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


Security relationships

133.  The EU adopted Guidelines on the EU's Foreign and Security Policy in East Asia during the 2005 UK Presidency, which added a security policy dimension to the EU's relations in East Asia. They demonstrate the EU's interest in fostering China's emergence as a "responsible global player" (p 270). However, the EU-China security relationship is not well-developed and the EU relies on its relationship with ASEM (see Chapter 4). Dr Gill told us that the EU had no alliances or traditional security commitments in the region. Individual Member States (UK, France, Germany) had a regular security dialogue with China, but the EU should try to establish a more formalised effort to engage China on energy and environmental security. Any EU dialogue should be placed in a broader East Asian context and include consultations with the US, Japan, South Korea and Australia (Q 608). The EU and its Member States had the potential to make a great contribution within China on "soft security questions" in helping China to become "more open, more pluralised, more just, more equitable and that that process unfolds in a stable way" (QQ 617-9, 620).

134.  Dr Gill did not believe that the EU took the regional dimension sufficiently into account. The EU should consult partners with experience of dealing with the Chinese, such as the US, Japan, Australia and South Korea, if it wished to engage on security issues. "The risk is that we see China as some sort of unique and overwhelmingly important actor … in the region to the detriment of maintaining important relationships" (Q 621). Patrick Child supported an increased EU presence in discussions of hot security issues in Asia to influence how EU funds and other instruments were used (Q 344). However, Professor Godement did not believe the EU had the leverage of the US in the region (QQ 589, 590). Dr Wacker agreed: the US had strategic interests in the Asia-Pacific region, a strong military presence, alliances and commitments; the EU had none (p 327).


135.  Dr Gill told us that the Chinese military were far more capable now than they had been 10-15 years previously and were the largest standing army in the world.[62] The Chinese threat perception had changed from its land borders (Soviet Union, India, Vietnam) to the East (the US, a more robust Taiwan independence movement and Japan). This had caused a rethink on doctrine and types of weapons and technologies required. Their aim was "active defence" or the achievement of a capacity where a potential adversary would wish to avoid a confrontation that might escalate, particularly over Taiwan (QQ 601, 603, 605). Ambassador Chen[63] told us that a declaration of independence by Taiwan would force China to take military action even if the US were to intervene.

136.  China's military modernisation is transforming its capacity to project force in East Asia and beyond[64]. In time this might be interpreted by China's neighbours, and by the United States, as a challenge to regional stability. Stephen Lillie commented that the lack of transparency in China's defence expenditure was a concern to many countries but defence was not an area of EU competence and was not much discussed (QQ 22-25). Ambassador Chen[65] told us that the only goal of China's military modernisation was to sustain national unity. It was possible that China would favour transparency when it was strong enough.

137.  The EU does not have a direct security role to play in East Asia, except on environmental and energy security issues, on which it should establish more formal discussions with China. On other security issues the EU will have to exert its influence through other regional actors, such as the USA and Japan, and through ASEM.

138.  We support regular dialogue between the EU and the United States on East Asian strategic and security matters.

Science and Technology collaboration and China's space and cyber programmes

139.  Dr Gill told us that the Chinese were putting significant resources and effort into cyber security and interference. In some ways this reflected conventional weakness rather than an aggressive offensive capacity or intention, but was of increasing concern, especially for the US military (Q 607). Professor Callahan added that China saw cyber warfare as an internal issue. Their expertise in developing the so-called Great Firewall of China to keep foreign websites out had helped them to develop the capability to attack sites outside China (QQ 167, 171).

140.  The relationship between internal political control and external cyber security was further revealed in January 2010 after US corporation Google reported "a highly sophisticated and targeted attack on our corporate infrastructure originating from China," aimed at the email accounts of human rights activists in China. The US State Department called on the Chinese government to investigate the sources of the attack. There have also been allegations of industrial espionage.[66]

141.  In its 2006 policy document on China,[67] the Commission recognised that scientific and technological cooperation was one of the flagship areas in EU-China relations. Dr Nicola Casarini (European University Institute, Florence) noted that the EU was now "China's most important source of scientific expertise and advanced technology". For example, the Galileo satellite navigation programme, in which China was the largest non-EU contributor, was intended to benefit both sides by sharing costs, facilitating the entry of European businesses into the Chinese aerospace market, and allowing Chinese companies to obtain know-how and advanced space technology. However, the EU should be concerned that China's interest in collaborative projects such as this had served to advance its own strategic capacity.

142.  In 2007 the Chinese government unveiled plans to build a Chinese competitor to Galileo for both civilian and military purposes. The EU countered by limiting the tendering process for the second phase[68] of Galileo to States party to the WTO Agreement on Government Procurement (GPA), effectively excluding China. This had been a "slap in the face" for the Chinese, who had always regarded space and satellite navigation cooperation with the EU as a model for their large-scale international S&T cooperation.

143.  Thanks to domestic programmes and international cooperation, particularly with the EU, China has succeeded in closing the scientific and technological gap with developed countries and Beijing is now in a position seriously to challenge the EU in high-tech sectors such as satellite navigation. Dr Casarini argued that EU policy-makers were faced with "the challenge of how to develop further cooperation with China in science and technology and, at the same time, seek to manage China's emergence as a strategic competitor in high-tech sectors." The Europeans were increasingly concerned at China's lack of progress on the protection of intellectual property rights (IPR) and the risk that the Chinese would use European advanced space technology to develop their own satellite system and challenge Galileo itself. The Chinese system ("Beidou") was now expected to be completed before 2015. Moreover, the Chinese satellites currently in orbit seemed to be using frequencies previously allocated to Galileo by the International Telecommunication Union (ITU) (pp 243-5).

EU-China Science and Technology Cooperation

Sino-European cooperation in S&T has a long history and has improved significantly in recent years. In 2004 the EU-China Agreement on Scientific and Technological Cooperation was renewed; it aims to link research organisations, industry, universities and researchers in the framework of projects supported by the EU budget. In 2005 the two sides further strengthened these ties by signing a Joint Declaration on EU-China Science and Technology Cooperation, with the aim of building a "knowledge-based strategic partnership". More recent initiatives include European participation in Chinese projects and the possibility of joint European and Chinese funding for research, especially in areas of mutual interest.
At the same time China has made huge progress in S&T: in its 2020 S&T Plan, adopted in 2004, China set the objective of catching up with the developed countries by 2020; and in 2008 it invested 1.45% of GDP on research and technological innovation (Casarini pp 241-3).

144.  Dr Gill thought that Chinese investment in its space programme had resulted in remarkable achievements. The programme was military, primarily operated by the PLA, and had a strategic purpose beyond the political and economic. However, technology of high intellectual property value, high financial value and potential military value being developed for Galileo was being "black boxed" and was not available to the Chinese for either military or commercial reasons. The PLA's action in shooting down one of its satellites[69] was their effort to demonstrate their ability to do so and "signal to countries who are very reliant, like the United States, upon space-based assets for their military activity, that in relatively inexpensive ways China can counteract some of the advantages that more powerful countries could have" (QQ 628-9).

145.  European companies had sold telecommunication satellites and other space technologies to Beijing. European remote sensing companies had sold spatial imagery to China, as had their American counterparts. France had sold some low-resolution micro-satellites to China (Casarini p 244). The Government told us that the UK had sold a small satellite to China through Surrey Satellite Technology Limited to operate part of a global disaster management constellation. Discussions on the sale of a second satellite had begun. The Government would welcome the Commission "setting out how they might oversee interaction with China on space issues" (p 273).

146.  The EU's engagement with China in the field of science and technology, including projects such as the Galileo satellite programme, is to be commended. EU-China S&T cooperation has brought benefits to both sides through, for example, the sharing of expertise and joint research. However, the EU should be aware that China is probably collaborating to compete. This is particularly the case for dual-use projects with both military and civilian potential, of which the space and satellite programmes are the most significant. The EU should be cautious about sharing technology with China that might involve commercial or strategic risk for the EU and its partners in the future.

147.  The development by China of a cyber capability has potentially serious commercial and communications implications for EU Member States[70]. The attack on the Google corporation exemplifies the rising capacity in China to use technology for political control at home and cyber attacks internationally. When attacks emanate from China the EU should make strong representations to the Chinese government and be prepared to take strong counter-measures including the curtailment of collaborative technology programmes. The EU should begin by engaging the Chinese authorities in discussions on the proper development and employment of cyber capability. This is an area where the EU should work closely with the United States through NATO and other relevant organisations.

The arms embargo

148.  The EU imposed an "arms embargo" following the brutal repression of pro-democracy demonstrations in Tiananmen Square in June 1989. However, it is not an arms embargo in the traditional sense, and does not include a list of proscribed technologies or weapons which would normally form part of a serious embargo (Dr Gill Q 623). It consists of two lines in a European Council Declaration[71], calling for the "interruption by the Member States of the Community of military cooperation and an embargo on trade in arms with China …" It is not legally binding and each country applies it differently.

149.  The scope of the embargo is limited to goods that might be used by the Chinese for internal repression, and it has not stopped arms sales by EU Member States to China (FCO pp 273-4) (see Box 2). In addition, the UK Government does not permit the export of goods if there is a clear risk that the export could be used for external aggression or to introduce new capabilities into the region (Lord Mandelson, footnote to Q 738).

150.  The embargo is an acutely sensitive and symbolic issue for the Chinese and a constant irritant in EU-China relations. The Chinese feel humiliated to be treated in the same way as Sudan or Zimbabwe. They do not understand why the EU refuses to lift the embargo and regularly raise the issue (Lord Patten of Barnes Q 563). Professor Song believed, however, that the Chinese should not allow the embargo to be a major issue (Q 523).

151.  Most of our witnesses commented that the embargo was not in fact the main instrument for regulating arms exports to China. While lifting the embargo would be politically symbolic (Lillie Q 27), the EU has more effective legislation in a Common Position on arms exports[72], which is legally binding on all Member States. It applies to exports to third countries and does not therefore single out China (Cooper Q 413). The EU also has a Dual-Use Regulation[73] which controls the export of sensitive technologies to China and other countries. James Moran in Brussels thought this Regulation was "extremely significant," although difficult to implement (Q 359).

152.  Former deputy defence minister of Taiwan Professor Chong-Pin Lin of Tamking University believed the embargo had slowed down China's attempts to acquire "critical technologies" for its military modernisation. This was "vital" for regional security (p 246).


153.  In 2003, the French President, Jacques Chirac, and German Chancellor, Gerhard Schröder, indicated to the Chinese that they favoured lifting the embargo, even though there was no consensus within the EU. This caused alarm in the US, where many feared the lifting of the embargo would lead to a surge in arms sales and the transfer of sensitive, including American, technology to China. The embargo was not lifted, and Lord Patten of Barnes attributed this to American pressure (Q 563). Robert Cooper, on the other hand, thought the EU had not arrived at a situation where the US exerted pressure "because we never got very close to lifting the arms embargo" (Q 413).

154.  According to Professor Godement, the Chinese were disappointed by the EU's decision, and perceived that the EU could not deliver on its promises. This was a turning point in EU-China relations. China realised that the EU would always side with the US (Q 591).

EU Member State arms sales to China

Total value of sales
2005 : €113.2 million
2006 : €133.9 million
2007 : €91.6 million


155.  Since 2003 the arms embargo has been under review. The December 2004 European Council Presidency conclusions reaffirmed:

    "the political will to continue to work towards lifting the arms embargo … It underlined that the result of any decision should not be an increase of arms exports from EU Member States to China, neither in quantitative nor qualitative terms. In this regard the European Council recalled the importance of the criteria of the Code of Conduct[75] on arms exports, in particular criteria regarding human rights, stability and security in the region and the national security of friendly and allied countries …"

156.  Stephen Lillie said that the UK's position was that the time was not right to lift the embargo but "it should rightly remain under review". There was consensus across the EU on this position (Q 27). Robert Cooper in Brussels thought consensus on lifting the embargo unlikely unless there was an improvement in China's human rights record; some Member States believed that lifting should be linked to China's ratification of the International Covenant on Civil and Political Rights (Q 413) (see also Chapter 8 on human rights). A 2003 European Parliament Resolution[76] linked the lifting of the embargo to human rights and Chinese threats against Taiwan. More recently, Resolution 2008/2031 said that since the EU had not received any explanation about the "Tiananmen massacre" there was no reason to lift the embargo[77].

157.  The US, Japan and Taiwan oppose lifting the arms embargo. Dr Gill thought the embargo was "a woefully misunderstood aspect of EU-China relations", primarily in Washington (Q 623). An official EU-US dialogue on China had been initiated following the attempt to lift the embargo in 2003, and this had been at least one good outcome of the "arms embargo imbroglio" (Q 619). The EU might be able to persuade the US government and Congress that the Common Position was "far more effective" than the embargo. If the EU prepared the ground properly, it could achieve the lifting of the embargo in a way that would receive concessions from the Chinese on certain issues (Q 625).

158.  Dr Wacker[78], however, thought that the US, Japan and Taiwan were unlikely to be convinced that the Common Position was enough (p 326). The Taipei Representative Office to the UK commented that the embargo should remain in place until China had met conditions including: ratification of the ICCPR; removal of the 1,500 missiles targeted at Taiwan; and the renunciation of the use of force against Taiwan (p 317).

159.  The EU arms embargo was imposed as a symbolic sanction to express concern about human rights in China following the suppression of the Tiananmen Square demonstrations in 1989, and it still retains this character. The 1989 embargo is limited in scope and has had little effect on the volume of arms sales by EU Member States to China. These are regulated at the EU level by a 2008 legally-binding Common Position on arms exports.

160.  The embargo is a sensitive and symbolic issue for the Chinese and an irritant in EU-China relations. It requires cautious and tactful handling by the EU. The Chinese were disappointed that the EU did not lift the arms embargo in 2003, and they were seen to have lost face because of the confidence they placed in European diplomacy to deliver the lift. The Chinese perceived the EU decision as driven by the US, even though it might have been derailed by European parliamentary and public opinion on human rights grounds. The Chinese perception that the EU is the weak partner in relation to the US, rather than a strong partner for China, still affects EU-China relations. The EU must avoid public division and policy reversals in future, which only serve to undermine its credibility.

161.  The embargo is understandably a sensitive issue for the United States, Japan and other partners. The EU must consult closely with these partners on any future proposal to lift the arms embargo. Regional stability and security in East Asia must be safeguarded. The EU would need to convince the United States and its East Asian partners that the arms embargo is mainly symbolic and that the Common Position on arms exports is sufficiently robust and enforceable to prevent the export of offensive weapons systems and sophisticated military technologies.

162.  The EU should be prepared to lift the arms embargo only when the international conditions above have been fulfilled and if the Chinese government makes progress on human rights and regional security. Specific conditions should include ratification of the International Covenant on Civil and Political Rights, greater transparency on military modernisation and the removal of the military threat to Taiwan.


163.  China's desire to reunite Taiwan with the mainland, and opposition to the independence movement there, steer a number of Chinese policies, including political and economic relations with third countries and how its armed forces are deployed. Chinese extreme sensitivities about Taiwan were demonstrated in their strong protest about US arms sales to Taiwan and their threat of retaliatory measures in January 2010. Stephen Lillie thought that China's purpose in projecting power was to use the threat of military intervention to deter a Taiwanese declaration of independence and to defend their territorial claims in the South China Sea[79] (Q 25).

164.  Isabel Hilton told us in March 2009 that China's relations with Taiwan were in "rather a good phase". The recent Taiwanese elections had brought to power Ma Ying-Jeou of the Kuomintang (KMT) who saw the Taiwan issue in the same way as Beijing on the "one China" issue. The Chinese had "given themselves the right to invade Taiwan" if they wished but, provided Taiwan did not do anything to change the international legal order, the Chinese did not see it as in their interests to go to war (Q 134). Dr Gill thought that the US and China had reached an understanding over the heads of the leaders and people of Taiwan to do everything possible to avoid Taiwan taking steps which would lead to conflict (Q 612).

165.  Stephen Lillie told us that the Commission had a non-diplomatic trade office in Taiwan to maintain its interests. He thought that the EU could play a role in supporting reconciliation and dialogue across the Taiwan Strait. The EU-Asia Policy Guidelines set out a basic approach for the EU, to support positive moves between the two sides and express concern at moves which would increase tension. He agreed that, since May 2008, the China-Taiwan dialogue had increased substantially including direct flights and shipping links which the EU had welcomed publicly (Q 31). Lord Patten of Barnes commented that, following the conclusion of discussions on Chinese and Taiwanese accession to the WTO, China had reluctantly accepted the establishment of an EU office in Taiwan, as well as in Beijing, as a necessary part of the trade relationship. He had explained to the Chinese that this did not constitute recognition of Taiwan's sovereignty (Q 556).

166.  Dr Gill thought that in recent years the EU had spoken more forcefully in stating its interest in a peaceful solution on the Taiwan Strait: "diplomatic language for letting China know that it should not use force to resolve those differences". Neither side should take unilateral actions that would disrupt the status quo. The EU had quietly supported efforts to grant Taiwan greater international space, e.g. allowing Taiwan to participate in various international organisations such as the World Health Assembly as an observer. The EU should join the US in encouraging China to be more flexible (Q 612). Robert Cooper thought that the EU had a serious interest in cross-Strait relations as the disruption of a conflict would be enormous and one could never exclude being dragged in. The best insurance was to develop political and commercial people-to-people exchanges, which were currently going well (Q 415).

167.  The Taipei Representative Office in the UK commented that Taiwan was strategically important for the EU. Taiwan could serve as a "role model and catalyst" for China's democratisation. EU-Taiwan trade amounted to €40 billion, making it the EU's 13th largest trading partner. Taiwan was a major contributor to China's economic modernisation, with 5 million jobs in China created due to investments totalling $76 billion. Taiwan was a unique partner for EU investors in China. China still had 1,500 missiles targeted at Taiwan. However, Taiwan's government sought improved ties with Beijing, and was willing to learn from the EU's experience of gradual economic and then political integration.

168.  Taiwan would like the EU to:

  • maintain its arms embargo against China until "relevant conditions" were met, including ratification of the International Covenant on Civil and Political Rights;
  • maintain a "balanced policy" on cross-Strait relations; make no reference to the issue of Taiwanese sovereignty in the PCA currently being negotiated between the EU and China; and consult Taiwan before the EU conducts talks with China about Taiwan;
  • continue to support Taiwan's "meaningful participation" in UN Specialised Agencies, building on the recent invitation to the World Health Assembly as an observer;
  • recognise Taiwan as an "international legal person" (but not a sovereign state), reflecting an arrangement in the WTO in which Taiwan participates as a "separated customs territory" but with full membership; and
  • agree to negotiate an EU-Taiwan Free Trade Agreement (p 316).

169.  China's perception of the threat of a unilateral declaration of independence by Taiwan has risen since the 1990s due to democratisation on the island and rising nationalism on the mainland. This has resulted in intense military preparation to deter or confront a possible Taiwanese de jure independence. Despite China's repeated claims that Taiwan is an internal issue, it is a potential flash-point for the whole region, which could bring the US and China into open conflict. Despite the EU's lack of a defence capacity in East Asia, it would face serious consequences from a conflict across the Taiwan Strait and its regional repercussions. Close consultation with the US and Japan is needed on the subject.

170.  Current policies in Taiwan and China mean that the situation remains stable. However, the latest US arms sales to Taipei have rekindled tension between Beijing and Washington. The EU should state its support for the one China policy but its rejection of re-unification by anything other than peaceful means. It should discourage China and Taiwan from taking any unilateral actions that would infringe these principles.

171.  The EU should continue to support Taiwan in areas which China would regard as non-threatening and should encourage the Chinese to be more flexible, seeking to persuade them that Taiwan's participation in some international organisations, such as observer status at the World Health Assembly, will not damage the Chinese case on reunification.

62   Dr Gill gave the numbers of the army as 2.185 million, of which 1.6 million (about two thirds) are army (land-based forces); navy 250,000; air force some 300,000. The remainder are domestic paramilitary forces (Q 603).  Back

63   Renmin University, Beijing, Appendix 4. Back

64   On March 5 2010 the official Chinese News Agency (Xinhua) reported that China planned to increase its national defence spending by 7.5 percent to 519 billion yuan (about US $76 billion) in 2010, according to a draft budget report. This would be a lower rate of increase than in previous years. Back

65   Renmin University, Beijing, Appendix 4. Back

66   The Sunday Times, 31 January 2010. Back

67   European Commission, EU-China: Closer Partners, Growing Responsibilities, Brussels, COM(2006) 632, 24 October 2006. Back

68   Phase two comprises the manufacturing, services and launch of the remaining 26 satellites of the European satellite system. Back

69   In January 2007 China destroyed one of its weather satellites using a ground-based medium-range ballistic missile. Source: BBC News 23 January 2007 quoting Chinese Foreign ministry spokesman Liu Jianchao. Back

70   See our 5th Report (2009-10) Protecting Europe against large-scale cyber-attacks (HL Paper 68). Back

71   Presidency Conclusions, Madrid European Council, June 1989. Back

72   This is the 2008 Common Position Defining Common Rules Governing the Control of Exports and Military Technology and Equipment, which replaced the 1998 EU Code of Conduct on Arms Exports. It applies to all countries outside the EU and does not therefore single out China.  Back

73   The Dual-Use Regulation 428/2009 sets out controlled items which may not leave the EU customs territory without an export authorisation. Goods and technologies are considered to be dual-use when they can be used for both civil and military purposes. Back

74   FCO written evidence p 273. Figures for the EU as a whole. Back

75   The Code of Conduct was not legally binding and preceded the Common Position on arms exports. Back

76   European Parliament Resolution on Removal of the EU embargo on arms sales to China (P5_TA(2003)0599). Back

77   European Parliament resolution of 4 September 2008 on the evaluation of EU sanctions as part of the EU's actions and policies in the area of human rights (2008/2031(INI)). Back

78   Stiftung Wissenschaft und Politik (SWP), Berlin. Back

79   These include the Spratly and Paracel Islands, the Macclesfield Bank and Scarborough Shoal. Back

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