16 April 2019

EU - CHINA RELATION - AN ALTERNATIVE TO THE TRANSATLANTIC DEAL?

Ştefan Oprea

The anticipations made by global actors to check strategic partner’s options aiming at securing them, when the latter are receiving tempting offers for the welfare of their citizens, becomes unproductive. A perspective that goes in line with the theme of the Conference organized by the Defence and Security Monitor "Transatlantic Security Bridges over increasing security vision gaps - Romania's perspective".

Image source: Mediafax

The moments the European Union is going through is marked by the lack of unity and, implicitly direction, being concerned with its future trajectory on the international stage and the maintenance of the current balance of power in the region. The appearance of vocal states, with strong economy and politically stable, willing to promote their individual national interests in the detriment of EU's collective interests, make the other Member States even more to aim at more freedom in economic policy. And not only.

Starting from the idea that independence has always been more profitable than interdependence, this lack of unity, at EU level, is becoming more and more present. Without a common plan to continue as pre-established by its founding principles, its members, seeking for better economic prospects, will deviate from the essence of the community space. And China, paradoxically, may be the foreign force that can bring them together.

Having a relation with large syncope with the US, the European Union faces difficulties in being a key actor in a more and more multipolar world, when the strategic triangle China, the EU and the US is increasing.

Despite US warnings, the pressure of some EU governments voluntarily undermines the EU's foreign policy by weakening or blocking EU positions at the request of powers outside of the EU. However, governments are totally aware that their countries need EU, at the same time for economic reasons, but also in different foreign, security and defence policy areas.

Although the power rivalries between the US and China increases US’s pressure on the EU to define its position in its relation with Beijing, the success of the Chinese President's visit to Europe and the positions of important European leaders have shown the progress and potential China-EU cooperation in different domains (economic, cultural, etc.).  

A brief analysis of the past 10 years events highlights a few moments with geopolitical valence regarding Beijing's concern to Europe.

US’s great foreign policy change, as a result of the new geopolitical concept (Pivot to Asia - 2011), which translates Washington's strategic interest towards East Asia, puts China in a delicate situation.

The 2012 Chinese initiative, known as "16 + 1", to promote cooperation with 16 Central and Eastern European countries, including the Balkan countries, highlights the magnitude of China's concerns in the European area, an important strategic player in region’s geopolitics, whose relationship was seen,  at that time, as a bilateral, strictly transactional one.

Beijing's will to step out of the US's "strategic corset" materializes in 2013, when President Xi Jinping launches the New Road Silk project (later named One Belt, One Road), marking the end of his "low profile" foreign policy by adopting a policy to restore the historical, economic, political and cultural role of China and Eurasia to the world.

Although the initiative is focused on Asia, Central and Eastern European countries (CEE) are an important part of the Belt and Road Initiative (BRI), reflecting the very intense development of China-CEE cooperation under the auspices of the BRI.

From a total of 16 countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, North Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia), 11 are EU Member States (five are members of the euro zone), four are candidate countries for accession to the EU and one is a potential candidate country. Since 2016, with the acquisition by the China Ocean Shipping Co (COSCO) of a 51 percent stake in Piraeus Port, China's involvement in CEE has begun to change. The loans given to Macedonia, Serbia, Montenegro for financing road infrastructure projects, as well as investments in other areas, despite warnings from the World Bank and the International Monetary Fund, that these projects may jeopardize the fiscal stability of the Balkan countries, show that China's attitude to the region is totally different from other actors which are somehow circumspect in regard of this area.

This diverse component (16 + 1 Initiative) and the direct cooperation of these countries with China have raised major criticism from the European Union, blaming Beijing for supposedly undermining the European integration process and calling for the adoption of the One Europe policy, same used by the EU in the relationship with China "One China".

In June 2018, at the 8th China-CEE Cooperation Summit in Sofia, Bulgaria, many have speculated that Beijing's relations with CEE capitals could go through a cool down period. However, the summit in Dubrovnik, on 11-13 April 2019, will eliminate all these predictions.

Although it was believed to be the last summit of this China - CEEC (16 + 1) cooperation format, reality has shown that the reason for changing the format will not be the one expected, but simply because another state is expected to become part of initiative. It was Greece, which, by giving up control over the Piraeus port, met Beijing's desire to connect the harbour via Macedonia to the high-speed rail line between Belgrade and Budapest and then to the West of the continent.

This will effectively turn the "16 + 1" Initiative into "17 + 1" a move that seems to confirm the importance of CEE countries for China.

As a result, China's cooperation with the countries of Central and Eastern Europe has raised a wave of criticism from the European Union. Over the past three years, EU officials have blamed China for the alleged undermining of the European process of integration, transforming some Central and Eastern European countries into "Trojan horses", thus contributing to widening disagreements between Member States.

If we add allso the position of Chancellor Angela Merkel from May 2013 when, together with Chinese Prime Minister Li Keqiang, they celebrated the "China-Germany Dream Team", China's important investments in the European terminals CSP Zeebrugge in Belgium, the Noatum container terminal in the Spanish port of Valencia and other ports in Europe, there are obvious the different perspective over Beijing's influence in South-eastern Europe.

These fears have materialized at the beginning of March 2019, before President Xi Jinping's visit to Europe, in a joint Communication to the European Parliament, the European Council and the Council, "EU-China - A strategic outlook". In this communication, "China is, simultaneously, in different policy areas, a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance." It was March 12th 2019 when the EU has used, for the first time, such a hard message towards China.

This new strategy was endorsed by the European Council on 22 March, as part of the preparations for the EU-China annual summit on 9 April.

A careful analysis of this approach highlights the pressure of some Member States and the business environment on the European Commission to take a firmer decision on China. This is based on a recent report by the Confederation of German Industries, stating that EU companies are still facing serious problems in accessing the Chinese market and that state-owned Chinese enterprises benefit from unfair subsidies.

This is compounded by increasing pressure from the United States, which has urged European governments not to accept Huawei's technology in the development of their 5G networks and not to support China's Belt and Road initiative.

Such an attitude shows that the issues raised by Brussels and Washington in regard of China are similar, but the situation is different, with the EU being forces to consider China's importance as a trading partner, which is why it is not interested in decoupling China from its biggest market for European luxury goods through a bilateral conflict as the US has done.

In the second part of March, the visit of Chinese President Xi Jinping to Italy, Monaco and France, without minimizing the importance of over $ 60 billion economic contracts, was more than an economic offer, marked a greater political moment. It took place in Paris, during the visit to France when German Chancellor Angela Merkel, after talks with President Xi Jinping, Emmanuel Macron and European Commission President Jean-Claude Juncker, admitted that the European Union wants to "play an active role" in the Belt and Road Initiative. Moreover, despite the US pressure, Italy, a member of the G7, during the visit of Xi, signed a Memorandum of Understanding on the Belt and Road initiative. Italy also claimed that signing the Memorandum of Understanding (which does not cover 5G technology) is not going against EU's overall strategy towards China.

During the visit of the Chinese President Xi Jinping to France, the French highlighted the need for China and the EU to join forces to protect the rule-based international order. That is why French President Emmanuel Macron invited German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker to meet with Xi in Paris to discuss the future of multilateralism. First, this means support for / reform of the World Trade Organization, taking into account the technological and financial changes of the last decade.

On April 9, EU and Chinese leaders met in Brussels, for the 21st Annual Summit. After a month, when Europe called China an "economic competitor" in critical industrial areas and a "systemic rival" from the political perspective, the EU was facing a major challenge across this summit, due to the need to maintain its position.

However, a joint statement was signed by European Council President Donald Tusk, European Commission President Jean-Claude Juncker, and Li Keqiang, Prime Minister of the State Council of the People's Republic of China. With a lot of proposals to be implemented, the will to find solutions and recognize progress, without mentioning the contentious issues, the Joint Declaration is appreciated by its existence, given that last year no such document was signed. The Investment Agreement between Brussels and Beijing, a document to which it is being worked since 2013, it is planned to be completed next year.

In conclusion, the summit, although it covered many major themes of debate, ended by pointing out that Beijing is strong enough to block their settlement on the basis of European unilateral positions. Jean-Claude Juncker's statement "If relations are based on greater realism about the constraints in which each partner operates, then it is a better basis for the future partnership," shows it.

After the summit EU-China ended, where Chinese Prime Minister Li Keqiang pledged to open his country's economy to Europe, another summit, this time in Dubrovnik, Croatia, held on 11-12 April, marks another success moment for China, now in relations with the leaders of Central and Eastern Europe.

Leaders of the 16 European countries plus China, reunited in the Chinese Financial Investment Platform ("16 + 1"), met in the context of Chinese efforts to attract Eastern European states into its strategic programs. It is worth mentioning that the Greek Prime Minister, Alexis Tsipras, participated in this summit, thus marking the new format of the meeting, "17 + 1".

In a ceremony, protocols and MOUs on areas such as trade, agriculture, food security, public health, sanitation, e-commerce and high technology were signed by representatives of the Chinese and CEE countries. The protocols also include facilitation funds for the Belt and Road Initiative and Huawei-led training programs in innovation.

Hoping that this cooperation with the Central and Eastern European countries will bring Beijing closer to the European Union, China has pledged to step up trade with these countries and to provide more financial support for major cross-border infrastructure projects in order to promote regional cooperation.

A $ 10 billion credit line and a $ 3 billion investment fund, previously announced for the 16-nation region, is a signal confirming the promise of Asian giant to continue to open up its economy and deepen ties with the economic bloc represented by these states. In addition, Eastern Europe is an essential component of the vast Belt and Road project worth about 1 trillion dollars and which aims at building terrestrial is and maritime transport infrastructure to allow Chinese exports to circulate westward.

Concluding, although almost half of EU member states have signed agreement memorandums with China on the Belt and Road Initiative, the European Commission, France, Germany and the UK continue to be circumspect about the lack of transparency and the possible debt trap for countries that have taken huge Chinese loans.

With all these reserves, China's growth, through unmatched economic and technological dynamism, becomes very important as it can set conditions for the EU and China to remain interdependent. And because Brussels and Beijing have both been affected by the US administration policy "America First" and suffers from the imposition of tariffs, interdependence, for each of them, will be manifested in the relationship with the US to ensure the prosperity of their citizens.

Finally, taking into account the statement of Greek Prime Minister Alexis Tsipras, that it is important for the region to leave behind the crisis, and that we have to find a new foundation for our cooperation at a regional and global level, the idea launched at the beginning of the analysis is becoming more important.

As a result, part of the European nations have identified an foreign force that can bring them together, the EU could not offer a counter offer, and the US played a critical role and often neglected this geopolitical reality.

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