Stars and Dragons: The EU and China - European Union Committee Contents


The significance of China for the EU

64.  In the light of China's emergence as a major economic and political power, the EU has had to adjust its policies. As Lord Mandelson put it, "China's growing economic weight, and therefore its increasing political influence or power in the world, means that we have to come to terms with China as it is … and not perhaps … as we would like it to be" (Q 715). The public has become increasingly aware of China's commercial importance, not least through the presence of so many "Made in China" articles in European shops.

Current structures

65.  We asked our witnesses for their views on the mechanisms operating in the EU-China relationship (see Chapter 1). For Stephen Lillie, the current structures represented a "huge architecture which reflects the breadth of the relationship" (Q 11). Europe Minister Chris Bryant MP argued, however, that the current institutional architecture was inadequate; a formal Council Decision should set the framework for the EU's policy on China, rather than the present working paper. He hoped that the new High Representative for Foreign Affairs created by the Lisbon Treaty would present the Council with proposals for a "more effective long-term, strategic relationship with China" (Q 758). The EU should be "more robust" in its relationship with China, and needed a "strategic vision" of that relationship (Q 766).

66.  Michael Pulch[38] told us that the EU Delegation in Beijing was one of the largest and was growing, reflecting the importance of China. Its staff of 120, Brussels-based and locally-engaged, included people from the EU agencies, e.g. the European Patent Office. With the implementation of the Lisbon Treaty, the Delegation would become the embassy of the EU as well as the Commission, and would probably expand further. More reporting would be expected than current resources could probably deliver. Trade provided most of the Delegation's work but they also undertook political reporting.

67.  Professor Ash thought that the way in which the EU talked to the central government and its agents posed a problem; there was no guarantee that policies formulated in central government were implemented when they reached provincial, sub-provincial and municipal governments (Q 184). Professor Breslin thought that the EU's Delegation concentrated its activities in the political centres, whereas the China-Britain Business Council, for example, operated offices in six or seven different cities and different regional activities. A more even representation in different parts of China would do no harm (Q 185).

68.  We were told by James Moran (DG Relex) that strategic dialogues on East Asia had started in recent years involving the troika[39]; one on transparency in military expenditure had gone well (Q 344). For Dr Gudrun Wacker (German Institute for International and Security Affairs), the added value of the sectoral dialogues was "far from clear". The recently-instituted High Level Economic and Trade Mechanism, modelled on the US Strategic Economic Dialogue, "could be helpful". It was not clear who could negotiate for the EU on currency issues, given that not all Member States were members of the euro (p 325).

69.  Patrick Child pointed out that the Chinese government had a longer time horizon in its planning than the EU and Member State governments, with the EU's institutional cycle and changing national governments (QQ 338, 353).

Coherence and consistency

70.  Professor Godement claimed that the EU's diplomacy with China lacked focus. In some 50 summits between the EU and China, the same EU policy priority had never appeared twice and the language changed. This contrasted with the United States' relationship with China, which was strategic and focused (Q 584).

71.  Dr Wacker thought the annual summit meetings were important to build trust in the "long-term orientation" of the partnership, but that EU representation by the Commission, Council and rotating Presidency was cumbersome[40]. It lacked consistency and continuity, as each rotating Presidency introduced something new, resulting in "nice words" in the summit statements but no follow-up. The EU should cover less ground with greater consistency; but Commission, Council and Member States would not subscribe to a common strategy, on paper or in implementation. Two 2006 Commission papers on economic and political relations with China were modified substantially by Council Conclusions. "The Member States are either not willing or not able to formulate their interests and priorities on China … instead, national reflexes prevail" (p 326).

72.  Professor Shambaugh wrote that the Commission and Council had formulated a series of well thought-through Communications on China since 1995. The problem was that the Member States did not follow the strategies and policy guidelines formulated by the Commission and Council, thus undercutting their authority as well as the substance and wisdom of EU policies. The incoherence of the "common" foreign and security policy had had a negative effect on how the EU was perceived in China. The diversity of the EU weakened its ability to gain China's respect and to negotiate effectively on substantive concerns (p 309).

A strategic partnership?

73.  In 2005 the EU began a strategic dialogue with China. Our witnesses were generally unimpressed with its development. The Europe Minister told us that it could be more strategic and coherent (Q 758). For Lord Mandelson, the best way to conduct the relationship was "at a high level, in a coherent way and with give and take". Dialogue was valuable, but it should lead to "deliverables" (Q 728). The EU should refocus its efforts in the light of the Lisbon Treaty. The UK would argue strongly that "one of the places [the EU] needs to … increase its reputation is in China" (Q 781). Professor Flemming Christiansen (Chair in Chinese Studies, Leeds University) hoped that European political discourse on China would undergo a "reality check". Obsolete perceptions should be discarded and shared understanding of China among European decision-makers built (p 247).

74.  Lord Patten of Barnes criticised the EU: China had a clear strategy but the EU response was fractured and inconsistent. Channels for dialogue proliferated across the European institutions and the Member States, including six climate dialogues and approximately 28 dialogues on trade and economic issues. The EU did not always act collectively, even in areas of EU competence such as these (QQ 551, 558).

75.  Professor Mitter believed that a "frank, honest and positive acknowledgement of … differences may be … more useful in terms of engaging with the policy makers and thinkers in China" rather than using phrases which attempted to overcome real differences in world view (Q 160). Professor Feng thought that in China the term "engagement" was not understood; "cooperation" should be used.

76.  Professor Godement challenged as outdated the EU's treatment of China as a developing country to be aided in transition towards a market economy and a changed political system. China still had underdeveloped areas, but the EU's relationship with China was not typical of its relationships with other developing countries. Interdependence between the EU and China would not, by itself, lead to a convergence of norms or to democracy in China. "We are dealing with an interlocutor who is naturally stronger and more realist" and who saw the EU's practice of engaging unconditionally with China as an opportunity to push further in many areas. Experience in negotiating with the Chinese on WTO entry had shown that the tough, united approach of the US had been more successful in gaining concessions than that of the EU (QQ 573, 574).

77.  The EU calls its relations with China a strategic partnership, but as yet this is a misnomer. In practice, the EU-China relationship is currently better described as a "collaborative partnership," in which they collaborate on a limited range of issues. The EU must seek to build a genuine strategic partnership with China, increasing mutual understanding and broadening engagement. This will involve a two-way exchange. The EU may, for example, have lessons to learn from the Chinese on commercial competition and gaining markets.

78.  The rotating EU Presidency, with its changing priorities, has not served the EU well in dealing with China. The EU must identify its key priorities for EU-China summits and pursue them with clarity, vigour and consistency so that China takes account of EU views. The Lisbon Treaty arrangements alone will not do this. It will also require strong political will and consistent determination.

79.  Experience in negotiating China's entry into the WTO showed that the tough approach used by the US produced the best results. The EU should not be afraid to use this approach if appropriate in negotiations with the Chinese. If the Chinese cancel a summit, the EU should demonstrate in other areas of the relationship that this is not cost-free.

80.  The institutional framework for EU-China relations is highly developed, especially at the working level. Summits and sectoral discussions should focus on deliverable outcomes on real issues. The sectoral discussions should be used in future to discuss those issues which have dropped from the summit agenda but are still important to Member States.

81.  The EU needs to expand its representation beyond Beijing and Hong Kong and establish regional offices, in order to extend its influence and effectiveness, particularly in China's other major centres.

82.  Apart from key climate change projects, the EU should ensure that funds disbursed under the development envelope focus on training in areas of governance such as the rule of law, human rights and social models.

83.  In discussions with China the EU should endeavour to ensure clarity in the language used, and that each side knows what the other means when using terminology, such as "strategic" and "engagement."

The interests of the Member States

84.  Dr Brown said that the UK, Germany and France had tended to take a lead within the EU on policy towards China; they were the biggest investors in China and recipients of investment from China (Q 78). On the other hand Matthew Baldwin (Cabinet of EU Commission President Barroso) thought the EU was increasingly acting as a union though there would always be a parallel set of contacts between the larger Member States and China. The EU was working on a multiplicity of contacts: parliamentary, business-to-business, NGO (QQ 322, 328).

85.  Professor Shambaugh wrote that perspectives on China varied greatly among the Member States. Some central European countries were quite hostile to China; some Mediterranean countries were naïve about China; France, Germany, and the Netherlands were quite sceptical of China; whereas the UK and the Scandinavian states were much more positive towards China. Only Germany and the UK had national "strategies" for managing relations with China (p 310).

86.  Robert Cooper (Director General, EU Council Secretariat) commented that there would always be different interests and points of view among 27 countries; the question was whether there was sufficient solidarity and common interest to get more from cooperative behaviour than from trying to make gains as individuals (QQ 411-412).

87.  Professor Godement said that several countries had faced difficulties in their relations with China: the Netherlands in the early 1980s, and the UK in the run-up to the 1997 handover of Hong Kong. France had alternated between "honeymoon diplomacy" and sudden crises. Currently the UK, Germany and France were caught in a "prisoner's dilemma" in their relations with China, each seeking advantages from the difficulties encountered by others (QQ 573-575, 580, 582).

88.  Charles Grant also commented that Europeans sometimes undermined each other: when the German Chancellor had got into trouble over the Dalai Lama in 2007, the British and French had not shown solidarity; nor had the French received solidarity when President Sarkozy had got into trouble on the same subject[41]. "If only we could … get our act together and concert our diplomacy—not unify with one voice but concert it so we support each other—we would be much stronger in dealing with the Chinese. They would have more respect for us" (QQ 87, 100-1). Lord Patten of Barnes agreed: when European leaders decided to meet the Dalai Lama, China found it easy to pick them off. "Not a single Member State comes to the defence of the others … everybody hopes that they will gain some imagined commercial benefit from the embarrassment caused to a fellow Member State" (QQ 551, 558).

89.  Although Member States will continue to pursue their own interests for political and commercial reasons, unwarranted Chinese political or economic action against any Member State must be seen as an affront to all EU Member States. There should be a presumption that the EU and its Member States should take action promptly in such cases to uphold solidarity across the EU. This would be one of the most effective measures to rebalance the relationship.

The Partnership and Cooperation Agreement

90.  Patrick Child told us (in May 2009) that discussions on a Partnership and Cooperation Agreement were making good progress. James Moran said that updating the 1985 Agreement was suggested by the Chinese. The new Agreement would be more comprehensive. As of May, agreement had been reached on a number of difficult areas, for example non-proliferation (on which the Council was in the lead). With the new Agreement, the EU aspired to engage the Chinese at the level of their State Council. Trade had however been more difficult as the Chinese would not go beyond their WTO commitments (QQ 337, 340). Franz Jessen at the Commission added that crime, terrorism, corruption and migration were four major chapters in the PCA negotiation and progress had been made on the first three (Q 365).

91.  Stephen Lillie told us that the PCA was being pursued as two parallel negotiations: on trade, which was moving more slowly; and on other areas including environment, tourism, culture and transport, which were moving slightly faster. There was also an article on terrorism. Points of divergence remained, including many difficult market access issues from the European perspective[42]. One of the sensitive negotiations concerned Taiwan which was politically very important for the Chinese but raised difficulties for the European side (see Chapter 5) (QQ 11, 33).

92.  Lord Mandelson believed that the PCA would be an appropriate framework within which to address economic and political relations between the EU and China, covering the whole range of issues. Negotiation was making steady but slow progress. While agreements such as these appeared to be time-consuming, they allowed issues to be raised and compromises made for mutual benefit. A trade agreement was different and should focus on trade (Q 749, 750).

93.  We support the EU's efforts to negotiate a PCA with China to replace the outdated 1985 Trade and Cooperation Agreement. The new Agreement must underpin the new wide-ranging strategic relationship but the EU should be careful not to dilute the long-standing political aims such as language on human rights, for progress on commercial relations. The time-frame should enable a good result rather than a rushed one.

38   Chargé d'Affaires at the EC Delegation, Beijing, Appendix 4. Back

39   Presidency, Commission, High Representative. Back

40   EU-China summits are attended by the Chinese Prime Minister and other relevant Ministers and, for the EU, by the President of the Council of Ministers, the President of the Commission and the High Representative, as well as other relevant Ministers and Commissioners. Back

41   In 2008, during the French Presidency, the Chinese cancelled the summit following President Sarkozy's meeting with the Dalai Lama. Back

42   Evidence given in March 2009. Back

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