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China–European Union relations

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Sino-European relations
Map indicating locations of European Union and People's Republic of China

European Union
China

Relations between the European Union and the People's Republic of China were established in 1975. A major point of contention in relations is the EU's arms ban to China.

Agreements

Relations are governed by the 1985 EU-China Trade and Cooperation Agreement. Since 2007, negotiations have been underway to upgrade this to a new Partnership and Cooperation Agreement and there are already 24 sectoral dialogues and agreements from environmental protection to education.[1]

History

After the end of the Cold War, relations with Europe were not as high a priority for China as its relations with the US, Japan and other Asian powers. However interest in closer relations started to rise as economic contacts increased and interest in a multipolar system grew. Although initially imposing an arms embargo on China after Tiananmen (see arms embargo section below), European leaders eased off China's isolation. China's growing economy became the focus for many European visitors and in turn Chinese businessmen began to make frequent trips to Europe. Europe's interest in China led to the EU becoming unusually active with China during the 1990s with high-level exchanges. EU-Chinese trade increased faster than the Chinese economy itself, tripling in ten years from USD14.3 billion in 1985 to USD45.6 billion in 1994.[2]

However political and security co-operation was hampered with China seeing little chance of headway there. Europe was leading the desire for NATO expansion and intervention in Kosovo, which China opposed as it saw them as extending US influence. However by 2001 China moderated its anti-US stance in the hopes that Europe would cancel its arms embargo but pressure from the US led to the embargo remaining in place. Due to this, China saw the EU as being too weak, divided and dependent on the US to be a significant power. Furthermore, it shared too many of the US' concerns about China's authoritarian system and threats of force over Taiwan. Even in the economic sphere, China was angered at protectionist measures against its exports to Europe and the EU's opposition to giving China the status of market economy in order to join the WTO.[2]

However, economic cooperation continued, with the EU's "New Asia Strategy", the first Asia–Europe Meeting in 1996, the 1998 EU-China summit and frequent policy documents desiring closer partnerships with China. Although the 1997 Asian Financial Crisis dampened investors enthusiasm, China weathered the crisis well and continued to be a major focus of EU trade. Chinese leaders were anxious to return the European interest and made high level visits throughout the 1990s, visits that were accompanied by major EU sales to China. Trade in 1993 saw a 63% increase from the previous year. China became Europe's fourth largest trading partner at this time. Even following the financial crisis in 1997, EU-Chinese trade increased by 15% in 1998.[2]

France was leading the EU's desire for closer ties in order to establish a multipolar world and was the first, along with Russia, to establish strategic partnerships with China.[2] However EU-China have experienced a cool down after China canceled the EU-China yearly summit in November 2008. This was apparently caused due to French President Sarkozy's plans to meet with the Dalai Lama.[3]

China and consumer protection: European Union, China and the United States faced in the context of World Shanghai Expo and the China-EU Summit, the United States, consumer issues and product safety. This section lists the reference documents. The press release from the European Commission, the speech of the President of the Commission as well as more specific information on European policy in the field of consumer protection.[citation needed]

Trade

The EU is China's largest trading partner,[4][5] and China is the EU's second largest trade partner after the United States. Most of this trade is in industrial and manufactured goods. Between 2009 and 2010 alone EU exports to China increased by 38% and China's exports to the EU increased by 31%.[4]

Direction of trade Goods (2011)[6] Services (2010)[6] FDI (2010)[6]
EU-China €136,2 billion €22,3 billion €7,1 billion
China-EU €292,1 billion €16,3 billion €0,7 billion

There have been some disputes, such as the dispute over textile imports into the EU (see below). China and the EU are increasingly seeking cooperation, for example China joined the Galileo project investing €230 million and has been buying Airbus planes in return for a construction plant to be built in China; in 2006 China placed an order for 150 planes during a visit by the French President.[7] Also, despite the arms embargo, a leaked US diplomatic cable suggested that in 2003 the EU sold China €400 million of "defence exports" and later, other military grade submarine and radar technology.[8]

Textiles conflict

There is a dispute over textile imports into the EU (the Bra wars) with domestic European manufactures losing out to cheaper Chinese imported goods. The EU and China have finally reached an agreement ending the 'conflict of textiles', which poisoned their relations for several weeks. Both parties (the Chinese government on the one hand, European Commission on the other) have finally found Monday, Sept. 5, a deal that appears to end the dispute between Beijing and Brussels since the end of July. Under the terms of the agreement, China agreed, in exchange for the release of 80 million items held in European ports, only half of these are deducted from its export quotas for 2006.[citation needed]

Debt purchases

During the European sovereign debt crisis, several European countries required EU and International Monetary Fund bailouts. China assisted Europe by buying billions of euros' worth of junk Eurozone bonds;[8] in particular from Greece, Ireland, Italy, Portugal and Spain. Some analysts suggested China was buying political influence in the EU but China maintains they are building strong trade ties and supporting the European economy so that trade issues can move ahead more smoothly.[9][10]

Arms embargo

European military hardware, such as the Eurofighter Typhoon (pictured), are banned from being exported to the People's Republic.

The EU arms embargo on the China was imposed by the EU on the People's Republic of China in response to its suppression of the Tiananmen Square protests of 1989.[11] China insists that the embargo be removed, calling it "very puzzling" and amounting to "political discrimination". However, the EU is currently not planning to remove the embargo due to the continuing human rights situation in China.[12] In January 2010, China once again asked that the embargo be removed, saying the sanctions were based on "prejudice".[13]

Internal EU divisions

A leaked US cable indicates the internal divisions in the EU on the ban during negotiations in 2004. France viewed the ban as anachronistic and refused to consider attaching reforms in China as a condition, stating that "China would not accept human rights conditionality." Austria, Belgium, the Czech Republic, Greece, Italy and the UK are all broadly in the French camp. Germany, Denmark, Netherlands and Sweden wished to attach a lifting of the ban to "specific Chinese steps on human rights." All agreed in principle if certain conditions were met then the ban should be lifted. France and the UK are known to maintain their positions in 2011, with Germany a possible important swing state.[8] Various EU heads of state have objected to the embargo's cancellation or supported its continued existence in the immediate future. Angela Merkel has indicated her opposition to a lifting of the embargo, whereas her predecessor, Gerhard Schröder, had been in favour.[14]

The European Parliament has consistently argued against removing the embargo, passing resolutions critical of China and in support of Taiwan.[15] However, High Representative Catherine Ashton put forward plans for lifting the embargo in 2010, arguing that "The current arms embargo is a major impediment for developing stronger EU-China co-operation on foreign policy and security matters." The Chinese ambassador to the EU Song Zhe agreed, noting "It doesn't make any sense to maintain the embargo ... With it [in place] we will develop our own arms even faster. So, at the end of the day, it is the [arms] companies in Europe that are losing out."[16] The plan was rejected then but is thought to still be on the drawing board.[17]

Outside pressure

The United States, which also has an arms embargo on China, fears that lifting the embargo will create a technology transfer that will increase the capabilities of the Chinese army. The US has stated that it will protect Taiwan if invaded by the China, so it fears that European arms would be used against the US if such a situations occurs.[18] The US has been influential in keeping the EU ban in place. The US sees China as a military threat and pressured the EU in keeping it in place, but they have not got the issue off the agenda. In 2011 the Chinese EU ambassador suggested that in future the EU should "make decisions on its own".[10][8]

Similarly, Japan has been at the forefront of lobbying efforts against any attempt to remove restrictions on arm sales to Beijing.[19] Japan's government, particularly hard line members of the government cabinet, fear that any such move will alter the balance of power in South east Asia strongly in favour of China at Japan's expense. China described Japan's position as "provocative".[20] Japan stated the EU's proposal to lift it in 2010 was a "mistake" which caused great "concern" in Japan.[17]

Other trade

Whilst the embargo remains, China buys much of its arms from Russia. China had turned to Israel for surveillance planes, but under pressure from the U.S., Israel refused to go through with the deal.[19] Despite the ban, another leaked US cable suggested that in 2003 the EU sold €400 million of "defence exports" to China, and later approved other sales of military grade submarine and radar technology.[8]

See also

References

  1. ^ http://ec.europa.eu/external_relations/china/index_en.htm
  2. ^ a b c d Sutter, Robert G. (2008) Chinese Foreign Relations Maryland, Rowman & Littlefield Publishers. p.340-342
  3. ^ Business fears over Chinese-French rift, Financial Times
  4. ^ a b http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/china/
  5. ^ EU replaces U.S. as biggest trading partner of China(09/15/06) china-embassy.org
  6. ^ a b c EU - China statistics
  7. ^ With big order, China gives Airbus a boost iht.com
  8. ^ a b c d e Rettman, Andrew (25 July 2011) Leaked cable shows fragility of EU arms ban on China, EU observer
  9. ^ Phillips, Leigh (27 June 2011) Wen: China will continue to buy European debt, EU observer
  10. ^ a b Rettman, Andrew (8 July 2011) China: EU bailout leaves 'fundamental problems' unresolved, EU observer
  11. ^ Q&A: China arms embargo row. BBC News. April 18, 2005.
  12. ^ "EU urged to lift ‘damaging’ arms embargo against China", The Parliament, November 28, 2008.
  13. ^ "China asks EU to scrap 'prejudiced' arms embargo". The Hindu. January 28, 2010. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  14. ^ "Hu meets Merkel As Germany Reaffirms EU Arms Ban", Deutsche Welle, November 11, 2005.
  15. ^ "OP-ED: Taiwan’s challenge to China", Daily Times, March 16, 2004.
  16. ^ Rettman, Andrew (17 December 2010) Ashton pragmatic on China in EU foreign policy blueprint, EU Observer
  17. ^ a b Willis, Andrew (19 May 2011) Japan: Ashton was wrong on China arms ban, EU Observer
  18. ^ "US fury over EU weapons for China", Daily Telegraph, April 12, 2008.
  19. ^ a b "Japan concerned by call to lift China embargo - official", Forbes, November 27, 2008.
  20. ^ "Abe's Support for EU Arms Embargo `Provocative', China Says", Bloomberg, January 18, 2007.
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