Editor's comment: it is about time. Europe has been lagging in its dealing with China. When UK, US are sanctioning China over HK, Europe is still talking with China on trade deals. Stand together is the only way to deal with tyranny.
Last week’s crisis between China on the one hand, and the EU, US and their allies on the other, has helped crystallize a number of issues previously obscured by uncertainty.
This uncertainty stemmed from the EU’s decision to initial an investment treaty with China just before the new year. This raised two major questions. Was it, as many European critics have argued, a diplomatic error by the EU to give China a diplomatic victory just as the incoming team of US President-elect Joe Biden hinted that they would rather Europeans are waiting for her to take office to forge a common approach to Beijing?
And, secondly, did he pull the rug under any pretense of European “strategic autonomy” vis-à-vis China? The signing of the deal just days after Beijing’s dictatorial crackdown on dissidents in Hong Kong certainly suggested a certain European callousness in the pursuit of commercial interests. Beyond that, it has been legitimately argued that if the deal is implemented it would increase the cost for European economies to challenge Beijing on social and human rights grounds, such as its oppression in Hong Kong. and the forced labor of Uyghur citizens in Xinjiang.
On the other hand, the more optimistic stance (which I spoke about) highlighted how the EU was equipping itself, both in the investment agreement and unilaterally, with legal tools to lobby. on China. Much depends on the incentives of the EU’s internal and external political economy to use them.
If the last few days are anything to say, Europe and the West are healthier than the pessimists would like.
The imposition of sanctions against Chinese officials responsible for the persecution of Uyghurs has been coordinated between the EU and the United States, with the participation of the United Kingdom and Canada. (The EU, however, could usefully join US sanctions for abuses in Hong Kong as well.) And this coordinated stance doesn’t sound like lightning in the pan. The Biden administration has done everything it can to mend barriers with Europe after the Trump years, with Secretary of State Antony Blinken arriving in Brussels this week to re-establish a US-EU dialogue on relations with China.
This proves that the December investment deal did not torpedo a close transatlantic relationship with China. The unity of interest between Europe and the United States runs much deeper than that.
For now, at least. But what happens next? The hope of optimists has always been that the EU would find the political courage to keep China to high standards, whether by deciding to ratify the investment agreement, using the legal tools it provides, or more generally by taking autonomous measures to promote its values against a power which it recognizes not only as an economic competitor and a potential partner on issues such as climate change, but as a “systemic rival”. With the new sanctions, the EU has just done it. The question is whether this will continue.
Ironically, Beijing’s own reactions make the answer more likely to be “yes”. By launching counter-sanctions against MEPs, academics and analysts, Chinese authorities have made it politically impossible for the EU to ratify the investment deal unless it backs down. If this is how Beijing deals with what they see as a loss of face, they simply put themselves in a situation where you have to lose face twice to get back to where they were.
Behaviors such as the childish habit of having official spokespersons mocking Western leaders, or the tirade uttered by Blinken’s Chinese counterpart, Yang Jiechi, at last week’s meeting between the two, also make any reconciliation more difficult.
For now, EU countries have allayed suspicions that European business opportunities will always trump European values in their dealings with China. Europe has a limit, although much of it depends on how far that limit is set. But it’s yet another clear sign that the bloc is ready to subordinate traditional trade policy to strategic imperatives. The pursuit or maintenance of integration with China will not come at any cost.
Much more depends on what China will do. Getting through all the great geopolitical challenges ahead is the central question of whether Beijing is ready to see some economic decoupling between itself and the West as a price to pay for resisting Western pressure.
The answer was obviously “yes” in its relations with small partners. Beijing’s intimidation of Australia, or the freezing of Norway after dissident Liu Xiaobo won the Nobel Peace Prize, illustrates China’s staunch desire to cut economic ties with critics. But it doesn’t cost an economy of its size anything. It’s a different issue against the US or the EU, let alone the two together. After all, Beijing made a trade deal with Donald Trump when he was president. And its attempt to divide EU member states through the 16 + 1 initiative shows that it fears EU unity against it.
It is true that the Chinese leadership aims to develop its economy towards a more self-sufficient model. The overall trade intensity of its economy is not as strong as it was a decade ago, although it is still stronger than that of the United States. A central element of President Xi Jinping’s dual circulation strategy is to strengthen the capacity of the national economy to thrive. But the key word remains “double”. As the recent signing of the Comprehensive Regional Economic Partnership Trade Agreement shows, Beijing’s economic strategy is not isolationist. Dual circulation should not be seen as a decoupling of the domestic economy from the global economy, but rather as an attempt to tie international economic activity to China’s domestic economic engines rather than the other way around, like this has been the case so far.
Any serious decoupling would undermine this strategy. It would even be a brake on deeper integration, especially in the new and growing areas of connected technology and digital services. But these are precisely the areas where the West can prevent such deep integration with China as we have seen in conventional trade, depending on Chinese behavior. Are they ready to do it? My hunch is yes: unlike China, they have the experience of being less globalized but still rich. As Beijing is well aware, China is still not a rich country. It needs the West more than the West needs.
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