evidence that trade between the two regions has significantly increased since the establishment of ASEM. Moreover, the third stage of cooperation in the ASEM process indicates that if both sides of the ASEM equation do not feel that they are equally benefiting from the cooperation process, either the EC or individual East Asian member states could refuse to extend their full cooperation. This clearly amounts to the accentuation of hierarchy, or at least an attempt to accentuate hierarchy, whereby the EC tries to take control of the process particularly when smaller states are involved. Once again, the informality of the ASEM process acts as a double-edged sword and offers 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 an institutionalized process would encourage, the Europeans appear to be phasing out cooperation in ASEM in favour of bilateral talks. The inability to advance conditionality in the ASEM process may appear to the Europeans as another deadlock in the relationship. The 2003 ‘New Partnership with Southeast Asia’ communication from the Commission appears to be an alternative means of dealing with the ASEAN members of ASEM (CEC 2003). It also offers a way out for the EC, which would be more reluctant in placing conditionality on its relationship with China than it would with ASEAN member states. Thirdly, suggestions that ASEM could play an important role as a catalyst for action in other international forums and be a valuable instrument for formalizing structures of regional economic integration in Asia (Krenzler 2002: 10) might be rather unfounded. The 2003 Cancun trade talks indicate that ASEM members are extremely fragmented in their stand on trade liberalisation, and that the ASEM process has done little to improve communication or cooperation between Europe and Asia in matters concerning multilateral trade in the WTO (Gilson 2004; Kwa 2002; Maull and Okfen 2003: 245). The implication for multilateral interregionalism is that ASEM may not be an adequate supporting process of international trade liberalization efforts, particularly if the partners have not yet reconciled and agreed on their common interests. Conclusion: Active Bilateralism and Passive Multilateralism EC/EU-China relations have certainly evolved over the past five decades. The form they have taken is a reflection of the various balances in conscious and subconscious policy choices made between shifting modes of cooperation and material or ideational interests. The establishment of accepted principles of conduct has also been derived from the history of interaction between the EC and the East Asian nations, often resulting in a mixture of material interest and ideas being used in the cooperation process. The result of the evolution of EC-East Asian cooperation has been the current process of active bilateralism juxtaposed with passive multilateralism. Right from the start, EU-China relations were thus rooted in strong, common and material interests. A high degree of institutionalization, in both the bilateral and multilateral relationships, can explain how the desire for unrestrained material achievement was controlled. Neo-realism

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and neo-liberal institutionalism can explicate the EC-China relationship to a certain extent but they fail to explain how and why the ASEM multilateral forum has still managed to survive. Rational choice theory also fails to conclusively explain how the EC-Japan relationship, seriously troubled at its initiation, managed to mature and its cooperation sustained despite serious periods of high tension conflict and trade imbalances. Similarly, the EC ambition to enter into an early friendly partnership with China, despite its fledgling economy and status as a non-market economy, cannot be entirely justified through neo-realism and neoliberal institutionalism. The EC’s desired identity as both an economic and a political powerhouse in the context of inter-regionalism has been a factor in its attempts to make certain that its conduct of external relations is not only based on material factors, but ideational ones as well. In the case of the EC and China, a friendship has been established based on the long term acceptance of each other. Meanwhile, the resilience of the multilateral ASEM process has been grounded in ideas, in addition to having a strong institutional basis. The EC and China appear to have opted to place priority on their common material interests, an exercise which has seen them head towards a period of active bilateralism. The EC-China relationship has proven, over the years, to be based almost entirely on the common ambition for increased trade between the regions. While some politicization of the process has taken place, this has mainly been from the influences of trade. Likewise, the purpose of any established dialogue or institutions is to promote the common material interests and to ensure that both sides are guaranteed reciprocal treatment. Given the preliminary empirical evidence surveyed for this chapter, a period of active bilateralism has ensued during which trade issues receive priority in the evolution of cooperation and where reciprocity is a requirement. The issues of institutions, values and ideas are factors which might enter this active bilateralism as a secondary influence in order to sustain cooperation. More importantly, whether cooperation thrives in the evolution of active bilateralism depends strongly on accepted principles of conduct which include the partners’ reputations, the consistency of dialogue, and the question of whether or not negotiations are usually concluded in a reciprocal manner. These have been some of the key factors which have sustained the EC-China relationship in the past.

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While an active and ongoing bilateral cooperation process dominates the EC-China relationship, the ASEM process can be best described as passive multilateralism. During the course of the relationship and the creation of great expectations for ASEM during the Asian economic boom, the partners may not have acknowledged that the true purpose of ASEM may have simply been to encourage bilateralism. As such, one might suggest that ASEM as a passive multilateral forum may not be considered a failure, since its role has always been to stimulate and sustain 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 in others. While trade interaction between the EC and the Asian ASEM members only increased marginally, leading to its poor reputation as a multilateral forum, a steady process of increased institutionalization and dialogue has been kept active. European and East Asian partners are continually engaged in a series of meetings between top level bureaucrats and political leaders, convening as often as twice a year. At ASEM summits, sensitive political dialogue is undertaken, alongside economic issues; this is rarely seen at a bilateral level. ASEM is, hence, the only forum where the EC could actively engage the East Asian nations in a dialogue on issues which would be almost impossible to address bilaterally. The notion that passive ASEM multilateralism may have led to a relatively successful set of EC-East Asian bilateral relationships is, however, misleading for several reasons. First, trade data indicate that Japan (and ASEAN) has actually declined in importance as a trade partner for the EC. Secondly, the ASEM forum has not had any role in ameliorating or mediating any major bilateral trade conflicts, with the EC-ROK shipbuilding conflict being one of the most striking cases. Thirdly, the successful and maturing EU relationships with Japan and China are attributable more to bilateral institutionalization, developed long before the initiation of ASEM, than to any initiatives started by the multilateral forum. For these reasons, ASEM appears to be a passive multilateral mode of cooperation which has had limited benefit, particularly in the material sense, for both sides of the partnership. The passivity, however, has meant that the European and Asian ASEM members have been able to enter 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 both sides become familiarized with each other’s ideas and values. These ideas and values have been introduced by both the European and Asian ASEM members into ASEM, and the ASEM process has been conducted around these ideas and values. Last but not least, an extremely intense nature of dialogue and institutionalization, possibly leading to the dreaded ‘forum fatigue’, might actually be one of ASEM’s most useful features. The lack of understanding of ASEM’s purpose and value may be the primary factor keeping this multilateral forum from advancing further. A concise evaluation of the significance of this multilateral mode of cooperation results in the preliminary finding that, while being only marginally important, the evolution of cooperation between the EC and China would have been different without ASEM. The relationship would have been one with a smaller degree of trust, less dialogue and a lower level of ‘caring for’, and familiarity with, ‘one other’. Although passive, the presence of the multilateral mode of cooperation in the EC-China engagement is justified if only because of the manner in which ASEM has gradually introduced ideational values into the relationship. These have been important in shaping the behaviour of the partners as well as in ensuring that dialogue continues, even in the face of recurring instances of conflict.

References Aggarwal, Vinod K. and Edward. Fogarty (eds). 2003. EU Trade Strategies: Between Regionalism and Globalism. Basingstoke: Palgrave/Macmillan. Allen, T., 2002. EU Trade with China and Russia. Eurostat Statistics in Focus. Eurostat: European Communities. Commission of the European Communities. 1995. ‘A Long Term Policy for China-Europe Relations: Communication of the Commission’, Com(279) final (Brussels: European Community). Commission of the European Communities. 1994. ‘Towards a New Asia Strategy: Communication from the Commission to the Council’, Com(94) 314 (Brussels: European Community). Commission of the European Communities. 2003a. ‘A new partnership with Southeast 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 of the 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 a European Union-Mercosur Agreement’ in Journal of Common Market Studies, 45(2): 281-314. Farrell, M., 2005. ‘A Triumph of Realism over Idealism? Cooperation between the European Union and Africa’ in Journal of European Integration, 27(3): 263283. Forster, A., 2000. ‘Evaluating the EU–ASEM Relationship: A Negotiated Order Approach’ in Journal of European Public Policy, 7(5): 787-805. Gilson, J., 2004. ‘Weaving a New Silk Road: Europe Meets Asia’ in Aggarwal and Fogarty (eds), EU Trade Strategies: Between Regionalism and Globalization, Houndmills. 64-92. Gilson, J. 2005. ‘New Interregionalism? The EU and East Asia’ in Journal of European Integration, 27(3): 307-326. Hettne, B. 2001. ‘Regional Co-operation for security and development in Southern Africa’ in Vale, P., Swatuk, L. A. and Oden, B. (eds) Theory, Change and 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 Transition Economies’ in Asia-Pacific Studies in Australia and Europe: A Research Agenda for the Future, 5-6 July 2002. 1-34. Krenzler, H. 2002. ‘The 4th ASEM Summit in Copenhagen’. Paper presented at the Cooperation between Asia-Pacific, Latin America, and Spain Conference (Barcelona, 28 November 2002). Kwa, A. 2002. Power Politics in the WTO: Developing Country Perspectives on Decision-making Processes in Trade Negotiations. Bangkok: Focus on the Global South. Lamy, P. 2002. ‘Stepping-Stones or Stumbling-Blocks? The EU’s Approach Towards 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 the Emergence of ‘Third Generation’ Regionalism. UNU-CRIS Occasional Papers, 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. Alecu de Flers, Nicole and Elfriede Regelsberger. 2005. ‘The EU and Interregional Cooperation’ in Christopher Hill and Michael Smith (eds) Interna-

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tional Relations in the European Union. Oxford: Oxford University Press. 317342. Rüland, J. 2001. ‘ASEAN and the European Union: A Bumpy Inter-regional Relationship’. Bonn: Zentrum für Europäische Integrationsforschung (ZEI), discussion paper C95. Santander, S. 2005. ‘The European Partnership with Mercosur: a Relationship Based on Strategic and Neo–liberal Principles’ in Journal of European Integration, 27(3): 285-306. Shambaugh, D.L. 1996. China and Europe, 1949-1995. London: Contemporary China Institute (School of Oriental and African Studies) University of London. Smith, M.H. and N. Vichitsorasatra. 2007. ‘The European Union as a Foreign Policy Actor in Asia: Defining and Theorising EU-Asia Relations’ in P. Anderson and Georg Wiessala (eds) The European Union and Asia. European Studies: A Journal of European Culture, History and Politics 25(1): 103-124. Amsterdam and New York: Rodopi. Soderbaum, F., P. Stalgren and L. Langenhove. 2005. ‘The EU as a Global Actor and the Dynamics of Interregionalism: A Comparative Analysis’ in Journal of European Integration, 27(3): 365-380. Tharakan, M. 2002. ‘European Union and Preferential Arrangements in The World Economy 25(10): 1387-1398.

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DUALITY - DIALOGUE - DISCOURSE: SOME PERSPECTIVES ON HUMAN RIGHTS IN EU-CHINA RELATIONS Georg Wiessala Abstract This 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 fundamental ambiguities in Sino-European relations, and points to the legacies of past civilisational encounters, in as far as they continue to have an impact on current EU-China interaction (‘dualities’, ‘encounters’). The chapter then briefly discusses how the EU-China dialogue can be conceptualised from the point of view of international relations theory and discourse in China and Europe (‘embeddings’, ‘discourses’). The essay proceeds to an analysis of the role of ideas, identity-politics and perceptions in EU-China human rights discussions and examines how EU China foreign policy can be understood to be constructed around some key elements and frameworks (‘identities’, ‘pathways’). The chapter closes by emphasising the roles of intellectual exchange and knowledge-based co-operation and by offering a brief closing assessment of the likely future course of EU-China debates over human rights (‘connectivities’, ‘appraisals’). Dualities When a citizenry that lacks rights consciousness is confronted with foreign pressures, it is like a withered tree in a storm. Or – if there are no foreign pressures – such a citizenry is like the tree in a drought. I see that all of the millions of inhabitants of the earth, except for the black savages of India,

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The relations between the European Union (EU) and the People’s Republic 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 EUChina interaction – an important phenomenon this chapter will explore. But beyond that, perhaps more importantly, ‘duality’ seems to be the watch-word of China-EU contacts. Some would go further and say that ambiguity is the leitmotiv of the relationship, as well as the handmaiden of consensus, in the China-Europe inter-continental conversation. When it comes to what one may call the intellectual geography, and the position of human rights, in the EU-China exchange, a number of paradoxes and dualities become apparent. On the most general level, there is the duality of history. The key paradoxes here concern, for instance, the fact that it was often Chinese inventions of many centuries ago, which, when borrowed by Europe, allowed the latter to steam ahead of China from the late 19th Century onwards. On the flipside of this paradox, Yahuda (2008: 20/1) rightly points to the thought that it was the very assimilation of the European, Westphalian, system by China which did much to determine Chinese concerns for issues such as territorial integrity, national security and claims to succession, for instance in regard to Taiwan and Tibet. A second intriguing paradox is the way in which European attitudes towards China have always vacillated between admiration and disgust, Sinophilia and Sinophobia, since before Montaigne, Leibnitz or Voltaire.2 The arguments advanced by Sen (2006) about European ‘curatorial’, ‘magisterial’ and ‘exoticist’ approaches towards India transpose quite easily to the Europe-China context. This chapter suggests that these perceptions continue to count today, for instance, in debates over Chinese agency in world history, ‘Asian Values’, globalization, contributions to civilisation and the ‘right’ path towards 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: 1 Liang Qichao (1873-1929). Xinmin shuo, Chung-hua shu-chü (ed. Taiwan: Zhonghua shuju, 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.

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debates about rights contain the potential to become, firstly, an ‘enabling’, accelerating, aspect of relations. Secondly, they can also turn into an ‘inhibitory’ mechanism, slowing down progress. Human rights issues, in the shape of EU policy-conditionalities are, thirdly, often drivers of international foreign-policy decisions pertaining to the EU and China – as the activities of the PRC in Africa3 show (Holslag 2006: 11/12; Zhang Tiejun 2007: 153/4; Leonard 2008: 96/7). This chapter seeks to demonstrate that this enabling-inhibitory-dynamic is alive in contemporary EUChina dialogue. In China-EU exchanges, a dynamic tension exists between, on the one hand, the lure and ‘myth’ of the (Chinese) market (Yahuda 2008: 21) and China’s impact on Europe’s economic recovery, and, on the other hand, human rights and the rule of law; this tension forms a key dualist theme in this chapter. It is not just since US Foreign Secretary Hillary Clinton’s explicit de-coupling of trade from human rights in US-China relations4 that some point to liberties being ‘sacrificed’ on the ‘altar’ of Sino-European trade. But the most pertinent duality of all, framing human rights in EUChina relations, lies in the starkly contrasting views of China in circulation at present (Peerenboom 2008: 2-22; World Affairs 2007): on the one hand, the PRC is seen, in a phrase coined by Kishore Mahbubani, as manifestation of the ‘New Asian Hemisphere’ (Mahbubani 2008), a selfconfident, peacefully-rising superpower, replacing the prevailing Washington Consensus on world affairs with ideas like Beijing Consensus, Harmonious Society, Walled World and Lawfare; a successful rational-authoritarian oneparty state, with an emerging, largely conservative, middle-class; a government putting economic and cultural rights before civil and political ones; a state jockeying for position in a new Asian ‘Great Game’; above all, a potential example for other developing nations in Asia and Africa to follow suit (Youngs 2001; Leonard 2008: 96-107). Its many critics, on the other hand, perceive the PRC as a brutal human rights pariah, censoring the press and the internet, closing human rights law firms,5 destroying Tibetan culture, propping up ‘rogue-states’ such as Sudan, North Korea, Uzbekistan and Burma, and abusing the prestige afforded

3

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

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by the Olympic Games to hide intolerance, corruption and manipulation6. The dualities hinted at, above, seem to be woven deeply into the very fabric of EU-China interaction – this chapter cannot, therefore, resolve them in one stroke. It may, however, be useful to explore some of the ways in which ‘duality’ contributes to a frame of reference for the human rights question in EU-China contacts, and to offer for further scrutiny some of the borders of this frame. Encounters The theory of people’s rights will bring us not a particle of good but a hundred evils. Are we going to establish a parliament? 7

It is well nigh impossible to refer to human rights in EU-China relations without recourse to the basic historical legacies of the relationship. The European ‘mood-swings’ which accompanied Sino-European contacts have already been hinted at. They were a wider manifestation of the way in which Europe and China have always defined themselves, for better or for worse, in contra-distinction of one another, as each other’s – at times 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 friction in China-EU dialogue also has to embrace some appreciation of what one may call the ‘iceberg-issues’: obstacles to understanding beneath the surface of discussion-formats, such as the Informal ASEM Seminars on Human Rights (e.g. ASEF, 2001), the ASEF University, the ASEAN Human Rights Mechanism and the EU-China Human Rights Dialogue. Icebergissues, nevertheless, possess the potential to cause serious harm, if they are, wilfully or inadvertently, ignored. The history of China-Europe civilisational exchange looms large here: suffice it to mention Chinese humiliation and European colonial guilt stemming from the time of the Treaty Ports,9 and the debates between European Jesuits and Chinese

6

See the chapters by David Askew and Peter Anderson in this volume. 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. 7

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intellectuals over the ‘right’ way, to measure time, decode the heavens and grasp the place of human beings in society. These episodes have left important legacies, as has the development of diverse traditions in East and West. The Enlightenment left Europe with a taste for individualism and a curiosity of enquiry (de Prado 2007; Ringmar 2007). Confucian scholars, by contrast, emphasised societal harmony, duties and subordination of the individual to group requirements. Both intellectual traditions continue to be instrumentalised in human rights and ‘Asian Values’ debates of our era, in spite of their wider potential (Bell 2008; Garton Ash 2009). However, in our time, Confucius has ‘gone to market’.10 The Master’s teachings experience experiencing a renaissance as a tool in contemporary Chinese international diplomacy.11 These legacies of China-Europe relations have important contemporary repercussions: they live on in the enquiries of the 21st Century, as to what kind of contributions East and West will have made to global civilisation. They also inform debates over just how instrumental economic and cultural, civil and political, rights were in these contributions. In terms of China-EU, the lessons of the past – if they have indeed been learned – influence the present and the future. They constitute a knowledge resource base and a store of memories, determining how conceptions of ‘rights’ are shaped, how research agendas develop and how political labels such as ‘knowledge-based-dialogue’ or ‘value-guided policies’ emerge. In EU-China relations, issues such as global leadership, involvement in international organisations, rights régimes and security challenges have deep roots in the connections of former centuries. Contemporary arguments about ‘de-Westernisation’, the ‘Asian Hemisphere’, ‘Clashes of Civilisations’ and ‘Peaceful Rise’ owe a recognisable debt to the vagaries and stereotypes of China-Europe civilisational encounters of past ages; and a consciousness regarding human rights and their relative ranking in society is an integral part of this picture.

10 11

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

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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 for a critique of human rights matters in EU-China relations. Some sought to position the issue in the context of ‘globalisation’, ‘clashes of civilisations’, ‘paths to modernity’, ‘development studies’ and ‘normative theory’. At least one, realist-inspired, ‘global political economy’ perspective has been very influential (Close and Askew 2004). However, the most deepseated EU-China human rights dichotomy is, arguably, the universalistversus-relativist paradigm: its tenor hardly needs elaborating. In the ‘Western’ tradition, an understanding of civil and political rights was influenced by a Judaeo-Christian background. Those categories of rights particularly, but by no means exclusively, are seen as ‘all-embracing’, embedded in the very nature of what it means to be human, and globally applicable, quite irrespective of local traditions. They cannot be abrogated with impunity, by reference to concepts like ‘culture’ or ‘values’. By contrast, relativists and ‘Asian Values’ proponents point to the division of rights into economic-cultural ones on the one hand, and civil-political ones on the other; they stress that the latter do not make sense without first creating the right conditions for the former, such as wealth. Many supporters of this view emphasise collectivist over individual entitlements, often stressing regional traditions. In addition to these views, it is possible to delineate the EU-China normative territory with reference to the term ‘identity’. Here, human rights, especially civil liberties and integrity-rights, are perceived to form an intrinsic part of the ‘political DNA’ of regions. In the case of the EU, largely derived from Development Policy, human rights consciousness is constructed as a part of the very cloth of European-ness, from which follows that human rights cannot be subservient to economic and other conditions. This results in a particular promotional agenda of exporting the ‘Western’ model of rule of law, democracy, good governance and human rights to the international stage (Youngs 2001). In the case of China, this notion of a mission democratique of the EU is countered by an emphasis on Asian legal traditions, ‘Asian Values’ and an insistence on non-interference in ‘domestic’ affairs – an approach polemicised as

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Beijingoism.12 Many of these notions are rooted in concepts of specific national ‘identities’ and regional ‘destinies’. A further, major, part of the EU-China research agenda is driven by a focus on regionalism, institutionalism and regime-types (Katzenstein 2005), inter-regional co-operation and the question of the ‘model-character’ of regional entities for one another (Fort and Webber 2006; Welfens et at 2006). Here, the issue, for example, of what China, ASEAN and the EU can possibly learn from one another about human rights, can assume a central position. A notable portion of this programme of enquiry is predisposed towards social-constructivist, theories, the key to which is an understanding of the dialectic of ‘agency’ and ‘structure‘, and the role of ‘ideas’, ‘role-concepts’ and ‘identities’, as drivers of politics and constitutions (Tonra and Christiansen 2004; Wiessala 2006). Political actors like the EU or China are moulded by the very way they interact, the conditions they create – for instance for a fruitful human rights – dialogue, and by the ‘patterns of opportunity and constraint’ within which political agency and advocacy occur (Bretherton and Vogler 1999: 29). The ‘enabling’ versus ‘inhibitory’ dynamic of divergent ideas on human rights in EU-China interaction can, therefore, be seen to be playing itself out in overlapping, normative and identity-related, arenas of the EU-China dialogue. The rejection of realist and liberal approaches and the juxtaposition of ‘hard’ versus ‘soft’ power appears common to most constructivist views. For EU-China relations, an emphasis is placed, rather, on negotiation, persuasion, knowledge-partnerships and intellectual exchange, all of which are seen as powerful agents of change and conduits for ‘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 underpinned by a range of powerful discursive traditions influencing human rights discussions in EU-China relations. The ‘Asian Values’ debates of the 1990s (e.g. Bauer and Bell, 1999; Youngs 2001) might seem dated now (World Affairs, 1998), but it is by no means dead, and China has its 12 13

The Economist, 2 August 2008: 11. Phrase inspired by: E. Friedman in Jacobsen and Bruun 2000: 21.

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unique place in it. For many, the Asian Financial Crisis (1997/98) rendered thinking about ‘Asian Values’ obsolete. After all, the Asian Sonderweg, or special path to development, did not prevent the collapse; it did not then, nor does it now, in the global downturn of our times. For those of a universalist normative persuasion, the ‘Asian Values’ label was always little more than an ideological tool, justifying authoritarianism in Asia, on the spurious grounds that states are rather like families, and duties count for more than rights. It is not necessary to dwell on this for too long here, as China, in any case, escaped much of that particular crisis owing to its government’s fiscal policies. However, this did not prevent the PRC’s leaders from promoting many of the paternalistic ideas attributed to this particular discursive channel, especially when faced with criticism from the EU or US over the Chinese human rights record. Even now, the spirit of the ‘Asian Values’ debate is never far away – instead, it has metamorphosed into wider arguments over who has been the real engine of world history,14 and who contributes most to international organisations and inter-civilisational dialogue. Next to cultural politics and ‘Asian Values’, the normative spaces occupied by the human rights issue in EU-China dialogue are inspired by discursive traditions analysing democratic institutional practice, security and regionalism (Katzenstein 2005), ASEAN-EU relations, and Asian human rights mechanisms (e.g. Muntarbhorn 2001; Close and Askew 2004). Alternative enquiries focus on Asian constitutionalism (e.g. ANU 2003), 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-philosophical dimension, seeking to recruit Buddhism or Confucianism15, in order to buttress human rights, humanism, communitarian ideas and noninterference (World Affairs, 1998: 25/6; Bauer and Bell 1999; Wiessala 2006: 44-47). Thus, personalities from times past and present, from the Indian Emperor Aśoka, to the Dalai Lama, have become something akin to ‘human rights heroes’ (World Affairs, 1998: 26-28; Sen 2001: 236). In addition, some have suggested that a ‘special path’ for China is justified by her size, age and other conditions (Christie and Roy 2001; Barr 2002). But contemporary, discourse inside the ‘Chinese power-house of ideas’ is as wide-spread, as it is generally underrated by many Western 14 15

For example: BBC History Magazine 9(8) August 2008: 21. For example: Asian Affairs, 02/08: 28.

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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, 9499) demonstrates cogently how Chinese intellectuals – of a liberal-internationalist, ‘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’ (ruan quanli), through an enhanced dissemination of Chinese culture and ideas world-wide, through agents such as Confucius Institutes, CCTV 9 and China Radio International.16 But it applies equally to human rights debates (Jacobsen and Bruun 2000). Indeed, ‘rights’ and ‘values’ have always been key leitmotivs of post-enlightenment China-Europe exchange; in this context, Chinese intellectuals thematised ‘freedom’ and ‘personal liberty’ (Angle 2002; Yun 2002), examined the ‘fragmented’ character of Chinese society and explored notions of ‘human nature’, ‘good’ and ‘evil’, ‘duties’ and ‘rights’ (He 1996: 110). The subordination of ‘rights’ under prerequisites, such as economic circumstances, development and national conditions (guoqing) is a recurring theme (Yun, 2002: 7; Angle 2002: 256). Scholars like Chih-Yu Shih (1999: 97-99), related human rights with current Chinese rule-of-lawthought. 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 contemporaries (Chan 2000: 218/9; Christie and Roy 2001: 220) argued that Confucian morale transcends a relationship-based ethic and does not need 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. David Kelly’s ‘Asian Lexical Matrix’, demonstrating the associations between ‘freedom’, ‘human rights’ and such concepts, and the accessibility of appropriate words/ signs for them in Asian languages has lost none of its power more than ten years after its first publication (Kelly 1998). More recently, scholarship on ‘discursive constructions’ and ‘communicative strategies’ in EU-China relations was contributed by Séan Golden 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 6155 kHz.

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(2006), perhaps as a reminder of just how powerful, yet under-represented, the analytical tools of integration-discourse-analysis can be in the study of EU-Asia interaction (Diez 2001). In the present, scholars like Peerenboom (2008) are attempting to separate ideological ballast from pertinent critique in EU-China relations. Peerenboom’s work helps to isolate the key questions: what is the relationship between development and the rule of law, between the latter and democratisation, between wealth, civil society and human rights? Is an amount of discretion compatible with rule of law, and can trade be married 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 competition to one another. Is China, as Christie and Roy have claimed (2001: 232), really ‘too vast, too poor and too populous to sustain political and economic rights’? Is it disingenuous to state, as some do (Cameron and Yongnian 2007: 13), that human rights are ‘too sensitive’ a subject to be brought to the (Chinese) leadership level? Is economic advancement ipso iure changing political assertiveness among the Chinese public, and fostering convergence on human rights and democratic reform (Haina Lu 2003; Andreosso 2004)? Will political pluralism – as if on ‘auto-pilot’ – contribute to a resolution of China’s problems? There are no simple answers to these questions, but it seems that the PRC is currently something akin to a ‘global laboratory’ of political transition. There is evidence that economics, democratisation and human rights are, indeed, strongly inter-linked (Wei-Wei Zhang 2003: 11; Andreosso O’Callaghan 2004). On human rights, many comment on the EU’s policy-preference for the civil-political side of the spectrum. Is this justifiable or, as some have suggested (Angle 2002: 256/7; Peerenboom 2008), merely a tactical dialogue-debate, deliberately conflating liberal democracy with the rule of law, and seeking to skirt awkward questions about global inequalities? Identities Many of these questions are indeed behind the ‘ups and downs’ of EU dialogue with China over human rights. In addition to this, what makes this particular aspect of EU-Asia relations so special is a peculiar, threefold, phenomenon: Firstly, EU-China human rights interaction can be said to be characterised by a large number of, what may be termed, ‘signature-issues’. This

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term is meant to imply that (a) these topics have become emblematic for a focus on the civil and political category of human rights; (b) that they stand out through their recurrence and ‘recognisability’ in the official EU-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 PRC and in Hong Kong, the suppression of opposition and political dissent since the Tiananmen Square massacres;18 conditions of detention, the death penalty, the ‘Sinification’ of Tibet; the position of the Dalai Lama and religious choice for Christians, Muslims and Falun Gong practitioners in China; the Chinese ‘strike-hard-at-crime’ campaigns, the Chinese judicial system and the pace of (legal) reform (Ching 2008; Peerenboom 2008). Last, but not least, this, incomplete, list must also include Chinese ratification of the International Covenant of Civil and Political Rights (ICCPR), the situation in Myanmar (Burma)19 and issues of ‘associationpolitics’ and national identity across the Taiwan Straits (Fuh-Sheng Hsieh 2004).20 Secondly, a number of questions, such as the arms embargo, and EU Member States’ sponsorship (until 1998) of a Resolution censuring the PRC over human rights at the UN Human Rights Commission, have become ‘wedge-issues’ in EU-China dialogue, dividing Member States and Council alike (Close and Askew 2004: 106; Balducci 2009: 9-11). Some see in those developments the fruits of a deliberate Chinese strategy of divide et impera.21 To counterbalance this, there are also ‘hinge-issues’, bringing the EU and the PRC closer together over common interests. Terrorism, climate-change and policy towards Burma (Myanmar) constitute pertinent examples. These issues have become corner-stones 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 of ex-premier Zhao Ziyang’s secret memoirs Prisoner of the State. In May 2009, the BBC World Service broadcast a series of commemorative programmes, entitled The Lost Voices of Tiananmen Square (http://www.bbc.co.uk/podcasts/series/docarchive). 19 Events in Burma in May 2009 influenced the 11th EU-China Summit in May 2009 (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/

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in the EU’s diplomatic toolkit for China, the rhetorical construction of which has, at times, been more ‘declaratory’, at times more ‘activist’ in nature. 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, ‘rising’ Asia.22 In spite of this, the EU has but trifling successes to point to. In the face of an institutionalised EU-China Human Rights Dialogue (HRD) from 1995 onwards,23 and after the 60th Anniversary of the UNDHR in 2008, many Chinese activists continue to be in detention, while pre-Olympics promises of liberty are not being honoured. Success eludes the EU in human rights engagement with China, and China demonstrates to Europe that, ‘the king is naked’ (Baker 2002: 60/1; Balducci 2009: 8). Notwithstanding this, the EU has, thirdly, been uniquely successful in rendering human rights and liberal democracy integral parts of its own political identity, acquis communautaire and self-image. This ‘incremental’ constitutionalisation of human rights into a ‘value-based’ EU foreign policy owes much to the eventful European history of the last two decades, as well as to EU co-operation with international organisations, although, in the case of China, there has been little European unity at the UN of late. The principal EU human rights stance can be said to have arisen from (a) a progressive, incremental, ‘politicisation’ of the Development Policy and the CFSP (Bartels 2005; KAS 2006); (b) the growth of supranational competencies; (c) many ‘integration-friendly’ decisions of the European Parliament and the European Court of Justice; and (d) the wider EU treaty-architecture and legal institutionalism, which gradually became more inclusive of human rights (K. Smith, 2003; Wiessala, 2006). This specific EU ethic of a ‘principled’ political actor-ness is powerfully articulated through a paradigm-shift towards a ‘soft’, ‘civilian’, ‘normative’ power-base, from which stems democratic pressure to promote human rights, globally and in China (Wiessala 2006; Haltern 2004: 184-191; Youngs 2001: 2). This inter-locking of identity, unity, integration, and law in the EU polity yielded a ‘culture of rights’ and culminated 22 For example: COM (1995) 279; (1998) 181; (2001) 265; (2003) 533; the PRC countered with its first ‘EU-Policy’ paper, in 2003. 23 The 27th round of the EU-China HRD, as well as, the 11th EU-China Summit both took place in Prague in May 2009 (Council: Press Release 9995/09 Presse 134).

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in the EU Human Rights Charter. The spirit of the 1973 Declaration on European Identity,24 referring to human rights as part of a shared ‘European heritage’, has clearly been acted on. Few in the EU-Asia epistemic community have since asked against whom or what this identity may be defined. Apart from the legacy of stereotyping, there is another, potentially more serious, issue here. This concerns divergent levels of stringency and legal scrutiny in EU human rights standards towards the PRC, on the one 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, consequentially, the Union has to face accusations of political double standards in foreign policy, demanding higher standards, in an unequal manner, 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 not need a ghost writer (Holslag 2006: 12)

EU foreign policy towards the PRC on human rights exists next to similar 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 a wider, ‘strategic’, dialogue (zonghe zhanlue huoban guanxi) (KAS 2006; Shambaugh 2008: 135). Looking at its detail, Algieri (2008: 79) mentions the EU’s policy-making and institutionalization patterns as the two main wellsprings of its China policy. The ‘strategic partnership’ entails a network of sector-specific, regional and multi-lateral co-operation, although the use of the term is still subject to critical scrutiny (Holslag 2006; Jing Men 2009: 4).25 While the multitude of EU-China sector-specific dialogues cannot be elaborated 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 24

Copenhagen Summit, 14 December 1973: EC Bulletin, 12-1973. 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 25

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credibility-deficit. There is no co-ordinated EU-China policy on human rights, and the EU does not have sufficient political instruments and dialogue-capacities for its efficient construction (Youngs 2001: 188/9; Algieri 2008). For some (Holslag 2006), this is part of the ‘Great Disillusion’ of EU-China. What strategy there is, remains clearly skewed towards economic objectives. The European Voice summarised this dilemma with characteristic aplomb: Galileo grabs the Headlines, but Human Rights Problems in China still a Major Bugbear.27 China-EU analysts are right in deploring a deficiency in mutual ‘understanding’ at the root of relations; perhaps another duality of the dialogue is apparent here (Cameron and Zheng 2007: 12; Yahuda 2008: 30; Jing Men 2009: 5). This gap is in strange contradiction to the branched-out nature of EU-China initiatives.28 Some have claimed that this ‘mushrooming’ of initiatives, much like the Asia-Europe Meeting (ASEM), hides real progress on the ground in exactly such matters as human rights, democracy and the pace of reforms. Others would level similar allegations against two other pillars of EU China policy: the ‘oneChina-principle’ and the EU’s method of ‘constructive’, or ‘conditional engagement’, an approach the EU appears to have borrowed from the ASEAN vocabulary, and which is distinct from the containment-competition approach at times preferred by the US.29 In the past, the EU routinely framed its China approach in terms of a dialogue ‘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 for collaboration. Europe, in Holslag’s words, did ‘not try to floor the dragon, neither to cage it, but to discipline it’. (Holslag 2006: 5). More recently, the EU’s linguistic-constructive diplomatic arsenal produced a new, subtler, flavour, emphasising commonality, shared responsibilities and respect for difference.30 A May 2009 statement of James Moran, Asia-Director in DG RELEX, summarised this new way: human rights divergencies must not be allowed to ‘undermine’ the ‘overall direction’ of EU-China relations (Moran 2009: 4/5). Thus, trade is the real ‘back27

European Voice, 23-29 October 2003: 29. 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. 28

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bone’ of EU-China relations, and relations are vital to the European economic recovery.31 Not quite the Clinton-take, but, perhaps, not far off. Other practically-minded policy-makers point out that the old EU concept may have proved too rigid, and that human rights issues now require dis-association from broader co-operation. If China has indeed changed beyond recognition over the last decade, so it is argued, is it not somewhat anachronistic that EU human rights policies vis-à-vis China remained so comparatively immutable? Connectivities One more point deserves to be mentioned – just because there are now signs that this immutability is slowly being overcome: geo-politics, human rights and knowledge do, of course, go hand in hand. Indeed, recent EU policy papers on China are now strongly foregrounding education, people-to-people exchanges, inter-civilisational dialogue, common curriculum development (Wiessala 2008; Shambaugh et al 2008), intellectual exchange and an EU-Asia partnership of knowledge. This new strand in EU-Asia relations calls for more knowledge-based co-operation and appears driven by conclusions drawn about the global village and the importance of knowledge-economies for future multi-level governance (de Prado 2007). This is, of course, not a new idea at all: knowledge-transference, as well as stereotyping have a venerable tradition in the centuries-old EUAsia-China civilisational encounter, since long before the time of the Silk Road.32 From Europe’s point of view, for instance, the ‘learning dimension’ of a relationship with China (and Asia) has embraced aspects as diverse as the ‘discovery’ of Buddhism by European ‘Orientalists’, the structured learning environment (ratio studiorum) introduced by the Jesuit enterprise in China, the amnésie philosophique of European intellectuals towards India (Droit 2004) and the defensive modernisation of parts of Asia 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 very embodiment of a ‘connectivity of ideas and knowledge’ stipulated by some observers (World Affairs 11:4 (2007) 17, 107). The most recent EU 31

See: euobserver of 19 May 2009 (http://euobserver.com/9/28156?print=1). 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 of this history. 32

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policy papers on Asia now routinely foreground issues such as ‘knowledge-based-cooperation’ and ‘the warp and weft of growing people-to-people-contacts’ (Crossick and Reuter 2007: xx). It seems that now is a good time to ‘put flesh to the bones’, and to extend this ‘learning dimension’ into the area of human rights. A ‘holistic’ extension of EU-China relations, into the field of education, would appear to be vindicated by current analyses of the links between the ‘thirst for knowledge’ and human rights, in China and elsewhere. Thus, Will Hutton identified the ‘dare to know’ and the ‘capacity to aspire’ (Hutton 2007: 53, 201) as keys to future pluralism and human rights consciousness. Similarly, de Prado (2007: 26-29, 97), identifies ‘soft intellectual power’ and ‘knowledge-mediators’ as facilitators of AsiaEurope dialogue. Ringmar (2007: 221-241) stresses the importance of ‘reflective institutions’ and the potentialities of institutionalised learning in China-Europe relations. In terms of human rights in EU-China relations, these debates may, over time, become important tools of the new knowledge-economies; tools, which benefit the East-West dialogue, because, in Li Jinshan’s phrase (2007: 223), they ‘amplify the mental power of mankind’. Perhaps initiatives such as the European Studies in Asia (ESiA) programme of the Asia-Europe Foundation (ASEF) and the Europe through the Eyes of Asia project (Holland et al 2007),33 can be a first step on this particular Long March to understanding. Appraisals In 2006 the Economist could still claim that: Whereas economically, China has surged ahead in the past few years, politically, it remains almost as secretive, just as risk-averse nearly as dictatorial and every bit as determined to crush any organised dissent as it was at the turn of the decade.34

And, near the end of the present decade, Rana Mitter (2008: 91) elaborated 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, a largely Chinese society, is democratic, in that it has regular elections which 33 34

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

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are nominally open to opposition candidates (but at high cost to themselves), but is not free (the media and political activism are both heavily regulated). Most intriguing though, is Hong Kong, which is little more democratic than it was under the British.

Notwithstanding these comments, China has made significant strides on her path to social re-structuring, poverty-alleviation, freedom for its citizens, wealth-creation and, to some degree, political transparency (Cameron and Yongnian 2007: 11). Keyuan Zou’s assessment encapsulates 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 in contemporary China, governed by a version of ‘rule of the Party by law’. In this situation the suggestions put forward by some (e.g.: Crossick and Reuter 2007: 192), that human rights ought now to begin to be articulated towards China as a matter of ‘national interest’, rather than one of ‘external pressure’, can point to a constructive way forward for one of the most significant foreign policy human rights relationships of the European Union. Perhaps the EU and China may wish to be guided in their future relations by both the inspiration and the challenge expressed in the Chinese axiom of ‘overcoming difficult times together’ (gong ke shi jian):

共克时艰。

References Algieri, Franco. 2008. ‘It’s the System that Matters’ in Shambaugh, David; Sandschneider, Eberhard and Zhou Hong. 2008. China-Europe Relations. Perceptions, Policies and Projects, London: Routledge: 65-83 Andreosso-O’Callaghan, Bernadette; Rees, Nicholas and Yanlai Wang. 2004. ‘Economic Change and Political Development in China: Findings from a a Public Opinion Survey’ in Journal of Contemporary China, 13(39): 203-222 Angle, S. C. 2002. Human Rights and Chinese Thought, Cambridge: CUP. Asia-Europe Foundation (ASEF). 2001. Fourth Informal ASEM Seminar on Human Rights (Bali, Indonesia, 12-13 July 2001), Singapore: ASEF Australian National University (ANU). 2003. Constitutions & Human Rights in a Global Age, Canberra: ANU. Baker, Philip. 2002. ‘Human Rights, Europe and the PRC’ in The China Quarterly, 169: 45-63.

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Balducci, G. ‘Prospects and Challenges for the European Promotion of Human Rights in China’ in EU-China Observer, 1/2009, Brugge: College of Europe: 8-12. Barr, Michael D. 2002. Cultural Politics and Asian Values, London: Routledge. Bartels, Lorand. 2005. Human Rights Conditionality in the EU’s International Agreements, Oxford: OUP. Bauer, J.R. and Bell, D.A. 1999. The East Asian Challenge for Human Rights, Cambridge: CUP. Bell, Daniel 2008 ‘What’s Left of Confucianism’ in: Policy Innovations (Carnegie Council) http://www.policyinnovations.org. Cameron, Fraser and Zheng Yongnian. 2007. ‘Key Elements of a Strategic Partnership’ in Crossick, Stanley and Reuter, Etienne (eds) China-EU A Common Future, London: World Scientific: 3-14. Chan, Joseph. 1999. ‘A Confucian Perspective on Human Rights for Contemporary China’ in Bauer, J. R. and Bell, D. A. 1999. The East Asian Challenge for Human Rights, Cambridge: CUP: 212-237. Chih-Yu, Shih. 1999. Collective Democracy – Political and Legal Reform in China, Hong Kong: Chinese University Press. Ching, Frank. 2008. China: The Truth about its Human Rights Record, London: Rider. Christie, Kenneth; Roy, Denny. 2001. The Politics of Human Rights in Asia, London: Pluto Press. Close, Paul and Askew, David. 2004. Asia Pacific and Human Rights. A Global Political Economy Perspective, London: Ashgate. Crossick Stanley and Reuter, Etienne. 2007. China-EU A Common Future, London: World Scientific. De Bary, Theodore. 1998. Asian Values and Human Rights. A Confucian Communitarian Perspective, Cambridge/ Mass: Harvard University Press. De Bary, Theodore and Lufrano, R. 2000. Sources of Chinese Tradition (Volume II), New York: Columbia University Press. De Prado, César. 2007. Global Multi-Level Governance. European and East Asian leadership, Tokyo: UN University Press. Diez, Thomas. 2001. ‘Speaking ‘Europe’: The Politics of Integration Discourse’ in Christiansen, T.; Jørgensen, K.E. and Wiener, A. 2001. The Social Construction of Europe, London: Sage: 85-100 Droit, Roger-Pol. 2004. L’oubli de l’Inde, Paris: Éditions du Seuil Fort, Bertrand; Webber, Douglas. 2006. Regional Integration in East Asia and Europe Convergence or Divergence? London: Routledge. Fuh-Sheng Hsieh, John. 2004. National Identity and Taiwan’s Mainland China Policy in Journal of Contemporary China 13(40): 479-490. Garton-Ash, Timothy. 2009. ‘Confucius can speak to us still – and not just about China’ in The Guardian 9 April 2009: 31. Golden, Séan. 2006. ‘Socio-Cultural Aspects of the Relationship between the EU and East Asia, With Particular Reference to China’ in Asia-Europe Journal 4: 265294

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Gungwu, Wang (2003), Ideas Won’t Keep-The Struggle for China’s Future Singapore: Eastern Universities Press Haina, Lu. 2003. ‘EU-China Rights Dialogue: An “Acceptable Option”? in EurAsia Bulletin June-July 2003, EIAS, Brussels: EIAS: 5/6. He, Baogang. 1996. The Democratisation of China. Routledge: London. Holland, Martin et al. 2007. The EU through the Eyes of Asia, Singapore: ASEF. Holslag, Jonathan. 2006. ‘The EU & China: The Great Disillusion’ in BICCS Asia Paper 1(3), Brussels: Brussels Institute for Contemporary China Studies (BICCS) Hutton, Will. 2007. The Writing on the Wall. China and the West in the 21st Century, London: Abacus. Jacobsen, M and Bruun, O. 2001. Human Rights and Asian Values, Richmond/ Surrey: Curzon Jing, Men ‘EU-China Relations need more Mutual Understanding’ in EU-China Observer 1/2009, Brugge: College of Europe: 3-7 KAS (Konrad-Adenauer Stiftung). 2006. The EU & China, Singapore: KAS Katzenstein, Peter J. 2005. A World of Regions – Asia and Europe in the American Imperium, Ithaca and London: Cornell University Press Kelly, David. 1998. ‘Freedom, A Eurasian Mosaic’ in Kelly, D. and Reid, A. (eds) Asian Freedoms Cambridge: CUP: 1-17 Leonard, Mark. 2008. What Does China Think? London: Harper Collins Li, Jinshan. 2007. ‘Governance’ in Crossick, Stanley and Reuter, Etienne (eds) ChinaEU A Common Future, London: World Scientific: 215-227. Mahbubani, Kishore. 2008. The New Asian Hemisphere, New York: Public Affairs Mitter, Rana. 2008. Modern China – A Very Short Introduction. Oxford, OUP: 91. Moran, James. 2009. ‘The EU and China: Growing Expectations, Growing Challenges’ in EU-China Observer 2/2009, Brugge: College of Europe: 2-5 Muntarbhorn, Vitit (2001), ‘Strengthening ASEAN Cooperation […]’ in Petchsiri, A. 2001. Strengthening ASEAN Integration, Bangkok: CES: 65-73. Peerenboom, Randall. 2008. China Modernizes – Threat to the West or Model for the Rest, Oxford: OUP. Ratnam, K.J. 2003 Rights, Freedoms and Civil Society, Pulau Pinang: Universiti Sains Malaysia Ringmar, Erik. 2007. Why Europe Was First: Social Change and Economic Growth in Europe and East Asia, 1500-2050, London: Anthem Press. Sen, Amartya. 2006. The Argumentative Indian, London: Penguin. Shambaugh, David; Sandschneider, Eberhard and Zhou Hong. 2008. China-Europe Relations. Perceptions, Policies and Projects, London: Routledge Singh, G. 2007. ‘Emerging Civil Society in China: The Post-Reform Period’ in World Affairs 11(4): 108-117. Tonra, Ben and Christiansen, Thomas. 2004. Rethinking EU Foreign Policy. Manchester: MUP. Wei-Wei Zhang. 2003. ‘China’s Political Transition’ in EurAsia Bulletin, October 2003, EIAS, Brussels: EIAS: 11-14.

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Welfens, P.J.J.; Knipping, F.; Chirathivat, S.; Ryan, C. (eds) 2006. Integration in Asia and Europe, Berlin: Springer. Wiessala, Georg. 2006. Re-Orienting the Fundamentals. Human Rights and New Connections in EU-Asia Relations, Aldershot: Ashgate. -- 2008. ‘Weaving the “Asia-Europe www of Learning” – Academic Co-operation and Curriculum Development in Asia-Europe Relations’ in Holland, Martin et al (eds) The Future of European Studies in Asia, Singapore: ASEF. World Affairs. 1998. Special Issue: Pespectives on Human Rights, New Delhi. -- 2007. Special Issue: Asia Rising: Towards Eastern Hegemony? New Delhi. Xiang, Yun. 2002. ‘Human Rights Ideas and Concepts in Traditional Chinese Culture’, Human Rights, 5: 7-10, Beijing: CSHRS. Zhang, Tiejun. 2007. ‘Africa’ in Crossick, Stanley and Reuter, Etienne (eds) ChinaEU A Common Future, London: World Scientific: 145-156. Zou, Keyuan. 2006. ‘Administrative Reform and Rule of Law in China’ in Copenhagen Journal of Asian Studies 24/2006, Copenhagen: Asia-Research Centre: 5-32. Audio Sources, Broadcasts and Podcasts Chinese in Britain (7 Parts, 2007). Countdown to the Olympics (BBC 2008). The Lost of Voices of Tiananmen Square (BBC May 2009).

EUROPEAN STUDIES 27 (2009): 103-120

SPORT AND POLITICS: THE 2008 BEIJING OLYMPIC GAMES David Askew Abstract During the Cold War, and in post-Mao China today, international sporting events have been, and continue to be, seen as an arena in which to display national superiority. Despite the emphasis of the Olympic movement on the ability of sport to promote international understanding and peace, the sporting field all too frequently remains a political arena that is divided by rivalry instead of united by friendship. In China, sport has long been mobilized to construct narratives of national identity. In the twentieth century, initial anxieties about China’s place in the world were projected onto the bodies of Chinese athletes, and produced a discourse that fixated on what were perceived to be inherent national weaknesses. Sporting success has helped China to overcome, at least in part, this sense of inferiority. Today, the Olympic Games provide a newly confident China with a highly visible arena in which the new Chinese body can be displayed, and in which athletic ability and national competitiveness can be celebrated. In particular, the Beijing Olympic Games functioned as a site of intense nationalistic emotion and pride. Following the collapse of communism as a legitimate ideal, an attempt has been made in China to graft aspects of the market economy on to a Marxist political dictatorship. Since the CCP suffers questions of legitimacy, the nationalistic pride generated by sporting success has become increasingly important to the Party-State. However, the narrative on Beijing and national identity also faces many challenges, with China’s human rights record in particular threatening to cast a dark shadow over the Olympic success story.

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Introduction Hong et al (2005) note that Beijing views international and, in particular, Olympic sporting successes as a significant, symbolic, demonstration of its determination to forge a place in the international community for China as a superpower. Beijing hoped and believed that the Beijing Olympic Games would function to announce the arrival of an emerging global power, and sought to recreate the global narrative of China as the story of a forward-looking, modern nation that can boast a long and glorious past. When China bid for the Games, the confident and revealing slogan it used was ‘New Beijing, Great Olympics’ (in English) – and ‘New Beijing, New Olympics’ (Xin Beijing Xin Aoyun) in Chinese. According to the official Party version of Chinese history, China’s modern history consists of a century of shame and humiliation that lasted from the Opium Wars through to 1949. This century was followed by a long period of international isolation and what can only be called the genocidal madness of the PRC – the Anti-Rightist Campaign of 1957, the Great Leap Forward of 1958-1960 and subsequent mass starvation, the Cultural Revolution of 1966 to 1969, and the Tiananmen Square (June the Fourth) Massacre of 1989, together with the invasion and occupation of 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 laid to rest. In a fascinating and insightful paper, Lovell (2008: 765) argues that, ‘an unstable consciousness of ancient glory and modern humiliation still haunts the contemporary China’s self-image, and provides the context against which we must read the mixed messages of the Beijing Olympics – a metonym for the curious phenomenon of modern Chinese nationalism’. To understand the Beijing Olympic Games, we have to discuss this ‘unstable consciousness’, and also introduce modern Chinese perceptions of ‘Self’ and ‘Other’ which were created through the encounter 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 Built December 2008 was the thirtieth anniversary of the CCP meeting at which Deng Xiaoping announced a reversal of communist dogma and the 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 ‘great legacy’ of Deng was that he undid that of Mao Zedong. The ‘reform’ and ‘opening’ policies introduced in December 1978, and pursued now for three decades, sought to promote economic growth by learning from the experience of the East Asian ‘economic miracle’. Thus, 1978 ushered in a new era in which a Western and, in particular, an American way of life was embraced, and the commercialization of life and consumerism were pursued. Rejecting communist dogma in favour of pragmatism, Beijing in effect decided to westernize the Chinese economy. The result has been a Chinese economic miracle that has attracted as much, if not more, attention than the original models provided first by Japan and then by South Korea, Taiwan, Singapore, and Hong Kong. One unforeseen consequence has been the commercialization not only of the economy but also of culture. Indeed, Chinese culture has become increasingly westernized as the country has been exposed to the values of hedonistic materialism, capitalism, and consumerism. The forces of globalization threaten to bury both Chinese traditions and Chinese communism, and so inevitably challenge Chinese cultural identity. Three decades after Deng decided on a pragmatic acceptance of markets, China has emerged as a powerful global actor. China or Zhongguo, the Central Kingdom, once was central in fact as well as name. Following a long hiatus of half a millennium, China is today quickly recovering lost ground. The economy has averaged growth of 9.8 percent per year for the past three decades (Chang 2008). In 1978, China’s share of the global economy was only 1.8 percent; today it is 6 percent (The Economist 2008b). Millions of impoverished Chinese individuals – 200 million, according to The Economist – have been lifted out of poverty. Since Deng launched his market-oriented policies, China has also come of age as a political power. A major Chinese goal has long been national reunification – and Hong Kong was handed back to China in 1997, while Macau was returned in 1999. Another major goal has been to fully rejoin the international community after decades of self-imposed isolation under Mao. China did in fact join the World Trade Organization in 2001, and, after failure in 1993, made a successful bid for the Olympic Games in 2001. The year 2008 marked another anniversary: 1978 saw the spontaneous outbreak of the first major democracy movement in China since 1949 – the Democracy Wall Movement. Wei Jingsheng, perhaps China’s

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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 troubles, Wei was imprisoned for 15 years.1 The second major democracy movement in China was that of 1989, and 2009 marks the twentieth anniversary of the Tiananmen Square massacre which ended it. China today is, therefore, a country that has embraced economic reform and subsequently experienced remarkable economic growth over the past three decades, but which remains an authoritarian state ruled by the CCP-Party State. It is emerging as a significant regional power. However, the Party-State suffers from an Achilles Heel. As Ha Jin (2008), among many others, notes, ‘No party members believe in the ideal of communism any more’. Together with the threat posed to Chinese cultural identity by the forces of globalization, the structural contradictions between a market economy and authoritarian politics have produced a crisis of legitimacy. The Party-State can no longer rely on communism to provide the legitimacy it needs, and instead has turned increasingly to nationalism. In other words, China has become a commercialized society run by a communist party that no longer is ideologically committed to communism. From the 1990s on, following the collapse of communism as a legitimate ideology – a collapse symbolized by the implosion of the Soviet Union, the spontaneous destruction of the Berlin Wall, and, in China, the Tiananmen Square massacre – the Party-State has sought to legitimize its rule by mobilizing and promoting nationalism, especially in China’s schools, and by promising continued economic growth in return for a general acquiescence to political dictatorship. Those who challenge or are seen to challenge the right of the CCP to rule are suppressed; those who do not are allowed to chase the dream of material wealth. This dovetails with what Nathan (2008) has identified in a review article as one of the major themes of a recent publication on the Beijing Olympics, Owning the Olympics (Price and Dayan eds 2008): ‘the Olympics redefine citizenship

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

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(…) as consumership, abetting the depoliticization of public life that lies at the heart of China’s post-Mao propaganda strategy’. China then appears as a country which has experienced an economic miracle, is still labouring under a political dictatorship, and is increasingly turning to nationalism, in order to provide the legitimacy to fill the vacuum left by the collapse of communism. However, China is also the country which staged the global extravaganza of 2008: the Beijing Olympic Games. Many areas of the Chinese economy, of politics and legitimacy, can be explored through an examination of the role of sports in China today. Sports in China: From the ‘Sick Man of East Asia’ to Olympic Superpower China has certainly come a long way since the Opium Wars and since 1978. The Epilogue of Hong’s (1997) insightful book Footbinding, Feminism, and Freedom is entitled From Cripples to Champions. Like China itself, Chinese women have indeed been slowly liberated, albeit sporadically and incompletely, since the mid-1800s (in fact, Chinese women today massively outperform their male counterparts at events like the Olympics). Staging the Olympic Games in China has long been a Chinese national aspiration. In 1907, the YMCA journal Tiantsin Young Men discussed a speech about China and the Olympics in which the future participation of China was anticipated (it was not until 1932 before China’s first athlete participated in an Olympic event). The next year, in 1908, the following three questions were asked: When would China be able to send a winning athlete to Olympic contests? 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 for an Olympic Games?2 The aspiration to stage the Olympics was finally realized, of course, in 2008.

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

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Among others, Xu (2008: 4) uses sports as a means to examine ‘the formation of China’s modern national identity and its sometimes ambivalent embrace of internationalization’. The history of sports in modern China is also a history of the introduction of Western sports at the expense of indigenous physical activities, and so is a history of China’s embrace of the West.3 It is also a history of a distinct Chinese discourse in which the state or condition of the physical body, of what was perceived as the typical Chinese physique, was projected onto the body politic, and in which training the body was seen as an essential part of the nation building process. For much of the twentieth century, a phrase that summarized China’s national identity was ‘the sick man of East Asia’ (dongya bingfu). Although probably coined by a Chinese intellectual, in the nationalist discourse, dongya bingfu became a label imposed on China and the Chinese body politic by Japan and the West. Curing the ‘sick man’, a savagely self-critical image, has thus long been a central goal of China in order to gain international respect and status. The major means chosen to affect this cure was the area of Western sports, since traditional sports were perceived to have failed to do so. For instance, the Boxer Rebellion (1898-1900) was led by ‘Boxers’, a Western term describing practitioners of 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’s history. For instance, in his first published article, ‘Tiyu zhi yanjiu’ (The research of physical education) (1917), a young Mao Zedong called on all Chinese to strengthen their bodies in order to save the country.4 Mao’s ideas were repeated by his arch-rival, Chiang Kai-Shek, who said ‘we have to work hard to make our country strong, if we don’t want to be despised by other nations, and our foremost task is to emphasize physical education and work on it’ (cited in Xu 2008: 66). This discourse is still seen today. For instance, after the Athens Games, the People’s Daily 3 Sport in China has slowly emerged as a burgeoning area of increasingly sophisticated research in the West. A history of sport in Republican China is provided in Morris (2004). But it is Susan Brownell, in particular, who revolutionized the state of academic 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).

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trumpeted China’s sporting successes, claiming ‘When a country is powerful, its sports will flourish (…) Chinese athletes will make contributions 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 the Chinese were not “a bunch of spineless weaklings”, and that when individual citizens learned to straighten their spines China would stand tall in the 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 a strong and healthy state required a strong and healthy people (Xu 2008: 62). Sports and physical exercise were thus crucial in re-forging the national image. The various attempts to cure the ‘sick man’ focused on Western ideas of physical education and Western sports. Moreover, China believed that it needed to demonstrate to the world that it had been cured, and therefore ached for opportunities to excel in international competitions. Because it was believed that the physical vitality of the new China could be demonstrated through victory on international playing fields, the Olympics and other international competitions promised to provide a means to achieve the recognition China so desperately sought. It is no coincidence that the visit to Beijing by President Nixon was prepared through Ping-Pong Diplomacy. And it is because of this happy coincidence of physical activities, national health and vitality, legitimacy, and subsequent international status, that ‘the Chinese have shown [such] unbridled enthusiasm for using sports for political purposes, most especially for strengthening the ruling party’s legitimacy and as a means of garnering international prestige’ (Xu 2008: 49). Victory in international sporting events served as a symbolic representation of a revitalized national strength and national status and fed a meta-narrative of national vigour. The hated ’sick man’ label was banished for good by sporting victories from the 1980s and most emphatically by the Beijing Olympic Games. Without understanding China’s modern history, and especially the crisis following the end of communism, it is difficult to understand the way in which, for instance, the China’s women’s volleyball team triggered such nationalistic pride in the 1980s when the Chinese women’s volleyball team defeated Japan, in 1981, in the final of the World Cup, and went on to dominate the sport for much of the decade. This team and its sporting prowess demon-

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strated the power of sports to promote the creation in China of ‘political identity, national confidence and international status for China’ (Hong 1997: 11). Xu (2008: 268) notes that: A nation that obsesses over gold medals is not a self-assured nation. A government that needs gold medals to bolster nationalistic sentiment and its domestic legitimacy is not a confident government. And a population that cannot gracefully accept losses in sports is not a composed and secure population.

However, China is not yet able to readily accept losses. Training the body was thus seen as a means of national salvation (the personal was the political). Mao’s famous swim across the Yangtze River in 1966 was a reflection not only of his belief that a strong body meant a strong nation, but also of the notion that legitimate leadership rested on physical prowess – the swim proved he was fit to rule (Browell 1995: 57 uses the pun too). In terms of the Olympic Games, the sleek, healthy, and athletic body of Olympic sportsmen and sportswomen can be viewed as an official attempt to project to the world an image of a healthy, modern, and Western China. However, China’s Westernization is a selective Westernization in which technology, for instance, is vigorously adopted, but democracy is kept firmly at arm’s length. In terms of sports, Olympic sports in China are without exception foreign imports, and are defined in China as ‘modern’ sports and contrasted to indigenous traditional or pre-modern sports that are not privileged by the Party-State (one indigenous practice is qigong, a quiet, meditational breathing exercise that is increasing popular in China today, and, as seen in practitioners of Falun Gong, is used to articulate a quiet resistance to communist rule). Thus Western sports were adopted and vigorously promoted in China as a tool for promoting the image of a healthy body politic and as a means of both stimulating and satisfying nationalistic emotions. It is, however, important to stress both the political and the ambiguous nature of Western sports in China: traditional (pre-modern) Chinese culture placed an enormous weight on literacy. This was encapsulated in the popular phrase of zhongwen qingwu (esteem literacy, despise martiality). Sports are, of course, frequently seen to be military in nature, and so, in China, the acceptance of modern sports required a rejection of traditional beliefs. With women in particular, sport also symbolizes a political rejection of traditional ideas of femininity (footbinding) and therefore sym-

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bolizes a radical emancipatory revolution of ideas and practice. Moreover, as Brownell (2008: 62) notes, ‘Chinese people embraced modern sports, as they did the form of the nation, because of their desire to take their place on the global stage of modernity’. Sporting prowess is thus a means of reinforcing notions of national identity, of highlighting communist legitimacy, and of recreating the image of a powerful China. However, at the same time, the Chinese government wishes to reject what it sees as Western cultural pollution. The Beijing Olympic Games An examination of the literature on the Beijing Olympics reveals that a major theme is that of narrative, and in particular Beijing’s official narrative of the Games and various contesting counter-narratives.5 The official narrative is a product of state and society; of the CCP’s propaganda machinery and of a strong nationalistic desire on the part of majority Han 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 for the games, the PRC claimed that Beijing would provide a Green Olympics, a People’s Olympics, and a High-Tech Olympics. The official slogan of the 2008 Games was ‘One-World-One-Dream’. The CCP hoped to use the Games to promote a story that focuses on three decades of economic growth and the subsequent success in overcoming poverty, on present prosperity, and on future aspirations to fully rejoin the global community. Beijing has attempted to persuade the world that China is a powerful but peaceful, a prosperous and normal state, and in doing so hopes to enhance the stature of both China and the CCP at home and overseas. The Beijing Games would allow Beijing to symbolically declare an end to the century of national humiliation that began with the Opium War, the subsequent collapse of the Sino-centric world, and the brutal exploitation of China by imperialist powers. Beijing will wish to emphasize political stability in addition to economic growth, and will want to claim the status of a major global power, specifically in terms of sporting prowess, but also generally in terms of both soft and hard power.

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

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A number of counter-narratives can be identified. Some play on official themes, slogans, and symbols. Reporters without Borders, for instance, has used five interlinked handcuffs to create a disturbing and powerful image of the 2008 Games. In a play on the official Chinese slogan, 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 Human Rights Watch – note that some NGOs like Olympic Watch were created specifically to deal with the Beijing Games – have also developed a counter-narrative that critically exposes China’s human rights record, shedding light on the ongoing persecution of the Falun Gong religious movement, of peasants, of various ethnic minorities, and of the poorer residents of Beijing whose homes and communities have been destroyed to make room for the Olympic Games. China’s record overseas has also been highlighted, with its close ties to unsavoury regimes in Myanmar (Burma), Zimbabwe, and especially Sudan denounced. Indeed, the 2008 Games were, at times, labelled the ‘Genocide Games’, because of China’s involvement with Sudan. The first attempt to host the Games failed at least in part because of Western concerns about Beijing’s human rights record. Jarvie et al (2008: 118) argue that, ‘as far as the critical Western gaze was concerned’, the decision to award the 2008 Olympic Games to Beijing was, ‘a compromise between the political imperative to give the Olympic-host role to China and the ethical imperative to refuse to do so’. Having turned Beijing down once, it was decided that the West could not afford to do so again. In the period leading up to the Beijing Olympic Games, concerns about human rights abuses in China continued to be widely raised in the Western media. Following the campaign to label the Beijing Games the ‘Genocide Olympics’, the Washington Post published an editorial calling for a boycott, and Steven Spielberg resigned from his position as artistic advisor in protest of China’s refusal to do more to end the widespread crimes against humanity in Darfur (Washington Post, 2006). Throughout 2008, unrest and then violence in Tibet served only to underline these questions about China’s status as a responsible international citizen. As Sheridan (2008) emphasized at the time, ‘with the Olympic Games due to start in just a few months, and with the global media poised to descend en masse on its national capital, Beijing found itself caught in a

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dilemma when protesters in Tibet took to the streets’. Sheridan continues: The eyes of the world are on Beijing, as perhaps never before. Nevertheless, despite the promise (or threat) of a looming concentration of media, Beijing decided to crack down savagely on its own citizens, sending in massive numbers of soldiers – not police, mind you, but soldiers – and clearly giving the order to shoot its own citizens down in the streets. Slaughter in Tibet poses a dilemma for the international community – especially given that the Chinese economy is now so large that many nations might decide that they need China more than China needs them (Sheridan 2008: 6).

Together with close ties to ‘unsavoury’, ‘rogue’ regimes, domestic oppression poses a major stumbling block in Beijing’s attempts to construct an image of a benign and peaceful power and threatens its Olympic narrative. During the Games, the official narrative in which Beijing attempted to use the Games to construct a new national identity and to articulate its aspirations for a new world order in which China will play an increasingly central role, and the counter-narrative which criticized China’s human rights record, were both unveiled on the global stage. The Opening Ceremony, for instance, was widely seen as a huge success. It has been claimed that the Ceremony reflected Needham’s China. Brook (2008) notes, ‘indeed, were it not for Needham, I doubt that the Olympic organisers would have chosen the history of Chinese science as their theme for the opening extravaganza in Beijing this summer’.6 The Opening Ceremony did, on the one hand, reflect the official narrative, in which a secure, confident and westernizing China demonstrated that it was both willing and able to (re)join the community of nations and seemed to confirm one understanding of China – that of a modern, sophisticated, and powerful nation with a glorious past. On the other hand, however, the violence and bloodshed immediately preceding the Games lent support to the counter-narrative, and seemed to confirm a very different understanding of the Chinese Party-State as a savage and brutal power, indifferent to human rights and contemptuous of its colonized peoples. Lovell (2008: 759) argues that Beijing hoped the 2008 Olympics would prove to ‘be a harmonious fusion of nationalism and internation6 For Joseph Needham, see Winchester’s (2008) recent biography, Bomb, Book and Compass. Brook’s paper is a review of Winchester.

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alism, of Chinese tradition and high-tech modernity: a utopian symbol of China’s triumphant – but decidedly non-hegemonic – recovery of central position in the international political, economic and cultural realm, some 150 years after the country’s humiliating nineteenth-century clash with Western imperialism’. These hopes were threatened, if not thwarted, by the torch relay that heralded the opening of the Games. The torch relay was disrupted, particularly 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 only the awesome achievements of the country but also the grave shortcomings of the current regime’. Beijing was unprepared for the global protests on issues such as Sudan, Tibet, and democracy. Economy and Segal (2008) comment as follows: ‘as the Olympic torch circled the globe with legions of protesters in tow, Beijing’s Olympic dream quickly turned into a ‘public-relations nightmare’. Beijing had been anxious to use the Games not only as a coming out party to announce the arrival of a new global power, but also to enhance China’s reputation overseas and boost the CCP’s legitimacy domestically. This was threatened by the torch relay. Instead of being the party Beijing desired, ‘preparations for the games have degenerated into some of the ugliest verbal confrontations for years between China and its critics’ (The Economist 2008a). As Mangan (2008: 753) notes, the torch relay degenerated into ‘symbol not of friendship but of friction, not of harmony but of 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, status and recognition converted readily to legitimacy for the regime. The question 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 time evaluating whether sport, China or indeed the world is a more just place, a more trusting place, a more humane place, a more safe and secure place to be 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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Human Rights Legacies The 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 Beijing in 1993 to evaluate China’s bid for the 2000 Games, neighbourhood committees were ordered to tidy up their respective districts. As part of this tidying up, the police arrested a mentally retarded man, 40 year-old Wang Chaoru. Wang had been ‘beaten (…) to a pulp’ the year before he died as part of an official effort ‘to beautify Beijing’ before the beginning of the annual National People’s Congress (Kristof and WuDunn 1994/1995: 99). A year later, the order to ‘beautify Beijing’ was issued again. Kristof (2008: 19) continues: ‘just hours before the Olympic visitors actually touched down, the police beat Wang Chaoru to death. His parents were allowed to view the body, which was covered with blood and bruises, and then the police officials invited them to a hearty lunch to make things up’. The murder of ‘a mentally retarded man because he didn’t fit in with the Olympic image’, WuDunn claims, ‘was the kind of thing that the Nazis might have done before their 1936 Berlin Olympiad’ (Kristof and 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 also home to some incredibly courageous individuals. For instance, on 10 December 2008, to mark the 60th Anniversary of the Universal Declaration of Human Rights, a group of 303 dissidents and human rights activities unveiled Charter 08 (Lingba Xianzhang), a document calling for democracy, freedom, and political reform. This is, of course, a call for political liberalization – the Fifth Modernization. As is the case with much public debate, and especially dissident debate, in contemporary China, Charter 08 was published on the internet, which now functions as the modern equivalent of China’s ‘Democracy Wall’. Charter 08 begins as 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 Univer7 Hobbes used the Latin tag homo homini lupus – man is a wolf to man – in his De Cive (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.

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sal Declaration of Human Rights, the thirtieth anniversary of the appearance of the Democracy Wall in Beijing, and the tenth of China’s signing of the International Covenant on Civil and Political Rights. We are approaching the twentieth anniversary of the 1989 Tiananmen massacre of pro-democracy student protesters. The Chinese people, who have endured human rights disasters and uncountable struggles across these same years, now include many who see clearly that freedom, equality, and human rights are universal values of humankind and that democracy and constitutional government 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 their rights, destroyed their dignity, and corrupted normal human intercourse. So we ask: Where is China headed in the twenty-first century? Will it continue with ‘modernization’ under authoritarian rule, or will it embrace universal human values, join the mainstream of civilized nations, and build a democratic system? There can be no avoiding these questions. The strong integrity and moral courage of such dissidents lends hope to the dream of a better tomorrow. However, it has to be noted that the universal values advocated here, are ‘Western’ in origin. Indeed, both the modern Olympic movement and the concept of human rights are European products that have been increasingly adopted by the modernizing world. A discussion of the Beijing Games (or of China and human rights) is therefore inevitably also a discussion of the impact of Westernization, modernization, and globalization on the Chinese body politic. In hosting the Olympics, Beijing hoped to be able to demonstrate that Chinese 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, however, is the test posed by human rights (understood here to include both civil liberties and individual freedoms). To the extent that human rights are universal, China needs to be able to show that this aspect of global legal culture has also been successfully adopted and internalized. The interaction of Games and rights presents a rich and multi-textured cultural terrain. There are a number of different understandings of human rights. Within the EU itself, the British Enlightenment has produced a perception of human rights that differs to that of the French Enlightenment.9 Moreover, the EU position on human rights is best 9 This difference can be understood in terms of dissimilarities between the normative assumptions of each ‘national’ Enlightenment period, and also between the ‘Com-

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understood as an evolving rather than a static position. For instance, until the mid-1970s, the European Commission saw economic development as a precondition for the realization of human rights, rather than the current position, which is to see the guarantee of human rights as a precondition for development. Needless to say, Beijing’s official position today shares much in common with the pre-mid-1970s European Commission (Bartels 2005: 7, cited in Wiessala 2006: 68).10 The EU has proclaimed itself to be in favour of a global promotion of core values – including tolerance, democracy, and human rights (in addition to being an exercise in soft power, this promotion can either be viewed as embodying good global citizenship or criticized as yet another round of Eurocentric cultural imperialism). The attempt by the EU to reinvent itself as a ‘normative’ power means that its relationship with China – which is certainly not a democracy and has a human rights record that is not infrequently denounced as abysmal – has been a troubled one. This is mainly due to Beijing’s human rights record, but is also partly because comparisons between and contra-distinction to an idealized notion of the Western ‘rule of law’ and the orientalized concept of ‘Oriental Despotism’ have such deep roots in Western culture. Conclusion Viewed as a text, the spectacle that is the modern Olympic Games serves as a cultural space in which perceptions of ‘Self’ and ‘Other’ can be and have been debated, articulated, and challenged. This is especially true of the Beijing Games, where these perceptions were tied to discursive narratives on the West and the East, on Capitalism and Communism, and on the politics of emerging power. Indeed, a symbolic landscape functions as a backdrop to the Chinese Olympic discourse. When reduced to its bare structure, the symbolic landscape maps a progressive movement of China vis-à-vis the global world. Beijing marks both the end of China’s struggle to rejoin, and the beginning of China’s full participation in, the global community. The symbolic significance of Beijing can perhaps be boiled down to the term recognition. This symbolic landscape reflects a similar discourse on the history of sports in China. As seen in Hong’s history, Footbinding, mon Law’ and ‘Civil Law’ traditions. 10 See also the chapter by Georg Wiessala, in this volume.

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Feminism and Freedom, an evolutionary history can be projected onto the Chinese body, in which a past culture that restricted bodily movement through such traditions as footbinding was overcome and replaced by new emancipation. In combating the legacy of the century of shame and humiliation, Beijing has turned to international sporting success as a means of regaining national dignity and prestige and of overcoming the humiliating label the ‘sick man of East Asia’. Many Chinese share this goal and, as a consequence, in China today ‘Sports patriotism unites the whole nation’ (Hong 2004: 345). In his Olympic Dreams, Xu (2008: 225) raises a frequently-asked question about the Beijing Games: will China’s Olympics be seen as the equivalent of the 1936 Berlin Games, which strengthened a terrible regime, or of the 1998 Seoul Games, which initiated democratic reform in South Korea and helped transform it into a dynamic democracy? The answer will almost certainly come to be seen as lying somewhere between the dystopian and utopian alternatives. The Games were a success, and certainly perceived so in China, and as a result have strengthened both the prestige and legitimacy of the Party-State. This increased security could be used to promote further reform, and in particular a political transition towards democracy. However, it could also be used to crack down on those demanding change. For the international community, a significant question is, will the emerging nationalistic China participate in or confront the existing world order?

References Brook, 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/chinaeconomic-reform-oped-cx_gc_1216chang.html. Close, Paul, David Askew, and Xu Xin. 2007. The Beijing Olympiad: The Political Economy of a Sporting Mega-event. London: Routledge. The Economist 2008a. ‘Chinese Nationalism: Flame On’ in The Economist, 26 April 2008.

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The Economist. 2008b. ‘China’s Reforms: The Second Long March’ in The Economist, 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 at www.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 2008 Olympic Games’ in The International Journal of the History of Sport 22 (4): 510529. Jarvie, Grant, Dong-Jhy Hwang and Mel Brennan. 2008. Sport, Revolution and the Beijing Olympics. Oxford: Berg. Kristof, Nicholas D., and Sheryl WuDunn. 1994/1995. China Wakes: The Struggle 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 Books 56 (1), 15 January 2009. Lovell, Julia. 2008. ‘Prologue: Beijing 2008 – The Mixed Messages of Contemporary Chinese Nationalism’ in The International Journal of the History of Sport 25 (7): 758-778. Mangan, J.A. 2008. ‘Preface: Geopolitical Games – Beijing 2008’ in The International Journal of the History of Sport 25 (7): 751-757. Morris, Andrew D. 2004. Marrow of the Nation: A History of Sport and Physical Culture in Republican China. Berkeley, Calif.: University of California Press. Nathan, Andrew J. 2008. ‘Medals and Rights: What the Olympics Reveal, and Conceal, about China’ in The New Republic, 9 July 2008: 41-47. Price, Monroe E., and Daniel Dayan (eds). 2008. Owning the Olympics: Narratives of the New China, Ann Arbor: The University of Michigan Press. Seymour, James D. (ed.). 1980. The Fifth Modernization: China’s Human Rights Movement, 1978-1979. New York: Human Rights Publishing Group. Sheridan, Greg. 2008. ‘Chinese Engagement is a Two-way Street’ in The Australian (27 March 2008). Washington Post. 2006. ‘China and Darfur: The Genocide Olympics?’ in Washington Post (14 December 2006). Wiessala, Georg. 2006. Re-orienting the Fundamentals: Human Rights and New Connections in EU-Asia Relations. Aldershot: Ashgate. Winchester, Simon. 2008. Bomb, Book and Compass: Joseph Needham and the Great Secrets of China. London: Viking.

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Worden, Minky (ed.). 2008. China’s Great Leap: The Beijing Games and Olympian Human Rights Challenges, New York: Seven Stories Press. Xu, Guoqi. 2008. Olympic Dreams: China and Sports, 1895-2008, Cambridge, Massachusetts, and London: Harvard University Press.

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CHINA VIEWS EUROPE: A MULTI-POLAR PERSPECTIVE Jenny Clegg Abstract The formation and development of the European Union, and the rise of China, are transforming the global order, promoting a more multicentred world. Sino-EU relations will play a key role in shaping the character of the newly-emerging multi-polarity. In examining how China views Europe, this chapter is concerned to set out China’s strategic perspective on Europe’s role in world multi-polarisation, explaining its significance from the Chinese perspective. By improving its relations with Europe step by step, China has been able to strengthen its own status in a world order dominated by the US. The discussion opens with a consideration of China’s multi-polar conception, illuminating this further by tracing the origins of the analysis to the 1970s, to Mao Zedong’s Theory of the Three Worlds. The chapter then outlines developments in Sino-European relations in the wider context of the changing international situation, to reveal how these have helped shape China’s strategic choices. Finally, the discussion reviews recent Chinese views on relations with the EU and considers the prospects for a strengthening of Sino-EU strategic cooperation. Introduction The idea of a multi-polar world came to the forefront in Western debate as the transatlantic rift opened over the issue of the US-led Iraq war. With France and Germany joining Russia, China and India to oppose the action, this was seen by some not merely as a new alignment against US unilateralism and aggression, but as having the potential to provide the

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foundation for an entirely new kind of peaceful developmental world order (Amin 2004). The year 2003 saw a new momentum in advancing the Sino-EU strategic partnership. However, difficulties soon arose and as transatlantic ties began to reassert themselves when the second Bush Administration reverted to a more multilateralist approach, the question was: had the multi-polar trend been over-exaggerated? China has long viewed Europe as a force capable of restraining US hegemonism, lending particular weight to emerging differences in the Western alliance in developing its own strategy against superpower dominance. This chapter sets out to explore China’s distinctive view of Europe, taking a long-term multi-polar perspective to highlight the strategic dimension of Sino-European relations. The step-by-step improvements in Sino-European relations, despite certain temporary setbacks, have been significant in influencing China, as it shifted towards a more cooperative stance in world affairs towards pursuing a strategy of multi-polar developmentalism. This chapter, firstly, sets out China’s multi-polar conception, its strategic partnership approach and New Security Concept which together underpin its peaceful development path. It moves on to a historical overview, starting by tracing the origins of China’s particular perspective on Europe to the 1970s to Mao Zedong’s Three World Theory, then considering the developments in Sino-European relations in the wider context of the changing world situation shaping China’s strategic choices. Finally, after setting out more recent Chinese views on the basis of the Sino-EU relations, the discussion concludes with a consideration of the latest developments in their partnership and, noting China’s diplomatic advances worldwide, the prospects for a strengthening of Sino-EU strategic cooperation. China’s Multi-polar Perspective In China, the concept of multi-polarisation has been under serious consideration since the mid-1980s (Segal 1982: 37). Seen through Chinese eyes, multi-polarisation involves, on the one hand, readjustments in the relations between the major powers, with the growing role in international affairs of Europe and Japan, and on the other, the rise of developing countries, as well as their regional associations such as ASEAN, the African Union, Mercosur, OPEC, together with the Shanghai Coopera-

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tion Organisation, and their international organisations such as the G77 and the non-aligned movement (Jin Yinan 2002). Whilst a multi-polar world order is seen to have the potential to constrain the ability of any superpower to dominate world affairs, China’s strategy is not one which seeks simply to counterbalance the other major powers against US dominance. Unlike the Western concept of balance of power, the Chinese view of multi-polarisation entails a world development dimension, furthering North-South dialogue and South-South cooperation, with developing countries playing a key role. According to Chinese strategists, the US has, since the end of the Cold War, endeavoured to pursue a unipolar world, strengthening its Cold War military alliances, primarily with NATO and Japan, to form a ‘python strategy’, 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, lies in the possibility of a more democratic and peaceful determination of world affairs. In seeking to hasten the trend, China’s aim is not only to find room, in a world situation in which unipolarity is the dominant aspect, to pursue its own development path and rise as a major power in it is own right, but also to create a new international political and economic order. With a strengthening of the world’s various powers and regional organisations providing the basis for a genuine multilateralism coordinated through the UN, this would enhance the possibilities of peaceful solutions to conflictual situations through dialogue and of new approaches to world development. Partnership Arrangements China’s vision for a multi-polar world is one coordinated through partnership arrangements between powers based on equality and respect for sovereignty and on common interests rather than shared values and ideologies. The EU-China strategic partnership arrangement announced in 1998 should be seen as one of a series initiated by China as it has sought to strengthen its relations with other major powers. The first to be agreed was with Russia (1996). Following this, discussions were opened with the US (1997), with Germany, France and the UK on an individual basis (1998), Japan (1998), ASEAN (2004) and India (2005). From a critical point of view, China’s partnership arrangements are seen to promise much, but lack substance. Indeed, nearly all have encountered

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difficulties; nevertheless, persistent endeavours have made a certain if variable progress. Partnerships should be viewed as much as a process as a goal; not so much an accomplished result, but a ‘possibility that may be realised’ (Saunders 2000: 62). China’s leaders recognise that their country’s emergence as a new international power is bound to give rise to tensions and strains in its relations with other powers, and so seek to build workable frameworks, with potential adversaries as well as nonadversaries, within which to handle differences, manage difficulties and resolve disputes and potential conflicts through dialogue over the long term (Goldstein 2001: 847; 850/1). China’s strategic partnerships are not targeted at the US: a conflictual strategy would be liable to achieve precisely what China seeks to avoid, creating an opening for the US to extend 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 approach of ‘setting aside differences and seeking common ground’, the aim is to avoid conflict in order to focus on shared interests, building good relations with other powers despite their military alliances and ties with the US, thereby deflecting the US encirclement strategy. Rather than being anti-American, its partnership arrangements are geared to maximise mutual benefit. The strengthening of both partners, and thereby the promotion of multi-polarity, will ultimately reduce US dominance. The New Security Strategy The articulation of a New Security Concept (NSC), based on ‘mutual trust, mutual benefit, equality and coordination’ in 2001 set out more clearly the kind of international order China is seeking to create through its partnership approach. The NSC guidelines call for adherence to principles of mutual respect for sovereignty, and the peaceful settlement of disputes through dialogue and negotiation; the strengthening of the UN, giving full play to its leading role in world affairs; and the reform of the existing international economic and financial organisations to provide for the financial and economic security of all countries and promote common prosperity and common development.1 At one level, the NSC provides a broad statement about the kind of international political environment in which China would feel secure to concentrate on its own devel1

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

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opment goals, but as Van Ness argues, it represented much more than this, forming a response, as it were, to US interventionism and to the then US President George W. Bush’s unilateralist, ‘preventive war’ doctrine (Van Ness 2005: 264).Whilst the US stands for a largely ideologically-driven international security environment which is shaped by military power and military alliance, the NSC opposes this revival of ‘Cold War’ mentality, instead positing a cooperative view of security, one which is not just something for countries with similar views but in which all countries to work together to foster a shared sense of security, to achieve common security for the world as a whole. Differences between countries, it is argued, should not become the reason for estrangement, hostility and conflict, posing barriers to the development of normal State-to-State relations, but should serve as driving forces behind closer exchanges and cooperation of countries and greater common development and progress.2 The NSC offers an alternative system for managing relations between diverse countries, a qualitatively new type of international relations of non-alliance and non-confrontation, inclusive of the US, and based not on power politics but on equality and trust. It reflects China’s interests in peaceful development, in creating a stable international environment which allows it to focus on its own development, not least by opening opportunities for others. What provides the strategic substance of China’s partnerships is not simply the shifting from a world pattern based on US dominance, but a world multi-polar developmentalism with its goals of conflict resolution through dialogue, ‘winwin’ economic cooperation and institutionalised multilateralism. Historical Overview The origins of China’s distinctive view of Europe’s multi-polar role can be traced to Mao Zedong’s Theory of the Three Worlds, which was initially delivered as a speech by Deng Xiaoping to the UN in 1974, aimed at supporting Third World demands for a New International Economic Order (NIEO).3 At this time, US leadership of the Western capitalist 2

Pei Yuanying ‘The Five Principles of Peaceful Coexistence and the Theory and Practice 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 in Beijing Review (12-18 May 1997). 3 See: Chairman Mao’s Theory of the Differentiation of the Three Worlds is a Major Contribution to Marxism-Leninism. 1977. Peking: Foreign Languages Press.

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bloc was coming under increasing challenge. The Vietnam War was being fought at huge expense and the collapse of the dollar saw the breakdown of the Bretton Woods system of economic coordination. From the perspective of the Theory of the Three Worlds, the world situation was not one of straightforward imperialist-socialist confrontation, but instead was being shaped by power relations between the three worlds of the superpowers of the US and USSR, the second order powers, namely Europe and Japan, and the Third World. These together created a complex web involving both cooperation and conflicts of interests. The theory focused in particular on superpower rivalry and dominance which was seen primarily as dividing and subordinating the Third World, and called for an international united front against hegemonism and superpower aggression. In this it sought to unite Third World states, regardless of their revolutionary or progressive stance, as the main force against imperialism, whilst also winning over second order powers. Whilst recognising the extensive cooperation amongst the advanced capitalist countries to shape the rules of the global economy to reflect their interests, the analysis nevertheless lent particular weight to the differences emerging within the Western alliance. This was considered to reveal a certain potential for Western Europe as well as Japan to develop as a counter hegemonic force. With the end of colonialism, both Europe and Japan were no longer the main forces of imperialist domination and oppression. They were now seen to emerge as intermediate global players. Although they looked to the US to maintain and promote the capitalist world system, drawing benefits from their relationship with the superpower, they in turn had to adapt their own development to the priority needs of the leading power. With the US seeking to extend its global domination, this tended to reduce their own independent influence in world affairs, limiting their sovereignty. However, in the eyes of Chinese strategists, these ‘secondary’ powers were becoming less willing to accept US leadership unconditionally, seeking instead a more equal partnership as they themselves started to outpace US growth after their successful post war reconstruction. The establishment of the Common Market in Western Europe, France’s partial withdrawal from NATO and De Gaulle’s independent stance, the reluctance of European powers to support US aggression in Indochina, the collapse of the dollar-based monetary system, and sharpening trade and currency conflicts between Europe and Japan on the one

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hand and the US on the other, the refusal by European allies to allow US planes to use US air bases on their soil in the Middle East war, were all seen by the mid-1970s as marking a serious weakening in the Western alliance, a harbinger, together with the Sino-Soviet split, of the break up of Cold War bipolarity (Ding Yuanhong 1983: 85-102). With the Third World pressing for a new more equal international economic order, the propoents of the Three Worlds Theory argued for the recognition of a degree of common ground, between the secondary powers and developing countries, as regards their discontent with US dominance. Although tied to US power, these states might, in their search for equal partnership with the US, remain neutral or even be prepared to make concessions to Third World countries. Indeed, both Japan and Western Europe were to respond after a fashion to the calls for an NIEO with their own development agendas, the Fukuda doctrine (1977) and the Brandt Report (1980). Taking a strategic perspective on the international trends of cooperation and conflict, the Three Worlds theory was of fundamental significance, in that it opened up opportunities for the emergence of counter-hegemonic alternatives to superpowerdominance. It paved the way for a qualitative shift in China’s diplomacy in the early 1980s from a revolutionary to a non-ideological approach, as the country strove for equal status as a world power and a level playing field in the global economy through North-South dialogue based on South-South cooperation. In 1982, China’s strategic direction underwent a qualitative shift, with the adoption of an independent foreign policy of peace and development. Following significant improvements in its relations with both superpowers, China no longer considered itself under pressure of imminent attack and could afford to take a more non-aligned stance.4 Its view that world revolution was the only alternative to imperialist wars and interventions had dictated a foreign policy based on ‘friends and foes’. Now China was to give priority to securing a peaceful international environment, whilst refocusing its objectives towards domestic construction. Chinese observers saw the improvements in their country’s situation as indicative of a qualitative, world-wide, shift, accompanied by declining capabilities, in both the US and USSR, to sustain Cold War divisions and dominate the world. Western Europe’s stance, in particular, 4 1982 saw the Joint Sino-American Communique, pledging to scale back arms sales to Taiwan; consultations also started on the normalisation of Sino-Soviet relations.

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which favoured East-West détente during the nuclear arms race between the US and USSR in the 1980s assumed great significance in China’s eyes. Weak in military power, Western Europe still tied its defence against the USSR to the US, agreeing to the rearmament of NATO in 1979, with both Britain and Germany accepting the siting of US cruise missiles 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 strategic priority and determined to maintain rough balance in nuclear arms, such that the two superpowers in effect held each other in check through mutually assured destruction, this placed the Western Europeans facing the prospect of a ‘limited nuclear war’ on European soil. So despite their dependence on the US alliance, Western Europe sought to expand its political and economic exchange with the USSR in order to shift relations from Cold War freeze towards dialogue (Guo Fengmin 1982: 98123). For China, the Reagan-Gorbachev agreement on nuclear arms control marked a monumental shift in the world situation: ‘war was no longer inevitable’ (Chan 1999: 121); the door had thus been opened for a multi-polar world. By the end of the 1980s, although the US and USSR were still overwhelmingly strong militarily, their political influence was dwindling. The EEC and Japan, both surpassing the US in economic terms, were starting to pursue at least a quasi-independent approach in world affairs across a range of issues. With this, the trends towards the greater independence of smaller and medium-sized nations were making ‘hegemonism and power politics run up against a wall’ (Quian Quichen 1989). In these new circumstances of emerging multi-polarity, shaped not least by Europe’s greater assertiveness, China, whilst still intending to keep a low profile, gradually stepped up its commitment to multilateralism and a negotiated world order, starting to seek membership of international organisations and participate in multilateral treaties. Although, with the end of the Cold War, the US clearly emerged as the sole superpower, Chinese analysts saw the world order configured not simply by unipolarity but characterised as a five-pointed star pattern: one superpower (the US) and four major powers (Europe, Japan, Russia and China) (Chan 1999: 110-112). This was seen to allow China to take a more proactive role. The US, indeed, had put on a dramatic display of overwhelming military superiority in the 1st Gulf War, but its economy was plagued by deficits, whilst Europe and Japan were continuing to

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develop as powerful economic entities. The deadlocked situation of the Uruguay round of GATT in the early 1990s was seen to prove that US relations with its chief allies were becoming more difficult to manage (Chen Xiaogong 1992: 3), with neither one keen to remain junior partners of the US, and wanting greater equality (Xin Hu 1993). Following the formation of the EU, its move towards closer relations with China in 1995 was remarkable from China’s perspective, coming as it did at a time of near breakdown in Sino-US relations over the Taiwan Strait crisis. At the same time, Sino-Russian relations were fast moving ahead. Towards the end of the 1990s, the multi-polar trend appeared to have taken a downturn. The US had been able to re-establish its superiority, reviving both NATO and its military alliance with Japan to rein in their growing assertiveness, whilst the developing world, which ultimately, according to China’s strategic vision, was the decisive factor in multipolarisation, remained weak and disunited. Nevertheless, as China saw it, the trend took a zigzag path of development as the major powers adjusted and readjusted their positions in the five pole pattern. This created the possibility of facilitating the trend through a mutual checking and balancing among the major powers (Cheng 1999: 2). It was in this context of the unipolar-multi-polar dynamic, with prospects of stronger relations with Europe and Russia, that China embarked on a more active international engagement to cultivate partnerships with all the major powers to minimise US dominance. What made these partnerships workable was that, although dominant, the US superpower could not entirely dictate how other powers conducted their relations with 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 to act on its own but had to work in conjunction with other major powers to maintain its dominance. As was to become increasingly clear, this meant that in order to achieve its strategic objective of unipolar hegemony, the US had at the same time to network and collaborate with other powers, thereby promoting a cooperation which conversely was conducive to improving the overall strength and international influence of its potential rivals.5 When France and Germany joined Russia and India to oppose the Iraq war, despite the fact that they all attached great importance to their relations with the US, this was seen to represent in 5

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

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Chinese eyes a substantive development in multi-polarisation. Although all of these major powers together had not been able to stop the US launching the war, nevertheless they could provide a certain restraint on its unilateralism.6 Debating Sino-EU Relations From China’s perspective, Europe’s search for its own equal partnership with the US after the end of the colonial era provided China with more options, and more room to bring into play its dynamic strategy rooted in the Three World Theory, with the aim of manoeuvering towards multipolarity (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 own terms. In particular, Europeans are seen as far less concerned than the US with the ‘threat’ of China’s ‘hard’ power. Europe has no military forces stationed in East Asia. Lacking the hegemonic reach and ambition of the US, the EU is regarded as more prepared to treat China as an equal. Following the return of Hong Kong (1997) and Macao (1999), the absence of any fundamental conflicts of interest in terms of geopolitics and strategic intention meant that whatever differences there may be between the two sides can be resolved through dialogue (Mai Zhaorong 2004). Many Europeans were critical of excessive US pressure on China in the negotiations over its entry into the WTO and advocated greater flexibility in terms. In this Europe is seen as more prepared to view China as a large developing country, rather than a ‘threat’, and to assist in its process of transition (Arias 2005). What provides the basis for a longterm stable relationship between China and the EU, are their common foundations as major trading partners, their shared interests in multilateralism, and in supporting the core role of the UN in handling regional and international crises (Feng Zhongping 2004). Nevertheless, many Chinese analysts recognise that considerable differences exist between China and Europe, given their different understandings of human rights and of free trade. The EU shares with the US a basic aim in ‘socialising’ China into the established Western-dominated international order. But whilst the EU pursues issues of labour standards and favours more rapid liberalisation, which could have a negative impact on development in 6

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

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China (Yu Xintuan 2004), its concerns with labour rights, gender equality and prison conditions are regarded as more in accord with China’s own aims to improve its governance (Yan Wei 2006). When, following the attack on Iraq, the tone of the EU towards China became more muted, indicating a greater willingness to accommodate China’s gradualist approach towards political reform, China took the opportunity to expand its engagement (Lanxin Xiang 2004: 113). Analysts were nevertheless cautious not to overstate the discord across the Atlantic, given the shared values and ideologies at the base of the USEuropean alliance (Wu Baiyu 2004). Once transatlantic commonalities began to reassert themselves, however, it was also noted that considerable potential still existed for new rifts to emerge. Differences over the US 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 to re-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, with agreements on China’s participation in the Galileo satellite tracking system, and on ITER - the International Thermonuclear Experimental Reactor - signifying new heights in technological cooperation. However, as the second Bush Administration returned to the multilateral fold, not least to ease the transatlantic rift, it at the same time exerted intense pressure on the EU not to comply with the Chinese government’s explicit request to lift the arms embargo, imposed after the 1989 Tiananmen Incident. As Europe’s trade deficit with China widened, the EU has also expressed economic concerns, deciding against granting China market economy status. This is despite the fact that China’s economy is already far more open than for example India or Russia, whose bids for this status the EU supports. The EU has also taken to joining US calls for renminbi revaluation. On the other hand, as Chinese commentators have pointed out, much of the deficit in trade is accounted for by Sino-European joint ventures in China.7 7 Over 60 per cent of the trade deficit was created through Sino-EU joint ventures (Ding Ying. 2008)

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To explain these limitations on the Sino-EU partnership, and especially the European reluctance to strain relations with the US, some Western commentators argue that the EU’s multilateralism and China’s multi-polarisation are at odds with the former emphasising a rules-based order 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 the US ‘python strategy’, preventing any link-up between NATO and the US allies in Asia. Direct relations with the EU are seen to offer a buffer between China and the US (Ni Yanshu 2005). But what China seeks in relation to the US is a peaceful ‘sharing of space’ so that it can make its own distinct contribution in shaping the future world.8 In advocating a multi-polar world, then, China is pursuing no more than the EU - an equal partnership with the US. The challenge, as China sees it, is to ‘figure out a way to make the US an ordinary member of the … [world order], rather than a lawmaker (Zhang Yansheng 2007)’. In fact, although the ‘US effect’ continues to exert an influence on the Sino-European relationship, the EU has not entirely lined itself up with the US. Europe continues high-level cooperation with China, including in sensitive technologies, indicating a certain preparedness to assist directly 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 decide when and how to change its policy (Ming Wan 2008). In 2007, the SinoEU relations took the further step of agreeing to cooperate on preventing big exchange rate fluctuations (Barber 2007). But how far will the EU be willing cooperate in China’s calls for the democratisation of the international order and the creation of a more stable international financial and economic system favourable to world development? Both China and the EU, lacking the military means to pursue their interests globally, share the need for a rules-based negotiated world order. They do, however, differ with respect to the type of rules needed for this - those shaping a liberal or a developmental international political economy. China’s multi-polar vision seeks an international order in which developing countries have their say to ensure that the system operates in their interests. A particular problem here for Europe is that the multi-polarising world trend brings into question its own over-representation in international 8 See ‘Bush, the new international order and China’s choice’ in People’s Daily (22 November 22).

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organisations such as the IMF and the UN Security Council permanent membership. Will the EU then choose a strategic cooperation with China to build a stable multi-polar order or will it instead seek a closer geopolitical coordination with the US, joining its containment strategy to restrain the rise of China and its multi-polarising impact? The Sino-European relationship is not the only one driving the multipolar process. China’s diplomatic relations have expanded extremely fast over the last few years, while the growing significance of the Shanghai Cooperation Organisation and the China-Africa forum in particular open up a new area for EU consideration. Indeed, there are huge opportunities for the EU in participating in China’s development. With the Chinese government planning to invest almost $200bn in renewable energy by 2020, there is significant potential here for collaboration in R&D. Successful cooperation through this and other joint projects in China has potential for a much wider application worldwide, teaming up with local actors, for example in Africa, to assist in development and poverty eradication, as well as in advancing the Eurasian link. Now that a new ‘energy Silk Road’ of oil and gas pipelines linking Europe and North East Asia with Central Asia and the Middle East, with China at the centre, has become a viable proposition, this calls for the EU and China to work together to invest in transcontinental infrastructure projects including an intercontinental road and railway link. As a partnership between the world’s largest developing and the second largest developed economic power, China attaches a global significance to Sino-EU cooperation in its potential to promote the multipolar trend and shape a more peaceful international order conducive to development. China’s aim as it develops, as we have argued here, is to build a stable relationship with the US. A strengthening relationship with the EU is a means of achieving this, helping to limit the possibility of breakdown in Sino-US relations by making it hard for the US to treat China as an enemy. At the same time, by helping to demonstrate that China’s emergence as a world power is peaceful, it also provides a way to gain US recognition of its needs to access state of the art technologies in order to develop. It is equally important for the EU to create a favourable atmosphere for international cooperation. A new polarising Cold War would inhibit its own role. On the other hand, there are ‘development dividends’ to be gained through strategic cooperation with China to promote multi-polar

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developmentalism. Such cooperation does not preclude human rights dialogue with China. By and large, China recognises its problems, though considering that improvements in human rights must follow social and economic development. As it seeks its place in the international order as an equal and responsible world power, China looks to the EU to play a special role in assisting US adjustment to the status of a ‘normal power’. For the EU, strategic cooperation demands recognition of its own role in helping to smooth Sino-US relations. It has to think strategically about how European participation in China’s development - and in the Eurasian and African dimensions of the Sino-EU partnership - can be pursued, without antagonising the US, as the latter’s global power status is thereby adjusted.

References Amin, Samir (cited in Bond, P. 2004). ‘Facing the Global Apartheid’ in Freeman, Alan and Kagarlitsky, Boris (eds.) The Politics of Empire. London: Pluto Press: 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 Press Chen Xiaogong, cited in Zhao Suisheng. 1992. ‘Beijing’s perception of the international system and foreign policy adjustment in the post-Cold War world’ in East Asia: An International Quarterly 11(3). Cheng, Joseph Y.S. 1999. ‘China’s ASEAN Policy in the 1990s’ in Contemporary Southeast 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-Europe Management Centre: 34. Goldstein, Avery. 2001. ‘The Diplomatic Face of China’s Grand Strategy’ in The China Quarterly 168 Guo Fengmin. 1982. ‘Western European Countries –The Canons of their Foreign 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 July 2002). Lanxin Xiang. 2004. ‘China’s Eurasian Experiment’ in Survival 46(2):113 Mai 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 line at: www.japanfocus.org/products/topdf/2576 (consulted 9.12.2008). Ni Yanshu. 2005. ‘Diplomacy Gathers Steam’ in Beijing Review (27 January 2005). Qian Qichen. 1989. ‘Year marks improved world situation’ in Beijing Review (26 December - 1 January 1989). Saunders, Phillip. 2000. ‘China’s America Watchers: Changing Attitudes Towards the United States’ in The China Quarterly 161 Segal, Gerald. 1982. The China Factor. London: Croom Helm Van Ness, Peter. 2005. ‘Conclusion’ in Gurtov, Mel and Van Ness, Peter (eds.), Confronting the Bush Doctrine. London and New York: Routledge Curzon Xin 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 Predominance’, 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 toward independent military role’ in People’s Daily (19 December 2004). Zhang Yansheng cited in McGregor, R., and Callan, E. 2007. ‘Bejing’s uncomfortable deal with America’ in Financial Times (11 April 2007).

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THE EUROPEAN UNION AND CHINA: INDIAN PERCEPTIONS AND PERSPECTIVES Rajendra K. Jain Abstract Both China and India are important partners for the European Union (EU) because of their demography, large domestic markets of a billion plus each, significant energy-consumption patterns, and because they are vital for resolving regional problems as well as global issues. However, Beijing has been - and continues to be - more central to European interests than New Delhi because of its political clout, its economic potential, the substantially higher economic stakes, and trade. As a result, there is a variable engagement of the Union towards the two rising Asian powers and a qualitative difference in the attention and focus given by the European Union to China than India. This chapter is divided into four sections. The first section begins with a discussion of how the EU perceives India and China. The second section discusses Indian perceptions of EU-China relations. The third one highlights some similarities in the Chinese and Indian approaches towards the EU. The concluding section outlines several lessons that India can learn from China’s engagement of the EU. EU Perceptions of China and India There are differences in the ways in which the European Union perceives India and China. EU policy-makers and think-tankers have for many years argued that China takes the European Union far more seriously. Most people in Brussels have generally tended to feel that Indian policy-makers appeared to need convincing that the EU is ‘a player that matters’ (Patten 2002). Former European Commission President

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Romano Prodi complained that India was ‘too focused’ on the United States in its foreign and economic policy, which ‘came at the expense of the EU’ (cited in Shedde 2001). Europeans often have urged India to shed its so-called narrow ‘prism of Pakistan’ once and for all and develop a wider ‘world-view like that of China’ in order to create a more meaningful partnership. Europeans argue that China has made greater efforts at understanding EU institutions than India. Some of them conclude that the Chinese perhaps understand Europe better than even the Europeans themselves. The EU, many Indians feel, does not make things easy, given the complexity of its institutions, proliferating regulations and rotating presidency. A major reason for this is that the Indian elite’s perceptions of the EU continue to be essentially conditioned by the Anglo-Saxon media, which impedes a more nuanced understanding of the processes and dynamics of European integration, as well as the intricacies and roles of EU institutions. China, Europeans argue, has been a much greater supporter of European integration, whereas India has tended to stay away from the debate. Even though India was one of the first countries to establish diplomatic relations with the European Economic Community, India has tended to take a comparatively more measured approach towards European integration. To many Indians, Europe is like ‘the doudy old lady’, known for over four centuries. There is ‘no excitement, no passion’ between India and Europe (Raja Mohan 2002: 62). India, the Europeans 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 more sophisticated approach towards Europe. Even though EU officials concede that the core of the relationship with both China and India is economic, but China, they insist, functions more like a demandeur, continuously seeking to widen constantly interaction and dialogue. People in Brussels often argue that India was neither proactive nor entrepreneurial enough like China to avail of existing opportunities. This may partly stem from the fact that on most things which are of vital concern to India, the EU as a collective is neither able nor willing to make a difference, with the result that most deliverables are perceived to essentially lie in bilateral relationships. EU officials are fond of saying that India does not devote adequate human 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 a separate embassy accredited to Belgium and a separate 60-member one to the EU. India, on the other hand, has a combined one of about onethird its size for Belgium, Luxembourg and the European Union. Whereas Beijing has about half a dozen officials for closely following the work of the European Parliament, India has none. There are about two dozen Chinese officials dealing with political affairs, whereas India has just a few. At summits and other dialogues, the Chinese are said to follow a structured approach with usually several rows of participants followed by note-takers, whereas EU officials say they confront a random democracy on the other side. Despite about 45-odd issues, on which there is dialogue and consultations with India under the Strategic Partnership, Brussels feels that it does encounter the problem of capacity and resources in the Ministry of External Affairs. Whereas the Union respects China as a great power, some in India feel that Brussels tends to regard India as a regional South Asian power and does not adequately appreciate its rise in the Asia-Pacific. Europeans tend to consider India as still ‘an emerging country’ whose status is being slowly enhanced, but the process of its global empowerment is just beginning, whereas China is clearly ahead in terms of GDP, defence capabilities and diplomatic clout (Racine 2007: 53-54). To most Indians, a Sino-centric Europe has been more willing to accommodate China rather than India; there is a tendency to draw a comparison with China, that India should emulate China in its dealings with EU and try to introduce a competitive spirit (‘you have only yourselves to blame for the lower level of interaction and engagement’). Beijing views the European Union as a pole in an emerging multipolar world and as a potential counterbalance to the United States. To that end, it has been keen that Europeans develop a more united voice. Indians, however, feel that it is going to be ‘a long, long way’ before Europe is going to act as a pole, largely because of the inherent constraints of the Common Foreign and Security Policy in a heterogeneous EU of 27 member states. Indian analysts as well as upper and decision-making classes 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 longterm gains for the Indian subcontinent, while maintaining intact the diverse range of Indian bilateral relations with specific European countries (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 as a credible power (Lisbonne-de Vergeron 2006: 5). While Europeans aspire for a multipolar world, they seem to endorse Chinese views of a unipolar Asia, and not a multipolar Asia which also takes into account the growing profile of India and Japan in the region. In fact, both Japan and India will not satisfy themselves with a mere balancing of China, but they will also vigorously contest Beijing’s attempts at establishing its dominance in various parts of Asia. (Raja Mohan 2009: 51). The romantic notion that Asia is a ‘naturally’ Sinocentric continent, Indian observers argue, should be discarded (Sahni 2008: 37). Perhaps in no other strategic partnership has Brussels invested so much political, diplomatic and financial resources as the one with China. As a permanent member of the UN Security Council, China has all the advantages of ‘great power exceptionalism’ (Ikenberry 2008: 32) which India does not. Because of its membership of the UN Security Council, it was natural that EU-China interaction was much more significant in the resolution of key problems, because in 2007 China had become the largest trading partner of Iran, North Korea, and Sudan, and the secondlargest of Burma and Zimbabwe. China is perceived by most Europeans as a direct and immediate threat to European jobs, since it is with China that the Union has the largest bilateral trade deficit. The EU’s trade deficit with China was rising by €15 million an hour and reached €170 billion in 2007. The Pew Global Attitudes Survey of June 2007 noted that China’s expanding economic and military power was triggering considerable anxiety in Western Europe, where the number of those with a favourable image of China declined in several West European countries between 2005 and 2007 (Pew Global Attitude Survey June 2007: 35). In a survey of June 2008, majorities in Western Europe believed that either China has already replaced the United States as the world’s leading superpower or that it will at some point replace the US (Pew Global Attitudes Project 2008: 5). On the other hand, the Union’s trade with India was nearly six times less than with China – €55 billion in 2007, compared to €300 billion with China. India is perceived by Europeans as a latent and potential threat taking away service-sector jobs, though pressures will increase 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 interests’ by the rise of China and India. Indian officials, however, stress that the tendency to equate India with China in the sense that they constitute a threat to European employment structures is ‘unfair’ because the EU’s trade with China is 12 per cent of its total, as compared to two per cent with India (Saran 2005: 4). Some Europeans concede that there is no empirical basis for this, but there is an unsubstantiated fear of a rapidly growing Indian economy having the potential of posing a danger at some time in the future. There is also an attitudinal difference on how China and India deal with the European Union. Europeans do not exactly relish the more vocal approach of a rising India and its confident and articulate elite keen on gaining a position at the ‘high table’. China tends to be generally much more subtle, making rather indirect and allusive statements, rather than brazenly direct pronouncements that India tends to make in the manner of Western foreign offices. In diplomatic discourse and conduct, India has tended ‘to carry many chips on its shoulder, almost always moralistic, needlessly arrogant, argumentative, mistaking 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 UScentric. India accords greater importance to the United States than the EU because as the principal foreign policy interlocutor, it is perceived as having the biggest impact on our national security environment. There is a societal bias towards the United States in terms of the importance given to Washington, cultural and intellectual ties with the US, and the million-strong Indian Diaspora. The US has the capacity to act in ways which are more benefiting to India than long European declaratory statements. As an aspiring power, India is more sympathetic to the American effort to ‘rework the rules of the global game’, whereas Europe is a staunch defender of the present order. Europe appears increasingly as ‘a conservative force: protectionist, in relation to markets but also much else, hoping to keep what it has’ (Khilnani 2006: 490-491). A key difference between the EU and American documents on India’s strategic partnership with them is that while gradual incrementalism through dialogue and discussion is the hallmark of the Union, there is a more practical, direct American approach, which focuses on vital issues to India such as geopolitical balance, energy and technology (Racine 2007). 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 leadership, whereas decision-making in the EU is inherently time-consuming in an increasingly heterogeneous EU-27 driven forward by committees and compromises. The US is making greater efforts to understand India’s foreign policy priorities and strategic preferences, whereas the Europeans come with their own foreign policy preferences, expecting us to conform to them or explain why we are not. Indian Perceptions of EU-China Relations Elites and decision-makers in India maintain that EU policy-makers have a fixation on China. For long, remarked a veteran Brussels-based Indian observer, the EU had single-mindedly focused on China since India was overshadowed 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 have abandoned its traditional focus on India to have concentrated on Southeast and Northeast Asia (Shashank 2007: 23). There has also been resentment in many quarters that until the turn of the millennium the EU maintained its Cold War policies of ‘equidistance’ between India and Pakistan. Most stakeholders in India feel that a Sino-centric Europe has been more willing to accommodate China rather than India, which, as Commissioner Mandelson said, ‘is getting there, but not quite arrived’ (cited in Rao 2007). India is perceived to be in the Commonwealth Games league, whereas China is in the Olympic Games league. Many stakeholders in India feel that there is a degree of discrimination in the European Union’s interest in and treatment of democratic India and in favour of undemocratic China, with which the Union has few common political values. Thus, many in India feel that the EU has been less sympathetic to and supportive of ‘a democratic secular India, one of the few countries to practice democracy in the developing countries against overwhelming odds’ (Ram 2002: 5). India’s democratic polity and shared values do not necessarily earn it any brownie points in Europe. Many Indian stakeholders wondered how EU espousal of human rights and promotion of democracy reconciled with political expediency to embrace military rulers responsible for ousting democraticallyelected rulers in Pakistan. The rise of India and China offers two developmental models to the world, especially to developing countries: in China, development has

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been spearheaded by a ‘non-democracy’ or one-party state relying on policies associated with ‘managed’ economies; whereas economic growth in India has been effected in an open and democratic regime with a free market economy. Despite the imperfections of Indian democracy, it has worked, even through more than a decade of coalition governance. Many countries, particularly in Africa, welcome Chinese support as an alternative to the Western pattern of interfering in their development. China’s spectacular growth is proof to many developing countries that reform and economic opening need not necessarily lead to democracy. Indian policy-makers feel that Europe does not seem to be unduly perturbed by the potential security implications of a rising China, about its military modernization and rising defence expenditure. Most Europeans tend to feel that they should convince Washington that China should not be regarded as ‘a strategic threat, but a crucial partner’ (Patten 2005: 278). This is partly because Asian issues and nations are too distant for them to directly impinge on its own security, partly because the EU is not militarily present in East Asia, and unlike the United States, does not play the role of an external balancer in Asia. It is difficult to say if most Europeans tend to see China as an economic threat, while India’s rise is seen as a benign and stabilizing development around the world. On the one hand, Europe tends to either regard the growing Chinese market as an economic opportunity. On the other hand, it is concerned about the mounting trade deficits, which may fuel protectionist sentiments. China continues to pose difficulties in India’s immediate neighbourhood – economically, politically, and strategically. The competition is intense in Myanmar, even though Sino-Indian relations will continually see elements of both competition and cooperation. It is also equally certain that India will not accept a secondary role to that of China in Asia and never wavers from its determination to emerge as an indispensable element in the Asian balance of power (Raja Mohan 2007). There are more numerous and deeper institutional links between the EU and China than between India and the Union. India’s interaction and institutional engagement with the EU is less intense, and dense in terms of visits, dialogues and consultations, than that of the Union with China. For instance, officials from the European Commission responsible for initiating and implementing the EU’s China policy made 206 trips to China 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-

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missioners and the High Representative for CFSP Javier Solana, whereas there were nine Commissioner visits to China alone in the first half of 2004. However, in recent years with India and EU talking across the board, the number of visits of Commissioners and officials has increased, but it still does not equal those to China. Similarities in Chinese and Indian Approaches towards the EU There are basic differences in both perceptions and interests of China and 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 to them. China and India argue that the structures of global governance (including the G8) must be more democratic, representative and legitimate. The two new ‘big kids on the block’ are wary of the creeping ‘regulatory imperialism’ of the North. What they want is ‘a different set of rules’ to safeguard the interests of their populations which constitute more than one-third of humanity. Both China and India have similar attitudes towards the role of the United Nations and multilateralism. During the UN debate on the eve of the Iraq war (2002-2003), the Europeans were at the forefront of questioning the American attempt to oust Saddam Hussein based on a perceived threat of weapons of mass destruction. China and India were vehemently opposed to European aspirations to transform the United Nations into a supranational organization which can gain and implement a mandate to interfere in domestic affairs. Both Asian giants resent European efforts to talk down to them from the high pedestal of post-modernism. They remain acutely sensitive about their sovereignty and internal autonomy against intrusive human rights issues and remain wary about humanitarian intervention and the circumstances in which force may be used. Both feel that hard power is as necessary as post-modernist Europe’s fascination for and advocacy of the merits of ‘soft power’. Above all, both China and India are unanimous that the Commission often tends to assume a patronizing attitude – ‘Engage and we shall teach you’. As the two most populous economies, China and India continue to have consultations and policy coordination in multilateral trade negotiations. Since the Cancun Ministerial meeting (2003), the advanced industrialized countries are being challenged in multilateral trade negotiations

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because of effective coalition-building by emerging powers. Senior EU officials have generally expressed a preference for and likeableness of China’s low profile and its general caution about assuming a leadership role inside the WTO in sharp contrast to the higher profile that India tends to occupy in multilateral trade negotiations. The greatest challenge, Trade Commissioner Mandelson recently remarked, is to have ‘a Chinese negotiator to start talking and an Indian negotiator to stop talking’ (cited in Dutt 2007). Some European thinkers wonder why China has, ‘bizarrely’, allowed Brazil and India to speak for the developing world’ in the on-going Doha Round (Grant and Valasek 2007: 30). At the Geneva ministerial summit, however, the Chinese were just as vocal as India in criticising the rigid Western approach that jeopardized the future of millions of poor and subsistence farmers. India and China have sought to coordinate their policies regarding climate change, especially as the North seeks to transfer incrementally the ecological burden of the entire planet at the door of developing countries, despite its ‘historic responsibility’ for cumulative emission levels. China and India are willing to take voluntary measures to curb carbon emissions. They are, however, unwilling to accept any mandatory carbon emission limits because only continuous growth offers a real possibility of lifting millions out of poverty. India argues that it is imperative to maintain a distinction between ‘lifestyle emissions’ of the West and ‘survival emissions’ of developing countries. ‘Capping or reducing emission levels in India may mean that 600 million Indians, who do not have access to electricity today, must be permanently denied this very basic energy service’ (Saran 2008). Both Asian countries argue that it is necessary for low emission technologies to be made available to poorer countries at a price they can afford; that technology needs to be shared generously and easily without stringent constraints on intellectual property rights. Climate change is increasingly becoming the next WTO-type of North-South divide. Neither is willing to allow the West to constrain their autonomy in determining their developmental priorities and ensuring continued economic growth which is contingent on ensuring energy security. Conclusion The relentless rise of China has presented the Indian business and political communities with both an example and an opportunity to be an

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alternative, to become more collaborative and to foster their own development. There are, perhaps, three lessons which India can learn from the ways in which China engages with the European Union. Firstly, India should more intensively engage the Council and the European Parliament. In the past, India concentrated almost entirely on the European Commission in its dealings with Brussels, primarily because it was the main interlocutor in dealing with trade irritants and seemed 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 profile and role of the European Parliament in the Union’s institutional architecture, the Indian attitude towards it seems to have changed significantly. This has been reflected in a number of recent high-profile visits, and the establishment of a separate India Delegation (as in the case of China). Secondly, India should emulate China in developing a more robust framework of educational exchanges and encourage Indian elites to study in Europe. There is a need to strengthen media relationships, academic and intellectual linkages, as well as foster greater intellectual and elite interaction. The number of Indian students studying in Europe has been rather limited, partly because of the limited number of courses in English and because Europe does not provide a structure of post-doctoral fellowships and employment prospects that is available in the United States. There is a continuing need to re-profile and reorient our mindsets 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 Confucius Institutes across the world, the Indian Council of Cultural Relations has established twenty India Cultural Centres around the world, of which only two are in Western Europe (Germany and the United Kingdom; with a third one coming up in Paris shortly). India also maintains nineteen Chairs of Indian Studies and five Chairs of Indian studies on a semester basis, mostly for teaching of Indian languages. Of these, there are six for Hindi in Europe (Poland, Hungary, Bulgaria, Romania, Belgium 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-tank community 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 engaged and committed to research and dissemination of information and debate on India are far and few. There is an urgent need to develop a sustained specialist and policy level dialogue between Indian and European think-tanks.

References Dutt, 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 European Reform. Ikenberry, G. John. 2008. ‘The Rise of China and the Future of the West’ in Foreign Affairs 87(1): 23-37. Jain, Rajendra K.. 2007. India and the European Union: Building a Strategic Partnership. 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. London: Chatham House. Mandelson, Peter. Letter to José Manuel Barroso, President of the European Commission. Cited in Stephen Castle. 2007. ‘EU-China trade tensions start to 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 narrow view of Pakistan; in The Times of India (10 October 2002). Patten, Christopher. 2005. Not Quite the Diplomat: Home Truths about World Affairs. London: Allen Lane. Pew Global Attitudes Project, ‘Some Positive Signs for U.S. Image, Global Economic Gloom – China and India Notable Exceptions, 24-Nation Pew Gl obal Atti tudes Survey, 12 June 2008’. Onl i ne at: http://pewglobal.org/reports/pdf/260.pdf Pew Global Attitudes Project, ‘World Publics Welcome Global Trade -- But Not Immigration: 47-Nation Pew Global Attitudes Survey,’ 4 October 2007’. Online at: http://pewglobal.org/reports/display.php?ReportID=258 Racine, Jean-Luc. 2007. ‘The India-Europe Relationship in the US Shadow’ in Rajendra K. Jain (ed.), India and the European Union: Building a Strategic Partnership. New Delhi: Radiant Publishers: 41-62.

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Raja Mohan, C. 2009. ‘India and the Emerging Non-Proliferation Order: The Second Nuclear Age’ in Harsh V. Pant (ed.) Indian Foreign Policy in a Unipolar World. 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: Radiant Publishers: 58-69. Raja Mohan, C. 2007. ‘Japan and India in a Rising Asia’ public lecture at Fukuoka, 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’ in Rajendra K. Jain (ed.) India and the European Union in the 21st Century. New Delhi: Radiant Publishers: 1-24. Rao, H.S, 2007. ‘Kamal Nath makes a point with 'fat cows'’ (14 December 2007). 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 China Report: 44(1): 33-39. Saran, Shyam. 2005. The EU-India Partnership Summit 2005. New Delhi: Konrad Adenaeur Foundation. Saran, Shyam. Speech by Special Envoy of the Prime Minister, on Climate C hange at Mu mbai , ( 2 1 Apri l 2 0 0 8 ). On l i ne at: http://www.meaindia.nic.in/speeches/13883 Shashank. 2007. ‘India and the European Union’ in Rajendra K. Jain (ed.) India and the European Union: Building a Strategic Partnership. New Delhi: Radiant Publishers: 32-40. Shedde, Meenakshi. 2001. ‘Indians seem to favour US because of Hollywood movies’ 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. New Delhi: Radiant Publishers: 25-57. Subhan, Malcolm. 2005. ‘Beneath unrest lies symbiotic harmony’ in The Financial Express (9 July 2005).

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RUSSIA’S CLOSER TIES WITH CHINA: THE GEO-POLITICS OF ENERGY AND THE IMPLICATIONS FOR THE EUROPEAN UNION Christopher Williams1 Abstract Against the background of a changing Sino-Soviet relationship, from 1949 until the collapse of communism in the USSR in 1991, this chapter analyses Russo-Chinese relations in the post-Soviet period, focusing on the Yeltsin and Putin eras. It assesses the reasons for closer ties and also examines the constraints posed by Russia’s geopolitics and energy security policies on Russo-Chinese relations in the early 21st century and the implications for the European Union and beyond. Introduction According to Vladimir Shlapentokh, in the post-war era the United States occupied a central position in the minds of the Soviet elite (Shlapentokh 2007: 2), whilst the same could be said of China after Nixon’s visit in 1972 (Ferdinand 2007: 842). Whilst the US is still crucial to both Russia and China, over the last two decades the Sino-Russian relationship has moved from a ‘constructive partnership’ in 1994 to a ‘strategic partnership’ by 1996, leading to a joint Good Neighbour, Friendship and Cooperation Treaty in 2001 (Wilson 2004: 6). Russia’s view of China has changed over time (Lukin 2003). After the success of the 1949 revolution, China was viewed as the Soviet Union’s ‘best friend’. However, 1 The author would like to thank the University of Central Lancashire (UCLan) for a period of research leave during which this piece was written and the staff of the European reading room Library of Congress, Washington DC for their help in locating some of the sources used during a November 2008 visit.

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following Stalin’s death in 1953, and Khrushchev’s rise to power after 1955, Russian perceptions changed and China was seen as Russia’s ‘enemy’ (Westad 1998). The Sino-Soviet disputes in the 1960s, culminating in border clashes in 1968-69, added to this negative view, and in the 1970s as both Russia and China got closer to the US, they continued to see each other as enemies (Jones and Kevill 1985). As a consequence, Shlapentokh writes: ‘In the 50 years after the victory of the Chinese revolution in 1949, Russians saw China as an ally for seven years (194956) and for thirty years they looked at China as a dangerous enemy (1957-87)’ (Shlapentokh 2007: 5). Russian attitudes towards China did not soften until the 1980s, when Mikhail Gorbachev made his historic visit to Beijing in June 1989 (Young Deng 2007: 866; see also Lowell 1992 and Wishnick 2001). Changes within China itself, as a result of Deng Xiaoping’s shift towards reform and liberalization in the same period, also paved the way for a more open Chinese foreign policy facilitating a gradual improvement in Sino-Soviet relations (Lee Nam ju 2001: 49-50). So why have China and Russia moved away from an emphasis on the US and shifted towards a closer relationship and potential partnership with each other? There are numerous reasons why this rapprochement occurred: firstly, Russia’s weakened state in the 1990s; secondly, the fact that Russia shares a substantial border with China; thirdly, awareness that the Russian Far East is facing a demographic crisis and economic problems; fourthly, global acknowledgment that China is growing in strength both economically and militarily; fifthly, the fact that Russia wants to be a significant player in the Asia-Pacific region (so it is more logical to cooperate with China, rather than oppose it); sixthly, both Russia and China have common security interests in Central Asia (the threat of Islamic extremism and separatism and an uneasiness about a US military presence since 2001); seventh, China urgently needs military technology as part of its modernisation strategy (which makes it a logical partner for the Russian military industrial complex (MIC), which is itself seeking markets since the USSR collapse); eighth, Chinese energy needs are high and can be partly met by the purchase of Russian gas and oil, which is in turn largely responsible for Russian economic growth this century; and finally, although Russian overt criticism of US unipolarity has diminished since 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 now briefly discuss each factor in turn. The Soviet Collapse and Sino-Russian Relations since 1991 In December 1991, the USSR finally collapsed, leaving the USSR in ruins and its MIC virtually redundant. This took the world, including the Chinese, by surprise and left the USA as the only remaining superpower and Russia severely weakened (Williams 2000: 248-266). From China’s perspective, although its attitude to Moscow did not change, Beijing still feared 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 maintain stability in Central Asia and also served a geopolitical function in China’s ongoing efforts to offset the hegemonic position of the US (Wilson 2004: 10). Under Yeltsin, Russian foreign policy went in a largely Westward direction, partly as a result of the weaknesses outlined above, which left Russia with little initial room for manoeuvre. A key role was played by the integrationist Russian Foreign Minister Andrei Kozyrev, who identified closely with the West and was in favour of promoting Russia’s integration into the world economy, arguing that the European security system in a post Cold War world would benefit if it included Russia and if Russia was now accepted as an equal partner to West. Nevertheless, Yeltsin kept his options open because during Kozyrev’s March 1992 visit to China, Russia did not condemn China’s human rights policy but instead stressed the importance of economics and trade and promised to work on border demarcation issues (Kuhrt 2007: 12-13). In overall terms, it was Western actions, the US tendency to act unilaterally (like a rogue-state) and the fact that Moscow was not treated as a full partner by the West, which initially persuaded Moscow to shift its foreign policy stance towards China. Clear evidence of this is the West’s intervention in Kosovo in 1999, with the US and UK totally bypassing the UN (Williams 2001: 248-266 and Williams with Golenkova 2001: 204-225). To this may be added the question of NATO’s eastward expansion, incorporating some former Russian allies in its previous buffer zone. This contradicted James Baker, the Secretary of State in the Bush (Senior) Administration, who had promised to Gorbachev back in February 1990 that apart from the incorporation of East Germany into the Federal Republic of Germany, NATO would not extend any further east.

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Similarly, the accidental bombing of the Chinese Embassy in Yugoslavia in May 1999, US criticism of China’s human rights record and its policy on Taiwan, and the signing of an American-Japanese security treaty, inflamed China. By the time of the Russian 1998 economic crash, there was a general feeling in Moscow that Russia’s flirtation with the Washington model (liberal democracy and the market) had produced nothing but pain and heartache. This led to a new direction in Russian foreign policy and resulted in Kozyrev being replaced by Yevgeny Primakov in 1997-98. This was important because Primakov wanted to forge links or build bridges between Russia and Asia (e.g. Central Asia and China) and his appointment marked a more positive Russian stance toward Asia (Iwashita 2007: 165-194). Primakov and other actors, such as the communists (KPRF) and neo-fascists (LDPR) were admirers of China’s reforms and experience. These groups, as well as the industrial lobby (MIC, heavy industry) wanted China as Russia’s ally (Lukin 2001: 2-4), partly to help reverse Russia’s economic decline but also to counter US unliteralism. At an early 1992 summit meeting between President Yeltsin and Jiang Zemin it was agreed that neither country would intervene in the domestic affairs of the other, that both would stand up against hegemonism, that neither country would strike the other first with nuclear weapons, and that it was in Russia and China’s best interests to expand economic, scientific, cultural and military exchanges (Lee Nam-ju 2001: 56-57; Su 2007: 93-112). Since then, both Moscow and Beijing have stressed the primacy of the UN in global decision-making and the precedence of national sovereignty over western conceptions of ‘humanitarian intervention’ and ‘limited sovereignty’. Both countries aspire to a ‘multipolar’ world, in which a few great powers (the US, Russia, the EU, China, India and Japan) make the ‘big’ decisions. Both Russia and China are opposed to the unipolar order associated with a hegemonic America. As a result, in UN General General Assembly voting, Russia and China have converged from 1974-2005 but diverged from the US (Ferdinand 2007: 860-862). An example is the way Russia and China blocked US attempts to reform the UNHRC in 2005 (Yong Deng 2007: 881). To reverse US domination Moscow and Beijing have adopted similar positions on the war against terror, the non-proliferation of weapons of mass destruction (WMD), and international conflict management, most recently in the context of the 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 especially important that Russia and China cooperate in key areas such as raising the authority and the role of the UN, defending the primacy of international law in world affairs, maintaining strategic stability, first and foremost, preserving the ABM treaty, creating a new, just, world economic 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 and non-ideological approach and the maintenance of friendly international relations; restraining the use of armed force while modernizing the military, and active participation in the international community (Swaine, and Tellis 2000: 113-114.) But for things to proceed more smoothly, RussoChinese border disputes needed to be resolved first. Border Disputes and Demarcation The backdrop to Russia’s concerns over its border was the collapse of the USSR, Chechnya and its overall feeling of vulnerability as Russia shares a 4,300km common border with China (Bobo Lo 2004: 296-297). Over time the border was gradually militarized, costing the Soviets 60 billion roubles in the 1960s and ‘70s alone (Wilson 2004: 49). Between the years 1969-78, there were fifteen rounds of negotiations, all to no avail. The deadlock was finally broken by Gorbachev in 1987 and by October that year an agreement had already been reached on the Eastern boundaries. This was followed in November 1989 by further discussions regarding Soviet and Chinese border troop reductions (Wilson 2004: 43). By 1991, only the status of three islands around the Ussuri and Argun rivers remained unresolved (Wilson 2004: 44). In the period 1992-94, negotiations over the Western sector of the former Soviet border continued and agreement was finally reached by June 1994, with border demarcation completed by November 1997 (Kireev 2006; Maxwell 2007: 47-72 and Wilson 2004: 44-45). Thus, there are no longer any border issues to settle, a major step forward. As a result, in the period 2005-7 two million Russians visited China and 700-750 million Chinese visited Russia, twothirds in the 1,000km border zone (Larin 2008: 2). The Russian Far East Question Closely linked to the border question is the vulnerability of the Russian Far East (hereafter RFE), which has suffered serious population-decline

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(the young, better educated and more industrious have migrated, leaving the elderly and infirm behind), massive Chinese immigration (of between 300,000 and 2 million), a major influx of Chinese goods and a serious economic depression, as result of the decline of the Soviet merchant and naval fleet. The RFE’s plight caused clashes between the Russian Federal government and the governors of various regions (krais)2 - most notably Khabarovsk and Primor’e - from 1991 to 1997. These regions and their rulers felt that the 1991 border demarcation agreement left them and Russian national security vulnerable (Rangsimaporn 2006: 132-135). Furthermore, the Russian state was also perceived to be neglecting the pressing needs of the RFE. As a consequence, a 2005 Russian public opinion poll revealed that 66% 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 Shlapentokh 2007: 6). In general terms, Russians think that the ‘Chinese show open contempt 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 conception that the RFE is a Chinese target and the population fear that the RFE will soon fall under Chinese control, so defeatism is already present (Shlapentokh 2007: 12-14). Although a 2004 survey showed that 35% of Russians in Khabarovsk and 42% in Vladivostok were against the Chinese (cited in Shlapentokh 2007: 14), attitudes are gradually changing as Russians realize the opportunities available in terms of jobs and Chinese trade with Russia’s Eastern regions and the Trans-Baikal, which rose from US$515m in 2000 to US$3.2 billion by 2005 (Larin 2008: 5). Furthermore, some pensioners from Blagoveshchensk, Russia, have been moving to Heihe, in China, to take advantage of lower apartment costs, utility fees and inflation (Larin 2008: 3) But there is still a long way to go – on the Russian side of the border the authorities are unable to cope with the Chinese flow, so smuggling, tax evasion and migration law violations occur. The Amur-Chinese bridge project has also made little progress since 1995 and both sides 2

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

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have different ideas and approaches towards regional development in border areas, with the Russians vacillating and the Chinese forging ahead (Larin 2008: 7-12). China’s Rise Russian concerns about Chinese expansionism mostly stem from fears arising from China’s rapid rise in the late 20th-early 21st centuries. China has become an economic superpower, and is now the second largest economy and exporter after the US (Bergsten et al 2008: 9). China has expanded on average by 10% per annum over the last three decades (Bergsten et al 2008: 106). For this reason, there are some groups within the Russian elite, government and foreign policy circles who see China as a threat. This group includes nationalists (LDPR), Westerners (Koyzrev, Gaidar), and even Putin himself at times. Thus, at a conference on the development of the RFE and the Trans-Baikal region held in Blagoveshchensk in June 2000, Putin warned: ‘I do not want to dramatize the situation, but if we do not make every real effort, even the indigenous Russian population will soon speak mostly Japanese, Chinese, and Korean’ (cited in Lukin 2001: 15-16). In some US circles, too, there is also a belief that China poses a challenge as an alternative model and source of support for the developing world; as a counter-balance to US alliances in East Asia (Japan, South Korea, Australia, Thailand, Philippines) and as an economic competitor for the US (Bergsten et al 2008: 227). However, there is also an acknowledgment within the US that China wants to improve its international reputation, does not seek a new Cold War, and so if the Chinese threat is exaggerated then this might reinforce Chinese suspicions about US disrespect and intention to curb its rise as a major power (Bergsten et al 2008: 228). Nevertheless, one source states that the US must remain vigilant about the effects of China’s rise on its domestic and international interests, but Washington should not look instinctively to blame or denounce China as a scapegoat for problems (Bergsten et al 2008: 228). The same thinking can apply to Russia. This is perhaps why there are advocates of a more balanced Russian foreign policy that favours neither the West nor China. China’s development provides opportunities for Russia, especially in relation to Russian military and energy sales to China. Both are essential to maintaining and strengthening Russia’s MIC and to Russia’s con-

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tinued economic growth, but at the same time Russia could be creating a major Chinese adversary in the long-term. Arms and Weapons Sales: Sustaining the Russian MIC Bobo Lo argues that Russian official trade with China has tripled under Putin while ‘unofficial’ commerce, dominated by cross-border shuttle trade, is at an all-time high (S10 billion according to Putin) (Bobo Lo 2005: 8). By May 2008, Russian Chinese trade had increased to $48 billion (Factbox 2008). This trade and investment involves nuclear energy, space cooperation, as well as in oil and gas projects, as we shall see later. Military-technical cooperation is also an important feature of Russo-Chinese relations (see Tsai 2003). China is now Russia’s biggest arms customer, accounting for 40 per cent of Russia’s arms exports. Arms exports comprise one-fifth of Russo-Chinese trade, and Russia earns in excess of $1 billion annually from Chinese arms purchases (Smith 2003: 12). Chinese arms purchases from Russia reached $6.5 billion from 1991to 1999 (Lee Nam-ju 2001: 64). China has received 200 Su-27SK and Su-27UB trainers; 48 Su30MKK fighter bombers; a Sukhoi-30 jet fighter, 5 Sovremennyi-class destroyers, 8 modern Kilo-class diesel destroyers; enough S-300PMU-1 ground to air missiles to equip eight divisions, now the core of the Chinese air defence forces and 35 Tor-M1 ground to air missiles (Lee Namju 2001: 64; Smith 2003: 12). In addition, since 1991 more than 2,000 Chinese officers have studied in Russia and currently around 200 Chinese officers are studying in Russian military academies (Smith 2003: 12). Of serious concern to Russia is the fact that the balance of power between the Russian and Chinese air forces on the Sino-Russian border is now in favour of China; whilst from a Western perspective the level of contacts between the Russian and Chinese armed forces has not so far matched those between the armed forces of NATO states and Russia but contacts are being extended at MOD and General Staff levels, so this may be a worry for the future. On top of military trade and sales, the Shanghai Cooperation Organisation (SCO) has also been used to encourage military co-operation among SCO members, to boost confidence among members and to develop a coordinated military policy against potential threats. Thus, in October 2000 the first round of war games took place between China and 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 by Russo-Chinese talks about joint exercises by signals troops in Inner Mongolia, and in October 2002 by a China-Kazakhstan joint anti-terror exercise. Then in August 2003 there were an expanded set of military exercises which featured all members, except Uzbekistan. Thereafter, in August 2005 Russia and China held their own military exercises with the other SCO members, as well as Iran, India and Pakistan sending observers. This was dubbed ‘Operation Peace Mission 2005' (Lanteigne 2006-7: 611). In March 2006, SCO members conducted a joint East Terror exercise in Uzbekistan, followed in April 2006 by an SCO Defence ministers meeting in Beijing. The following year, two events took place – the first, an anti-terror exercise entitled ‘Tianshan 1' between China and Kazakhstan, the second, an anti-terror military exercise in September 2007 involving China and Tajikistan (Wei 2007: 19). Earlier, from 9-17 August 2007, there was the SCO ‘2007 Peace Mission’ held in Chelyabinsk, Russia and Northwest China’s Xinjiang Autonomous region. It was the eighteenth joint military exercise between the Chinese and its partners since 2002. This one involved 6,500 military personnel and eighty aircraft from the six SCO member states (Smith 2007: 5; Wei 2007: 18-19). According to Wei, this particular drill enhanced security cooperation in the SCO, strengthened China-Russia relations, improved the anti-terror capacity of the SCO members and accelerated the modernization of their armed forces (Wei 2007: 18). Finally, Smith suggests that SCO members have used the Collective Security Treaty Organisation (CSTO) as a means of ensuring military development of membership until 2010 via unified military systems - air defence, communications, information and reconnaissance support (Smith 2007: 6). Russian Geo-politics: The SCO and Central Asia As the evolution and development of the SCO and its role in Central Asia has been addressed elsewhere (see Williams 2007: 215-237), only brief comments will be made here: as is well known, the SCO started as the Shanghai Five in 1996 and later expanded to become the SCO in 2001. It has been used by Russia and China as a way of combating the so-called three evils (terrorism, separatism and extremism), as a means of promoting multilateralism via emphasizing the role of the UN, and from 2005 as a way of forging new alliances between Russia and China, on the

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one hand, and India, Pakistan, Iran (Atai 2005: 102-103) and Central Asia (Sun Zhuanghi 2004: 600-612) on the other. The SCO has also been used to challenge US hegemony in Central Asia and the biggest coup occurred when the Uzbek government announced 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 an important outpost in Central Asia, the ability to act as a counterweight to Russia and China in the region and that in the short to medium term this will allow Russia to gain a stronger foothold (Gleason 2006: 52). By and large, though, the SCO lacks the material and diplomatic capabilities to challenge 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 the SCO. One view expressed in February 2008 argues that it is Russia and China who largely determine SCO policy, followed by Kazakhstan and Uzbekistan who exert ‘limited influence’, and finally by the SCO minnows Kyrgyzstan and Tajikistan who have no clout or influence (SCO 2008). However, although Russia wants the SCO to become a ‘militarypolitical bloc’, it has no desire to re-create the Warsaw Pact or to start a new Cold War. For both Russia and China the significance of the SCO is thus far largely economic – energy supplies are the key to both countries with Russia focusing on oil and gas exports and China on imports (for more detail see Aris 2008). It is possible, however, that while Russia and China will eventually compete for power in Central Asia, for the time being China seems content to keep a low key in the region and is unwilling 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 it has expanded, growing to its current size of twenty-seven member states, making the EU a major international actor, like the US and China, in 2009. Diplomatic relations between the EU and China started in 1975, with the EU firmly supporting China’s transition process and keen on sustaining China’s economic and social reforms, partly through trade and cooperation agreements since 1978 (Heisbourg 2001). According to Yong Deng (2007: 889), economic ties have reached a new height. China is now the second largest trading partner of the EU. Eurostat figures show 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 EU exports 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 tourism agreements (dating from 2002), a customs cooperation agreement (concluded in 2004), and a research agreement on the peaceful use of nuclear energy (concluded in 2004). New agreements on property rights, competition policy, textiles and enterprise are currently being negotiated. EUChina Summits have taken place annually since 1998; among the issues discussed are human rights, the environment, telecommunications, energy and trade. One of the ‘stumbling blocks’ is the arms embargo imposed on Beijing after the Tiananmen Square crackdown in 1989, which has not been removed due to US and Japanese opposition (Yong Deng 2007: 890). This partly explains why China goes to Russia to meet its arms and weapons needs. Energy is one of the biggest aspects of Russo-Chinese relations and perhaps the greatest threat to the EU. Russia is the world’s second largest oil producer and has vast reserves in East Siberia, the Komi Republic, Nenets Autonomous Okrug and the Barents region, and a great potential for exporting them. This has led to the development of what Marshall Goldman calls Russia’s ‘oilopoly’ under Putin (Goldman 2008). One source 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 Overcome Our Dependence 2002: 2-3, 9). There are, however, concerns in Western Europe that Russia may try to use its energy exports as a political lever by threatening to ‘turn off the taps’. In line with this view, Russia has already used oil and gas to pressurise the policies of Belarus, Ukraine and Moldova, while the cut-offs to Belarus or the Ukraine had a knock-on effect on Polish and German reserves back in 2004. Such EU concerns remain real, as the early 2009 energy disputes between the Ukraine (an EU applicant) and Russia during a cold winter snap show. Although the potential for Russia to cut off supplies to other countries within the EU cannot be totally ruled out, this is highly unlikely as Russia realizes that EU’s demand for energy will probably grow significantly as the market is restricted. Furthermore, Russian growth is based on high energy prices and profits and any adverse actions would possibly

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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, Japan and the USA, all of whom have begun to show an active interest in Russian oil (Monaghan 2005). As a result, energy security has become a major issue for the EU (see A Secure Europe in a Better World, 2003: 56). For example, the October 2005 EU-Russia summit focused on EU dependency on Russian energy; the matter was put on the agenda again at the recent January 2009 Czech Presidency of EU summit in the light of Ukraine-Russia gas disputes and their impact on EU countries (Harding 2009: 2). This makes Russo-Chinese energy relations particularly crucial. Chinese rapid economic growth has had a high cost in terms of resources and the environment, resulting in China’s increasing demand for energy which will reach an estimated 22% of global energy demand by 2030 (Bergsten et al 2008: 141, 155). Although Russia is willing to supply energy to China, there have been many problems, as the original Angarsk-Daqing pipeline fell through, in favour of an Angarsk-Nakhoda route. There have also been arduous negotiations over price and Russian failures to make deliveries. To try and offset these problems with Russia, the Chinese were rumoured to have financed Rosneft’s purchase of Yugansknefigaz, while China also reportedly paid a $6.6bn loan for the long-term pre-purchase of Russian oil (Monaghan 2005: 13). The Chinese have also looked to Kazakhstan and Turkmenistan (Ferdinand 2007:852) and started cooperating with SCO members in the energy field (Frolenkov 2008: 67-82). Conclusions It is evident that Russo-Chinese relations have dramatically improved in the last few decades, moving from reconciliation in the 1980s to relative stability by 2009. This reflects Russia’s scepticism towards the West, China’s rise, more pragmatic Chinese and Russian foreign policies, and Russian vulnerability in general and in the Far East in particular. It is the outcome of what Bobo Lo recently called the ‘Axis of convenience’ (Bobo Lo 2008). There are, however, certain limitations on the future of Russo-Chinese relations – historical suspicions, cultural prejudices and myths, geo-political rivalries, etc, in which Russia sees China as a possible 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 uses China to gain global influence (Anderson 1997; Garnett 2000 and Bobo Lo 2008). Although China has not yet achieved superpower status, its rise is nevertheless causing some concern in Washington, Moscow, Brussels and elsewhere. Whether or not the current close Russia-China ties are maintained will depend on a number of factors - the course of Russian foreign policy under new President Medvedev; US-Japanese ties; the impact of the Obama Presidency on the course of US-China and USRussia relations; the role of the UN; the settlement of disputes over the Korean peninsula (Zhebin and Yong Ung 2008: 29-47); and finally, whether the unilaterialism of President Bush (Junior) will gradually give way 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 relatively problem-free 2008 Olympics and China’s willingness to accept international aid during the May 2008 Sichuan earthquake, has partly countered negative perceptions of China and indicated its new openness. But Taiwan and Tibet remain serious Chinese concerns. In terms of the other main topic addressed here, energy security will continue to be the biggest potential obstacle to better Russo-Chinese relations for the short to medium term, and the issue most likely to dominate EU debates with Russia as well. Thus far, Russia has - and is still - using geo-politics (see Levgold 2007: 343-392), and energy in particular (Goldman 2008), to balance various regional powers in areas of key interest, such as Asia, in order to offset a perceived Chinese threat and to restore Russia’s ‘great power status’ on the world stage; however, this approach might well produce major problems in the long-term.

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Su, F. 2007. ‘Questions Regarding Past and Present Sino-Russian Cultural Exchange’ in Iwashita A. (ed.), Eager Eyes fixed on Eurasia (Vol. 2): Russia and its Eastern Edge, Sapporo: Slavic Research Center, Hokkaido University: 93-112 Sun Zhuanghi. 2004. ‘New and Old Regionalism: The Shanghai Cooperation Organization and Sino-Central Asian Relations’, in The Review of International Affairs, 3 (4), Summer: 600 – 612. Swaine M. D and Tellis, A. J. 2000. Interpreting China’s Grand Strategy, Santa Monica, CA: Rand. Tsai, Ming-Yen. 2003. From Adversaries to Partners? Chinese and Russian Military Cooperation after the Cold War, Westport, C.T.: Praeger. Traynor, I. 2009. ‘Energy Battle Leaves Moscow and Kiev out in Political Cold’, The Guardian 12 January. Vradiy, S. 2007. ‘Russia’s Unofficial Relations with Taiwan’ in Iwashita A. (ed.), Eager Eyes fixed on Eurasia (Vol. 2): Russia and its Eastern Edge, Sapporo: Slavic Research Center, Hokkaido University: 219-234. Wei, Y. 2007. ‘Partnership in security’, Beijing Review 9 August, 18-19. Westad O. A. (ed.) 1998. Brothers in Arms: The Rise and Fall of the Sino-Soviet Alliance, 1945-1963, Stanford: Stanford University Press. Williams, C. 2000. ‘The New Russia: From Cold War Strength to Post-Communist Weakness and Beyond’ in Anderson, P. J., Wiessala, G. and Williams, C. (ed.), New Europe in Transition (Continuum), 248-266. Williams, C. 2001. ‘Kosovo: A Fuse for the Lighting’ in Weymouth A. and Henig S. (eds.), The Kosovo Crisis: America’s last war in Europe? London: Pearson Education: 15-38, 288-290. Williams, C. with Golenkova, Z. T. 2001. ‘Russia: Walking the Tightrope’ in Weymouth A. and Henig S., (ed.), The Kosovo Crisis: America’s Last War in Europe? London: Pearson Education: 204-225, 298-300. Williams, C. 2007. ‘EU-Central Asian Relations and the New World Order’ in Anderson, P. J. and Wiessala, G. (ed.), The European Union and Asia – Reflections and Reorientations, Amsterdam/New York: Rodopi: 215-237. Wilson, J. L. 2004. Strategic Partners: Russian-Chinese Relations in the post-Soviet Era, Armonk New York: M. E. Sharpe. Wishnick E. (2001) Mending Fences, The Evolution of Moscow’s China Policy from Brezhnev to Yeltsin, Seattle: University of Washington Press, 2001. Yong Deng. 2007. ‘Remolding Great Power Politics: China’s Strategic Partnerships with Russia, the European Union and India’ in Journal of Strategic Studies 30 (4–5): 863-903. Zaderei. N. 2008. ‘Evolution of the Western Attitude Towards the SCO’, in Far Eastern Affairs 36 (2): 48-56. Zhebin, A. and Yong Ung, K. 2008. ‘Changes on the Korean Peninsula: Challenges and Opportunities’, in Far Eastern Affairs 36 (2), 29-47.

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THE EUROPEAN UNION, CHINA AND THE UNITED STATES: COMPLEX INTERDEPENDENCE AND BI-MULTILATERALISM IN COMMERCIAL RELATIONS Michael Smith and Huaixian Xie Abstract This chapter explores the emerging ‘triangle’ in commercial relations between the EU, China and the United States, using the concepts of ‘complex interdependence’ and ‘bi-multilateralism’ as organising and evaluative devices. The chapter argues that in the ‘triangle’ there are important areas of unevenness and variation reflecting differences of power, institutional factors and norms, but that nonetheless there can be discerned important elements of ‘complex interdependence’ as defined by Keohane and Nye. This can be observed in the bilateral relationships between the three parties; at the same time, however, the EU-China-US relationship is central to power, institutions and norms in the changing multilateral commercial system, centred on the World Trade Organisation. This means that many of the commercial policy negotiations between the three parties are essentially ‘bi-multilateral’: on the one hand, the management of bilateral relations creates externalities for the multilateral system, and on the other hand the evolution of the multilateral system creates new forces shaping the management of bilateral relationships. The chapter examines two cases, China’s entry into the WTO and the management of trade disputes over textiles, to illuminate the ways in which ‘bi-multilateral’ elements enter into the EU-China-US ‘triangle’. Introduction Both the European Union (EU) and the United States (US) face a common challenge from the emergence onto the global commercial stage of

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China (Grant and Barysch 2008; Zaborowski 2006a). In the context of EU-US relations more generally, which are characterised by a fluctuating mixture of competition and convergence (McGuire and Smith 2008), it might be predicted that this situation would produce the same often uneasy combination of joint positions and action with competitive strategies, producing what has been termed a process of ‘competitive cooperation’ between the two transatlantic partners (Smith 1998a; Smith and Woolcock 1993; chapter 3). At the same time, it might be argued that the ‘triangle’ of relations between the EU, the US and China would contribute to the development of a ‘new trilateralism’ between the EU, the US and Asia-Pacific countries, or even a successor to the more limited trilateralism between the EC, the US and Japan that was widely discerned in the 1970s and 1980s (Smith 2004). But the situation is not one that lends itself to analysis in terms of simple labels. It is clear that EUChina-US relations exist at many different levels and that they evolve against a changing global backdrop, in which the emergence of several new potential commercial ‘great powers’ and the continuing difficulties faced by global institutions such as the World Trade Organisation (WTO) play a key role. In this set of overlapping contexts, the bilateral and trilateral relationships between the EU, the US and China must be seen alongside the continuing development of inter-regional and global commercial relationships, and in turn the problems of strategy and implementation that confront the EU. This chapter sets out to analyse the emerging pattern of relations between the EU, China and the US, and to explore the ways in which this pattern impacts on the formulation and pursuit of policies, in particular policies centred on negotiations in the field of commercial policy. It does this in three stages. First, it looks at key areas of development in EU-China-US commercial relations, drawing attention to the growth of what has been termed ‘complex interdependence’ and to the implications of this interdependence for strategies and their implementation. Second, it considers the ways in which these relations can be analysed, and proposes an analysis coupling the idea of ‘complex interdependence’ with that of ‘bi-multilateralism’ in commercial policy negotiations. Finally, the paper focuses on two linked case studies, dealing with China’s accession to the World Trade Organisation (WTO) and the 2005 dispute over trade 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 further research in this area. The Development of EU-China-US Commercial Relations Over the post-Cold War period, the commercial relations between the EU, China and the US have developed rapidly, often in ways that have surprised policy-makers in Brussels and Washington. On the one hand, the explosive growth of the Chinese economy and its export orientation have created very mixed reactions in the leading developed economies, with the EU and the US at the centre of the process. Whilst retailers and consumers have welcomed access to cheap products, producers have often had much more mixed feelings, depending on the extent to which they can take advantage of production or licensing arrangements in China itself. Both the EU and the US have developed large deficits in their trade with China, which have led to demands in some quarters for protection and an emphasis on the vulnerability of both the world’s leading economies to the challenge from East Asia (Crossick and Reuter 2007: Part III; Freeman 2006; Zaborowski 2006b). At the same time, the growing availability of Chinese capital for investment in both the EU and the US has led to further mixed reactions, with the desire for new investment accompanied by the equal desire not to let prized assets fall into alien hands. Both the EU and the US have developed strategies for both ‘containing’ and taking advantage of the rise of China, involving not only a series of bilateral dialogues and agreements but also the use of inter-regional and global multilateral organisations to regulate and ‘civilise’ 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 any emerging ‘triangle’ composed of themselves and Beijing. In some ways, these different positions are similar to those occupied by the EC and the US in the previous ‘triangle’, centred on the EC, the US and Japan during the 1980s and early 1990s. In that case, the linkages between the US and the EC, and the US and Japan, were not only strong in commercial terms but also bolstered by important security and diplomatic connections that gave a strong central core to the relationships and prevented purely commercial tensions from getting out of hand. But the relationship between the EC and Japan – not to mention that between the EU and 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 ‘thinner’ web of linkages between the two parties (Smith 1998b). In the case of the EU-US-China ‘triangle’ some of the same qualities can be discerned. The United States continues to have strong and multidimensional relationships with the EU, which embed the commercial relationship into a much broader set of linkages and networks, and which encompass economic, diplomatic and security concerns (McGuire and Smith 2008: chapter 2). Although it does not have a highly developed alliance with China, the US does have a multi-dimensional strategic relationship, which gives a key significance to security issues such as the ‘Taiwan question’ and commits the US to a role much broader than a simple commercial one (Zaborowski 2006b). By contrast, the EU can be seen as ‘under-powered’, pursuing a strategy in which there are important variations between the stakes of individual Member States and in which there is a distinct lack of the multi-dimensional economic, diplomatic and security themes that are so powerful in US-China relations (Crossick and Reuter, 2007: 73-80). Although there are clearly elements of a ‘triangle’ between the EU, the US and China, it is clear that there are important areas of unevenness and (from the EU’s perspective) ‘gaps’ in the overall structure, whilst the overall development of relations is fluid and dynamic, especially in light of the rapid development of China’s position. This unevenness and dynamism translates into important variations in strategy between the three participants. For each of them, there are key considerations: the relationship between ‘grand strategy’ and the requirements of commercial relations, the relationship between the roles of ‘partner’ and ‘competitor’, and the distribution of responsibility between the different stakeholders in the overall constellation of relations. Some at least of these considerations arise as much out of how the three participants see themselves as ‘players’ in the global arena as they do out of material resources and conflicts of interest, and thus relate to norms and role-conceptions as much as they do to specific institutional arrangements or distributions of power. What is clear is that the different EU, Chinese and US positions lead to markedly different responses to the demands of international life and to the demands of life within the ‘triangle’. Thus, the EU’s response has been (as it has in many other areas of external policy) to focus on the building of a ‘strategic partnership’ with China, centred on the principles of multilateralism and encompassing a large number of sectoral and

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other dialogues designed to present and promote the interests of commercial groups in Europe (Jing Men 2007); on occasion, it has appeared that this partnership might be designed partly as a response to the perceived unilateralism and coercive nature of US policy, particularly under the George W. Bush Presidencies (Crossick and Reuter 2007: 73-80; Pollack 2003). By contrast, the US has focused much more on an approach to China couched in terms of ‘grand strategy’, emphasising the linkages between economics, diplomacy and security, and linking China policy to vital national interests in a way that is simply not available to the EU (Zaborowski 2006b). It might also be argued that the US has as a result been sharply aware of the wider vulnerabilities that might be engendered by too great a reliance on China in commercial terms. For the Chinese, it seems clear that their approach to both the EU and the US is shaped by broader considerations of China’s emergent role in the world, and by the desire to maintain autonomy and shape a multipolar distribution of global power; but it is also clear that they feel the need to engage over a much broader front with the US than they do (at least at present) with the EU (Zhiyuan Cui 2004). This discussion demonstrates that the increasing mutual entanglement of the EU, China and the US is central to the development of the global arena, but that it reflects variations in salience, scope and sensitivity for each of the three participants. At a very general level, they are entangled in a common situation reflecting the relative dynamism of their political and economic trajectories, but at the level of broad considerations of economic, diplomacy and security, there are important differences among them. In terms of their approaches to the global commercial system and to trade issues, this means that they are likely to take different positions not only on specific issues and disputes but also on the broad relevance and utility of material power, institutions and norms. To put it simply, they are entangled with each other in a situation that has important elements of ‘complex interdependence’ (Keohane and Nye 2001): their relations have grown in range and scope, they encompass a wide variety of governmental and other participants, they exhibit important linkages between issue areas and they demand a process of almost continuous negotiation. However, their responses to this are likely to be different not only in style but also in substance; not least, as also suggested by Keohane and Nye, the levels of perceived ‘sensitivity’ and ‘vulnerability’ to the consequences of growing interdependence among the three

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parties are likely to vary, with important consequences for their approaches to negotiations. The next section of the paper suggests a way in which the impact of ‘complex interdependence’ can be linked to the conduct of trade negotiations among the EU, China and the US. ‘Bi-Multilateralism’ and EU-China-US Commercial Relations As noted elsewhere, the relations between the EU and the US contain important and coexisting elements of bilateralism and multilateralism, which create distinctive problems for negotiation and the management of their relationship (Smith 2005). The argument here is that this quality can also be discerned in the EU-China-US ‘triangle’, although as we have seen this ‘triangle’ is also subject to fluctuation and variation. To a large extent, the EU-China-US relationship manifests the following qualities that are also encompassed by the EU-US relationship (Smith 2005: 167-8): Multi-level relationships with strong elements of public-private interaction as well as intergovernmental interaction. A search for institutionalisation, for example through the New Transatlantic Agenda (NTA) and the Transatlantic Economic Partnership (TEP), or the proposed EU-China Partnership and Cooperation Agreement, but issues about the gaps between institutional potential and institutional performance. Strong linkages between what goes on at the level of the ‘triangle’ and what goes on at the global level in the context of institutions such as the WTO and a range of other multilateral bodies. Intensifying integration especially in areas of the political economy, but unevenness of that integration across sectors. A proliferation of relevant networks and dialogues, both transgovernmental and transnational, but lack of clarity about how those networks and dialogues relate to each other and interact with each other. Co-existing ‘languages’ of policy discourse, ranging from coercion to coalition-building and collaboration but often in an uneasy coexistence, reflecting elements of normative consensus but equally strong areas of normative confusion. Issues of choice about forums for interaction, about strategies and about priorities which affect both the EU, and Chinese and US policy-makers. As a result, a set of ‘adversarial partnerships’ or relations of ‘competitive cooperation’ emerge, which are arguably suboptimal for all concerned (but which may also serve the purposes of policy-makers on all sides from time to time).

As noted above, this produces a context characterised by growing levels of ‘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 possible to distinguish sharply between bilateral and multilateral interactions. Such interactions are essentially co-constitutive of EU-China-US relations, meaning that what is done at the bilateral level will spill over and have 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 a number of problems for negotiations between the participants (Smith 2005: 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 privilege bilateral over multilateral negotiations in specific contexts, and how do they manage the linkages between the different levels and modes of interaction that result? A second set of problems relates to participation: how do the parties respond to the fact that they may be engaged in negotiations at different levels, and that different parts of their governmental machines may be carrying on negotiations simultaneously, with different aims? Third, there is a set of problems relating to the agenda for international negotiations: can the three parties manage the intersecting agendas created not only by their mutual interactions but also by the operation of multilateral organisations such as the WTO? Related to this there is a fourth set of problems to do with coalition building: can we see evidence in EU-China-US negotiations of the ways in which the building of bilateral partnerships intersects with and creates problems for multilateral negotiations? A fifth set of problems has to do with leadership: how do the parties establish, maintain and exercise leadership not only within the ‘triangle’ but also within other multilateral settings – and are these leadership pretensions mutually compatible? Sixth, there is a set of problems relating to outcomes: does the operation of bilateral relations within the ‘triangle’ facilitate or obstruct the achievement of results at the multilateral level, and do multilateral negotiations facilitate or obstruct the achievement of results in bilateral negotiations? Given the ways in which both bilateral and multilateral relations between the EU, China and the US have developed during the past ten to fifteen years, we would expect to find evidence of these implications, and also to find that such implications complicated further the conduct of often delicate negotiations. The management of bilateral relations would be expected to create externalities for the multilateral level, and by

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the same token, the conduct of negotiations in multilateral settings could be expected to produce externalities for contacts at the bilateral level. For those involved, the key issues are those of information, decision-making, management and evaluation. These are complicated by the multi-level nature of the context in which they are involved, but also by differences of style and approach, which give the participants different perspectives on power, institutions and norms within international negotiations (see above). Thus, it might be expected that the EU would make every effort to conduct relations within a multilateral context, emphasising the importance of multilateral rules and institutions and making their best efforts to deal with China (even on a bilateral basis) in ways that increased Beijing’s compliance with those rules and institutions. Likewise, we might assume that the US would adopt a far more strategic approach to China based primarily on bilateral relations, with multilateral rules and institutions as a kind of backstop to the exercise of power and the use of material resources. For China, the argument would be that Beijing would see the multilateral level as vital to its continued international emergence, but that there would be a fierce determination to preserve national autonomy and thus points of resistance to the imposition of multilateral rules in ways that were seen as undermining that autonomy. So far, the discussion has remained rather abstract, concerned with identifying broad patterns and problems, rather than with the day-to-day conduct of relations between the EU, China and the US. The next section of the paper presents two brief and interconnected case studies with the aim of illustrating how the politics of ‘bi-multilateralism’ can enter into commercial relations between the three parties, and of identifying some questions for further research. The Politics of ‘Bi-Multilateralism’: Two Cases The first case concerns a key element in the development of the EUChina-US ‘triangle’: China’s entry into the WTO. In a way, of course, this is almost a pre-condition for other developments in the commercial relations between the three parties, because it concerns China’s access to the key institution for the multilateral management of international commercial policy. There was a lengthy ‘pre-history’ to the formal negotiations that took place in the late 1990s and the first year or so of the new millennium, 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 context for the eventual negotiations, since the granting of WTO membership requires bilateral agreements with all existing member states (or groups, in the case of the EU). Given the development between the late 1980s and early 2000s of increasingly intense trade relations between the EU, China and the US (and of course, of increasing trade deficits for the EU and the US), it was to be expected that negotiations would be long and hard. The model of ‘bi-multilateralism’ would also predict that these negotiations would be characterised by linkages, by the coexistence of issues between the three parties and by the emergence of an outcome that reflected a complex set of trade-offs. It would further predict that there would be problems of management for all three of the parties, particularly the EU as the party with the narrowest and most commercially-focused set of interests and with important internal interests (in the shape of the Member States) to satisfy. Both the EU and the US were concerned above all with one key element in the eventual deal that might be struck with China: market access, which would give them the potential to expand their commercial interests in China not only through trade in goods but also through trade in services, intellectual property protection and potential future investment. They thus set priorities for the negotiations that implied a significant market-opening process in China, and also saw as central the WTO’s role in promoting rules and norms on international commercial transactions, 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 trade was a key underlying motivation for both the EU and the US; but it must be remembered that for the US, this was embedded in a wider conception of China’s role in the broader world order. For the Chinese themselves, it is clear that entry onto the WTO was seen as emblematic of a broader integration into the world order and recognition of their status – in addition, of course, the liberalisation of trade in areas such as textiles was a key material motivation. This liberalisation was a key concern for both the EU and the US, since it threatened to expose areas of vulnerability in their domestic industries, as well as providing new opportunities for manufacturers, retailers and consumers. During the negotiations themselves, between 1997 and 2001, there was thus a wide range of motivations between the three parties, as well

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as a large number of ‘negotiating occasions’ giving opportunities for linkages and trade-offs. For the EU, a key problem was countering the possibility of an unequal deal in which China would gain relatively free access to European markets whilst retaining significant levels of domestic protection. This went alongside the fact that at the same time as the EU was negotiating, the US was also negotiating its own bilateral deal with Beijing; this meant that the EU was faced with a problem of monitoring and influencing not only what went on in their relationship with China, but also their relationship with the US, and in turn the US relationship with China (Zimmermann 2004, 2007). The leadership role assumed by the US in many aspects of the negotiations, whether in the bilateral context or within the ‘Quad’ group (US, EU, Japan, Canada) thus presented a challenge for the EU; should they go along with what were often peremptory US demands, or should they try to define a distinctive position with the aim of making gains on key issues that were important for them? This position for the EU was shaped by the undeniable fact that they placed great importance on Chinese accession, which was seen as strengthening the WTO system in general but also as bringing China into a rules-based system where they would be more amenable to EU influence. Not only this, but there was a further important dimension for the EU in general and for the European Commission as the negotiator: the ways in which an active if not leading role in the negotiations could play into the broader international status and recognition accorded to the Union. For the US, as previously implied, there was a broader context of ‘grand strategy’, albeit under the Clinton Administration accompanied by a commitment to enlargement of the multilateral system, and a feeling that this was part of a strategic bargaining process as well as a need to protect certain key interests in the commercial and financial sectors. For the Chinese, as already noted, the issues were not only those of material economic benefit but also those of recognition within what they would define as a multipolar global system. The upshot of this complex and interconnected context was a process of manoeuvring and a focus on certain key issues in China’s claim for membership. Apart from (but linked to) market access, one key problem was the terms under which China should enter: should it be judged as a ‘developed’ or an ‘underdeveloped’ country’ (Anderson 1997)? This issue has 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 one on which the EU and US positions differed, with the EU inclined to accept that China should enter with the status of less developed country. The US position was much less accommodating than that of the EU throughout the negotiations – reflecting no doubt the relative priorities placed on membership for China per se, as well as the influence of Congress, which was extremely sensitive to any ‘give-away’ on the negotiations. What developed for the EU was a (self-allocated) role as a kind of intermediary between China and the US, emphasising the importance of sensitivity to the varying levels of development in different sectors of the Chinese economy and also stressing the importance of EU interests in such areas as trade in services and the integrity of the WTO system as a whole (Eglin 1997). This implied a delicate balancing act for the Commission in its role as negotiator – pushing hard for Chinese accession and stressing sensitivity to Chinese interests, but also accommodating itself to the hard line pursued by the US and thus emphasising the need for Chinese concessions on key areas of market access and WTO rules. It also implied acute Commission sensitivity (underlined by the watchfulness of key commercial interests in the EU, such as financial services) to what could be seen as unequal deals by the Chinese that would favour US companies. When it came to the dénouement of the negotiations as a whole, there was a key role for timing. The EU as it transpired was the last of the major WTO members to conclude a bilateral deal with China, and this enabled it to push for greater concessions in some areas than the US had already achieved; at the same time, there was pressure on the EU to conclude a deal so that key Congressional votes in the US were not jeopardised (European Report 2000a, 2000b). As a result, the final conclusion of the bilateral agreement with the EU was delayed until May 2000 – the US having agreed in late 1999. It could be argued that this enabled the EU to achieve some slight advantage in the deals carved out for specific sectors, particularly for financial services. But it was also clear that Chinese entry (formally achieved on 1 January 2002) was only the beginning of the story. There remained key questions about the ways in which Chinese status within the WTO would be defined, and about the impact of the concessions that had been achieved in specific sectors.

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Among these, textiles were one of the most sensitive for all three parties to the EU-China-US ‘triangle’. Among the key agreements made during the entry negotiations had been one on the elimination of tariffs and quotas. On their side, the Chinese had agreed to eliminate quotas and other quantitative restrictions on imports no later than 2005, thus opening up in principle a large new market for both European and American goods (European Report 2001). Not surprisingly, Chinese entry was followed by sustained pressure on Beijing to introduce – if not to accelerate – these changes. But the changes have to be seen in the broader context of the reduction of quotas and quantitative restrictions for all countries as a result of the Uruguay Round of trade negotiations that was completed in 1993. One of these was key to both the EU and the US interest: the phasing out of the Multi-Fibre Arrangement, which had governed imports of textile products into industrial countries for many years, and which had, at its core, a set of quota arrangements (Brambilla et al 2007). The agreement was due to expire on 1st January 2005, replaced by the Agreement on Textiles and Clothing, which meant that the EU as well as other WTO members had had ten years to adjust – but the phasing out of quotas brought about a veritable flood of imports from China (as well as a number of other developing countries, especially those in South Asia). This posed a number of questions for the EU and for the US. Most particularly, how would they now deal with a need for ‘crisis management’ in a particularly sensitive area of declining production and vociferous domestic producer interests? In terms of complex interdependence, it seems clear that this situation moved the politics of trade in the EU and the US from a discourse centred on ‘sensitivity’ to one centred on ‘vulnerability’, with all of the resulting calls for protection and the re-imposition of quotas that might have been predicted. It thus called into question some of the key undertakings that had been made by both the EU and the US when the Chinese entered the WTO. As a result, the effectiveness of international institutions and rules was at least potentially challenged, and the potential for imposition of coercive measures against the Chinese, in the form of anti-dumping or other actions, was raised. Not only this, but the politics of textiles set a number of different ‘domestic’ interests for both the EU and the US against each other: in each case, there were strong regional variations in the salience of the textiles problem, between producing and

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non-producing regions; these were accompanied by splits between producers, retailers and consumers that called into question the apparently technocratic management of trade disputes and opened up the possibilities 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 within the context of their bilateral relationships with China and of their ‘domestic’ constituencies; as it developed, it also produced significant problems of adjustment for the Chinese, because of the need to adapt to successive negotiation phases. Potentially also, it played into the whole question 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 to impose protective measures against the surge of Chinese imports, and about whether they could use the WTO as an instrument or as a legitimising agent in applying whatever measures they might decide upon. Thus, although the dispute was about only a part of the trade with China conducted by the EU and the US, it raised far more general questions about the ways in which that trade was to be managed both at the time and in the future. Between 2004 and 2005, Chinese exports of textiles and clothing to the EU grew massively both in volume and in value; at the same time, average unit prices for textile products in the EU had dropped significantly. Not surprisingly, this led to protests from EU manufacturers, channelled especially through the trade association, Euratex, which identified China as the key culprit and argued that there was a threat both to EU producers and to other supplying countries from Chinese domination of the import market. The Commission had already identified the textiles issue as one which might lead to major pressure for protection, and had deployed a proposed amendment of Council regulations that would at least in principle allow for the imposition of safeguard measures (European Commission 2004, 2005). But this in itself did not prepare the EU for the dramatic flood of imports, nor for the conflicting pressures that arose from the tensions between producers, retailers and consumers as the crisis developed. In addition to the EU-based instruments, there was also the possibility that measures could be taken under general WTO provisions to counter market disruption. Finally, there was also the possibility of coordinated action with other countries or regions

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especially affected by the import surge – the obvious candidate being the US, which was itself confronting a crisis in this area. The EU’s early response was to place the emphasis on self-control by the Chinese, rather than to undertake unilateral measures, and to hold any possibility of action through the WTO very much in the background (Allen and Smith 2006). But the Commission’s hand was forced by pressure from Euratex to deploy safeguard measures, and by increasing evidence of concern on the part of particular Member States, especially Italy, Portugal and France. In effect, on this as on a number of other trade issues, there is a North-South divide in the EU itself, and this became increasingly obvious during the summer of 2005 as the retail interests of Northern members such as Sweden and the United Kingdom ran up against those of the producer countries. As a result of these complex pressures, Peter Mandelson, the EU Trade Commissioner, produced a set of guidelines; but at the same time, in April 2005, the US announced that it was considering the imposition of safeguard measures that might include revived quota arrangements. Here, the bilateral and ‘domestic’ problem faced by the EU became strongly linked to the responses of the United States, in ways that exerted further pressure on the Commission. Arguably, this led to a hardening of the EU position as spring moved into summer during 2005, with the first mention of possible reference to the WTO. But this in itself was trumped by the planned imposition of quotas by the US. The Commission found itself between a rock and a hard place, since it was determined not to jeopardise its broader relationship with China, and equally determined not to damage relations with a whole raft of other textile producers, in South Asia and elsewhere, that would be disrupted by any imposition of broad quotas. So there was a desperate search for specific measures that could be seen as evidence of Commission concern but which would not create significant harm. In this process, the threat of formal reference to the WTO played a role, by enabling the start of formal consultations with the Chinese government and an eventual agreement between the EU and China in June 2005. It was notable that at this stage, a contrast was drawn between this agreement based on consultation and negotiation, and the unilateral actions of the US (Bodeen 2005; Buckley 2005). The agreement of June 2005, though, only served to create further problems, partly because the mechanisms for implementation and moni-

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toring were ill-defined, thus leaving room for further increases in Chinese exports but also catching large numbers of textile products in a sort of limbo, trapped in European ports. It appeared that none of the vociferous interests involved in the crisis had actually been satisfied, and this led to further negotiations during the Summer – eventually producing an agreement in September 2005 that dealt with the release of the ‘trapped’ products and also established a system for reviewing the position in the medium 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 on a number of Chinese products, ran alongside the EU’s negotiations; the EU can partly be seen as using the US stance as a means of reinforcing its own position in negotiations and consultations, whilst the Chinese showed at various stages that they felt the EU stance could be used to exert some leverage on Washington. There was an apparent awareness by all three participants that although the disputes were not formally linked, they intersected and that one could play off the other. Notably, although all of the processes described took place in the shadow of the WTO, and all parties were well aware of this, there was no formal move to open a WTO dispute, or to use the established WTO safeguard provisions. Evaluation and Conclusions What do the two cases outlined here suggest in terms of the earlier discussion of complex interdependence and ‘bi-multilateralism’? A first assessment is that both of them show signs of the impact of complex interdependence, at least as seen from Brussels: multiple actors, multiple channels, the impact of linkages between different sectors and different negotiations, and the search for negotiated solutions. But they show these features in different ways and in different measures. Whereas there is evidence of pressure from a wide range of public and private actors in the case of WTO entry negotiations, this is to a degree at least muted and kept in the background, whilst the key negotiations themselves take place in a largely technocratic context with areas of politicisation reflecting broader national or regional agendas. There is clear evidence of linkages in the WTO entry negotiations, and of the ways in which these linkages could be exploited by different parties, just as there is evidence of a search for negotiated solutions in a context of linkages and possible coalitions.

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In the textiles dispute, however, the picture is different: multiple actors are not just there in the background, they are in the foreground, protesting, advocating and pressing for particular solutions. At the same time, there is a variety of channels for communicating these interests and ‘voices’, and many of these channels spend a good deal of their time searching for linkages between different concerns that might be exploited to turn negotiations in their favour. The different stages in which at least some kind of resolution of the dispute was pursued also gave opportunities for leverage, and enabled different interests to put pressure on the Commission in particular. These pressures also existed in the Chinese and American cases, and there is much more to be said outside the confines of this essay about the ways in which they interacted to produce the various changes in direction that were apparent during 2005. In both cases, it appears that there were also important differences of emphasis 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 tougher stance, and, for China, the imperative seems to have been mainly that of establishing and maintaining their position as an important global player, leading to a relatively accommodating stance. This bears out in very general terms the arguments made earlier in the essay about different European, 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 the impact of ‘bi-multilateralism’. Earlier, it was argued that this condition created a number of linked consequences for negotiations; these were to do with the occurrence and timing of negotiations, with the ways in which agendas were set, the existence and uses of linkages, the search for coalitions and the implementation of agreements. In the case of China’s WTO entry, there was almost an institutionalisation of ‘bi-multilateralism’, given the ways in which WTO entry negotiations are structured and pursued; this meant that the negotiations carried out by the EU with China were linked closely to those carried out by the US, and that this had clear effects on the kinds of strategies pursued by Brussels, including choices about timing and linkages within those negotiations. In the 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 negotiations occurred, the range and intensity of the interests engaged, and the different courses chosen by the EU and the US in responding to China. This essay has only ‘scratched the surface’ of the processes with which it has been concerned. As relations between the EU, China and the US intensify, widen and deepen, we can expect the impact both of complex interdependence in general and of ‘bi-multilateralism’ in particular to be underlined. The essay has only dealt with this set of problems in one restricted area, that of commercial policy and more particularly that of trade; there are important ways in which the study of such issues can be broadened, first by dealing with the more politicised areas of commercial policy (such as for example the EU’s arms embargo and proposals to lift it) and second by moving away from commercial policy itself into other areas of international negotiation, such as those dealing with environmental, energy and security issues. This would enable a more comprehensive picture to be drawn of what is inevitably going to be one of the main axes of negotiation in the global arena for the foreseeable future.

References Allen, 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 The World Economy, 20(6): 749-72. Berkofsky, A. 2006. ‘The EU-China Strategic Partnership: Rhetoric versus Reality’ in Zaborowski (2006a): 103-14. Bodeen, C. 2005. ‘EU.Chinese Trade Negotiations Reach Settlement on Chinese Textile Exports’, AP Worldstream. 10 June. http://www.highbeam. com/doc/ 1P1-109846139.html Brambilla, I., Khandelwal, A. and Schott, P. 2007. ‘China’s Experience under the Multifiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC)’. NBER Working Paper 13346, August. http://www.cid.harvard.edu/ neudc07/docs/neudc07s6p14brambilla.pdf 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# Crossick, S. and Reuter, E. (eds). 2007. China-EU: A Common Future. Singapore: World Scientific.

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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. European Commission. 2004. Regulation Abolishing Textiles Quotas for WTO Countries on 1 January 2005. http://ec.europa/eu.trade/issues/sectoral/ industry/textile.pr291104.en.htm European Commission. 2005. China and Textiles: Return to Quotas is Last Resort. Brussels, 15 March 2005. http://trade.ec.europa.eu/doclib/ docs/2005/march/tradoc.121856.pdf European Report. 2000a. ‘EU/China: EU Cautions on Beijing’s WTO Talks’. 22 January 2000, http://www.highbeam.com/doc/1G1-57766225.html 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 to Finally Join WTO’. 23rd June 2001. http://www.highbeam.com/doc/1G175824728.html Freeman, D. 2006. ‘China’s Rise and the Global Economy: Challenges for Europe’ 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 Challenges’. Policy Paper No. 12, European Studies Centre, University of Pittsburgh. 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: Competition and Convergence in the Global Arena. Basingstoke: Palgrave/Macmillan. Pearson, M. 1999. ‘China’s Integration into the International Trade and Investment Regime’ in Economy, E. and Oksenberg, M. (eds), China Joins the World: Progress and Prospects. New York: Council on Foreign Relations: 161205. Pollack, M. 2003 ‘Unilateral America, Multilateral Europe?’ in Peterson, J. and Pollack, M. (eds) Europe, America, Bush: Transatlantic Relations in the TwentyFirst Century. London: Routledge: 115-27. Rumbaugh, T. and Blancher, N. 2004. China: International Trade and WTO Accession. IMF Working Paper WP/04/36, Washington DC: IMF. Smith, M. 1998a. ‘Competitive Cooperation and EU-US Relations: Can the EU be a Strategic Partner for the US in the World Political Economy?’ in Journal of European Public Policy, 5(4): 561-77. Smith, M. 1998b. ‘The European Union and Asia-Pacific’ in McGrew, A. and Brook, C. (eds), Asia-Pacific and the new World Order. London: Routledge: 289315.

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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: 23755 Smith, M. 2005. ‘The European Union and the United States: the politics of “bi-multilateral” negotiations’ in Jönsson, C. and Elgström, O. (eds), European Union Negotiations: Processes, Networks and Institutions. London: Routledge: 164-82. Smith, M. and Woolcock, S. 1993. The United States and the European Community in a Transformed World. London: Pinter for the Royal Institute of International Affairs. Tanca, A. 2006. ‘Towards a Comprehensive China Strategy’ in Zaborowski (2006a): 115-22. Zaborowski, M. (ed) 2006a. ‘Facing China’s Rise: Guidelines for an EU Strategy’. Chaillot Paper 94, Paris: EU Institute for Security Studies. Zaborowski, M. 2006b. ‘US-China Relations: Running on Two Tracks’ in Zaborowski. 2006a: 83-100. Zhiyuan Cui. 2004. ‘The Bush Doctrine: A Chinese Perspective’ in Held, D. and Koenig-Archibugi, M. (eds), American Power in the 21st Century. Cambridge: Polity: 241-51. Zimmermann, H. 2004. ‘Governance by Negotiation: The EU, the United States and China’s Integration into the World Trade System’ in Schirm, S. (ed), New Rules for the Global Market: Public and Private Governance in the World Economy. Basingstoke: Palgrave/Macmillan: 67-86. Zimmermann, H. 2007. ‘Realist Power Europe? The EU in the Negotiations about China’s and Russia’s WTO Accession’ in Journal of Common Market Studies 45(4): 813-32.

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THE EUROPEAN UNION’S ECONOMIC TIES WITH THE REPUBLIC OF CHINA (TAIWAN)1 Paul Joseph Lim Abstract The Member States of the European Union (EU) maintain unofficial relations with the Republic of China (ROC, Taiwan), in keeping with the One China Policy. The Commission, although not a state and principally concerned with trade, maintains diplomatic relations with the People’s Republic of China, represented by its Delegation in Beijing, while having unofficial relations with Taiwan, represented by the European Economic and Trade Office (EETO) in Taipei. However, the ‘unofficial’ nature of relations has not prevented the development of trade and investment ties between the EEC/EU and Taiwan. Nevertheless, the One China Policy has had its effects on trade matters between the EU and Taiwan. Politics has consequences for economics; the two cannot be separated. This chapter will look at these aspects from a historical perspective, with a specific eye on archival materials collected from the EU completed by the works of a number of Taiwan specialists. This chapter does not cover the area of Development Cooperation. Overview: Early Politics and Trade Relations According to Chung-lih Wu (1985: 7, 9, 12-13), trade between the Republic of China (ROC) and Europe totalled only about 7.8% of the ROC’s total trade in the 1950s, with imports at about 9% and exports at 6%. The ROC imported more from Europe than it exported to Europe, 1 My thanks go to Stephane Gierts from the Archives of the Council of the EU, Anna Guegan, at the European Institute of Asian Studies (EIAS) and the Taipei Representative Office in Brussels, for the support provided.

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hence there was a deficit. The EEC accounted for 90.26% of total imports from Europe to ROC, while the ROC’s exports to the EEC 6 accounted for 98.7% of total exports to Europe. Agricultural products and 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 Europe followed the same overall pattern, that is, the value of imports consistently outweighed that of exports. However, the share of the deficit stemming from European trade showed a gradual decline, from 14% to 8.7%. Until 1973, the period was one of the most successful periods in the history of ROC foreign trade, especially with regard to exports. After 1973, the high prices for imported raw materials, shortages in supply, insufficient demand and stiff competition, resulted in a decline in foreign trade: trade with Europe exhibited a negative growth of -3.2% for exports and -26% for imports. Specific to the EEC, Wu stated that in the 1960s and 1970s imports of EEC goods into the ROC occupied a minimum of 87% of the total imports from Europe. In the 1960s, ROC exports to the EEC 6 accounted for 96.2% of total ROC exports to Europe. 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 manufacturing exports were low, resulting in the Export Oriented Industrialization (EOI) strategy. This was promoted by Western economists and politicians at the World Bank, and later adopted by the Asian ‘Tiger economies’. In the 1950s and 1960s, if the trade balance was in favour of the EEC, it was because Taiwan was importing capital goods to manufacture for export. In 1975, the EEC established diplomatic relations with the PRC. A Press Release of 15 September 1975 announced the consent of the appointment of Mr. Li Lien-pi, and stated that he would present his credentials to both the Presidents of the Council and of the Commission. The Official Journal of 1 September 1975 announced the accreditation with effect from 16 September 1975.2 These developments had been preceded by the (then) Member States, except Ireland, establishing diplomatic relations with the PRC: France transferred its recognition from the ROC to the PRC on 27 January 2

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

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1964, Italy on 6 November 1970, Belgium switched recognition on 26 October 1971, the Netherlands granted it on 27 March 1950, Luxembourg recognized China on 16 November 1972 (but it never had official links with the ROC), and the Federal Republic of Germany and the PRC agreed a communiqué on diplomatic relations at ambassadorial level in October 1972. The UK recognized the PRC in 6 January 1950, Denmark established relations with China on 9 January 1950 and Ireland, on 22 June 1979 (Cabestan, 2008: 85-86, 94; Mengin 2002: 137-139; Brodgaard 2001: 274). For the EEC to have ties with PRC meant it had to show it had no trade agreements with Taiwan. This was confirmed to the Chinese Foreign Minister by Sir Christopher Soames during his visit to Beijing in May 1975.3 As a result, what trade there was with Taiwan was conducted on an autonomous basis. It is important to note that the ROC had signed a ‘Self-Limitation-Agreement’ on 1 February 1971 with the then EEC.4 The agreement was to continue to function unofficially.5 Even though diplomatic relations was not yet established with the PRC, the expected behaviour remained as it had been since the first contacts with PRC representatives. Wilson (1973: 665) stated that this agreement would expire in 1973. The author could not find any evidence from the archives of any prolongation of this agreement, nor any document stating that it had ended. What was meant by ‘trade with Taiwan on an autonomous basis’? ‘Autonomous basis’ meant notifying the official Taiwanese trading company of the level of imports acceptable to the Community without the imposition of quantitative restrictions. The Community did not negotiate voluntary restraint agreements with Taiwan.6 This means that there were no consultations or negotiations with Taiwan in making and taking decisions. Rather, business with Taiwan was done via a private company, based in Rotterdam, and representing Taiwan. However, according to the Taipei Representative Office in Brussels, in 1971, the company Far East Trade Service Inc. was established to take the place of the Economic Division of 3

The relevant meeting of 6 May 1975 was recorded. 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. 4

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the Embassy, which closed down on 15 October 1971, on the date Belgium terminated its diplomatic relations with the ROC. As far as economics and trade were concerned, this was considered the ‘contact-point’ in all relevant subject-areas, including anti-dumping, until 1990. The Embassy of the ROC was replaced by the Chinese Cultural Centre (Centre Culturel Chinois) on 15 October 1971, and then by the Centre Culturel Sun Yat-sen from 24 February 1972 onwards. This was one of the effects of the acceptance of the One China Policy and will be analysed further at later stages in this chapter. Chinese leaders were informed by Sir Christopher Soames of this autonomous decision concerning the conduct of trade with Taiwan. Moreover, a Report, of 1 March 1985, by the European Parliament (EP), and concerning trade exchanges with Taiwan,7 revealed that Taiwan felt it was the victim of discrimination in comparison to the other Asian states which were its main competitors. Parliament wanted a reduction – draconian at times – in quotas imposed on textile products between 1978 and 1981, as part of the Multi-Fibre Agreement (MFA). The EP document further stated that, for many years, the European Community had principally exercised its action on imports by taking unilateral measures without either consulting Taiwan or sharing information. The European Community had never maintained formal trade relations with Taiwan until the 1980s at the earliest. On 25 June 1971, the ROC submitted to the Community an aidememoire, arguing that it ought to benefit from the Community’s Generalised System of Preferences (GSP). This was circulated to all Commissioners in a letter dated 12 July.8 From the minutes of a meeting with representatives of the Chinese Embassy on 22 July 1975, a Mr. Tran claimed that the EEC had not given Taiwan preferential treatment, ‘because it did not exist’ (Mengin 2002: 140). This was confirmed in the Van Aerssen Report of 1985, already quoted above, which stated in a footnote that the Commission, having taken pragmatic measures in the course of unofficial contacts with diverse milieus of Taiwanese production, the discrimination was reduced, albeit marginally. From 1971 onwards, Member States had expressed severe political reservations about 7

Van Aerssen Report: Doc. 2-1765/84, PE 94.190/def. p.12. 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). The Council examined its extension to non-member countries, amongst them Taiwan. 8

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including Taiwan in the GSP,9 again indicating some of the effects of a One China Policy. Taiwan as a developing country was consequently denied access to any trade development instruments. The next time Taiwan ‘appeared on the radar-screens’ of the EEC was in the context of the status of the ROC in the General Agreement on Tariffs and Trade (GATT).10 Matters revolved around the question of whether or not to invite the ROC to the 27th session of the GATT on the 16 November 1971 – and if so, under what status or rather invite the Government of the PRC. The ROC was a founding member of the GATT, on 21 May 1948, when it ratified the Protocol of Provisional Application (PPA), while signing the actual GATT on 30 October 1947. It withdrew on 6 March 1950 and became an ‘Observer’ on 16 March 1965. It lost its observer status on 19 November 1971 (see: Hindley 1993: 4, 8-9). From 15 January 1964 onwards, the ROC had also been a member of the 1962 International Agreement on Cotton Textiles. It had accepted its extension in 1967 and 1970.11 Further arguments arose on the question of inviting the ROC to the meeting of the Cotton Textiles Committee in mid-December 1971.12 The position of the then EEC 6 was to suspend sending documents to the Taiwanese Delegation to GATT and to discourage any representation of Taiwan during the 27th Session. ROC membership of GATT was revoked, following UN General Assembly Resolution 2758 (XXVI, 25/10/71), which expelled the Chiang Kai-shek regime. In implementing this resolution, The GATT, in its capacity as a specialized economic agency of the UN, re-examined its decision from 1965 regarding ROC observer status (Hindley 1993: 4; 8-9). The ROC consequently also withdrew from the meeting of the Cotton Textiles Committee.13 However, while the ROC was no longer a participant in this agreement on cotton textiles, the agreement which it had signed with the EEC continued to function unofficially. The archives also contain an aide-memoire, recording an official meeting with ROC representatives on 24 April 1972. Moreover, in the Minutes of the COREPER’s 624th Meeting on 17 December 1971, there is a statement 9

See, for example: Europe of 24 February 1971, p. 5. 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). 10

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that, in the probable case of Taiwan being excluded from the IACT, the bilateral agreement with Taiwan must be maintained and the Commission must contact the representatives of Taiwan in Brussels to obtain their agreement.14 Hence, Taiwan, it can be argued, suffered from the strict interpretation and application of the One China Policy. Last, but not least, Wu (1985: 10) has stated that over the period 1970-1979 ROC foreign trade accumulated a US$3,776 million surplus; a large portion of this surplus (45%, or US$1,728 million) originated through the ROC’s Europe trade. Wu further claims that there was somewhat of a disequilibrium in this trade. This situation would inevitably result in resistance and restrictions from trading partners, if allowed to continue over a long period. As an example of this, on 5 February 1974, a first Commission Regulation (No. 300/74) subjected to official authorization 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 autonomous basis, authorized the French Republic not to extend ‘community treatment’ to Taiwanese radio receivers, falling within the Common Customs Tariff (CCT). This authorization to France is recognized as a deflection of trade preventing the execution of measures of commercial policy taken as regards Taiwan.15 Trade in the 1980s: the ‘Autonomous Decisions’ Regime Throughout the 1980s, while deflections continued because they benefited EEC consumers, the restrictions of the 1970s continued, but were also applied to new products.16 Taiwan might not yet have developed the capability to develop and produce higher value-added technology, but there seemed to be a growing sophistication in the range of its products. For the first time, a number of Commission Decisions authorized intraCommunity surveillance (in France), in respect of certain piezo-electric quartz-crystal electronic digital watches originating in the ROC. Similar cases in Italy concerned Taiwanese imports of slide fasteners.17 The Van 14 Notes to COREPER of 10 November 1971; S/23/72 (COMER 8), of 17 January 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.

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Aerssen Report (1985) is noteworthy also for a range of trade measures which were subsequently adopted. Three key examples of these are: The extension of the competencies attributed to existing trade representatives of the Member States in Taiwan and of Taiwanese offices in the Community. The establishment of a system of information exchange regarding non-official contacts, as well as visits of Taiwanese representatives of trade and industrial interests to the Community and vice-versa. An improvement of the practical modalities for visits between the Member States and Taiwan. Ash (2002: 159, 163, 166) argued that it was only in the 1980s that Taiwan’s search for a more ‘diversified’ pattern of trade relations led to an acceleration in its trade with more EU Member States. This was a development to which Taiwan’s increased requirements for European capitalintensive goods contributed significantly. Taiwan’s surplus trade balance first peaked in 1980 with US$1.26 billion. Analysts such as Ash have also suggested that the closer economic ties between Taiwan and European countries, especially with EU Member States, facilitated more technological co-operation and the acquisition by Taiwan of key new technologies and market intelligence. Developments and Transitions in the 1990s It is worth noting from Table 1 that both the surpluses on the balance of trade and volume of trade fluctuated. Ash (2002: 165-167) pointed out that the deterioration in the trade balance was not only attributable to the vagaries of financial crises; it was also due to significant fluctuations in the 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 and 1990s also played a vital role. A typical 1993 statement (1993: 32-33) by Ma Ying-Jeou – who was then Vice-Chairman of the Cabinet’s Mainland Affairs Council and is now President of the ROC – pointed to another tendency which affected the state of Taiwan-EU trade: in order to facilitate flourishing relations, unofficial representatives in European capitals

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had been gradually replaced by semi-official ones, who were authorized to issue official visas.18 On 23 January 1990, an Economic and Cultural Office of Taipei (Office Economique et Culturel de Taïpei) was established in Brussels. It subsequently developed into a contact point for relevant legal notifications regarding the European Commission’s decisions, regulations and other legislative instruments. This office consolidated the handling of economic and trade with other issues. Hence, Far East Trade Service Inc ceased to be a point of contact in matters of anti-dumping. However, the latter continued to exist legally, with taxes paid annually. Nevertheless, from 1990, it did not any more serve its former de jure function as a Taiwan-EC-EU ‘interface’. In political practice after 1990, Commission regulations on anti-dumping, for example, were communicated via email, followed by the transmission of hard copy. Individual notifications were addressed to specific persons in charge, working in the Economic Division. The Office Economique et Culturel de Taïpei also replaced the Centre Culturel Sun Yat-sen. On 12 December 1995, the present Taipei Representative Office in Brussels was established, which subsequently became the new point of contact. Table 1: Taiwan’s Trade Balance and its Volume of Trade with the EU 15 in US$bn. Year Jan-Nov’89 Jan-Nov’90 Jan-Nov’91 Jan-Nov’92 Jan-Nov’93 Jan-Nov’94 Jan-Nov’95 Jan-Nov’96 Jan-Nov’97 Jan-Nov’98 Jan-Nov’99

Export 9,492,117,496 10,489,794,214 12,185,802,375 13,258,279,443 11,081,900,657 10,930,769,420 13,276,901,224 14,343,546,153 15,581,814,688 16,876,026,667 17,259,721,301

Import 6,708,956,036 7,348,452,344 7,745,000,565 9,402,034,746 10,201,371,42 11,821,274,31 13,835,375,27 14,250,546,82 15,953,912,01 15,357,866,51 13,187,163,14

Balance 2,783,191,40 2,235,233,56 4,440,801,80 3,856,244,67 880,529,245 -890,504,951 -558,474,023 92,999,351 -372,097,373 -2973028741 4,072,558,17

Volume 16,201,073,532 17,838,246,558 19,930,802,940 22,660,314,189 21,283,272,069 22,752,043,791 27,112,276,471 28,594,092,955 31,535,726,749 32,233,893,178 30,446,884,465

Source: Directorate-General of Customs, Ministry of Finance, ROC with balances and volume deduced. The above figures include re-imports and re-exports.

18 Mengin (2002:141-142, 145-146), has investigated the development of Taipei’s offices in Europe, pointing out that there was little coherence to the system, and that Belgium led the way on issuing visas.

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The Role of Investment As Table 2 reveals, the 1990s saw a growth of EU investments in Taiwan. The Netherlands and the United Kingdom were clearly the leaders in 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 1990 1991 1992 1993 1994 1996 1997 1998 1999 Total

France 17 6 28 8 12 9 8 4 15,422 112,921

Germany 37 20 16 33 91 37 66 63 29 420,273

Netherlands 49 54 68 85 79 28 103,865 125,493 192,741 865,057

UK 89 43 11 58 30 35 90 74 143,361 773,504

EU Total 194 124 124 186 214 111 269 268 380 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 1990 0 6 9 5 1991 0 1 3 6 1992 0 2 15 9 1993 0 0 5 10 1994 0 180 1 271 1995 20 882 5 20 1996 0 243 3 217 1997 30 127 3 11,113 1998 1 6 6 8 1999 0 1 21 17,800 Total 51 20,368 76,693 91,030

UK

11 14 4 237,918 16 8 6 13 9 10 332,924

EU Total 33 26 32 253 19 54 10 58 32 51 572

Source: Data provided by the Directorate-General of Customs, M. of Finance, ROC and added up.

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Even in times of the ‘Asian Financial Crisis’ of 1997/8, the overall levels of Taiwanese investment were the second highest of the decade. In this context, Ash (2002: 174-176) observed the disproportionate role played by the UK as a destination for Taiwanese capital outflows to Europe. The Czech Republic emerged as the key target of Taiwanese investments among the new Member States of the EU. Many observers have seen the political situation in the country as one possible reason for this. Others have pointed to more attractive conditions offered in connection with the Czech Republic as a ‘stepping stone’ or ‘bridge’ for products and services to be sold ‘westwards’. Table 4 illuminates the question of whether the key destination countries for Taiwanese investments also happen to be Taiwan’s biggest trading partners. Table 4: Taiwanese export destinations in the EU in terms of Volume of Trade 1991 Fra Ger Ita Ned Swe UK

2,310,146,387 6,334,099,147 1,673,494,443 2,749,623,821 801,036,355 2,955,420,123

1993 2,150,684,765 7,118,535,535 1,881,706,176 2,871,832,668 808,680,489 3,096,492,616

1995 2,776,478,529 8,720,900,525 2,389,863,195 4,085,796,157 1,107,794,630 3,728,731,256

1997 5,126,050,004 8,301,539,718 2,488,291,558 5,394,066,421 1,115,681,417 4,753,461,491

3,173,964,125 8,535,495,180 2,405,583,553 5,343,207,235 1,034,362,812 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, ROC and computed; basic figures included re-imports and re-exports.

The Table reveals that the UK, in spite of constituting a key target of major Taiwanese investment, is not in fact the principal trading partner of the ROC. That role goes to Germany, followed by the Netherlands, France and Italy. The data also show that the products subjected to antidumping and other restrictions were those most exported to the EU or most in demand in the Union. Notwithstanding the wide-ranging implications of the ‘Asian Financial Crisis’ of the 1990s, it appears that, under the regime of ‘autonomous decision’, there were no more deflections, although anti-dumping duties continued in relation to new products. Commission Regulation (EC) No 2397/1999 authorized, for the first time, transfers between the import-

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limits of textiles and clothing products originating in Taiwan.19 Overall, the 1990s became a dynamic decade in EU-ROC trade relations, owing to the kinds of goods exported to the new Single Market in an attempt ‘to combat the effects of the Asian Crisis’.20 This period also reflected Taiwan’s growing capacity and sophistication in the production and marketisation of its goods. On 1 January 1990, Taiwan formally applied for membership in the GATT. In September 1992, the GATT Council decided to set up a Working Party on Chinese Taipei to examine the application (under Article XXXIII) in the light of ‘separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu’ (Hindley 1993: 10; 16-18).21 The meeting of the GATT Council, from 29 September to 1 October 1992, noted that Taiwan – as ‘Chinese Taipei’ – should be granted observer status.22 The minutes of this meeting, interestingly, speak of the Working Party as being on ‘Chinese Taipei’, as well as on ‘China’s status’. Throughout these developments, the EU claimed it had facilitated this process wherever possible. By the end of the decade, a Council Declaration of 23 July 199823 stated that the EU and Taiwan had concluded bilateral market access negotiations in regard of Taiwan’s WTO accession. The significance of this for Taiwan lay in the fact that it was afforded due recognition as a legal personality, with the status of an equal partner. I would argue that, for trade and economic reasons, Taiwan cannot be left out in the cold. Somehow, the One China Policy will, ultimately, have to be adapted, since trade and economics always transcend political borders. Developments in EU-Taiwan Relations from 2000-2009 During the last decade of the 20th Century – and still under the ‘autonomous decision’ regime – anti-dumping continued to be an issue; it frequently involved new products, and there were cases concerning alleged ‘collusion’ of manufacturers across the Straits.24 Other problems sur19

Official Journal OJL 290 , 12/11/1999 P. 0015 – 0016. 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 from the 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. 20

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rounded, for example, anti-dumping and anti-subsidy proceedings concerning imports of polyethylene-terephthalate (PET). Is it fair to infer from this that import restrictions were placed on the most important ROC exports to the EU? A document concerning Taiwan-EU relations by the Taipei Representative Office reproduces the following Eurostat information for 2007: Product Groups Total Agricultural products Energy Non-agricultural raw materials Office/telecom equipment Power/non-electrical equipment Transport equipment Chemicals Textiles and clothing Iron and Steel

Exports (€ Million) % Imports (€ Million) % 26,139 100.0 13,266 1000 78

0.3

740

56

140

0.5

50

4

192 0.7 10,672 40.8

110 8 1,509 114

1,142

4.4

1,201

91

1,819

7

934

71

665

2.5

597

2.3

262

20

426

1.6

285

22

2,071 157

Source: Eurostat.

Accompanying this Table is a commentary. In the area of anti-dumping relating to Taiwanese imports, bicycles, as well as bicycle and motorcycle parts were referred to as ‘transport equipment’. It is noticeable that exports of the latter, according to data from the Directorate-General of Customs, Ministry of Finance, ROC, grew from US$149,299,271 in 1989 to US$542,767,251 in 2007. One prominent chemical which was the subject of anti-dumping cases was PET (see above). It is clear that, in terms of exports to the EU, Taiwan moved out of this labour-intensive industry in the 2000s. From these figures, it is possible to conclude that anti-dumping was, by and large, applied to products in demand in the EU.

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Table 6: Trade in goods between the EU and Taiwan – billion Euro 1999 2000 2001 2002 2003 2004 2005 2006 2007 EU exports to Taiwan 12.0 15.1 13.4 11.9 11.0 12.9 13.1 13.2 133 Annual Growth rate +25.8 -11.3 -11.2 -7.6 +16.8 +1.3 +1.3 +0.8 EU imports from Taiwan 21.3 28.3 26.0 23.2 22.6 23.9 24.1 26.7 Annual Growth rate +32.9 -8.1 -10.8 -3.4 +5.7 +0.9 +10.7 Total 33.3 43.4 39.4 35.1 33.7 36.8 37.2 39.9 Annual Growth rate +30.3 -9.2 -10.9 -5.1 +9.2 +1.1 +7.3 Balance for the EU -9.3 -13.2 -12.5 -11.3 -11.6 -11.0 -11.0 -13.5

261 -22 394 -13 -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 Economic and Trade Office (EETO): EU-Taiwan Trade / Investment Factfile 2008: 4.

As regards the state of both the balance and volume of trade, Table 6 allows some pertinent conclusions: there are considerable discrepancies between Eurostat trade statistics and Taiwan’s own customs statistics. These can be said to be due, among other things, to variations in exchange rates and changes from one year to another, as new Member States were added to the EU. Those figures speak for themselves: if the EU in 2007 was able to maintain the same level of exports to Taiwan, this was mainly thanks to the sustained performance in machinery and electrical equipment, iron, steel, and chemicals. On the other hand, the low level of EU exports explained the EU’s sustained deficit, but also accounted for the decline in Taiwan’s position among the major trade partners of the EU. The documents, Relations between Taiwan and the EU and EU-Taiwan Trade and Investment Factfile 2008, issued by the European Economic and Trade Office (EETO)25 both emphasized ROC-PRC trade and production relations as a key factor in raising Taiwanese trade flows. Both Ash (2002: 166-167) and Schucher 25

Pages 1 and 6, respectively.

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(2007: 32) pointed out that Taiwan’s merchandise trade surplus attained record levels in 2000, but declined until 2002 by 22%, as a result of international factors, and owing to Taiwan’s own economic crisis. Is it, therefore, possible to assume that, whatever decline in ROC exports to the EU there is, will be ‘made up’ by Taiwan’s contribution to China’s exports to the EU? In 2007, Taiwan was the EU’s thirteenth largest trading partner, because of Romania joining the EU. This was ‘one step up’ from 2006. Taiwan was, overall, the EU’s fifth most important partner in the whole of Asia. Conversely, the EU was Taiwan’s fourth largest trading partner, accounting for around 10% of Taiwan’s external trade. Moreover, Taiwan was in 2007 the EU’s twelfth largest import partner and twenty-second largest export partner.26 Table 7 concerns the services aspect of EU-Taiwan trade. The figures of the European Economic and Trade Office (EETO) speak of trade in services as a growing part of bilateral trade, which was equivalent to about 13% of trade in goods. 2003 and 2004 were described as years of rapid growth, followed by a pause and no more growth after that. Services trade with the ROC still amount to a small fraction 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 for the more than €10bn deficit on trade in goods. Table 7: Trade in Services between the EU and Taiwan EU exports to Taiwan EU imports to Taiwan Total Balance for the EU

2001

2002

2003

2004

2005

2006

2.0

2.0

2.4

3.2

3.1

31

1.8 3.8

1.8 3.8

201 4.5

2.1 5.3

2.1 5.2

21 52

0.2

0.2

0.3

1.1

1.0

10

Source: Eurostat (billion euro) – EU-15 until 2003; EU-27 from 2004 onwards.

26 EU-Taiwan Trade and Investment Factfile 2008, Taiwan's Bureau of Foreign Trade /CNA, 20 January 2008, pp. 2, 3, 4, 6.

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Table 8: Taiwanese export destinations in the EU in terms of volume of trade for alternative years of the 2000’s (1 unit = US$1,000) Jan-Nov ‘00 Belgium Finland

Jan-Nov ‘02

Jan-Nov ‘04

Jan-Nov ‘06

Jan-Nov ‘08

1,290,192,811 1,018,009,114 1,396,577,432 1,359,769,691 1,667,777,254 674,406,898

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

UK

5,896,441,833 3,978,850,745 4,710,102,709 4,826,631,566 5,190,454,441

756,006,531 1,045,975,589

987,399,374 1,169,469,485

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 continuity as regards the major destinations of Taiwanese exports: Germany, Netherlands, the United Kingdom, France and Italy are the principal destinations. However, in 2008, Italy overtook France. With regard to the investments of EU and ROC in one another’s territories, Tables 9 and 10 are quite instructive (1 unit = US$1,000): Table 9: Taiwan’s Investments in the EU Czech Year Republic 2000 2001 2,502 2002 2003 8,886 2004 567 2005 10,503 2006 10,974 2007 5,750 Total 39,182

France 1,669 47 614 2,008 7,822 465 335 132 13,092

Germany 8,878 5,297 17,066 10,860 22,781 6,262 9,719 7,976 88,839

King- EU Total Netherlands United dom 3,245 31,250 45 5,797 29,218 42 56,421 43.028 117 15,137 25,257 621 8,146 17,931 57 256,750 10,789 284 383,044 9,167 413239 399,933 2,671 416 1,128,473 169,311 1,997,897

Source: Taipei Representative Office; totals computed.

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It is possible to conclude that Taiwan invested more than US$2.4 billion in Europe. Taiwanese investment in the ‘old’ EU countries fluctuates, with France having the lowest level of Taiwanese investment. It is weaker in that respect than the Czech Republic. The latter, of course, is still a relatively new Member State, enjoying special attention from Taiwan. It seems that many Taiwanese investors see new EU Member States as a ‘springboard’ into the wider EU market.27 Taiwanese investment in the Netherlands represents 95% of all its investment in Europe. It can also be noted that, with the exception of the Czech Republic (see above), the key destinations of Taiwanese investment in the EU are also the countries which are the biggest trading partners of Taiwan. What does the picture look like in respect of overall EU investment in Taiwan? 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 Taiwan. This is explained by a surge in Dutch investments and was preceded by similar developments in 2006. The EU stock of all foreign direct investment (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 total FDI stocks.28 Table 10: EU Investments in Taiwan Year 2000 2001 2002 2003 2004 2005 2006 2007 Total

Czech United France Germany Netherlands EU Total Republic Kingdom 28,091 96,979 310,965 683,597 1,119,632 33,374 56,522 525,563 245,393 860 19,296 56,364 306,680 189,083 571 14 5,510 299,486 274,818 33,757 613 203,844 102,274 328,882 192,992 827 21,473 53,999 406,381 140,636 622 11,878 434,158 5,417,195 1,505,955 7,369,186 18,802 56,931 6,313,591 651,386 7,040,710 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.

27 28

Taipei Representative Office, Relations between EU and Taiwan, 2008, p. 4. EU-Taiwan Trade and Investment Factfile 2008 of the EETO, p. 14.

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WTO Accession and the Politics of Representation On 19 September 2001, the European Commission approved the terms of accession of the People’s Republic of China (PRC) and the Republic of China (ROC) on Taiwan to the WTO. This was subject to separate Commission declarations.29 The accession terms for the ROC included Penghu, Kinmen and Matsu. The PRC accepted Taiwan’s membership of GATT as ‘Chinese Taipei’. Once again, complex issues of the interconnectedness of economics, diplomacy and politics can be seen to have arisen through these developments. The European Commission subsequently opened its European Economic and Trade Office (EETO) in Taipei on 10 March 2003. Lan (2004: 129-130) argued that, from the Commission’s point of view, WTO membership of the ROC had been a pre-requisite for any future representative office in Taipei. The Office mainly covers economic and trade relations, as well as cultural and information activities. As seen above, and in line with the One China Policy, the Office is not to be engaged in relations of a diplomatic or political nature.30 However, even if the EETO professes to be ‘non-political’ and ‘not a diplomatic mission’, all the other activities it is involved in are identical to those of all other EC Delegations globally. Moreover, it seems almost inconceivable not to ‘talk politics’ in meetings with government officials – even on the sidelines. One could ask whether this situation constitutes the recognition of de facto diplomatic relations. In an October 2008 interview, for example, a European official in Taipei stated that his Office, while being ‘un-official’, certainly has political relations and monitors the political scene. This seems to be a situation second-best only to having full-blown diplomatic relations with Taiwan. Moreover, it has to be noted, that the European Parliament repeatedly called for an EU Representative Office in Taipei.31 An office such as this one had been late in coming. At least one former Commissioner, it was said, played a key role in pushing for it, and the situation therefore became appropriate for it to be inaugurated (Lan, Yuchun 2004: 129-130).32 But what were the real reasons for such a long delay? Did they really lie in the issues connected with WTO membership? Observers such as Mengin (2002: 136, 140-143, 145) and Cabestan (2008: 88-89) examined 29

Details: IP/01/1289; EP Resolution A5-0367/2001, of 25 October 2001. 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. 30

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the establishment, throughout the 1980s, of ‘unofficial offices’ in Taipei by several European countries, including those in Eastern and Central Europe. They claimed that, from time to time, growing economic exchanges between Europe and Taiwan had, in fact, exceeded the limits implicitly or explicitly set by the PRC. In parallel with this, political extensions to economic ties had multiplied. This was interpreted as a sign of the ROC’s claim to statehood. However, no European country opposed, in the long term, Beijing’s One China Policy. What this meant was that, by now, the European Commission was able to communicate its autonomous decisions in anti-dumping and other cases to the Taiwanese government through its European Economic and Trade Office (EETO) in Taipei – apart from also liaising with the Taipei Representative Office in Brussels from 12 December 1995 onwards. Conclusions and Aspects of a Future Research Agenda Could all of these events and developments be interpreted as granting Taiwan some kind of recognition close to statehood, or a legal personality? Do they amount to de facto diplomatic relations on the level of trade? In terms of developments between 1971 and 1990, the archival material available, and which has been consulted for this study, allows the following conclusions to be drawn: On textile products, a ‘new regime’ became applicable from 1 January 1987. In exchange, community exports (wine, tobacco and alcohol) to Taiwan were not subjected to discriminatory treatment. The Commission would propose the textile quantities for 1987 at their normal level.33 This seems to demonstrate quite clearly that some kind of compromise deal emerged between the EEC and the ‘non-state’ of Taiwan. The ‘autonomous decision’ principle existed, but seems to have left space for negotiations of both an official and unofficial nature. Events such as a 1992 meeting between the Commission services and Taiwan, or the visit of the then Commissioner Martin Bangemann to the island,34 can provide further clues to this effect. Small steps were thus taken more frequently than is traditionally acknowledged to move away gradually from the rather rigid doctrines of the One China Policy.

33 34

Council Document, 13 January 1987, p. 8. Europe, No. 5951, of 31 March 1993: 15.

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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 European Economic and Trade Office (EETO), point to annual consultations between the Commission and the ROC, which took place in Brussels between 1981 and 2008. This format covered issues as wide-ranging as research and technology, the information society, fisheries, environment, intellectual property rights, and standards and norms. Can these and similar consultations be seen as confirmation of de facto statehood recognition of the ROC by the EU? Are they indicative of the fact that Taiwan is given recognition, officially or unofficially, and being seen as an equal partner? To which degree is it possible to disengage political and economic considerations from one another? Many such questions are still open and will form the agenda of future research in this area. Among them is the issue of the legal basis of these consultations, especially in the 1980’s and 1990’s. The 1998 WTO agreement with the EU may be a legitimate starting point for such arguments, but consultations have expanded beyond the trade agenda, as can be seen from the many areas of cooperation which have emerged in contemporary EU-ROC relations. In conclusion, it seems fair to say that, at least on the level of the WTO, Taiwan has found its place on the international scene. Whether this comes close to a more ‘formal’ statehood-recognition, is not, at present, an issue for which there can be any clear-cut answers. Therefore, EU-Taiwan relations continue to be conducted in an area characterised by shades of grey. For the time being, this may well be the best possible solution. It affords both sides the space to be creative and to make the best of the developing relations. Each participant can thus have their own interpretation of the nature and extent of the One China Policy. The PRC may, in the future, want to commit the EU further – to pin it down, perhaps. A new EU-PRC Partnership and Cooperation Agreement will be a welcome occasion for much-needed further dialogue in this area.

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References N.B.: a detailed list of archival materials from the Council and European Commission, supplementing the resources cited below, and relating to EU-ChinaTaiwan 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 European Perspective’, March 2002. Brodgaard, Kjeld Erik. 2001. ‘China and Denmark: Relations since 1674’, in Kjeld Erik Brodgaard & Mads Kirkkebaek (eds), NIAS Press. Cabestan, Jean Pierre. 2008. ‘The Taiwan issue in Europe-China relations’ in Shambaugh, 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 Economic Community-Taiwanese Trade – Theory and Econometric Analysis, Bonn Hindley, 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, 19 March 1993 (Source: A3-0092/93, PE 203.426/fin). Kaspereit G. 1977. Report on Economic and Trade Relations between the European Community 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-Taiwan Issue: An Empirical Approach’ in European Foreign Affairs Review 9, Kluwer Law International. Ma Ying-Jeou. 1993. ‘Taipei-Beijing relation and East Asian stability: Implications for Europe’ in NATO Review (April 1993). Mengin, Françoise. 2002. ‘A Functional Relationship: Political Extensions to Europe-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 Studies 43(3). Taipei Representative Office, Brussels. 2008. Relations between Taiwan and the EU Van Aerssen, Jochen. 1985. On Trade Exchanges with Taiwan (Source: Doc. 21765/84, 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 Countries in the Twentieth Century’ in Industry of Free China, LXIV(6), December 1985.

ISSUES – POLICIES – PERCEPTIONS

EUROPEAN STUDIES 27 (2009): 209-224

CHINA, NEWS MEDIA FREEDOM AND THE WEST: PRESENT AND FUTURE PERSPECTIVES Peter J. Anderson Abstract One of the most frequently made European criticisms of China under communist rule has been of the continuing restrictions that the government places upon the freedom of expression of citizens and journalists. This study analyses Chinese journalism within an evolving political system, penetrated increasingly by Western ideas and criticisms as a result of globalisation, the opening up of the Chinese economy and the education of significant numbers of Chinese students in the West. It examines formal and informal restrictions on journalists’ freedom of expression in China. It discusses the modest expansion in their freedom of manoeuvre, as the media has been opened to market forces, and limited forms of criticism have been permitted. The study further explores Chinese views on media control in the context of both historically-rooted concerns about social stability and Communist Party ideology. The analysis concludes by discussing possible paths forward for Chinese journalism, bearing in mind the fact that the internet is likely to become increasingly difficult for the authorities to control, with both user numbers, and technological advances, increasing significantly. Introduction The criticisms and debates concerning China’s attitude towards both Chinese and foreign journalists and the news they report are well rehearsed and have formed already the subject matter of numerous book chapters, articles in academic journals, news items and blog commentaries (Herbert 2003, Shoemaker and Cohen, 2006, Yuezhi, 2000). The

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intention here is to review some of the most relevant developments and to open up some new perspectives on contemporary and possible future Chinese attitudes towards the news media. This study will do two things: first, the situation relating to the freedom of speech of the Chinese news media during the Olympic year of 2008 will be examined in terms of both the historical context, and its implications for the immediate future of Chinese journalism. The position of the foreign media in China during and after the games will be examined too. Second, given that the detailed inner workings of the highest levels of policy making within China are not accessible to those outside the Communist Party’s inner circle, an attempt will be made to portray media freedom from the government’s perspective via ‘informed scenario analysis’. It is highly likely that pressures – generated by criticisms from some of China’s key trading partners, the education of large numbers of Chinese students at Western universities, and the knowledge that the difficulties involved in ‘keeping the lid’ on the internet are likely to increase substantially over the next few years as technology progresses – have forced Beijing to think through the extent to which they might have little choice ultimately but to increase press freedom, including the consequences of so doing. Various options, which policy makers are likely to have looked at, are outlined, therefore, from a specifically Chinese point of view. Finally, some informed thoughts on where Chinese journalism is likely 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 threw on everything Chinese, 2008 was notable for three things with regard to the news media. First, the preparedness of the Chinese authorities to allow their domestic media to cover more fully than previously a major natural disaster: the Sichuan earthquake (Branigan 2008b). Second, the partial, but not insubstantial, fulfilment of the promise by the Chinese government to allow foreign journalists to report and to access the web within China, without restrictions, for the duration of the games. A wellpublished tussle ensued between the authorities and journalists over the implementation of this promise. Moreover, reports appeared afterwards, 1

See also the chapter by David Askew in this volume.

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suggesting that the ‘opening up’ was in a number of respects being closed down again, as the memory of the games began to fade (Branigan, 2008a, Branigan and Kiss, 2009). Third, the continuing imprisonment of Chinese journalists for straying beyond the boundaries of what is deemed politically acceptable to report and what is not (Reporters Sans Frontières 2008a and 2008b). The underlying causes of each of these trends within Chinese official attitudes towards the news media during 2008 have both overlapping and distinctive dimensions. The coverage of significant natural disasters had to be opened up more than previously, because the scale of such events as the Sichuan earthquake – when combined with the growth of the internet and the ability of some to get around government net controls – has made it impractical to try and conceal their occurrence, or the scale and effectiveness of the government’s response. Despite Beijing’s massive attempts to control what its people access on the internet, through its own and proxy controls (Bandurski 2007, Branigan and Kiss 2009, Kiss 2008), the fact that Chinese citizens with enough technical knowledge, guile and courage can still use it to disseminate ‘forbidden’ news, means that there is now no hiding place with regard to the effectiveness of government reactions to disasters. From the Beijing leadership’s point of view, it now makes much more sense to allow detailed coverage and to use its glare to suggest and highlight both the depth of the leadership’s concern for and sympathy with the plight of its citizens and the rapidity and appropriateness of its response. This latter concern in turn creates an incentive to pull out all the stops to try and meet disasters with proportionate rescue and relief operations. However, it should be noticed that the authorities did start to rein in the ability of the mainstream media to cover the aftermath of the earthquake when some of the reporting began to reveal more of a critical nature than they were comfortable with (Branigan 2008b). Furthermore, informed China watchers have noted that it is much easier for journalists from parts of China other than the provinces affected by particular disasters to report on them and that the same is true with issues such as provincial corruption (Yuezhi 2000: 590-591).2 The supposition is as follows: because negative factors contributing to the impact of disasters (such as negligent construction) can be caused by 2

This is a point also made by former CBS journalist, Robert Beers, for example.

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interests connected with provincial officials, and on account of possible linkages between provincial corruption and some regional Party people, there are frequently likely to be strong pressures on journalists from the provinces concerned to leave such issues alone. However, such pressures often do not apply to the same extent to journalists from other provinces. The government also had little choice but to provide a greater degree of freedom, openness and access to foreign journalists during the games, because a failure to do so would in effect have meant that they had completely reneged on the international understanding on which the award of the 2008 games had depended. The negative publicity that would have followed would have seriously damaged China’s attempt to use the Olympics to portray itself as a progressive state and an economic powerhouse coming of age. The Government could hardly risk antagonising any more than was already the case the very people from the world’s media upon whom the success of this propaganda exercise depended. A number of Western news organisations were already complaining, before the games actually began, about continuing restrictions on media freedom for their journalists (Reporters Sans Frontières 2008a). That there should be some claw-back of freedoms granted after the conclusion of the games (Branigan 2008a) is hardly a surprise. While this would be guaranteed to produce some criticism in the world’s media, this would be low on the global public’s radar, given its status as one story among many fighting for attention in the post Olympics period. Had the spotlight still been on China, then such ‘reinvigorated’ obstructing of journalists would have been highlighted automatically, as part of the ‘wider China story’, and the political damage to China’s reputation would have been more significant. The granting ultimately of more ‘officially recognised’ freedom to foreign news media, and the prominent coverage of this in some of the Western news media, arguably also had the effect of reducing the negative impact of both the number of domestic journalists still languishing in prison during the games, and of further oppressive measures against Chinese nationals stepping beyond permitted boundaries of free speech. The partial relaxation of controls not only conveyed an image of China as a state that was finally beginning to open up to, at least some, key Western ideas on freedom and human rights, albeit under considerable pressure; it also gave credence to Chinese claims that press freedoms

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would come gradually. It is often pointed out by Beijing’s elite that Communist China is still a relatively ‘new’ state and hasn’t had the hundreds of years that it took countries like Britain to evolve notions of free speech and press freedom (Organgrinder 2008). The opening up and the initial tussle over the degree to which it would be implemented also allowed Western media to do what often it likes most, i.e. talk about itself. In making themselves the story for a while, BBC and other journalists inadvertently left less time and space for the coverage of stories relating to China’s continuing repression of its more ‘adventurous’ domestic reporters. Again, once the brief Olympics and post-Olympics media spotlights were gone, the Chinese were able to continue this policy in the relatively low level glare of the everyday global news environment – an environment in which the repressive aspects of their policies would have to fight with huge volumes of other negative news stories all over the world to get onto mainstream television or radio news bulletins, or into news websites or papers. Even if they make it onto the agenda of a particular news programme at the moment of writing, pieces about them still have to fight for time and space against strong stories whose subject matter ranges from cholera in Mugabe’s bankrupt Zimbabwe, to atrocities and conflicts in the Middle East, Africa and Asia. So, if the story of 2008 was to be summarised, in so far as it relates to the Chinese regulation of the news media, it might most easily be depicted as two steps forward and one step backward. There does seem to be a recognition in the centre that some of the things which previously were tightly controlled in terms of reporting, now have to be treated in a slightly looser manner, if only for pragmatic reasons. They include natural disasters, following on from the earlier loosening up of controls on reporting corruption, as long as stories concerning them do not imply criticism of the Beijing leadership. However, the timing of such reports can still be affected by the government’s perception of when the least damaging moment for their release is. This was neatly illustrated by the fact that the reporting of the scandal relating to the contamination of milk with melamine was delayed as long as possible within China (Branigan 2008b). This was done in order to minimise the damage caused to the positive image that the leadership had been projecting to the outside world via the Olympic Games. As pointed out earlier, it was also claimed that some of the previously loos-

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ened controls concerning what could be reported about the Sichuan earthquake were subsequently re-tightened (Branigan 2008b). Foreign journalists were given considerably greater ‘officially recognised’ freedom to report within China than previously had been the case, although some of this was, once again, withdrawn after the conclusion of the games. The situation seems to vary from province to province according to the attitudes and numbers of ‘skeletons in the cupboards’ of local officials (Branigan 2008a). However, for those Chinese journalists working at the edge of media freedoms, and most particularly those who are trying to push the boundaries back further, theirs remains a risky profession. The boundary lines are not as clearly drawn as is sometimes suggested. Moreover, what would have seemed to have become permissible one week, can potentially cost a journalist their job when attempted again the next. Penalties can vary from not being allowed to practise as a journalist to imprisonment. Overall, Chinese governmental attitudes towards freedom of the news media remain pragmatic. Some leeway is given where this can be seen to fulfil useful goals or to be unavoidable. On account of the growth of the internet, this can, firstly, mean a degree of ‘bowing to the inevitable’. It is, for example, now simply impractical to suppress all inconvenient coverage during natural disasters. Secondly, granting limited license to the media to expose local corruption or incompetence – while simultaneously showing the determination of the central authorities to deal with it – helps maintain or improve the image of the Party. A third case is the facilitation of beneficial economic relations with capitalist democracies, through the making of small, but visible, steps towards greater press freedoms. Whether this situation is likely to change in favour of significant improvements in the news media’s freedom to report can best be understood by considering the lessons of the past (as China interprets them), together with present and emerging perceived threats to the Chinese political system, and then assessing how the government is likely to see the connection between all of these and press freedom in the future. With regard to the past, as has been pointed out many times before (see, for example, Heren et. al. 1973), Chinese leaderships tend to remember the weakness and chaos of China when it lost the central control of the most effective of the Emperors to the damaging rivalries of competing warlords. During the twentieth century they remember the

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civil war and the Japanese invasions and massacres that preceded the relative calm and political stability,3 resulting from the establishment of the People’s Republic of China (PRC) in 1949. They do not wish to risk the danger of such rivalries and weakness arising again by means of the emergence of a new, competing, effective opposition. One way of helping to ensure that this does not occur is through exerting overall control with regard to what can and cannot be said on Chinese news media and, where possible, on the world-wide-web. Within the present, the greatest potential for instability is seen as resulting from the massive disparity of wealth that still exists between the cities and the countryside.4 Just as the Communist Party originally turned the peasants into an effective fighting force that enabled them to take over the government, they now fear the emergence of new political movements that might be able to rally the peasants once again, this time against them. Once more, the ‘management’ of what goes in the country’s news media is seen as important in the control of views that could provoke or enable the organisation of an opposition with the potential to attempt a rebellion. The best way of trying to understand how the government sees the issue of press freedom in the future is through the device of scenario construction, as the next section explains. Understanding News Media Freedom from the Chinese Government’s Perspective The Chinese government is aware, most particularly through the example of Singapore, that embracing liberal economics does not inevitably entail the need to embrace liberal politics, with its accompanying press freedoms. As has been pointed out frequently (BBC 2009 for example), what they seem to be offering their people at the moment is a deal very much in line with the ‘Asian values’ concept long expounded by the Singaporean government (Wiessala 2006: 33): in return for the government delivering economic prosperity it is required that people relinquish ambitions for Western style democratic pluralism and for freedom of speech. Tiananmen Square and the collapse of Communism in the USSR and Eastern Europe reminded the leadership of the fact that liberal democracy is an idea that potentially could be a potent rallying point for oppo3 The word ‘relative’ is important, bearing in mind such tumultuous events as the Cultural Revolution. 4 In the view of an authoritative Party source.

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sition to its rule. While the Beijing demonstrators back in 1989 were brutally suppressed with military force, this is an option that now has higher costs, given the massive extent to which China has become linked in to the global economy. Among other things, China’s leaders will have observed that Russia’s last use of military power (in its ‘near abroad’) caused a flight of foreign investment from Moscow. The use of military force, both at home and abroad, can have serious economic consequences for the user within the globalized capitalist system if investors judge it to be destabilising of the economy/society of the user, or of the region within which it used. Being aware of this, it is likely that, since Tiananmen Square, Chinese policy makers have evaluated a variety of scenarios relating to situations in which pressures for greater freedom of speech once again arise (it is quite probable that the scenarios investigated by conservative and more liberal factions differ in range and content). They would be unwise not to have done this, given the following three developments. Firstly, in 1989, at least initially, the leadership were caught without appropriate scenarios in place in the face of a public democratic challenge; it showed signs of being temporarily paralysed as a result. Secondly, the Chinese government has taken risks, by allowing large numbers of Chinese students to study courses in Western universities, many of which are politically ‘sensitive’ for Chinese domestic society. Returning students will have been exposed to Western ideas and values and will have noted criticisms of their own government’s record on human rights. Many will, no doubt, be happy to ignore these on their return home if the ‘Asian values’ economic deal continues to be delivered. But equally, should this prove difficult as a result of a major global recession, or other factors, they are a potential ‘time-bomb’ at the heart of all of the major cities. Each one of them has seen at first hand alternative ways of doing politics and many, if faced with a Communist promise that is undelivered in the face of a sustained economic downturn, may, at some stage, demand democratic pluralism and greater freedom of speech. The knowledge that Party minders are likely to be among their fellow students may well caution what students say while in the West, but that knowledge cannot control their thoughts. A government that had not assessed the risks of allowing China’s young people to study abroad, and the costs and benefits of different ways of dealing with them, ultimately

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would be a government unprepared in terms of possible responses – as was the case in 1989. Thirdly, it is becoming increasingly difficult to ‘gate-keep’ the internet, even with the formidable army of access blockers employed by the Chinese government. The leadership knows that, at some point, it may cease to be able to ‘keep the lid’ on internet criticism of its policies (it cannot stop everything even as matters stand) and of the very idea of a one Party state. It is unlikely that it hasn’t weighed up possible responses when this day arrives – there are already holes in the ‘Great Firewall of China’. So what might these scenarios look like, presuming, as seems probable, that at least some of them have been considered, or at least are likely to be considered, should the pressure for greater freedom start to grow significantly? In the following analysis, we will sample a selection of the most likely scenarios from a Chinese viewpoint. Given that there is very limited space here for examining relevant options and given also that the internet is the challenge most likely to force a rethink of how the Chinese government handles the news media, it would seem most sensible to look at net related scenarios. By means of this analysis, can gain a much deeper understanding of the options facing the Chinese Communist Party and government as China becomes more and more integrated into a global system, within which the influence of democracy is not likely to go away, even as the power of some Western powers wanes, due to the compensatory rise of democratic India. However, it is important to remember that these scenarios will be viewed differently by conservative and liberal wings of the CCP. The extent to which these policies might ever be implemented will depend upon the balance of power between the various factions within the Party at relevant points in time. Scenario One: The ‘Big Bang’. Many argue that this is the least likely of eventualities, bearing in mind the strength of feeling among Party conservatives and their reaction to Chinese media coverage following Tiananmen Square (Herbert 2003: 126). In this scenario, the Chinese government agrees to remove all foreign and domestic media restrictions, other than those relating to libel, slander and ‘national security’ as understood in its narrower, Western sense. Outside of any BBC-equivalent ‘impartial’ public service news organisations that the government

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might decide to set up, there would be no requirement to produce balanced journalism; news organisations, journalists and bloggers would be left to decide on their own reporting. This would only become an option where the value to the government of trying to block access to criticism of its policies and leaders had disappeared. This would be the case where ‘gate keeping’ the web had become impractical for technical reasons, and where internet usage across China – and the accessing of alternative news media on the web – had become so widespread as to make continuing efforts to censor the mainstream media an ineffective means of controlling the information flow to the mass of the population. Any continuing attempt to censor news reporting within China would be both increasingly obsolete (unless, as in Burma, it was decided effectively to shut the internet down within its borders) and counterproductive, in so far as it would confirm some of the criticisms of the regime that bloggers and others make. Such a dramatic liberation of news reporting would put the predominant position of the CCP under strain, unless measures were kept in place to prevent the formation of an effective opposition Party. However, such restraints would become difficult to maintain if the internet was no longer controllable and journalists and bloggers were given full freedom to report and comment on the views of those who advocate alternatives to the current Chinese political system. Even the old Party stalwarts in the media might prove unreliable if given their freedom, as the reporting of the People’s Daily and the Central Television Station in the brief, heady days of 1989 suggested (Herbert 2003: 126). Should alternative ideas start to become popular, they may, eventually, be held by so many people that it would be difficult to suppress them. In theory, the People’s Liberation Army (PLA) could always be brought in, as happened in the case of Tiananmen Square. But the soldiers that were summoned in 1989 had been given only filtered information. If media controls had been abandoned then the PLA would be free to form their own views. And if opposition ideas spread into the army as a result, the outcome of any attempt to use military force could be civil war and the collapse of an effective governmental system within China. Scenario Two: A Smaller ‘Bang’. This scenario would be prompted by the same basic cause and involves an extension of press freedoms to include the full reporting of criticism of the central government with regard to its policies and legislative initiatives, with the exception of a narrow band of

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‘national security matters’ relating to counter-terrorism, the intelligence services and military defence. Such criticism would be reported only within a balanced context in all of the media which Beijing could still regulate. Should this be permitted it would not be the result of any ‘Damascene conversion’ to the values of impartial reporting, but of a hardheaded political calculation: this would simply be the least damaging way of extending press freedom, if forced to do so by the pressure of circumstances. The government would be given as much space to put its view across as its detractors. This would allow it to respond to unregulated internet criticism by showing that it was no longer censoring the free presentation of views, while keeping the right for its political and economic arguments to be heard in full. Should sufficient numbers of the Chinese people still rely primarily on the regulated mainstream media at the time of this policy’s introduction and should the government win the argument in such an open presentation of competing views often enough to stay in power, then the problems created by freely available access to criticisms of its policies would be solved to a significant degree. However, should the government ‘lose’ the debate consistently, or should too many people ‘switch their allegiance’ from mainstream, regulated, news reporting to the unregulated criticism on the internet and decide that a one Party state was no longer desirable – then the situation would be very different. The government would have to choose whether to brazen things out, to agree to popular demands for change, or to suppress dissent. 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 army has a ‘stake’ in the economic system established by Deng and his successors. Scenario Three. This scenario is nearly the same as the previous one, above. In contrast to it, however, reporting is ‘balanced to one side’: the government 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 of view, at least with regard to the media it could still regulate. In practice, however, it could prove ineffective. A media debate, so obviously weighted in favour of views and policies that many find unacceptable, might prompt a large number of people to migrate to unregulated report-

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ing on the internet. From that, they might develop political ideas that prompt 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 Chinese news media that could still be regulated, it would be required that criticism should be presented in the manner and style which the Daily Mail newspaper in the UK uses to present the opinions of the Labour Party. It does so by representing the latter’s views as being inferior in quality, logic and practicality to those of the Party that the paper prefers. The risks would be similar to those in scenario three, above. Scenario Five. This scenario involves an extension of press freedom that includes allowing the reporting of criticism of the central government with regard to a specific and narrow range of ‘sensitive’ policies and legislative initiatives, but which does not extend that freedom to allow criticism of the President – and which requires that such criticisms be presented within a balanced context in which the government is given as much space to put its view as its critics. This might become an option where it was still possible to prevent access to the majority of negative postings on the internet, but enough criticism was nevertheless evading official controls to make it necessary to acknowledge some of its most populist dimensions and show a willingness to deal with it. To allow balanced mainstream reporting of such criticism in this context would be to try and ‘take the initiative away’ from the bloggers and counteract it by improving the credibility of the regulated ‘authoritative’ mainstream news media. It would give the government a chance to be seen as listening to, and engaging with, its critics in ‘an open and positive debate’ on some issues of popular concern. Should the government lose the debate, in terms of the reactions of the people, then the president, who would have remained aloof from it and un-criticised within the media, would have the opportunity to remain politically ‘unscathed’. The Party could attempt to re-establish its legitimacy through him stepping forward as the people’s champion to re-shape the unpopular policies, thereby ‘correcting the consequences of bad advice’ given to him, or other leading figures, by ‘other isolated and ill-informed members of the government’, in a manner that would be covered by the mainstream media.

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Scenario Six. This possibility would be similar to scenario five, above, except with reporting that was ‘balanced to one side’ in so far as the government 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 the credibility of the mainstream news media, it could undermine it further. Scenario Seven: this eventuality has most of the characteristics of scenario five, except that such criticism would be presented in the manner that the Daily Mail newspaper in the UK would present the views of the Labour Party, as described in scenario four. From the government’s point of view, much would depend on the skill with which this propaganda (in the Western sense of the word) exercise was carried through and 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 of China has been one of power and influence, shifting back and to from conservative to more liberal factions within the Communist Party. The conservatives remain, as always, a force to be reckoned with. Should the internet get completely out of control at a time when the Party was feeling increasingly insecure as a result of economic or other reasons, and if, simultaneously, the conservatives were in a dominant position, there is always the possibility of the internet being ‘shut down’ within China. This could be done with the hope of both silencing ‘destabilising’ dissent and re-establishing the government’s ability to control the flow of information to the people through a closely controlled mainstream news media. 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 a move would be likely to be seen externally as an indication that China was taking a step back developmentally and that the position of the government was now so fragile that the only way it could keep hold of power was through a draconian close down of a communication facility that other advanced nations regard as fundamental. Such a statement of the fear of instability could also frighten away crucial external investors. The ‘Burmese option’ could be costly both in economic terms and in terms of loss of China’s external reputation as a modern state and society.

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Conclusions At the present moment, the collective intelligence of the leadership is sufficient for it to realise that issues like corruption, which discredit the Party in the eyes of the people need to be addressed and that the news media can have a useful role in helping to deal with that. It has realised too, that natural disasters like the Sichuan earthquake have to be more ‘fully’ covered in the internet age, and that the same is true of unnatural disasters, such as the contamination of milk with melamine during 2008. The consequence has been a further degree of opening up of media freedom. However, anything hinting at criticism of the Beijing leadership, or of the authority of Party rule is still as much forbidden as before and journalists who cross the line can find themselves out of a job, or in prison. The above scenarios have suggested that the world-wide web has the potential to grow completely out of the government’s control, and different ways of exploiting it continue to develop at breakneck speed. The leadership cannot assume that the degree of censorship that pertains currently will be viable into the future. If it is not simply to be the prisoner of developments it has to evaluate a variety of scenarios for dealing with such possibilities as the internet escaping from its grasp. It has been the task of this discussion to show what some of those might look like. Overall, as far as the above sample scenarios are concerned, several things are clear. Firstly, the extent to which the Party would be prepared to risk implementing any of the media policy options covered within these scenarios would be dependent on how it felt each related to its fundamental desire to minimise the threats to its continued rule at a given moment in time. This calculation in turn would be affected significantly by the balance of conservative and liberal forces within the Party at 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 through the effective use of force, should the outcome of the implementation of policy options contained within particular scenarios turn out to be negative, and should this threaten the Party’s continuation in power. Significantly, key army personnel have become serious economic players during the Deng and post-Deng periods, and it is very much in their interests that the stability from which they benefit economically should be preserved. However, as has been pointed out, should a freeing up of the news media lead to the spreading of opposition ideas among significant

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numbers of the ranks, the overall reliability of the army might become questionable in some circumstances. Thirdly, and finally, it should be noted that, as far as the internet is concerned, the picture is more complex than it has been possible to represent adequately here. A lot depends on the extent to which Chinese users decide to access the web to look for ‘alternative’ political news and comment should it in future become ‘un-blockable’. One of the things that research has shown so far is that in ‘internet rich’, ‘free’, societies, such as the United States for example, very few people go to political blogs. Those users who access the internet regularly for political news remain very much in the minority (Pew 2005 and 2006; Anderson and Ward 2007: 269-70). Should Chinese net-accessing patterns turn out to mirror or even accentuate these trends towards low ‘political’ usage, the Chinese authorities might conclude that the internet provides them with fewer worries than they feared, and with less of a reason for significantly changing policies towards mainstream-media controls.

References Anderson, P.J. and Ward, G. 2007. The Future of Journalism in the Advanced Democracies 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-thestrings-of-China’s-internet?sea... BBC Ten O’Clock News. 2009 (2nd February). Branigan, T. 2008a. Belgian Reporters Assaulted and Robbed in China. Accessed at: www.guardian.co.uk/media/2008/dec/01journalists-assaultchina-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 Crackdown 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. Accessed 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-webcensorship Organgrinder Blog. 2008. The Coverage for the Olympics – Has it Helped Press 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 the Internet’, 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 the Internet’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 at www.rsf.org/article.php3?id_article=25650 – 2008b. Political Essayist Gets Three Years in Prison for Three Articles Posted 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/acup-of-tea-with... Shoemaker, P.J. and A.A.Cohen. 2006. News Around the World: Content, Practitioners and the Public. New York: Routledge. Wiessala, G. 2006. Re-Orienting the Fundamentals. Human Rights and New Connections 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-InC h i n a - N e w - R u l e s - A l l o w i n g - G r e ate r-F re e dom-M a y - N o t - B e Extended/Article/200810315122997 Yuezhi, Z. 2000. Watchdogs on Party Leashes? Contexts and implications of investigative journalism in post-Deng China. Journalism Studies. 1, 2, 577-597.

EUROPEAN STUDIES 27 (2009): 225-240

TRADE AND INVESTMENT IN THE RELATIONS BETWEEN THE EUROPEAN UNION AND THE PEOPLE’S REPUBLIC OF CHINA

Carlo Filippini Abstract Services are the fastest growing component of the import-export flows of developed countries. At the same time, they are the source of many disputes because of their nature, being often intangible, and non-excludable, with high value added. This is the case for service flows between China and the European Union (EU): they are relevant but the EU is concerned about the need to ‘level the playing field’. China’s WTO accession has eased some problems, but not solved them. The most relevant EU requests concern the intellectual property rights, counterfeit and pirated goods, and technology transfer. In addition to this, China has not yet implemented all its WTO accession obligations, e.g. in the financial sector. What follows is a detailed data analysis on service flows. It will comprise of, in particular, China-EU exchanges compared to world totals. Moreover, data over time, by EU country, and by sub-sector, will be analysed. Inward FDI has been liberalized in steps; it is amongst the main export drivers. It is an important vehicle for the technological upgrading of industrial sectors. The strict conditions imposed on foreign corporations have allowed China to acquire nearly up-to-date technologies, acting as a monopsonist with many suppliers. On FDI, the EU is further stressing a lack of reciprocity. Recently, Chinese outward FDI has been growing, due to very large Chinese foreign reserves, even though investment towards the EU remains modest. Last but not least, the chapter 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.

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Introduction Trade relations between Europe and China have a long history. Mercantile delegations, diplomatic embassies, and religious missions already were exchanged between China and the Roman Empire more than 2000 years ago (cf. Innes Miller 1969). In fact, the Ancient Romans were ‘infatuated’ with Chinese silk and paid huge amounts of gold to acquire it. Later on, these relations stayed stagnant because China became more developed than Europe and thought that no external goods were worth importing. After a long decline of the Chinese economy, the last decades have seen its strong and rapid revival; EU–China trade relations are now quite important: China is the second biggest trade partner of the EU, its first market for imports and its fourth for exports (as of 2007). This chapter investigates the evolution of EU–China relations and agreements; furthermore, it presents data to quantify trade structures and raises some critical points relating to views in the EU and China; finally the chapter offers a number of tentative conclusions. Globalization: China’s and the EU’s Choices The sixty years from the birth of the People’s Republic of China (PRC) can be divided almost evenly into two periods: the first is characterized by quite rigid plans that covered foreign trade flows too. Exports and imports were not linked to relative prices or to comparative advantage. After 1978, China changed its economic policy and began a slow, but straightforward, process of reforms that included deeper integration into the world economy. A few features of this transformation are worth noting: the coexistence of liberalization in the economy and continuity (that is a monopoly of power by the Communist Party) in politics and gradualism in the process: reforms were initially carried out in limited areas, or sectors, and later on extended on an ever larger scale if successful. In the end one can speak 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 GATT and WTO and on account of the many more bilateral Free Trade Area accords. At the same time, innovation and technical progress, together with the ICT, drastically cut costs in transport and communications. One of the results was the birth of production networks or fragmentation.

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China was very skilful in exploiting its low-cost labour and the (potential) size of its market attracting FDI and asking foreign enterprises to bring in state-of-art technologies, not the ones dismissed in the country of origin. By the mid-1980s, China was already a major production centre for many foreign firms. The sanctions following on the heels of the government crackdown of the Tiananmen protests (1989) simply slowed the process. Exports have been an important driving factor of Chinese economic growth, and the country’s 2001 WTO accession was the occasion of further real and promised openings. As one can imagine, liberalization in merchandize trade has been generally greater than in the service sectors. Chinese exports are covering a wide range of products and seem to defy the traditional theory of comparative advantage. One the one hand, factor endowments can be modified by economic policies through expenditures in education, research and technology imports; on the other hand, quite often only parts of the final high-tech goods that are exported are produced in China, due to production fragmentation. The European Union (EU) has adopted a positive attitude towards China from the beginning and on many occasions has stated its wider objectives: to support China’s transition to a pluralist society based upon the rule of law and respect for human rights, and to encourage its transformation into an open market economy, integrated into the world by means of the broadening and deepening of both bilateral and multilateral dialogue. While in the years up to the beginning of this millennium the EU has been accommodating towards China because of the latter’s ‘developing country’ status and the high expectations of gains from trade and FDI, more recently a number of disappointments have emerged: to the EU China is not only an opportunity but a threat too. At the same time it is quite difficult to speak of a coherent ‘European’ policy towards China, because there are many voices and actors, not always coordinated and too often conflicting. Key Steps and Documents in EU–China Economic Relations After the recognition of the People’s Republic of China (PRC) as the legitimate government of China (October 25, 1971) by the UN General Assembly and the establishment of diplomatic relations between the PRC and most EU member states in the following years, on May 6 1975 the European Union too established diplomatic relations with the PRC.

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On May 2, 1978 a Trade Agreement was signed and the EU-China Joint Committee was established, the first meeting of which was held in Brussels 15 months later. On July 18, 1979, the first agreement, on textile 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 trade and to encourage a steady expansion of economic cooperation between the two actors. This agreement is still the main legal framework for economic relations with China; it was extended twice, in order to cover political issues (in 1994 and 2002). Economics and politics are intertwined in complex ways because of the different moral principles, cultural traditions, and historical legacies of the two entities. Two main turning points must be mentioned: firstly, the Tiananmen Square protests in 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 Agreement has been under negotiation for some years, in order to take into account the new realities and to update the 1985 treaty. Over the past decade or so the EU has produced a range of key documents on EU-China relations; just to mention a few: the 1995 Communication on A Long-term Policy for China-Europe Relations, the 1998 one on Building a Comprehensive Partnership with China, the 2003 policy paper on A Maturing Partnership: Shared Interests and Challenges in EU-China Relations. In 2006, a set of Council Conclusions (EU Council 2006), the Communication Closer Partner, Growing Responsibilities and the related working document on Competition and Partnership marked a clear (even if ineffectual) break with the previous – generally optimistic – EU position: these documents emphasise China’s increased responsibilities, stemming from her economic growth and global influence, and stress the need for a ‘level field’ in solving trade and investment frictions. In addition to regular political, trade, and economic dialogue meetings, there are many other, sector-specific (‘sectoral’), dialogues and agreements covering many aspects. A representative list of these sectorspecific dialogues is represented in table 1, below:

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Table 1: Sector-specific EU-China Dialogues Agricultural dialogue Civil Aviation Competition Policy Consumer Product Safety Customs Co-operation Education and Culture Employment and Social Affairs Energy Environment Food Safety Global Satellite Navigation Services Information Society

Intellectual Property Rights (IPR) Macro-economic Policy and the Regulation of Financial Markets Maritime Transport Regional Policy Regulatory and Industrial Policy Sanitary and Phyto-sanitary Issues Science and Technology Space Co-operation Textile Trade Dialogue Trade Policy Dialogue Transport (in general)

A more recent (April 2008), and Chinese-inspired, initiative is the EUChina High Level Economic and Trade Dialogue (HLM), modelled on the US-China Strategic Economic Dialogue, to support and complement the existing dialogues. In the recent past, there have been informal talks and negotiations (since January 2007) about a new Partnership and Cooperation Agreement, to update and upgrade the 1985 Agreement: the European and Chinese negotiating positions are, however, quite distant, and the latter’s decision to postpone, with only a few days’ notice, the 11th EU-China Summit, scheduled for December 1, 2008, because of a meeting between the French President Sarkozy and the Dalai Lama is a clear evidence of existing frictions. Other cooperation programmes have been going on for many years, covering various areas, in order to support China’s development efforts (EU Comm, 2008). Merchandise Trade EU-China merchandise trade has been growing rapidly for years; in the years 1999-2007, EU-25 imports increased four times in value – from 52.41 to 230.31 billion EUR – and from 7 to 16.1 % as a share; exports showed 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 (excluding intra-EU trade). In 2007, China has been the second biggest EU-27 trade partner after the USA (11.4 %), but the 1st import (16.2 %) and the 4th export (5.8 %) partner. Conversely, EU-27 has been the biggest trade partner for China (17.3 %), being in 2nd place for imports (12.7 %), after Japan, and in 1st place for exports (20.6 %). The EU-27 is exporting to

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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

58

Machinery 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

2

36

..

14

Animal and vegetable oils, fats and waxes

Source: Eurostat

The EU-27 imports from China manufactured products, machinery and textiles, plus clothing; primary products are negligible (see table 3). Table 3: EU27 Imports from China, 2007 (EUR million) Products (Sitc Sections) by order of importance TOTAL Miscellaneous manuf. Articles Machinery and transport equipment Manuf. goods classified chiefly by material Chemicals and related products, n.e.s. Food and live animals Crude materials inedible, except fuels Mineral fuels lubricants and rel. Materials Commodities and transactions, n.e.c. Animal and vegetable oils, fats and waxes Beverages and tobacco Source: Eurostat

% 231,516 64,475 61,952 34,867 6,934 2,417 2,264 673 510 83 76

100 27.8 26.8 15.1 3.0 1.0 1.0 0.3 0.2 .. ..

% total EU imports 162 367 230 192 61 38 37 2 16 14 11

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Table 4: EU-27 Trade with China, by Member State, 2007 (EUR million) Exports

Share in Extra-EU exports

Imports

Share in Extra-EU imports

Balance

Extra-EU

71,757

231,516

100%

100%

-159,759

Belgium

3,344

12,526

4.7%

5.4%

-9,182

Bulgaria

70

608

0.1%

0.3%

-538

Czech Rep.

504

4,340

0.7%

1.9%

-3,836

Denmark

1,282

3,892

1.8%

1.7%

-2,61

Germany

29,874

47,877

41.6%

20.7%

-18,003

Estonia

65

299

0.1%

0.1%

-235

Ireland

1,284

2,013

1.8%

0.9%

-730

Greece

111

2,795

0.2%

1.2%

-2,684

Spain

1,980

15,737

2.8%

6.8%

-13,758

France

9,032

18,000

12.6%

7.8%

-8,968

Italy

6,311

21,764

8.8%

9.4%

-15,453

Cyprus

8

333

0.0%

0.1%

-325

Latvia

17

257

0.0%

0.1%

-240

Lithuania

15

498

0.0%

0.2%

-483

Luxembourg

194

3,413

0.3%

1.5%

-3,219

Hungary

752

5,394

1.0%

2.3%

-4,642

Malta

27

92

0.0%

0.0%

-65

Netherlands

3,724

37,746

5.2%

16.3%

-34,022

Austria

1,666

2,928

2.3%

1.3%

-1,262

Poland

724

5,050

1.0%

2.2%

-4,326

Portugal

181

1,063

0.3%

0.5%

-882

Romania

157

1,667

0.2%

0.7%

-1,51

Slovenia

69

447

0.1%

0.2%

-378

Slovakia

321

1,569

0.4%

0.7%

-1,248

Finland

2,161

3,296

3.0%

1.4%

-1,135

Sweden

2,396

4,703

3.3%

2.0%

-2,307

UK

5,489

33,207

7.6%

14.3%

-27,719

Source: Eurostat

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Almost half of the EU’s trade deficit with the PRC is due to machinery, mechanical appliances and electrical equipment; other important items are textiles, base metals and articles in base metals, as well as miscellaneous articles. As far as individual member states are concerned the most important exports partners are Germany (more than 40 % of the EU-27 total), France, Italy, and UK; for imports Germany, Netherlands, and UK are in the top positions; the Netherlands, the UK, and Germany show the highest deficits. The substantial figures for Netherlands are of course due to the function of Rotterdam as a key entry point (see table 4). Trade in Services In 2007, the extra-EU trade in services shows an EU-25 surplus. The credit side is worth 1,166 billion EUR and the debit side 1,026 billion EUR, 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 doubled its flows, while Hong Kong nearly balanced its exchanges thanks to rising exports to the EU-25 (see table 5). Table 5: EU-25 Trade in Services (EUR million) Extra-EU 2004 2005 2006 2007 China 2004 2005 2006 2007 Hong Kong 2004 2005 2006 2007 Source: Eurostat

Credit 874,341 956,851 1,057,862 1,165,855 9,105 12,419 13,329 17,742 7,124 8,402 6,998 8,225

Debit 799,428 869,054 943,776 1,026,073 7,370 9,392 11,860 13,722 5,211 5,648 6,602 8,122

Net 74,913 87,797 114,086 139,782 1,735 3,027 1,469 4,02 1,913 2,754 396 103

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The positive service balance sheet of the EU-25 with China alone represents less than one-fortieth of the negative trade balance. The EU is estimating potential losses in the order of billions or euros, because of Chinese unfair practices. The credit side is worth 17.74 billion EUR and the debit one 13.72 billion EUR, giving as a result a net figure of just over 4 billion EUR; the figures are showing an upwards trend in the past decade in particular after the WTO accession in 2001 (see table 6). However the EU performance in service trade with China is difficult to fully evaluate, because the flows are, to some extent, indirect and going through Hong Kong. Table 6: EU-25 Trade in services with China, 2007 (EUR million) CHINA total Royalties Financial services Insurance Transportation Travel

Credit 17,742 1,179 453 109 5,501 1,877

Debit 13,722 120 181 281 6,561 2,893

Net 4,02 1,059 272 -172 -1,06 -1,016

Source: Eurostat

EU Linkages between Economic and Non-economic Issues From the very beginning, the EU has stressed the importance of democracy and human rights in its relations with China1. This appears quite typical of its cultural traditions and values: democracy, freedom, and the rule of law are all the foundations of a state. One of the aims of EUChina contact was thus to support China’s transition to a more open society. In the past, however, a greater weight was given to the process rather than to the actual results. In addition to this, the possibility of gains from the opening of such a huge market played a role. Throughout the current decade, rapid Chinese growth, both in economic and political terms, and the perception of a challenge rather than a chance, have changed the EU’s position (Holslag 2006). Moreover, Chinese policies in Tibet, with regards to political dissidents or simply internet users, have been increasingly subject to severe 1

[editors’ note] see also the chapters by D. Askew and G. Wiessala in this volume.

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criticism in Europe. If one adds environmental issues, and China’s refusal to be bound by international protocols, it is easy to understand why relations are, at times, turning sour. China maintains that trade issues must be discussed independently from other problems, some of which are seen as domestic (Tibet, e.g.), not international. Of course, the Chine power elite is reluctant to give up its status and role; it perceives too much openness as a threat; the collapse of the Soviet Union and its Communist 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 for years; in 2007, the negative balance amounts to over EUR 186 billion – about 15% of total exports. Over the past decade this percentage almost doubled. 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 country, and is equal to EUR 72 billion (2007). It would, of course, be naïve to say that the EU’s deficit is caused by China alone; it would be even more naïve to claim that eliminating the deficit would, somehow, solve all problems. However, the size, growth, and circumstances of the deficit are disquieting for many in the EU. A first point to be made pertains to the undervaluation of the Chinese currency. It is quite difficult to tell the ‘right’ level of any currency, in particular, in relation to another one (Frankel 2009). A number of scholars are, however, arguing for a substantial revaluation of the renmimbi versus the US dollar and the Euro. This opinion is often raised in the USA, even by the new Obama administration; the ‘Big Mac index’, a very rough and oversimplified PPP version, shows a 40% undervaluation (The Economist, Jan 22, 2009). In addition, as we shall see later, many groups and firms are complaining of unfair practices, and of obstacles to both EU goods and investment. Last but not least, the trade surplus is one 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 of Chinese exports (to the EU and to the world) are due to European or other foreign direct investment; moreover they incorporate a substantial share 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

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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 capital intermediate goods and re-exports them. Globalization pressures, the increasing relevance of FTAs and similar arrangements, and innovations in the transport and communication sectors, have all boosted production networks 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, the Union alleges, are unfair, in regard to trade and investment. A list of the principal problems can be seen in table 7, below. Table 7: Obstacles to trade and investment Obstacles to market-access Tariffs Non-tariff barriers Government procurement Transparency and administrative coordination Discrimination of foreign operators Investment restriction Conditions of competition IPR and legal rights Forced technology transfers Export subsidies (and taxes) Environmental, social and safety conditions Market 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 agricultural ones), there still are some tariff peaks on goods of particular importance to European firms. Quite recently, for example, the WTO Appellate Body has ruled in favour of the EU (plus USA and Canada) about surcharges over car parts. More relevant are the non-tariff barriers in the form of product certification (a compulsory system covering more than 100 items), labelling standards (for instance for pre-packaged food),

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import approval requirements, and custom clearance delays. Agricultural and pharmaceutical goods and cosmetics are subject to strict and groundless requirements; there are often more severe than those required for domestic goods, in contrast to WTO rules. Moreover, Chinese standards are sometimes appreciably different from international ones. This results 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 across provinces and local authorities in China. Administrative discretion is quite large, and foreign firms are discriminated against. There appears a need for more active and timely official interpretations of administrative regulations. The prosecution in bribery cases is quite erratic, obscure, and rather exceptional. Even if public calls for comments from the Government on proposed legislation are becoming more frequent, there is inadequate time to analyse the bills and provide constructive feedback. The value of public procurements is not easily calculated, but certainly quite large. In 2007, it was over EUR 38 billion according to the Chinese Ministry of Finance; however, given the figures for the total of fixed asset investments, it ought to be much higher; the economic measures announced at the end of 2008, in order to overcome the effects of the world financial crisis, will certainly increase this. China must accede to the WTO Government Procurement Agreement, but the initial proposal made in 2007 was judged quite unsatisfactory by the European officials and firms. In too many areas foreign (and of course, European) firms are discriminated against, in policy or practice, as a result of a ‘China first’ approach. The same grievance applies to FDI, because of over- stringent requirements imposed on non-Chinese companies. Intellectual Property Rights (IPR) are one of the most contentious topics in EU–China trade relations (see Shi 2008 for a detailed analysis); on the one hand, European firms are upgrading their productions: both goods and services have an increasingly high-tech character; on the other hand, counterfeiting is becoming more and more widespread (and not only in China). Despite improvements, it is still quite difficult to get a real protection in Chinese courts, and, if protection should be reached, it is often unduly complex to implement decisions. Too much confidential information is required in applications for technical and regulatory approval for products, and this information is not adequately protected. Local firms not only copy EU products, and often sell them under the

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name of the EU firm, but increasingly apply for patents regarding identical or near-identical products. At the same time, filing for trademarks can take as long as three years in case of opposition. Last but not least, significant subsidies, or preferential access to credit, are afforded to companies destined to become national or regional champions. The taxation system is granting tax preferences, contingent on the use of local content or export performance. Export subsidies have effects similar to currency devaluation, while export taxes (also quite common in China) contribute to currency revaluation. Recent cases of dangerous products originating from China – from toothpaste and powdered milk, to toys – have hardened the European stance, undermined consumers’ confidence, and frequently turned public opinion against the ‘made in China’ label. Chinese Perceptions and Objections China too is expressing concerns about those EU policies and decisions seen to be unfair or restrictive for Chinese firms. It has already been mentioned that China views the EU nexus between human rights and trade 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 peak tariffs on some products, and, last but not least, the arms embargo against China. China maintains that MES is not being granted, in order to put a further constraint on its growth, and that it is discriminated against, pointing out that Russia was given this status in 2002, even though at that time it was not (and still is not) a member of WTO. There is a formal reputation aspect not to be played down, because harmony and ‘not losing face’ is paramount in any Confucian culture. However, the wider consequences of this status are much more important: MES would render it very difficult for the EU to open anti-dumping (AD) cases against Chinese firms – this is the essence of the problem. Upon joining the WTO, China accepted to be treated as a non-market economy for 15 years 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 used safeguards against Chinese exports; in relation to trade value China is the biggest target. In order to avoid a full confrontation, the EU has given it

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the status of ‘transition economy’. That, however, does not carry much weight. More fundamentally, the EU argues that China is, in fact, not fulfilling 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-discriminatory 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 privatized firms. Only the last criterion is met, at least according to the EU. The EU has rather 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 chemical products). The increasing number of dangerous products originating from China is not inducing the EU to be more accommodating – quite the contrary appears to be true. The arm embargo was imposed in the aftermath of the Tiananmen repression in 1989; this problem too has two aspects: a face-saving and a practical one. China is seeing it as an offence to its status as a world power, and as an obstacle to its efforts to modernize the armed forces. After many decades of low profile in military matters China is now upgrading weapons and equipment, in order to be able to play a more visible role. The transformation, for instance, of its navy, from a brownwater to a blue-water force, is quite telling. Conclusions and Outlook In conclusion, it may be said that the EU has been investing enormous political, diplomatic, and financial resources into expanding its relations with China for many years. It has done so with a number of aims in mind: to support change towards a democratic society and an open market-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, but these were overcome because of China’s status as a developing country.

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In 2006 however, the EU realized that most of its hopes were unfulfilled and changed its political mood, asking China to deliver its part of the bargain (Berkofsky, 2008 and Scott, 2007). The EU ought now to set its priorities clearly, speak with one voice, and build up a credible stock of human capital. European objectives are many and encompass other areas than just economics: international security and politics, human rights, aid and cooperation, cultural exchanges count amongst those. What is clearly lacking is a coherent and open ranking with relative weights for any trade-off or compromise solution. This may be due to the fact that competences are fragmented and the EU’s bodies and Member States have their own aims and policies. The EU Commission has exclusive competence over trade matters, but is not always in tune with the EU Council; the Lisbon Treaty, if and when ratified and implemented, may solve some problems, at least partially. But national interests are often in conflict, and there is no ‘clearing room’ for finding a synthesis. Throughout 2004 and 2005 for example, conflicting signals over the arms embargo, and surcharges on Chinese (and Vietnamese) shoes and clothing, served to prove this point. It seems that people working with China frequently have little or no knowledge of its language or culture. Assignments rotate every few years and there is no incentive or time to acquire information and knowledge. Also, to many scholars and experts the solution appears quite simple: the EU ought to separate human rights and trade, give China the MES, and take a long-term view about IPR and similar problems (Messerlin and Wang, 2008, among others). However, it is not evident what the EU would gain from this compliant policy, given the past history of EUChina relations. The present world crisis is an additional obstacle, because economic nationalism and protectionism are making a come-back (Dreyer and Erixon, 2008 and Erixon and Sally 2009). A compromise solution will have to be found, because a breakdown is very unlikely and contrary to everybody’s interests: as major political and economic actors on the world stage, the EU and China are far too big to engage in long and costly confrontations.

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References Berkofsky 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, Policy Brief 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 European 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 downloaded on Jan 21, 2009). EUCCC. 2008. European Union Chamber of Commerce in China. Position Paper 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 wp 14700. Holslag, J. 2006. The European Union and China: The Great Disillusion. European Foreign Affairs Review, 555-580. Innes-Miller, J. 1969. The Spice Trade of the Roman Empire, 29 BC - Ad 641, Oxford, Clarendon Press, Oxford University Press. Koopman R., Zhi Wang, and Shang-Jin Wei. 2008. How Much of Chinese Exports is 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 Trade Policy strategy towards China. ECIPE-GEM wp 04/2008 Scott, D. 2007. China-EU convergence 1957-2003: towards a ‘strategic partnership’. Asia Europe Journal, 217-233. Shi, Wei. 2008. Intellectual Property in the Global Trading System: EU-China Perspective. Springer, Berlin.

EUROPEAN STUDIES 27 (2009): 241-258

EU-CHINA FOREIGN DIRECT INVESTMENT: A DOUBLE-SIDED PERSPECTIVE

Valeria Gattai Abstract This chapter analyzes the EU-China Foreign Direct Investment (FDI) relationship, through a double-sided perspective that considers the two partners in the mutual roles of ‘host’ and ‘home’ economies. Although many have traditionally identified China as a low-cost manufacturing location, the country has recently turned out to be an important home for multinational activity. Since internationalization of Chinese companies represents a very recent chapter in the country’s long history, this chapter first provides a brief historical overview to highlight the main steps along China open up path and clarify the role of government intervention in accelerating its global engagement. Based on recent data, the relative importance of China and the EU in the respective FDI outflows is then examined, so as to delineate the relevant trends, discuss the main findings and evaluate future perspectives. Introduction Many analysts regard Foreign Direct Investment (FDI) as a privileged entry mode into a foreign market.1 The upward trend in FDI that began in 2004 accelerated further in 2007, at a pace that varied greatly across 1 According to the IMF/OECD definition, FDI is investment in a foreign company where the investor owns at least 10 percent of the ordinary shares, undertaken with the objective of establishing a lasting interest in the country, a long-term relationship and a significant influence on the management of the firm (IMF 1993; OECD 1996).

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industries and regions (UNCTAD 2008). The sector pattern has been experiencing a steady shift towards services: while Foreign Direct Investment 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 emerging as significant host and home economies. Inflows into developed countries 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 total FDI inflows into industrialized economies (UNCTAD 2008). As far as developing countries are concerned, FDI inflows reached their highest level ever in 2007 (550 billion USD), with an increase of 21% over the previous year. Moreover, developing countries started to gain importance as a source of Foreign Direct Investment, mainly because of overseas expansion by Asian Multinational Enterprises (MNEs). Even though any observers have traditionally considered Asia as a host for Foreign Direct Investment, it has recently turned out to be an important home for multinational activity. China, in particular, has consolidated its position as a global investor, challenging the dominance of the Asian new industrialized economies as the main source of FDI outflows from the East (UNCTAD 2007). In December 2004, the Lenovo Group, China’s largest computer manufacturer, successfully acquired the global PC business of IMB, through a deal worth 1.25 billion USD. At the same time, the China Minmetal Group was negotiating a 100% acquisition of the Canadian nickel and copper mining giant Norand. The Shanghai Automotive Industry Corporation was considering injecting up to one billion pound sterling into a joint-venture partnership with MG Rover, Britain’s carmaker. In fact, since the early 1980s, China has been able to surprise global observers through a number of record performances, from steady economic growth to FDI attraction, from trade expansion to the emergence of a large and relatively affluent middle class. However, the one aspect of China’s rising power that is most noticed nowadays, with a mixture of enthusiasm and concern, is the dramatic growth of its outward FDI, moving from virtually zero in 1978 to the record stock of 95799 millions USD in 2007 (UNCTAD 2008). With lower restrictions on outward investment, and an increase in government

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efforts to promote global expansion, many expect China’s role as a major investor to keep on growing in the future (Zhang Y. 2005). Given these impressive figures, it soon becomes clear that China and the 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 picture of the EU-China FDI relationship, through a double-sided perspective that considers the two partners in the mutual roles of host and home economies. Is the EU a privileged destination for Chinese investment? What share of European FDI is oriented to the Chinese market? What are the sectors involved? What are the key issues and future perspectives? This chapter aims to answer the previous questions, by means of a detailed empirical analysis. Based on recent data, the relative importance of China and the EU in the respective FDI outflows will be described, highlighting the relevant trends and discuss the main findings. The double-sided perspective adopted here represents the main novelty of this analysis, compared to the traditional view of trade and investment flowing one direction from developed to developing countries. At the same time, it is obvious that the Chinese global strategy represents a very recent 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, and with a view to clarifying the role of government intervention in accelerating its global engagement. After delineating the historical background, much attention is devoted to the empirical analysis through a number of detailed statistics on European and Chinese outward FDI. Some concluding remarks then close the paper and suggest future lines of research. The Historical Setting Having remained aside from the international arena for a long time, China has emerged as a global economic power since the 1980s.2 This has resulted from important economic reforms that accelerated the transition from a planned towards a market system. The so called ‘Open Door Policy’ (jingji gaige), promoted by Deng Xiaoping in 1978, initiated a new era of modernization and growth: fast development, structural 2

[editors’ note]: see also the chapter by Nicholas Rees in this volume.

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changes and lifestyle improvements have made the country one of the main Asian players and an important FDI platform. China’s government intervention has been a leading ingredient beyond the whole modernization process, and a key force in first attracting, and later promoting Foreign Direct Investment, as a privileged gateway to capital and technology. The contribution of the Open Door Policy to inward FDI roughly falls in two major phases, from 1978 to 1990 and from 1990 to the present.3 The year 1978 proved to be an important threshold-date between the past, characterized by autarchy, socialism and planned economy, and the present, made by trade, internationalization and market structure. Through a gradual approach, the reform – launched at first in few Special 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 from the army to the political system. In 1979, the Law on Equity Joint-Venture legitimised Inward FDI. It provided the legal base for (partial) foreign ownership of Chinese enterprises. However, one has to wait until 1986 for wholly foreign-owned FDI to be formally accepted. Due to economic and legislative reforms, Western multinationals started to target the Chinese market, locating along the coastal regions were conditions to inward investment were more favourable. Some observers suggest (e.g., Li and Li 1999), that the year 1990 was a second critical threshold along the Chinese path of opening up. If the government objective during the 1980s was to modernize and internationalize as many regions as possible, the new goal in the 1990s is to deepen reforms, adding contents rather than territories. Therefore, incentives to inward FDI were increased and foreign penetration to the Western Chinese provinces was encouraged under the ‘Go West’ policy. It is during this phase that outward FDI started to grow and cross-border acquisitions by Chinese companies captured international attention for the first time, even if Beijing had been formulating its going out strategy since the early 1980s, as a critical component of the larger ‘Open Door Policy’ (Wu 2005). The outward internationalization of Chinese enterprises has evolved in stages, moving from experimental and highly regulated flows during the 1980s, to rapid spread of overseas affiliates one decade later, and 3

For more details see Li and Li (1999).

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hyperbolic growth of multinational activity nowadays (Cai 1999; Tseng 1994; Warner et al. 2004). While it was a part of the overall design of a number of policies to help companies to invest abroad, the main motivations for the Chinese government in supporting multinational expansion lay in the three categories of access to overseas natural resources, geopolitical positioning and increase of national competitiveness through advanced technology and business experience (Schuller and Turner 2005). Broadly speaking, government policy on outward direct investment can be classified into five stages, corresponding to the years 1979-1983, 1984-1992, 1993-1998, 1999-2002, 2003-present (Zhang K. 2005). It is possible to characterize the first period (1979-1993) as a process of caseby-case approvals. At this stage, only state-owned trading companies and municipal-based economic and technological cooperation enterprises could legitimately invest abroad. The State Council was the only authority to examine and approve outward FDI and there was no regulation specific on this issue. The second period (1984-1992) saw the standardization of the approval procedures. In particular, the liberalization of restrictive policies allowed more enterprises, including non state-owned ones, to establish subsidiaries abroad. However, one has to wait until 1993-1998 for a stricter screening and a more rigorous monitoring process, induced by a surge of state asset losses in Hong Kong real estate and stock markets. As a result, several new measures helped to regularize FDI outflows. They also ensured that investors placed Chinese capital abroad properly, i.e. for production purposes. Many analysts consider the fourth period (1999-2002) as the starting point for Chinese enterprises to go global, by encouraging overseas projects in processing trade. The government specifically urged enterprises producing textiles, machinery and electrical equipment to establish manufacturing subsidiaries abroad, in order to process raw materials. To favour international involvement, export tax rebates, foreign exchange assistance and financial support were granted to Chinese companies using own raw materials or made parts and machineries. Finally, in the course of the Sixteenth Party Congress of the Chinese Communist Party (CPP) in 2002, the new leadership advocated the so-called ‘Go Global’ strategy (zhou chu qu) to improve overall levels of the opening-up of the economy. Therefore, during the fifth stage, outward Foreign Di-

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rect Investment received a great boost from government intervention in creating incentive policy, streamlining administrative procedures, easing capital controls, providing information and guidance and reducing investment risks.4 Because of its relatively late start, Chinese outward FDI is still quite small by world standards, but it is accelerating fast. To analyze it in detail, the next section describes the EU-China Foreign Direct Investment relationship, through recent data and comparative statistics. Empirical Evidence: FDI from the EU to China By the end of 2006, total FDI outflows from the European Union amounted to 260.2 billion EUR, against 157.1 billion EUR of inflows during the same year (EUROSTAT 2008a). Figure 1 shows the geographical distribution of outward flows to stress the relative importance of Asia in general, and China in particular, as a destination of European overseas operations. Based on EUROSTAT (2008a) data, North America received the largest share (40%) in 2006, followed by European countries not included in the Union (26%), Latin America (15%) and Asia (11%). Hence, EU multinationals showed a clear tendency to locate their overseas affiliates in high-income developed countries and to target transition economies with minor emphasis. Asia as a whole accounted for a limited 11% of outflows, however almost half of these were oriented towards China that turned out to be the major recipient of the region. Figure 2 details the geographical distribution of Foreign Direct Investment from the EU to East Asia, organised by host economy, in the years 2002-2006. Empirical evidence shows that China was a privileged host over the whole period, with a peak in 2004. Nowadays, almost 50% of the accumulated outward stock of FDI in East Asia emerges from China, along a steep ascending path begun in 2005.

4

For more details, see Zhang Y. (2005).

EU CHINA FOREIGN DIRECT INVESTMENT

Figure 1: EU FDI outflows by destination, 2006

Latin America 15% North America 40%

Other European countries 26% Africa 5%

Oceania 3%

China (incl. HK) 3%

Other Asian countries 8%

Source: abstracted statistics from: Eurostat (2008a) Figure 2: EU FDI to East Asia, by country (million EUR), 2002-2006 15500 13500 11500 India Thailand

9500

Malaysia Indonesia

7500

Singapore 5500

Philippins China (incl. HK)

3500

South Korea Taiw an

1500 -500

2002

2003

2004

2005

2006

-2500

Source: abstracted statistics from: Eurostat (2008a)

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A number of purposes can drive the decision to operate in China, from the huge market dimension to the low cost labour force, from the need to avoid thigh competition or constrictive laws at home, to the wish to establish a commercial platform in Asia. According to recent studies on European FDI in China, market-seeking considerations tend to play the major role, followed by the low cost labour force. This issue correlates with the destination of the goods produced in China. In a comparative study of Swiss, Spanish and Italian operations in China, I have shown earlier (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 horizontal FDI, aimed at serving the host market, while asset-seeking motivations are of major importance in the case of vertical operations, driven by production efficiency considerations (Markusen and Maskus 2001). If one analyses the entire sample of European direct investments in China, one can see that manufacturing activities are represented most significantly (48%), as taking advantage of the low cost labour force; however, services (37%) are also gaining in importance, because of the country’s modernization process and technology advance. As many authors suggest (see, among others, Zhang Y. 2005) China is no longer a low cost manufacturing location or; at least this not the only view of a country with almost 800 foreign R&D centres dotted all around its territory Looking at EU Member States, it transpires that their propensity to invest in China is not homogenous, but it varies greatly across the Union. For instance, UK multinationals showed a strong tendency to operate in China, to make the country the most important home for EU outward FDI in 2007, followed by Germany, France and Spain (see Figure 3). Italy, Belgium, Sweden and Luxembourg complemented the picture of outward direct investment, but their accumulated stock in 2007 appeared less pronounced. Many studies (e.g., Guopei 1999; Chapel 1998; Luo, 2000; Harris and Moran 1996) provide documentary evidence of the perception that China is still perceived as a very complex and distant destination for European companies, this distance being not only physical, but also psychological, which makes it extremely hard for foreigners (especially Western) to work there and achieve success. Market players sometimes feel frustrated or even indignant about their experiences in China: they take part in

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lengthy negotiations, they write letters and send catalogues that fail to evoke responses and they make journeys to and from China, all without definite results. Following closely my earlier findings (Gattai 2008), I would re-emphasise that cultural distance, linguistic difficulties, lack of good infrastructure and the absence of a clear and transparent legal system are among the main complaints of European investors in China. This made many of them opt for joint ventures, rather than wholly owned subsidiaries. Figure 3: EU outward FDI stock to China, by member state, 2007

France 19,2%

Belgium 4,1%

Luxembourg 0,3% Sw eden Italy 1,0% Spain 4,3% 8,6%

Germany 24,7%

UK 37,7%

Source: abstracted statistics from: Eurostat (2008a)

The reasons to engage in a partnership range from the sharing of risks and costs to achieving an optimal size, from enhancing skills and competitive position to gaining local support, with the last motivation being on top of European priorities. Indeed, many observers still consider finding a partner who is acquainted with the domestic context, able to negotiate with Chinese suppliers and customers, and skilful in engaging the local authorities, as a privileged gateway into the country. Among European MNEs that established wholly owned subsidiaries in China, the largest majority chose this entry mode in order to achieve strong control over technology transfer and high flexibility standards in lines

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with the theoretical expectations.5 Especially high tech companies are very reluctant to invest in developing countries since they do not want to share intangible assets, such as technology, human capital and reputation, with a lower skilled partner. Wholly owned subsidiaries seem the most natural way to avoid this risk, as MNEs simply work alone and they do not need to consult with a local counterpart on management decisions. Having described European outward investment to China, this chapter now turns to what may be termed the opposite side of the story: Chinese outward investment to the EU. Empirical Evidence: FDI from China to the EU By the end of 2007, nearly 7000 Chinese firms have established more than 10000 overseas subsidiaries, spreading in almost 200 countries worldwide (MOFCOM 2008). The accumulated outward FDI stock accounted for 95799 million USD and outflows reached 22469 million USD. Figure 4 shows the geographical distribution of Chinese FDI outflows by destination country, in the period 2005-2007. Based on these data, Asia is attracting the largest share of Chinese overseas operations, with increasing importance over the years 2005, 2006, 2007. One can regard Latin America as a leading destination too, but its weight has decreased over time, while Africa, North America, Oceania and the EU accounted only for a limited percentage of Chinese FDI, even if their role as recipients is larger today compared with the 2005 figures.6 Some authors suggest (see, for instance, Kumar 1998), that Chinese MNEs exhibit a strong investment-concentration on a small number of destinations. Some of them are high-income and developed countries. These differ from transition economy multinationals, which target only similar markets. As far as the European Union is concerned, its percentage of total Chinese FDI outflows in 2007 amounts to nearly 4%, reaching 1044.12 million USD. This amount is unequally distributed across EU Member States. The UK is the largest recipient, with more than 50%, followed by Germany (23%), the Netherlands (10%) and Sweden (7%), while Italy, France, Poland, Romania, Spain and Hungary are among destination countries as well, but they account for very limited percentages.

5 6

For a survey, see Markusen 1995, Barba Navaretti and Venables 2004, Saggi 2000. Similar results hold when we look at the accumulated FDI stock.

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Figure 4: Chinese FDI outflows by destination country (non-financial), 2005-2007 7 0%

6 0%

5 0%

4 0%

2 00 5 2 00 6

3 0%

2 00 7 2 0%

1 0%

0% A s ia

A f ric a

EU

Oth e r L a tin No rth O c e an ia Eu r op e a n A me ric a A me r ic a c o un tr ie s

Source: abstracted information from: MOFCOM (2008)

There exists a close relationship between the sector and geographical distribution of Chinese outward investments: Chinese investors tend to target Africa and Latin America for their abundance of natural resources, whereas they are accessing Europe and North America primarily because of market and asset-seeking considerations (Nicolas and Thomsen 2008). Chinese firms are motivated to internationalize their operations through a variety of ‘push’ and ‘pull’ factors. It is possible to group these into four main categories: the security of raw materials and natural resources, the support for export and access to new markets, the acquisition of advanced technology, know how and well-known brands, and the establishment of local distribution networks to compensate for overcapacity in the domestic economy (Wu 2005; Zhang K. 2005; Deng 2007). While early protagonists of Chinese internationalization were stateowned enterprises, operating in a highly regulated policy environment, and motivated by the first class of reasons, new actors are now appearing in the international arena, driven by global ambitions and strategic considerations, rather than hunt for natural resources (Child and Rodrigues

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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 is mandatory to keep the importance of the state in perspective. Although some investments are still aiming to secure raw materials, and involve state-owned enterprises, the drivers for the vast majority of the projects are now international and domestic competition. Put another way, Chinese firms are encouraged to go abroad to acquire those skills and technologies that inward flows were not able to deliver. This is particular evident in the EU, where localization is dictated by purely opportunistic considerations. In fact, Chinese investors tend to select the sectors for which a given country has a particular strength; therefore, they invest in machinery in Germany, in automobile in the UK and in design in Italy, to capture externalities created by host country 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 creative reconsideration of mainstream theory concerning FDI and international expansion. While traditional investment patterns, based on Dunning’s OLI paradigm (Dunning 1993), were explained by resource transfer to a host country (see, for instance, Caves 1996), strategic asset seeking-FDI is undertaken in order to access intangible resources and gain new capabilities in a host country. This is particularly true for Chinese MNEs because, as latecomers, they urgently need to engage in Foreign Direct Investment to address their competitive disadvantages and improve their global competitiveness. Notice that competitive disadvantages include a number of critical issues such as regional protectionism, limited access to capital, lack of developed intellectual property rights, under-provision of training and education, poor local infrastructure and fragmentation of regional 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 account 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 has still a comparative advantage in terms of production efficiency, by means of cheap inputs and low labour costs. There is, therefore, a tendency to perform manufacturing activities domestically, rather than off-shored.

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Figure 5: Chinese FDI outflows by economic activity (non-financial), 2007

o th er 8% le as in g & bu s in es s se rvic es 2 1%

a gri cu lt ure , fo res try , fis he ry 1% m in in g 15 % ma n ufac tu ry 8%

tra ns p ort 1 5%

fi na nc e 6% wh ol es a le & re ta il 2 6%

Source: abstracted information from: MOFCOM (2008)

In line with the previous discussion, it is possible to offer a rough taxonomy of Chinese internationalization strategies, based on their asset-seeking motivations. While developed countries multinationals are primarily interested in protecting their intangible resources when expanding abroad, Chinese MNEs try to access those resources, and they select their entry modes accordingly. As a result, they operate abroad mainly through acquisitions of foreign enterprises with certain characteristics. Following closely the arguments of Schuller and Turner (2005), Chinese acquirers tend to select overseas companies because of their distribution network, brand name and technology. Ailing or financially distressed firms, competitive niche producers, former partners or contractors are among the number one targets: indeed Chinese firms contribute financial strength, but they lack technical expertise, whereas European firms have financial difficulties, but they are able to supply know how. Hence, a perfect matching results when they decide to partner. Although acquisition of an existing facility is the most common entry mode in Europe, some Chinese multinationals have built new plants from scratch, under a greenfield investment scheme. This often consists of the establishment of headquarters, subsidiaries, trade representative offices, trading companies

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and R&D centres, in order to facilitate Chinese access to the European market and to help with the customization of products to meet local consumers’ needs (Deng 2007). Before concluding this analysis, it is worth mentioning that China is as large as a whole continent. This makes it challenging to explore its global involvement at the provincial level. Such an analysis would help to evaluate whether internationalization is a widespread phenomenon, or confined 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%) and Zheijiang (6%). In fact, the promotion of Foreign Direct Investment is not equal throughout the country; rather, it shows clusters in a few coastal regions, which are also the main recipients of FDI inflows. Figure 6: Chinese FDI outflows by province (non-financial), 2007

Other 28%

Shanghai 8%

Jiangsu 8% Zhejiang 6% Fujian 6% Xiam en 3%

Sichuan 5% Shenzhen 15%

Guangdong 18%

Source: abstracted information from: MOFCOM (2008)

Shandong 3%

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Conclusion This chapter has provided a brief overview of the FDI dimension of the EU-China relationship. It has done so by means of a double-sided perspective, since both regions are now acting as both investor and investment recipient on the world’s stage. This reflects the new view of the People’s Republic of China becoming a major source of multinational activity rather than a magnet (Deng 2007; Schuller and Turner 2005). European observers frequently greet this idea with a mixture of enthusiasm and concern. What then, is the relative importance of China for EU outward investment? What share of Chinese FDI is oriented to Europe? Based on the empirical evidence reviewed in this chapter, two distinct results are worth mentioning: firstly, EU-China Foreign Direct Investment is still a limited phenomenon, both in terms of flows and stocks; secondly, it involves a growing number of firms, therefore it is likely to raise some questions about the impact of cross-countries operations on the domestic market. While the influence of Foreign Direct Investment on China’s growth has been widely documented in the past (e.g., Guopei 1999), it has been the particular concern of this study, to explore ‘the other side of the story’; that is to say, the effect – if any – of Chinese operations in Europe. For the time being, Chinese investment in EU has had but little impact. This, however, continues to depend on a number of specific reasons, none of which is set in stone. Firstly, Chinese investment represents a small share of total inward FDI into the EU. Most of it arrived only recently; secondly, many acquisitions have not yet succeeded in restoring ailing European firms to health; thirdly, investment is seldom targeted towards labour-intensive sectors in which the impacts of unemployment could be anticipated; and fourthly, European firms have already transferred a large share of production to China. The author believes that a number of these issues deserve more attention in the future, as they provide precious clues for future discussion. Schuller and Turner (2005) point out that acquisitions of Western companies by Chinese multinationals and green-field-operations have frequently resulted in unsuccessful stories, casting doubt on the effective sustainability of what may be termed ‘the dragon’s surge’. Failures in acquisitions, in turn, often depend on overly optimistic market expectations and synergy estimations, poor merger integration and excessive pricing in competitive tender offers (Copeland et al. 2000). These prob-

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lems stand for domestic as well as for foreign operations, but it is likely that the international scenario exacerbates the relationship between the acquired and the acquiring firms. While there is a considerable amount of literature that emphasizes the difficulties encountered by Western multinationals in China7, cultural distance and different negotiation styles can also affect Chinese crossborder mergers. Another common fear, among European firms, relates to the bad reputation of China’s state-owned enterprises. These still represent a significant share of overseas investors. Indeed, Chinese participating affiliates appear to be afraid of being tainted by poor management practices, low productivity and a lack of transparency from their parent companies. Adding to this, in some sectors, Chinese investors represent a competitive threat to European firms, especially as they become more adept at managing brands and at meeting local tastes. Finally, China’s hunt for natural resources raises the alarm of national economic security in some of the countries being ‘targeted’ (Zhang K. 2005), once environmental degradation and sustainable development have become urgent issues in the political agenda. A number of analysts point out (e.g., Zhang Y. 2005), that political and social turmoil, high public debt and social inequality are among the most serious ‘drawbacks’ of China’s multifaceted story, adding to the astounding economic growth. Having described some potential risks of Chinese FDI for European firms, I would conclude by pointing to some benefits eventually implied by China’s ‘Go Global’ attitude. As Nicolas and Thomsen (2008) suggest, Chinese operations may contribute to industrial resurgence, through acquisition of some ailing local firms, and they are likely to provide direct access to Asian markets by exploiting established links with overseas multi-national enterprises. Moreover, it is noticeable that many fears about the so-called ‘dragon’s surge’ relate to a limited awareness of Chinese outward investment, since it is a relatively new phenomenon. There is still a considerable lack of in-depth research in this area. While this chapter represents a first attempt at critically examining EU-China investment relations, I believe that further research is needed, based on firm-level data, in order to delineate a neater picture, and with a view to evaluating some future perspectives in detail. The way in which 7

See the empirical section about FDI from the EU to China.

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Chinese firms adjust to, and learn from, global markets will not only affect the economic future of the People’s Republic of China, but may influence its relations with other regions of the world – first among them the European Union.

References Barba 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 China Quarterly 160:856-880. Caves, Richard E. 1996. Multinational Enterprise and Economic Analysis. Cambridge UK: Cambridge University Press, Second Edition. Chapel, William B. 1998. ‘Effective Management Communication for China’ in Selmer, John (ed.) International Management in China. London: Routlegde: 169181. Child, John and Suzanna B. Rodrigues. 2005. ‘The Internationalization of Chinese Firms: A case for Theoretical Extension?’ in Management and Organization 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 Case of 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.eu Gattai, 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: 224232. Harris, Peter R. and Robert T. Moran. 1996. Managing Cultural Differences. Houston, TX: Gulf Publishing Company. IMF. 1993. Balance of Payments Compilation Guide. Washington, DC: International Monetary Fund.

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Kumar, Neil (ed.). 1998. Globalization, Foreign Direct Investment and Technology Transfers: 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: 169189. Markusen, James R. and Keith Maskus. 2001. ‘General Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence’, in NBER Working Paper Series 8334. MOFCOM. 2008. Statistical Bulletin of China’s Outward Foreign Direct Investment at www.mofcom.gov.cn Nicolas, Francoise and Stephen Thomsen. 2008. ‘The Rise of Chinese Firms in Europe: Motives, Strategies and Implications’. Paper presented at a Research 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 Edition. Saggi, Kamal. 2000. ‘Trade, Foreign Direct Investment, and International Technology Transfer. A Survey’, World Bank Policy Research Working Paper 2329. Schuller, Margot and Anke Turner. 2005. ‘Global Ambitions: Chinese Companies Spread their Wings’ in China Aktuell-Journal of Current Chinese Affairs 4: 3-14. Tseng, Choo S. 1994. ‘The Process of Internationalization of PRC Multinationals’ 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.org Warner, Malcom, Sek H. Ng and Xiaojun Xu. 2004. ‘Late Development Experience and the Evolution of Transnational Firms in the People’s Republic of China’ in Asia Pacific Business Review 10: 324.345. Wu, Friedrich. 2005. ‘The Globalization of Corporate China’ in NBR Analysis 16(3). Zhang, Yongjin. 2005. China Goes Global. London: The Foreign Policy Centre. Zhang, Kenny. 2005. ‘The Why, Where and How of Chinese Companies’ Outward Investment Intentions’ in Asia Pacific Foundation of Canada 5.

EUROPEAN STUDIES 27 (2009): 259-273

CHINA’S SEARCH FOR ENERGY SECURITY AND EU-CHINA RELATIONS

Pradeep Taneja

Abstract This chapter focuses on China’s search for energy security, especially in the oil and gas sector, and on the impact of this search on China’s relations with the European Union (EU). It places the Chinese energy security strategy within the context of the country’s economic reform program by examining the political dynamics behind developments in the energy sector. The study outlines some key initiatives China has taken to ensure regular and cost-effective oil and gas supplies. It surveys China’s energy security policy and the institutional structure which supports it. China’s search for energy security has led the PRC to develop closer political and military ties with a number of countries in Africa, the Middle East and Central Asia; Chinese state-owned oil and gas companies have invested billions of dollars in the development of energy assets there. These efforts have been backed up by Chinese civilian and military aid flows to some strife-torn countries in Africa. This is seen by many European politicians and EU officials as ‘undermining’ their efforts to improve quality of governance and respect for human rights in those countries. This chapter examines the differences between the European Union and China over the situation in the Darfur region of Sudan, a country in which China has made significant investments in nearly all aspects of the oil industry.

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Introduction Since the beginning of China’s economic reform program in 1978, the Chinese Communist Party (CCP) has pursued three basic goals: national unity, economic prosperity and social and political stability. With the return of Hong Kong and Macau to Chinese sovereignty in 1997 and 1999 respectively, the first goal has been partially met, although it will not be considered to have been fully achieved until Taiwan is reunited with the mainland. The second goal has also been partially achieved as reformist policies have delivered an average annual rate of 9 per cent economic growth over the past 30 years, catapulting China into the league of leading economies of the world. On the third goal, a precarious balance has been maintained, especially since the events of Tiananmen Square in May-June 1989, in the form of an unwritten social compact between the government and the Chinese people, ensuring social stability in return for continuing improvements in living standards. Indeed, the three goals are interrelated, although maintaining social and political stability is regarded by the CCP leadership to be paramount. China’s leaders regard an annual increase of eight per cent in Gross Domestic Product (GDP) as essential for keeping employment up and the possibility of social and political unrest down.1 The ongoing global financial crisis prompted the Chinese government, in November 2008, to unveil a massive stimulus package of nearly US$600 billion to ensure GDP growth stays above 8 per cent. As an additional measure to stimulate the domestic economy, in his report to the National People’s Congress (NPC) in March 2009, Premier Wen Jiabao projected a fiscal deficit of 950 billion yuan (US$139 billion) for 2009, the highest deficit in six decades. At the same time, he also committed to improving ‘the early warning system for social stability to actively prevent and properly handle all types of mass incidents,’ using the official code for protests and riots that might threaten the stability of the regime.2 It is, therefore, clear that maintaining a high GDP growth trajectory is crucial to preserving social and political stability in China. One of the critical factors behind China’s enviable record of economic growth over 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.htm l (consulted 03.06.2009).

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the past three decades has been its relatively easy access to global energy and mineral resources. China is now focused on developing a comprehensive energy policy that will underpin its future economic growth. Given the importance of energy to China’s future economic growth and political stability, this chapter focuses on China’s search for energy security, especially in the oil and gas sector, and its implications for its relations with the European Union. It begins by describing China’s energy policy within the context of its domestic economic reform program before outlining some of the key global initiatives China has undertaken to ensure regular and cost-effective supplies of oil and gas to fuel the continuation of its economic boom. The chapter then looks at areas of concern insofar as the impact of these initiatives on China’s relations with the European Union is concerned. It concludes by highlighting the potential for cooperation between the two sides in areas where they share common interests and goals, such as clean coal and alternative sources of energy to deal with the impact of climate change. Energy Security: Background China’s rapid economic growth over the past three decades has led to a sharp increase in energy consumption, especially coal, oil and gas. It is already the world’s second largest oil consumer after the United States, accounting for over 10 per cent of the world’s total oil consumption. In 2008, China crossed an important energy milestone as its oil imports equalled domestic production for the first time, making it the third largest importer of oil, relying on imports for fifty per cent of its domestic demand of 7.6 million barrels per day3. However, unlike other major oil importing countries, China is not a member of the International Energy Agency (IEA), set up after the oil shocks of the 1970s to help developed countries manage oil supplies.4 It largely relies on its own efforts to secure and manage oil supplies to meet its current and future energy needs, although it has also begun to work with other countries to promote energy cooperation, as will be discussed later in this chapter. 3

‘China oil dependence sparks concern’, Radio Free Europe, 5 January 2009. 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 Assistant Secretary of State, said in Beijing: ‘China should consider a declaration that it plans to pursue membership in the IEA. This could help ameliorate the anxiety expressed in some quarters over its intentions as it pursues greater energy security’ (Shai Oster 2008). 4

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Ever since China became a net importer of oil in 1993, the country’s leadership has intensified its efforts to ensure that its continued economic growth will not be short-circuited by energy shortages. In addition to inviting foreign oil companies to invest in oil and gas exploration on Chinese territory beginning in the early 1980s, the Chinese government has also encouraged its state-owned oil and gas companies to look for and acquire valuable oil and gas assets in other parts of the world as part of its ‘go out’ policy. As Daniel Yergin (2005) points out, ‘China is participating in partnerships, acquiring oil reserves, contracting for future supplies of liquefied natural gas, selling oil field services, developing projects around the world, and buying lots of oil.’ Before discussing China’s international efforts to achieve energy security, however, it would be useful to discuss the domestic political context in which the country’s reform and energy security policies are formulated. While international politics has always been at the centre of the global energy security debate, often little attention is paid to the internal political dynamics in individual countries in relation to their energy policies5. Doing so in this case would allow us to visualise the domestic context in which China seeks to secure energy supplies for its future economic development. While the Chinese state has retreated from 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 on a number of important industrial sectors, including the oil and gas industry, despite many institutional changes over the past thirty years. The management and control of the energy sector has been the subject of intense discussion both in official channels as well as in the growing number of semi-official publications and internet discussion forums in China. Economic Reform and Energy Policy To understand China’s energy security initiatives it is necessary to first examine the political dynamics behind China’s economic reform program. As has been noted by Peter Nolan (2001), China’s effort to support the growth of ‘national team’ of large firms, which are globally competitive was against the prevailing global trend of liberalization and privatization. By contrast, the neoclassical economic orthodoxy which 5

See also the chapters by Keyuan Zou and Christopher Williams in this volume.

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guided the industrial reform in Russia and other former Soviet-bloc countries emphasised the role of small- and medium-sized enterprises and downplayed that of larger firms. It also had a ‘highly idealised’ view of the workings of advanced capitalism and an ardent faith in the corrective mechanisms of the market. China’s gradualist approach to economic reform, encapsulated in the saying mozhe shitou guohe or ‘crossing the river by feeling the stones,’ represented a break from the old-style central planning but without totally abandoning it at once. It also represented an evolving political consensus within the CCP in favour of market-oriented economic reform. In contrast to Eastern Europe, industrial policy in China has drawn from nonmainstream economic theory and considerations of ‘national pride and power’ (Nolan 2001: 5). A look at the institutional structure of China’s oil and gas industry and the incentives for individual bureaucrats and managers also provides meaningful insights into China’s current political and economic system. As Philip Andrews-Speed (2004: 364) has argued, ‘the major political questions relevant to the energy sector concern the role of the Communist Party and the authority of the central government’. In fact, the two issues are interconnected. In spite of the perceived decline in the legitimacy and controlling power of the Party, the CCP remains a strong institution. Its membership has grown steadily over the past decade and now numbers around 73 million as many private entrepreneurs and corporate leaders are welcomed into the Party. According to some estimates, less than hundred of the one thousand richest people in China are not linked to the CCP (Lee 2009). It must be acknowledged, however, that economic decentralisation has resulted in some decline in the ability of the Party and the central government to control events at local and enterprise level. But petroleum companies are major enterprises and the majority of their leaders are senior party members who must follow the guidance of the Party leadership if they are to survive within the system. The Chinese government is the controlling shareholder in all the major oil and gas companies in China even though most are now listed companies. However, with the exception of a short-lived and ineffective Ministry of Energy that existed between 1988 and 1993, China has not had a significant and powerful coordinating agency charged with oversight of the oil and gas industry, although several ministries and other govern-

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ment agencies have overarching authority across the industry. These agencies include the National Development and Reform Commission (NDRC), Ministry of Commerce, State Asset Supervisory and Administration Commission, and the State Environmental Protection Administration. In March 2003, an Energy Bureau was set up by bringing together the energy components of a number of departments within the NDRC, except the pricing department. But the bureau had fewer than one hundred employees – nowhere near enough to provide coordinated policy certainty to the sector. In 1988, when the now-defunct ministry of energy was created, the Ministry of Petroleum was abolished and its assets were divided between two newly-created companies: China National Petroleum Corporation (CNPC) and the China National Petrochemical Corporation (Sinopec) with responsibilities for upstream and downstream activities respectively. Together with a third company - the China National Offshore Oil Corporation (CNOOC) - these companies control the bulk of China’s oil and gas assets at home and abroad. Because of the dominance of large companies, the petroleum industry remains highly centralised; at least in comparison with the coal industry where close to 50 per cent of the output comes from locally-controlled coal mines. In spite of this, the Party and central government sometimes find it difficult to exercise adequate control and supervision over these companies or to hold them accountable for their actions. While these companies are responsive to the central government’s requirements for energy security, as publicly-listed companies on Chinese and foreign stock markets, they are also accountable to their other shareholders. This often presents serious dilemma for the managers of these companies.6 The much-publicised but ultimately failed attempt by CNOOC to take over California-based Unocal in 2005 highlights some of the political complexities inherent in the current system. As a public listed company, the CNOOC board consisted of eight directors, including four foreigners who sat on the board as non-executive members. However, the board members were apparently not even informed about the plan by the company’s chief executive officer, Fu Chengyu, until the negotiations were already well underway with Unocal management. The four foreign directors of the company found this unacceptable and refused to support 6 The real issue here is the ability of the Party and central government to adapt to a changing economic environment, which brings forth new types of market participants and creates the need for new modes of corporate governance.

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the plan until the details of the plan were professionally examined (Powell 2005). What is unknown here is the role, if any, played by the senior leaders of the central government and the CCP in this audacious bid by CNOOC to takeover America’s 9th largest oil company at the time. Was it a purely corporate decision by the company’s chief executive or was he instructed by the Party and government leaders to pursue this option? It is very difficult to determine the facts in this matter. In answering a question about the role of the Chinese government in his bid to takeover Unocal, Fu Chengyu later claimed: The only thing we needed permission from the Central Government was to take such a sizeable amount of money out of the country. That’s all. We received that permission from the appropriate financial authorities, and that’s been the extent of government involvement. (Time Asia 2005)

However, given the level of secrecy maintained by Fu before revealing the plan to his company’s board, it seems likely that the plan must have been at least discussed at the highest level of government and Party hierarchy. The code used for the acquisition plan – ‘operation treasure ship’— is also revealing of its importance for restoring China’s national pride. ‘Treasure Ship’ (baochuan) was the name of the flagships used by the Ming Dynasty seafarer Zheng He who led seven massive fleets to the Western Pacific and the Indian Ocean between 1405 and 1433. The acquisition of a major American company by a Chinese firm would have symbolised China’s arrival as a major power in the world economy. One of the potential obstacles to China’s realisation of the three basic goals discussed at the beginning of this chapter is energy. Severe electricity shortages since 2002 and soaring oil prices and demand have highlighted the ineffectiveness of China’s dysfunctional energy bureaucracy. As a result, the State Council, China’s cabinet, has appointed a new energy coordination taskforce under the leadership of Premier Wen Jiabao. It has also established an Office of Energy which will report directly to the taskforce. The creation of the new Office of Energy under the State Council can be explained as an attempt to halt the breakdown of hierarchies7 in the face of soaring demand for energy and highly volatile oil prices. This move is not dissimilar to the creation by the Party of the Central Financial Work Commission (CFWC) in the aftermath of the Asian Financial 7

This concept is developed by Steven L Solnick (1996).

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Crisis in 1997. As argued by Heilmann (2005), the purpose of this commission was also to prevent the breakdown of hierarchies and to reassert central policy decisiveness in financial affairs. The CCP leadership has shown time and again that the Leninist means of control, in particular its nomenclatural system, provides the basis for upholding a precarious balance between economic decentralisation and political coherence. As Heilmann (2005) has demonstrated, under the Zhu Rongji government, Party supervision in the financial industry was exercised mainly through appointment, performance appraisal and ‘discipline inspection’ of company cadres. It is not uncommon in China today for officials to move between corporate and bureaucratic positions at the behest of the Party leadership. A case in point is the appointment of Ma Fucai as a deputy head of the Energy Office. Ma was General Manager of China National Petroleum Corporation (CNPC) when 243 people died in an oil well explosion in Chongqing in December 2003. He later took moral responsibility for the accident and resigned from the position. His appointment to the Energy Office post signalled his return to public office after having spent some time in political and corporate wilderness. The Party’s right to appoint, transfer or sack senior corporate executives of state-owned firms, means that it is able to control their corporate and political behaviour to a large extent. In another example, Chen Tonghai, the head of Sinopec, the largest oil refining company in Asia, resigned from his position in June 2007 for what was then described as ‘personal reasons’. But it was later revealed that he was removed because of corruption and ‘decadent behaviour’.8 He was also expelled from the Party. His replacement was an executive of PetroChina, a subsidiary of CNPC, another state-owned oil company. Energy Security: International Initiatives Ever since it began its economic reform program, the Chinese government has made concerted efforts to ensure its economic growth prospects are not curtailed by a lack of energy resources or interruptions to energy supplies. It has taken a number of steps in this direction, including supply diversification, the build-up of a strategic oil reserve, more efficient fuel use, maximizing domestic oil and gas production and sub-

8

“Chinese Business leader ‘corrupt’”, BBC News, 25 January 2008.

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stitution. It has also begun working with other countries – both producers and consumers of oil and gas – to promote energy cooperation. As a sign of its willingness to cooperate with other countries and to allay fears about the negative implications of its global energy investments, China has established regular dialogue mechanisms with both the European Union and the United States on energy-related issues. In June 2004, it hosted a meeting of the twenty-two member Asia Cooperation Dialogue (ACD) which focused on energy cooperation. This meeting issued a framework agreement on energy cooperation in Asia. Known as the Qingdao Initiative, this document was aimed at developing long-term policies to promote energy security in the wider Asian region (Hu 2004). Speaking at the Qingdao ministerial meeting, Premier Wen Jiabao said that the Chinese government stands for ‘accommodating the interests of others while safeguarding a country’s own interests’ (Hu 2004). Not surprisingly, protecting China’s own energy interests has been at the forefront of China’s new energy security strategy. The most important plank of this strategy has been the acquisition of offshore energy assets in different parts of the world. Chinese oil companies have been willing to pay premium prices for oil and gas assets in jurisdictions where many multinational oil companies are reluctant to go because of higher levels of economic and political risks or because these countries are listed as ‘rogue’ states by the United States. Major Chinese oil companies such as CNPC frequently outbid foreign oil companies, some of them from other energy-hungry developing nations like India, in acquiring minority or controlling stakes in overseas oil and gas projects (Rashid and Saywell 1998). Oil and gas security considerations have led China to reach out to countries in Africa, the Middle East, South America as well as its neighbour Russia and the Central Asian states, some of whom have rich oil and gas reserves. With an eye on their energy resources, China has developed closer political and military ties with a number of these countries. Chinese state-owned oil and gas companies have invested tens of billions of dollars in the development of energy assets in these countries. The first shipments of crude oil from Chinese-owned oil fields located abroad arrived in China from Kazakhstan and Peru in late 1997, marking the beginning of this new energy strategy in Beijing (Rashid and Saywell 1998). This strategy entails locking in energy supplies by buying drilling rights and oil fields or signing loans-for-oil deals with governments

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across the world and shipping the crude back home to meet rising domestic demand. When crude oil price reached a record level of US$147 a barrel in July 2008 before falling to a low of US$33 a barrel in February 2009, Chinese oil companies escalated their acquisition of foreign oil fields and drilling rights with the help of Chinese state-owned banks. As many oilrich countries lack financial resources to develop new oil fields or other related infrastructure, China has been offering loans on favourable terms to these governments or government-owned companies in return for oil on long-term contracts. Between February and May 2009, China committed 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 relationships with oil-producing countries seeks to bypass the world market as much as possible, which many developed countries want to strengthen and better regulate. In 2006, the former Australian Treasurer, Peter Costello, told a gathering of G-20 finance ministers in Melbourne, ‘I believe that true energy security is not possible without effective energy markets, strong regional cooperation, and sound policy and regulatory frameworks’ (Uren 2006). He added that his vision was ‘the creation of an energy freeway linking energy suppliers and consumers across the Asia-Pacific region for the benefit of all’. This is a view shared by a number of oil industry experts and scholars in the West who believe that China’s strategy is unlikely to succeed. Citing the experience of France in the 1980s with Iran, Amy Myers Jaffe (quoted in Uren 2006) warns that ‘Hard lessons have been learnt in the West about the ineffectiveness of strategic bilateral relationships with key oil exporting countries to safeguard energy supply’. Even some Chinese experts warn that the potential political and economic risks of overseas investments need to be carefully assessed (He and Qin 2006: 102). Others argue that International Oil Companies (IOC) such as Shell or Exxon offer better technology and more experience to resource-owning countries than national oil companies from China. In a speech to an oil industry meeting in Paris in April 2005, Shell CEO Jeroen van der Veer argued that there are advantages for resource holders in working with IOCs.9 Whereas national oil com9 Jeroen van der Veer, ‘What is the international oil company of the future going to look like?’ Online at: http://www-static.shell.com/static/media/downloads/speeches/ jvdv_oilsummb.pdf.

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panies such as CNPC or SINOPEC ‘will be driven by the interests of their government and that can make relationships with other governments more complicated’, our agenda, he argued, is ‘simply to deliver’ by running our business more efficiently and keeping costs under control. It is perhaps too early to judge the success or failure of the Chinese strategy as Chinese oil companies remain undeterred by the criticisms of their foreign business rivals or other experts. Chinese investments in oil-rich countries are also supported by considerable increases in Chinese civilian and military aid flows to these countries, although exact figures on Chinese foreign aid and military assistance are hard to come by. China’s commerce ministry and the National Development and Reform Commission have published a list of countries and resources, and Chinese companies which invest in them are eligible for state subsidies (Zweig and Bi 2005: 27). One of the biggest destinations for Chinese overseas investments in the energy sector is Sudan, Africa’s largest country and ranked as the second most politically unstable 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 Nile Petroleum Operating Corporation (GNPOC) – a consortium that dominates Sudan’s oil fields in partnership with national oil companies from Malaysia and India. The consortium’s Heglig and Unity oil fields were producing 350,000 barrels of oil per day in 2004 (Goodman 2004). In addition to its investment in GNPOC, CNPC separately owns most of an oil field in the Darfur region. Chinese oil companies have also built oil pipelines, storage facilities and a major oil refinery in Sudan. In short, China is heavily involved in the production, storage and transportation of oil in Sudan. The Chinese share of the oil produced in Sudan is shipped back to China via the Red Sea. In addition to Sudan, Chinese oil companies are involved in oil exploration and production in a number of other African countries. Investment relations are fortified with diplomatic visits at the highest level. China’s foreign minister traditionally starts the year with a tour of Africa to underscore the strong relationship with the continent’s major energy suppliers.

10 The Failed States Index is published jointly by the Fund for Peace and the Foreign Policy magazine. Online at: http://www.fundforpeace.org/web/

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Implications for EU-China Relations Regardless of the political and economic risks to China of investing in unstable and dangerous environments, the Chinese strategy of locking in oil and gas supplies across the world has raised some serious concerns in Europe. These concerns centre less on China’s reasons for aggressively pursuing this strategy and more on where Chinese oil companies make these investments (Jakobson and Zha 2006: 65). Sudan has been subject to American and European sanctions for many years now because of the alleged atrocities committed on the African people of the Darfur region by its military and the Arab Janjaweed militia supported by the government. It is said that the crisis in Darfur has already killed more than 200,000 people and displaced more than 2.4 million.11 A number of European non-governmental organizations have campaigned for years to pressure European and other foreign governments to move decisively against the government of Sudan to put an end to these atrocities. But the combined pressure from the EU and the United States has so far failed to persuade the Sudanese government to respond convincingly to these demands. It has long been believed that China, as Sudan’s most important investment and trading partner and supplier of military equipment, has the necessary influence with the Sudanese government to stop these atrocities but chooses not to use it. China’s usual approach in dealing with 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 the Beijing Olympics, and facing the threat of a boycott of the games by some countries, China appointed a special envoy to Darfur, Liu Guijin, and took a number of other steps to allay the concerns of European and other foreign governments and human rights groups. It also became more active in trying to persuade the Khartoum regime to support the international community in dealing with the Darfur crisis. During a visit to Sudan in February 2007, President Hu Jintao is believed to have pressured Sudanese President Omar Hassan al-Bashir to pursue a peace settlement. He also urged President Bashir to cooperate with the United Nations. Sudan subsequently agreed to allow a joint African UnionUnited Nations peacekeeping force in Darfur. China also agreed to provide 315 peacekeepers for Darfur in addition to the 800 it had already 11

Aegis Fund4Darfur. See: http://www.fund4darfur.org/darfur.html

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sent to Southern Sudan (Grant and Barysch 2008: 87). In the end, a lack of cooperation from the Khartoum regime meant that most of the peacekeeping force had failed to deploy. In the meantime, despite early fears that some foreign leaders might stay away from the opening ceremony of the Beijing Olympics, the ceremony and the games passed off smoothly and were judged to be a great success for the Chinese organizers. The pressure had been lifted from the shoulders of China’s leaders. China’s search for energy security and its investments in Africa, particularly in Sudan, have added to the already long list of differences between the European Union and China. Although the Commission has adopted a softer and more diplomatic approach in dealing with these differences, the European Parliament (EP) has been much more strident in its criticism of China – criticism which is strongly rejected by the Chinese. It passed a resolution in April 2008 expressing concern about China’s growing influence in Africa at a time when European influence was declining. The Chinese government called such criticism ‘irresponsible’ and ‘totally unfounded’, telling the European Parliament to stop its ‘confrontationist and provocative’ activities.12 A month earlier, the EP had decided to disinvest in PetroChina/CNPC in protest against Chinese support for the Sudanese government (Sengupta 2008). This followed revelations that its members’ pension funds continued to be invested in the Chinese company. In 2007, its Sakharov Prize was awarded to Salih Mahmoud Osman, a leading human rights activist from Darfur, who has been very critical of China’s role in Sudan. In December 2008, Osman accused China of ‘undermining the lives of millions of people of Darfur for a long time by siding with the Sudanese government and through aerial bombardments caused by Chinese helicopter gunships’.13 In an article published in a Chinese newspaper, the EU High Representative for Common Foreign and Security Policy, Javier Solana (2007), stressed that the EU and China have a common responsibility and interest in dealing with the challenges of poverty, instability and war in Africa. Pointing to the agreement reached at the Helsinki EU-China summit in 2006 to establish a senior official level dialogue on Africa, Solana 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/015-44395-350-12-51-90220081212STO44317-2008-15-12-2008/default_en.htm.

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called for better and more exchanges of information so that ‘our efforts do not cut across each other as they sometimes have in the past’ (Solana 2007). Citing a long list of areas in which the EU is actively engaged in promoting cooperation with African countries, including good governance, fight against AIDS and regional integration, Solana said that there is ‘positive correlation’ between EU and Chinese strategies in Africa. While the tone of this article was clearly upbeat, the underlying message seemed to be that the EU has spent a long time trying to persuade African governments to comply with certain governance benchmarks and does do not wish China to undermine European long-term efforts. Conclusion China’s arrival on the world stage as a major player has forced other major powers to rethink their own strategies in dealing with international issues of critical importance to their citizens. Its ambitious energy security agenda and its push into Africa have obliged the EU to come up with creative ways to engage with this rapidly growing power. While the EU may feel that China’s so-called ‘win-win’ approach in Africa might be undermining EU efforts to improve governance standards on the continent, African governments seem happy to deal with China, albeit not without driving hard bargains. As Bernt Berger recently pointed out, ‘China has increasingly regarded Africa as an opportunity, while Europe has long regarded the continent as a burden’.14 The EU will now have to learn to work with China (and other emerging powers) in seeking the opportunities in Africa. As China continues its search for energy security, it will also have to work with other countries in dealing with the huge challenge of climate change and environmental degradation. The problems are likely to be more severe for China and could seriously hamper its efforts to improve living standards. But a joint and cooperative approach is more likely to bring about better outcomes for all. It is heartening to see that the EU and China have already taken the first steps on this long journey. At each of the past several EU-China summits a plethora of agreements have been signed to promote bilateral cooperation in areas relevant to energy conservation, clean energy and scientific and technological collaboration.

14 ‘China outwits the EU in Africa’. Online at: http://www.atimes.com/atimes/ China/IL13Ad01.html.

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References Andrews-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: Communist 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 June 2004). Jakobson, Linda and Daojiong Zha. 2006. ‘China and the Worldwide Search for Oil Security’ in Asia-Pacific Review 13(2): 60-73. Lee, John. 2009. ‘Democracy’s Long March to China’ in The Australian (3 June 2009). Nolan, Peter. 2001. China and the Global Economy: National Champions, Industrial Policy and the Big Business Revolution. Houndmills and New York, N.Y.: Palgrave. Oster, Shai. 2008. ‘US Wants to Get China to Come Inside the International Energy 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 Economic 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.

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RECENT CHINESE PRACTICE IN THE MAINTENANCE OF MARITIME SECURITY AND THE EUROPEAN EXPERIENCE Zou Keyuan Abstract On 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 international responsibilities. This chapter surveys and assesses recent developments in regard to China’s practice in this area, including China’s recent maritime legislation, its supportive actions for the East China Sea, South China Sea and the Malacca Straits, and its response to the global actions of maritime security, particularly in connection with the fight against terrorism and sea piracy under the framework of the United Nations. Some comparisons between the EU and China will be made throughout the chapter. Introduction China as a big coastal and shipping country; maritime security is, therefore, critical to its economic growth, national security and international responsibility. It has long coastlines and borders on the Yellow Sea, the East China Sea and the South China Sea, where there are abundant natural resources and various shipping routes. On the one hand, and in terms of its shipping capacity, China ranked fourth in the shipping world by the end of 2007. By July 2008, China had ranked first in the port cargo and in the ‘container throughput’ sections for five consecutive years. On the other hand, rapid economic development in China continues to be accompanied by

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China’s increasing demand for energy. Experts predicted that China would import more than 500 million tons of oil and over 100 billion cubic meters of natural gas in 2020, owing to its rapid economic growth and demand for energy resources.1 The demand for energy and increased energy consumption will definitely make China more actively involved in oil and gas exploration and exploitation in its adjacent sea areas, and in securing the oil supply routes at sea. This chapter will assess recent developments in China’s practice in this area, including China’s recent maritime legislation, its supportive activities for the East China Sea, South China Sea and the Malacca Straits, and its response to the global actions of maritime security, particularly in connection to the fight against terrorism and sea piracy under the framework of the United Nations. Some comparisons between the EU and China will be made. Maintaining the Security of Sea Lanes After the collapse of the Soviet communist bloc, China gradually revised its security concept, in response to the changed situation for the post Cold War era. A new security concept was formulated in the 1990s and has been reflected in China’s White Papers on defence. The 1998 White Paper was the first to put forward this new concept. The 2000 White Paper provided more detail, by adding four core components: mutual trust, mutual benefit, equality and cooperation.2 Maritime security is a major concern in the development of China’s perception of national security. It is reported that 80 per cent of China’s oil for consumption are imported from overseas by sea routes (Zhu 2004: 19). With the increase of its energy demand, China is ever more concerned with the security of the sea lanes in its adjacent seas and the Straits of Malacca. According to the 1982 United Nations Convention on the Law of the Sea (LOS Convention), all States enjoy freedom of navigation on the high seas and in exclusive economic zones of coastal States. For straits used for international navigation, all states enjoy transit passage. Thus, ships of all nations have the right to the freedom of navigation in the South China Sea and transit passage in the Straits of Malacca and Singapore. However, after the September 11 terrorist attacks, maritime security has become a 1

CCH Asia China E-News Alert, No.43, February 2004. NK"http://www.people.com.cn/GB/shizheng/1027/3082005.html"http:// www.people.com.cn/GB/shizheng/1027/3082005.html 2

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serious international concern, in particular the existing and potential threats posed by sea piracy and maritime terrorism. It is widely known that piracy is found in the Straits of Malacca and the South China Sea. In 2000, figures showed that piracy in the region accounted for 65% of the worldwide total. The incidents in the South China Sea increased from 120 in 2001 to 140 in 2002.3 Although the prominence of piracy has been shifted from Southeast Asia to the Somali waters, vigilance is still badly needed to prevent and suppress piracy and possible maritime terrorism in the South China Sea and the Straits of Malacca. International law has established an obligation on states to cooperate in the suppression of piracy. It grants states certain rights to seize pirate ships and suspected criminals. The LOS Convention constitutes a major anti-piracy treaty, providing that ‘All states shall cooperate to the fullest possible extent in the repression of piracy on the high seas or in any other place outside the jurisdiction of any state’, and should seize pirate ships and criminals. Another important international treaty governing the suppression of piracy and maritime terrorism is the 1988 Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA Convention), which authorizes its contracting state parties to handle maritime violent crimes and threats. According to Chinese Criminal Law, the crime of piracy is punished as robbery, murder, larceny, or kidnapping, since there is no specific, legal, definition of piracy in the Chinese legal system. China can also exercise universal jurisdiction permitted by international law to bring piracy cases to trial as international crimes. In recent legal practice, China tried several piracy cases including the vessels Tenyu, Cheung Son, Marine Fortuner and Xanxai. One can take the Cheung Son as an example of how the relevant Chinese departments dealt with piracy: on 12 November 1998, the Cheung Son, which belonged to a Hong Kong shipping company, disappeared in the South China Sea on the way to Malaysia from Shanghai Harbour. Several days into the voyage, some bodies of crew members of that ship floated in the sea adjacent to Guangdong Province. The Public Security Department of the province began to investigate the case and found that this was a case of maritime hijacking, planned by an Indonesian with some Chinese collab3

Report: IMO Doc. MSC.4/Circ.32, 17 April 2003.

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orators. The perpetrators killed all 23 crew members and robbed the whole ship. As of 8 August 1999, China arrested all suspected pirates. In January 2000, 13 pirates, including one Indonesian and 12 Chinese, received the death penalty for crimes of robbery and murder. The remaining 24 pirates were also punished. While China’s legal system does not contain the precise terminology for ‘piracy’, China has accepted the term ‘robbery at sea’ in its legislation. A regulation issued in 1993, governing the safety of navigation and fishery activities in the East China Sea, adopted the above term. This is in line with the new terminology created by the International Maritime Organization (IMO), i.e., ‘piracy and armed robbery against ships’. The concept embraces piracy on the high seas, as well as acts of piracy in ports or national waters.4 The regulation requires the coastal regions and governmental departments concerned to pay close attention to the safety of navigation. The Department of Public Security is charged with responsibility for combating criminal activities, including robbery at sea (Wang 1994: 786). In terms of other legislation concerning maritime security, China promulgated several important laws and regulations including the 1992 Law on the Territorial Sea and the Contiguous Zone, the 1998 Law on the Exclusive Economic Zone and the Continental Shelf, the 1983 Law on the Maritime Traffic Safety and the 1992 Regulations on the Management of Maritime Navigational Warnings and Navigational Notices. On the 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 waters all by herself. Therefore, regional cooperation is necessary to reach the goal of effectiveness. For that purpose, China signed the Joint Declaration on Cooperation in the Field of Non-Traditional Security Issues with the Association of Southeast Asian Nations (ASEAN) in November 2002. This initiated full cooperation between ASEAN and China in the field of non-traditional security issues and listed various priorities and forms of cooperation. The priorities include ‘combating trafficking in illegal drugs, people-smuggling including trafficking in women and children, sea piracy, terrorism, arms-smuggling, money-laundering, interna-

4

http://www.imo.org/includes/blastDataOnly.asp/data_id%3D1880/984.pdf

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tional economic crime and cyber crime’. As to the envisaged multilateral and bilateral cooperation, the Declaration aims to: Strengthen the exchange of information personnel and training Enhance 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 the South China Sea also mentions the suppression of piracy and armed robbery at sea. Based on the above declaration, China sponsored several workshops and conferences on non-traditional security issues, including sea piracy and maritime security. For example, the China National Institute for South China Sea Studies ran a training workshop on maritime security in the Straits of Malacca in December 2007 for governmental officials from Southeast Asia. In April 2000, heads of coast guard agencies from 16 countries and one region (ten ASEAN countries, India, Sri Lanka, Bangladesh, South Korea, China, Hong Kong and Japan), attended the first regional conference on maritime security where three key documents were adopted. In a statement entitled ‘Asia Anti-Piracy Challenge 2000', the participants expressed their intention to reinforce mutual cooperation in combating piracy and armed robbery against ships. The ‘Tokyo Appeal’ calls for the establishment of contact points, for information exchange among relevant authorities and for the drafting of a national anti-piracy action plan. The Model Action Plan suggests specific countermeasures based on the Tokyo Appeal. Regional efforts reached their climax in the conclusion of, arguably, the most significant regional treaty on anti-piracy: the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) in November 2004, agreed between the above Asian states. It entered into force on 4 September 2006. The agreement obliges the contracting states to:6

5 6

http://www.aseansec.org/13185.htm http://www.recaap.org/about/pdf/ReCAAP%20Agreement.pdf

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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, including preventing and suppressing piracy and armed robbery against ships ‘to the fullest extent possible’, ‘in accordance with their respective national laws and regulations, and subject to their available resources or capabilities’ (see Article 2.1). For cooperation purposes, the contracting parties endeavour to render one another mutual legal assistance, as well as conduct extradition of suspects for piracy suppression and punishment. The other significant development contained in the agreement is the institutional arrangement to establish an Information Sharing Center (ISC) for the cooperation of intelligence sharing among contracting states. The ISC was officially launched in November 2007. It is located in Singapore. ReCAAP is thus the first specific international treaty concerning the prevention and suppression of piracy. Because of this, it becomes a model of law for other regional legal arrangements. It is reported that a similar agreement will be concluded for the Western Indian Ocean. China’s Attitude towards the Proliferation Security Initiative Related to the suppression of piracy is a recent scheme for maritime security initiated by the United States: the Proliferation Security Initiative (PSI). The PSI represents an effort to consider possible collective measures among the participating countries, in accordance with national legal authorities and relevant international law and frameworks, in order to prevent the proliferation of so-called weapons of mass destruction (WMD), missiles and their related materials that pose threats to the peace and stability of the international community. The PSI is administered by a ‘core group’ of eleven countries (Japan, US, UK, Italy, the Netherlands, Australia, France, Germany, Spain, Poland, Portugal).7 Another four 7

http://www.mofa.go.jp/policy/un/disarmament/arms/psi/exercise-2.html

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countries joined at a later stage (Canada, Singapore, Russia and Norway). Forty-six other countries support it as well (Roach, 2006, 352). The core element in the PSI is ‘interdiction at sea’. The US developed a number of principles guiding the activities of the states participating in the PSI. In detail, these are designed to:8 Undertake effective measures, either alone or in concert with other states, for the interdicting of the transfer, or transport, of WMD, delivery systems and related materials, to and from states and nonstate actors of ‘proliferation-concern’. Adopt more ‘streamlined’ procedures for the rapid exchange of relevant information concerning suspected proliferation activity. Review and strengthen relevant national legal authorities where necessary. Take specific actions in support of interdiction efforts regarding cargoes of WMD, their delivery systems or related materials. Although the PSI does not target any particular country, countries of concern include North Korea, Iran and Syria. The PSI raises a number of issues in international law. In the maritime domain, the LOS Convention grants exclusive jurisdiction and control of vessels to the Flag State on the high seas. Any search or visit is thus subject to the permission of the Flag State. Exceptions do exist, but they are limited to the suppression of piracy, transport of slaves, illicit traffic in narcotic drugs, or unauthorized broadcasting. Besides, a warship, having reasonable grounds, may visit a ship without nationality. Since there is no specific rule in international law regarding the interdiction of ships suspected of carrying WMD, Chinese scholars perceive such interdiction on the high seas as a grave de-valuation of the international legal system and a great downgrade of the solemnity of international law (Gao and Sun 2004: 170). Because of the controversial issues existing in regard to the PSI, many demand its improvement, through institutionalization (Garvey 2005: 125-147). China’s feelings towards the PSI are complex: China needs the safety of navigation in the Straits of Malacca. Most of China’s imported oil reaches the country through this strait. However, China is also concerned about a possible American intervention in the Straits, about possible

8

http://www.state.gov/t/np/rls/prsrl/23764.htm

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blockages to China’s oil transportation, and about a concomitant deterioration in Sino-US bilateral relations, owing to some dispute over, for instance, the Taiwan issue. For that reason, China has long been considering the construction of an oil pipeline from Myanmar to China to reduce its dependence on shipping oil imports through the Strait of Malacca. Furthermore, a key Chinese diplomat stated that maritime security is of vital importance for the welfare and economic development of the region and that regional cooperation is indispensable for maritime security (Zhao Jianhua, 2004). However, China has some real doubts over whether principles embodied in international law including the UN Charter ‘would be or could be strictly observed in real actions against maritime threats. Extreme care and sensitiveness is thus needed when it comes to military involvement (Zhao Jianhua, 2004). In a word, China prefers a regional rather than an international arrangement of maritime security for the Straits of Malacca. In addition to this, China has some previous, bitter, experience regarding interdiction at sea, as the following example illustrates: on 7 July 1993, the Chinese freighter Milky Way (yinhe) departed from Tianjin to the 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 for the production of chemical weapons. The American side thus demanded an on-board inspection of the vessel. From 1 August onward, several American warships followed the Milky Way, monitoring its movement and taking photos so that the Chinese ship could not sail normally. Due to these American pressures, the Milky Way was refused anchorage in port; it remained on the high seas until late August. Finally, on 29 August, China agreed to check the containers on board together with the Saudi Arabian representative and some American experts. The investigation proved that there were no chemical materials as the United States had alleged. As a consequence of this incident, the Chinese Foreign Ministry issued a statement on 4 September 1993, condemning the American ‘hegemonic’ attitude and its ‘groundless’ accusations.9 Chinese legal scholars accused the United States of having violated international law, including the freedom of the high seas. They demanded the US bear legal liability to compensate for the economic loss 9

http://news.163.com/2004w09/12686/2004w09_1096092272435.html

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suffered by the Chinese freighter (Zhao Lihai 1996: 237-244). Judging from this episode, it may become clearer that China is very averse, indeed, to the PSI as far as military interdiction at sea is involved. This attitude also can also be detected in China’s basic policy regarding the South China Sea: China has always reiterated that it will maintain the freedom of navigation, and of over-flight, in the South China Sea. It has never interfered in such free passage and will not do so in future. As for the issue of the PSI, China expressed its position through one of her Foreign Ministry spokespersons, who made the following statement: ‘we agree with the objective of PSI. But the Chinese side thinks that relevant measures under PSI should be taken within the reign of international law in accordance with relevant principles of the UN Charter. We hold reservations in regard to the possibility of the PSI, of taking coercive interception beyond the reign of international law’. At the same time, China did not close its door to the PSI, by stating further, that ‘we would like to exchange views with relevant countries on this point’.10 On the other hand, for a number of reasons, China might support military interdiction or naval inspection in future. The US-sponsored PSI, once fully implemented in East Asia, may more justifiably give China rights of inspection and of performing the same control actions towards American vessels. The PSI has been gradually gaining ground in international law as it has developed. The first significant document which gives the PSI some kind of legal support was United Nations Security Council Resolution 1540, adopted on 28 April 2004. The Resolution stipulated that, ‘all states shall refrain from providing any form of support to non-state actors which attempt to develop, acquire, manufacture, possess, transport, transfer or use nuclear, chemical or biological weapons and their means of delivery’. The Security Council further called ‘upon all states, in accordance with their national legal authorities and legislation, and consistent with international law, to take cooperative action to prevent illicit trafficking in nuclear, chemical or biological weapons, their means of delivery, and related materials’.11 It must be noted, however, that the Resolution only mentions ‘non-state actors’ - by which it most likely means terrorist groups. However, the PSI appears also to target some socalled ‘rogue states’, based on the perceptions of the US. 10 11

http://www.fmprc.gov.cn/eng/xwfw/s2510/t169072.htm See: UN Doc. S/RES/1540 (2004).

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While it is debated whether Resolution 1540 has provided legal ground for the PSI, the amendments made, in October 2005, to the SUA Convention have clearly shown the legalization process in respect of the PSI. There are two major revisions/additions: first, a Protocol expands the coverage of the unlawful acts under Article 3 of the SUA Convention. It does so by adding new provisions. These rules cover, in particular, the following potential scenarios:12 The use against, or on, a ship, or discharging from a ship, of any explosive, radioactive, biological, chemical, or nuclear materials or weapons, in a manner which causes, or is likely to cause, death or serious injury or damage. The discharging, from a ship, of oil, liquefied natural gas, or other hazardous or noxious substances, in such quantity or concentration, which causes, or is likely to cause, death or serious injury or damage. The use of a ship in a manner, which causes death or serious injury or damage; the transport on board ship, of any explosive or radioactive material, knowing that it is intended to be used to cause, or used in a threat to cause, death or serious injury or damage for the purpose of intimidating a population, or compelling a government or an international organization to do, or to abstain from doing any act. The transportation, on board a ship, of any biological, chemical or nuclear weapon, in the knowledge that such a weapon is on board. The carriage of any source material, special fissionable material, or equipment or material especially designed or prepared for the processing, use or production of special fissionable material, knowing that it is intended to be used in a nuclear explosive activity or in any other nuclear activity not under safeguards pursuant to an IAEA comprehensive safeguards agreement. The transportation, on board a ship, of any equipment, material or software, or of related technology, which significantly contributes to the design, manufacture or delivery of a BCN weapon, with the intention that it will be used for such purpose.

12

http://www.imo.org/Conventions/

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Another major development is the ship boarding regime. According to Article 8bis of the 2005 Protocol, co-operation and procedures are needed if a any party from a state desires to board a ship flying the flag of another state party, when the requesting Party has reasonable grounds to suspect that the ship or a person on board the ship is, has been, or is about to be involved in, the commission of an offence under the Convention. The authorization and co-operation of the Flag State is required before such a boarding. A state party may notify the IMO SecretaryGeneral that it would allow authorization to board and search a ship flying its flag, its cargo and the persons on board, if there is no response from the Flag State within four hours. A state party can also give notification 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, in order to determine whether an offence has been, or is about to be, committed. The Protocol limits the use of force and includes important safeguarding measures when a state party takes action against a ship. Through the above amendments, the controversial boarding regime embodied in the PSI scheme has been legalized under international law. A number of significant modifications and additions of safeguarding measures were enacted, in order to ensure that there is no abuse of this boarding right. European Experience: An Example for China? It is Columbus, a European who is said to have ‘discovered’ the New World. Other Europeans, including the British, Dutch, French, Portuguese and Spanish explorers, merchants, missionaries and navigators, dominated the Asian sea-routes for centuries. The law of the sea, the oldest branch of international law, emerged in Europe. It emerged from the debate between the concepts of mare clausum and mare liberum in the 17th Century (Johnston 2008: 51-52). More recently, the European Union (EU) has exerted great efforts to develop a more concerted maritime policy among its Member States. In 2006, the European Commission adopted a Green Paper entitled Towards a Future Maritime Policy for the Union. In 2007 the Union also adopted a document on Integrated Maritime Policy for the European Union. According to this paper, it is believed that ‘an Integrated Maritime Policy will enhance Europe's capacity to face the challenges of globalisation and competitiveness, climate change, degradation of the marine environment, maritime safety

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and security, and energy security and sustainability’.13 According to the Treaty of the European Union, EU members have to agree to cede some of their sovereign rights to the EU and let the organization exercise them on behalf of its members. This arrangement also concerns matters of maritime security. When the European Community acceded to the LOS Convention, it made a declaration, stating that certain competences have been transferred from its Member States to the organization, including those in the protection and preservation of the marine environment, commercial and customs policy, conservation and management of sea fishing resources.14 For the implementation of a unified policy in maritime security, the European Maritime Safety Agency (EMSA) was created, with a brief to contribute to the enhancement of the overall maritime safety system in the 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 order to prevent safety and security threats by goods brought into or out of the customs territory of the EU, electronic pre-arrival and pre-departure declarations, with data elements harmonised on an EU-wide scale, will become mandatory as of 1 July 2009, for all modes of transport including the maritime sector.16 Law enforcement agencies in the EU Member States, as well as Europol, have taken coordinated and concerted actions against illegal immigration from Africa and maritime narcotics trafficking. In June 2008, the EU issued further Guidelines for an integrated approach to maritime policy and it is expected that under a unified EU maritime policy, more state power of EU members in maritime security will be transferred to the EU. In comparison to this, it seems that China has not yet formulated a unified maritime policy, and maritime law enforcement is fragmented among different governmental agencies. The existing institutional arrangements in China show that the State Oceanic Administration is responsible for ocean affairs in general. Other governmental departments are also in charge of maritime matters such as the Ministry of Agricul-

13

http://eur-ex.europa.eu/ http://www.un.org/Depts/los/convention_agreements/convention_declarations.htm 15 http://www.emsa.europa.eu/end179d002.html 16 DG Maritime Affairs and Fisheries, non-paper on Surveillance, 13 October 2008:5. 14

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ture, responsible for the management of marine fisheries, the Ministry of Transport for the management of maritime transportation, and the Ministry of Public Security for maintaining maritime public order and security. Some roles are overlapping: for example, while the Ministry of Public Security has the mandate to maintain security and order at sea, the State Oceanic Administration and the Ministry of Agriculture also have maritime law enforcement facilities and personnel in this regard. It is therefore suggested that China should establish a more centralized and comprehensive administrative agency for the management of ocean affairs and that, moreover, the country needs a coastguard for maritime law enforcement. The EU process of endeavouring the formulation of a unified maritime policy deserves further, careful, study and scrutiny by the Chinese. The persistent issue of Somali piracy reflects the attitudes of the EU and China towards the crackdown on piracy in the Somali waters. In June 2008 the United Nations Security Council passed a resolution on combating acts of piracy and armed robbery off Somalia’s coast (Resolution 1816). It authorizes UN Member States to enter the territorial waters of Somalia for the purpose of repressing acts of piracy and armed robbery at sea, in a manner consistent with such action permitted on the high seas with respect to piracy under relevant international law. Following the resolution, relevant states, especially a number of EU countries, Canada, Russia and the United States, have taken individual and/or collective actions against piracy in the waters off Somalia.17 The EU established its first naval task force called Op Atalanta in December 2008 to protect vessels of the World Food Programme delivering food aid to Somalia and other vulnerable shipping off Somalia, as well as to provide deterrence towards acts of piracy, by means of presence and surveillance. Op Atalanta involved six warships and three surveillance aircraft contributed by the UK, France, Greece, Spain, and Germany, with the UK Royal Navy in charge. In contrast to the more ‘pro-active’ attitude of the EU, China’s approach is noticeably more cautious. It may be recalled that, during the discussion of the draft UN Resolution, China expressed the view that the facilitation initiated by the Council of international assistance in combat17 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

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ing piracy should not produce any negative consequences, that, moreover, 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 its vessels were kidnapped by Somali pirates. In this case, the ambassador of the Somali government to Beijing expressed his welcome of the Chinese navy to the Somali waters. At a special conference sponsored by the UN in December 2008, the Chinese representative expressed China’s willingness to cooperate with other countries to suppress piracy in accordance with international law and the UN Security Council resolutions.18 With this in mind, it is not known when and how China would be involved on a more practical level in the crackdown on Somali piracy. Once China determines to become involved in military actions against piracy in the Somali waters, the necessary cooperation and coordination between China and EU can be well perceived. Conclusion After the Cold War, non-traditional security issues became much more complicated and salient in the context of a wider human security. This concept includes piracy and maritime terrorism. In recent years, China has considerably strengthened her capacity in maintaining maritime security in its adjacent seas, as well as, seeking to work towards regional and world peace and security in cooperation with the international community, including the EU. While there are some opportunities for China and EU to cooperate in the maintenance of maritime security, China is more immediately concerned with her surrounding areas and has concluded a number of pertinent legal and political arrangements with neighbouring countries. It is certain that such a policy will continue. On the other hand, as a rising power, China may be more willing to contribute its efforts globally over time.

18

http://www.nanhai.org.cn/news/news_info.asp?ArticleID=1847

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References Gao, Ying and Sun Bo (2004), ‘The United States’ Proliferation Security Initiative’, in China Association of Arms Control and Disarmament (ed.). 2004. Report on International Arms Control and Disarmament, Beijing: World Knowledge Press)(in Chinese), 170. Garvey, Jack I. 2005. ‘The International Institutional Imperative for Countering the Spread of Weapons of Mass Destruction: Assessing the Proliferation Security Initiative’ in Journal of Conflict and Security Law, Vol.10 (2): 125-147. Johnston, Douglas M. 2008. The Historical Foundations of World Order: The Tower and the Arena, Boston/Leiden: Martinus Nijhoff. Roach, J. Ashley. 2006. ‘Proliferation Security Initiative (PSI): Countering Proliferation by Sea’ in Myron H. Nordquist, John N. Moore and Kuenchen 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 of China, Supplementary Volume, Jilin: Jilin People’s Publishing House (in Chinese): 786. Zhao, Jianhua. 2004. ‘The Straits of Malacca and Challenges Ahead: China’s Perspective’ (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 University Press (in Chinese). Zhu, Huayou (2004), ‘Energy Diplomacy in the South China Sea and Its Surroundings’, in Zhu Huayou et al (eds.), Collected Conference Papers on the South China Sea and China’s Energy Security, Hainan, China: National Institute for South China Sea Studies (in Chinese): 19.

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CONCLUSIONS: TOWARDS AN EU-CHINA RESEARCH-AGENDA 2010 Georg Wiessala, Pradeep Taneja, John Wilson

We believe that the diverse contributions in this volume have demonstrated the growth and evolution not only of the multi-faceted area of EU-China relations, but also of a concomitant agenda of study, enquiry and research which appears as thorough as it is branched-out and complex The chapters in this volume represent not more than a fleeting glimpse of the state of affairs of research into EU-China relations as of mid-2009. They were compiled at a time when the relationship has become, arguably, one of most significant and multi-layered foreign policy arenas of the European Union (EU). In our view, the chapters in this collection offer both critical assessment and theoretical debate regarding a number of sides of EU-China relations which have hitherto been largely under-researched, for example on matters of energy security, maritime safety, the construction of identities, and sports and politics. In other areas, such as human rights, economics and foreign policy analysis, we hope that the preceding chapters will have done their part to stimulate the debate and to take the academic analysis of EU-China contacts into new areas and directions. We believe that a number of important strands and themes have emerged which not only represent some of the key conclusions to be drawn from this examination, but which will also, we hope, point interested China watchers in the direction of some future analytical focal points and, perhaps, towards an Agenda for 2010 and beyond. Against this backdrop, Rajendra Jain, in the conclusion to his chapter for this volume, has offered what is, perhaps, one of the most pertinent observations, albeit in a more specific context: “there is a continuing

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need to re-profile and re-orient our mindsets about the growing prominence of the EU as a collective entity”. The nature and development of EU ‘actor-ship’ – in foreign policy in general, and in the context of SinoEU interaction in particular - does, indeed, emerge as one of the principal concerns in all of the preceding sections. This appears to hold true especially, when seen against the background of the search for that ‘elusive’, unified, European Union China Policy on the one hand, and of the – frequently conflicting – attitudes and interests in the Member States on the other hand. Speaking una voce with the PRC, it appears, is still difficult for the aspiring global player that is the EU. With regard to the People’s Republic of China (PRC), it has almost become a commonplace to state that this vast country is currently living through times of unprecedented change, the pace of which seems to be ever-quickening. In our view, this book has thrown into relief two aspects, in particular, of that change: first, it is possible to conclude from the findings of several chapters offered here, that the immediate future of China, and of China-EU relations, will be shaped by the evolving relationship between Party and regime stability, and national interest, on the one hand, and questions of openness, democratisation, rule of law, (media) freedom and internet access on the other hand. Secondly, in terms of Chinese politics and China-EU relations, the role of Chinese discursive narratives, identity-constructions and symbolic landscapes in building political meanings, legitimacy, national prestige, patriotic sentiment and international relations must not be underrated. This moves into the foreground a third and related aspect: ‘ideational values’, perceptions (and mis-perceptions) – as gaps in mutual understanding in the China-EU ‘asymmetrical’ relationship – all continue to impinge on the conduct of the contemporary diplomacy; in many cases, bilateral EU-China negotiations are still suffering from underlying, unseen, issues, which threaten to derail progress if wilfully or inadvertently neglected. We have termed those the ‘iceberg-issues’ of China-Europe. These are also the areas where the chequered history of China-Europe contacts continues to have a significant bearing on the present. If there is, then, a pressing need for more mutual reaching-out and interaction, many chapters in this book have pointed to areas in which bridges can be built and common interests can be pursued. In a wider context of the network of influence that is international relations, we think that it is possible to conclude that China’s relations

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with the EU, through engaging a variety of EU institutions, processes and decision-makers, and by means of employing a so-called ‘sector-specific’ 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 Association for Regional Co-operation (SAARC) and the Asia-Europe Meeting (ASEM). However, our examination has also demonstrated that there is now a wider choice of potential interlocutors and partners for China in many areas and regions of geo-political competition, for example on the African Continent and in Central Asia. China’s growing engagement with these regions will test the validity of many of the EU’s ‘value-based’, ideological, foundations in areas such as human rights, ‘conditional’ aid and development. Some of the contributions in this issue have emphasised the continuing importance of China-US relations for the EU-China dialogue in a multi-polar world order. Among the important points highlighted by the writers of the preceding chapters have been, for example, the sometimes divergent US and EU approaches to the PRC, and the way negotiations are conducted, and differences amongst partners exploited, in the quest for political positioning in the global arena. Here, as in other areas, the concepts 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 dynamic EU-China relationship, we argue that one of the principal conclusions of this volume surrounds China’s responses to globalization, as evidenced through increasingly confident Chinese foreign and economic policies, investment relations and in other areas such as sport and identity-projection. Given China's growing contribution to international trade, as well as its growing technological confidence, we believe that a number of chapters in this collection have demonstrated that the EU will have to negotiate much more carefully in the future, in order to ensure that greater balance is achieved in such matters as cross-regional trade, technology-transfer and investment. We further conclude that the EU-China relations of the next decade will be largely determined by the question of how successful both sides are 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 (‘Dinosaur’) views, long held in mutuality, will have to be re-visited and ad-

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justed. In areas ranging from human rights to Taiwan, from the oneChina-Policy to development, EU-China dialogue is in need of being developed past the stage of a mere ‘laundry-list’ of formal, sector-specific, (dis-)agreements, towards a much deeper understanding, in an attempt to overcome procrastination where it exists. This widening and deepening of EU-China contacts will be the more successful, the more it embraces aspects of culture, language, and of what is sometimes euphemistically-termed ‘people-to-people-dialogue’. In order for it to have a more enduring impact, the evolving discourse revolving around EUChina must encompass a more comprehensive critical scrutiny of such concerns as grass-roots and NGO dialogues, élite-perceptions, thinktank-dialogue, cultural distance, educational exchanges, dialogue of civilisations, human capital, inter-faith dialogue, intellectual linkages and related areas. ‘Dialogue’ thus becomes the watchword of EU-China relations. Secondly, and in close relation to the first point, in EU-China relations, we think that most – if not all – of the chapters in this volume have shown that more ‘equilibrium’ is required in adjusting the balance between trade and economic matters and other areas. The interaction, which is, at present, heavily skewed towards material interests and commercial dialogue, will need to embrace also – and much more wholeheartedly – many of the broader issues hinted at in this book, such as ideas and values. It transpires from this volume that a deeper and more meaningful, ‘holistic’, China-EU exchange is needed, encompassing a rage of issues that are – sometimes mistakenly – claimed to be ‘binary’ in character, such as ‘development and democracy’, ‘tradition and modernity’, ‘equity and growth’ and ‘human rights and political stability’. Furthermore, we both conclude and predict that one of the main directions a future EU-China research-agenda will take is a social-constructivistinformed approach, to international relations in general, and to the educational, intellectual and ideational dimensions of Asia-Europe relations in particular. Thus, a more comprehensive future research programme on China-EU interaction, could – and ought to – extend to key themes like political strategy and ‘declaratory diplomacy’, ‘identity’ and ‘text’, linguistics and ‘meaning’, seeking to employ, where relevant, some of the tools of disciplines such as discourse-analysis. The third kind of balance to be addressed – and re-dressed – in the EU-China relations of the future surrounds those new ‘hinge-issues’ of

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the relations, which have been analysed in several of the preceding chapters, and which have such significant potential to shape – and distort – the relations of the future. It is both conceivable and desirable, that future research foci are thus placed on subject-areas like evolving multipolar ‘developmentalism’, the environment, global governance, energysecurity, maritime terrorism and a new transcontinental (Asia-Europe) infrastructure. Human rights too fall into this latter category. The research assembled for this volume allows us to draw the conclusion that human rights are very definitely in the process of being ‘de-emphasised’ in the context of EU-China relations. This is not only careless from the point of view of political pragmatism; it also ignores the fact that human rights are a multi-dimensional issue, underlying all areas of the EU-China dialogue. More constructive – perhaps ‘constructivist’ – ways must, therefore, be found to ‘connect’ debates about human rights more creatively with other discussions about rights to development, regionalism, democracy, tolerance and control, dialogue and respect, responses to globalization and contributions to human civilisation.