Xinning Song. Europe and China. Volume 1. Hong Kong University Press, 2012.

The European Communities established formal diplomatic relations with China in 1975. Further agreements on trade and economic cooperation followed in May 1978 and May 1985, and in October 1988 the European Commission (EC) opened its delegation office in Beijing. Despite the smoothness of the relationship during the later period of the Cold War, it was still regarded as a derivable relationship (Shambaugh, 1997: 45), dependent on Sino-US and Sino-Soviet ties. The EC lacked a policy towards China that was independent of these larger geopolitical considerations. The end of the Cold War thus impacted greatly on the bilateral relationship. A new era dawned after 1995, when the EC issued its first China policy paper entitled A Long-Term Policy for China-Europe Relations. Since then, EU-China relations have gone through different stages and have entered into a new period of transition which is still unfinished and whose outcomes are yet to be clear.

The evolution of EU-China relations since the end of the Cold War

Since 1989, three distinct stages that merit closer historical analysis could be used to characterize the EU-China relationship:

The Transitional Period (1989-94)

The relations between the EC and China entered their most difficult period in the immediate aftermath of the events at Tiananmen Square in June 1989. The EC “froze in” relations with China and imposed a number of sanctions including an arms embargo that continues to be in force until today. In response to the political tensions, trade took a big dip, falling from a volume of US$ 23.51 billion in 1989 to US$ 11.61 billion in 1991, and US$ 17.40 billion in 1992. It returned back to the 1989 levels only in 1993. At the same time, Chinese foreign trade increased from US$ 111.68 billion in 1989 to US$ 195.70 billion in 1993. Concomitantly, the percentage of trade with EU declined from 21.05% in 1989 to 10.51% in 1992 and recovered only partially to 13.34% in 1993.

It was not until October 1990 that the European Council and the European Parliament decided to gradually re-establish bilateral relations. This move was not followed up with concrete measures until 1992 when, according to the European Commission (2010), EC-China relations finally returned to their normal course. The main progress during this period included the launch of an environmental dialogue and the establishment of a new political dialogue in June 1992. These dialogues, in particular the political one, did not lead to any distinct achievements, yet despite the lack of tangible results, both sides started the framework of a structured political dialogue on issues of common concern in 1994.

Overall, the period of 1989-94 can now be regarded as a period of transition. For Europe as a continent, it was a transition from the Cold War to the post-Cold War era. It was also a transition from EC to the EU, with the Maastricht Treaty coming into effect in January 1993. It was during this period that the EU began to rethink China’s domestic development. Deng Xiaoping’s trip to southern China in 1992 and the growing speed of China’s reform process had a big impact on the EU’s view of China. For EU-China relations it was a period of reviewing EU’s policy towards China, making room for mutual adjustment in each other’s positions. Both sides began to become aware of, and contemplate the future roles of, the EU and China in global affairs.

These considerations were heavily influenced by the normalization of US policy towards China. After Bill Clinton assumed the US presidency in 1992, a revision of US-China policy got underway in the second half of 1993. The Clinton administration returned to a policy of “engagement” with China, holding an informal summit between Jiang Zemin and Clinton in November 1993 during the APEC (Asia-Pacific Economic Cooperation) meeting in Seattle. This was the first summit meeting between the two powers after the events of Tiananmen in 1989.

The Rapid Development Period (1995-2002)

The later 1980s and early 1990s was a period of rapid economic development in East Asia, whereas Europe was embroiled in serious economic problems. As the EC realized, “[t]he rise of Asia is dramatically changing the world balance of economic power,” “[t]he European Union needs therefore to accord Asia a higher priority than is at present the case” (European Commission, 1994). Against this background, the EC issued its first Asian strategy paper in 1994, with China being the main target of this strategy. This was followed by the 1995 China policy paper, the first ever of its kind (European Commission, 1995). Since then, a new period of rapid development of ties between the EU and China has set in.

In economic terms, both sides extended their cooperation in trade, investment, science and technology, as well as other fields. The volume of EU-China trade grew from US$ 31.52 billion in 1994 (13.32% of China’s total foreign trade) to US$ 86.75 billion (13.97%) by 2002. Foreign direct investment (FDI) inflows from the EU to China in the period 1998-2002 amounted to US$ 20.9 billion, slightly behind America’s US$ 22.5 billion and ahead of Japan’s US$ 17.6 billion (European Commission, 2003a). In political terms, a new political dialogue was started (1994) and a framework of annual summits was established (1998). The EU and China also began a new human rights dialogue (1996) and intensified their political consultations (1998) when a new EU policy paper on China was launched (European Commission, 1998).

One of the main reasons why EU-China relations developed both rapidly and cordially was because both sides had clear and pragmatic objectives for promoting their respective interests. The EU’s 1995 policy paper defined its approach as “constructive engagement” and “practical cooperation,” mainly focusing on economics and trade, and aiming to raise the EU’s profile in China. To reflect the increasing closeness between both sides, the 1998 policy paper defined the EU strategy as “comprehensive engagement” and “comprehensive partnership,” emphasizing the upgrade of political dialogue and supporting China’s economic and social reforms. For China, economic cooperation with Europe was important not only for China’s economic growth but also for China’s domestic social and political stability (see Song, 2005: 147-168; 2008: 174-186).

The “Imagined Honeymoon” Period (2003-05)

Many Chinese referred to the years 2003 and 2004 as being a “honeymoon” in EU-China relations. Several events occurred in these years that heavily influenced the Chinese imagination and its expectations.

1. The US launched its military invasion in Iraq on March 20, 2003, which was strongly opposed by some EU member states such as France and Germany. Many Chinese welcomed this opposition and regarded it as the signal of a growing independence and assertive-ness of the EU in international affairs. Some people even believed that the transatlantic alliance had started to fundamentally change. It also seemed to provide an opportunity for China and the EU to potentially work together against perceived US unilateralism.
2. In June 2003, the Council of European Union released the first ever European Security Strategy, the Solana Report, in which China was regarded as one of the EU’s strategic partners (Solana, 2003).
3. The EC issued another China policy paper in September 2003 entitled A Maturing Partnership: Shared Interests and Challenges in EU-China Relations in which the EC reaffirmed the claims in the Solana Report that “China is one of the EU’s major strategic partners,” that “the EU and China have an ever greater interest to work together as strategic partners,” and that “a dynamic growth of the relationship between the EU and China, … have brought a new maturity in the relationship.” “It is in the clear interest of the EU and China to work as strategic partners on the international scene” (European Commission, 2003a).
4. The Chinese Foreign Ministry published its first ever EU policy paper in October 2003. It did not mention the EU as a strategic partner of China but referred to it as “a major force in the world” that “will play an increasingly important role in both regional and international affairs.” The main objective of Chinese EU policy was “to enhance China-EU all-round cooperation and promote a long-term and stable development of China-EU relations” and a “full partnership with the EU.” Interestingly, the last sentence of the policy paper argued that “[t]he EU should lift its ban on arms sales to China at an early date so as to remove barriers to greater bilateral cooperation on defense industry and technology” (MFA, 2003). It reflected the widespread belief among many Chinese that the EU might lift its arms embargo, in response to hints from some major European politicians, including Jacques Chirac and Gerhard Schroder.
5. The sixth EU-China summit, held in Beijing in October 2003, was the first time that leaders of the EU and China began to talk about their mutual relations as a “strategic partnership” and emphasized the strategic nature of EU-China relations. The leaders agreed that the development of the relations “is an indicator of the increasing maturity and growing strategic nature of the partnership.” They welcomed the Galileo satellite navigation cooperation agreement, which was regarded as a “strategic program.” They also noted the draft European Security Strategy, in which China features as “one of the key partners for the EU’s strategic security relationships.” In conclusion, both sides stressed their resolve to further expand and deepen China-EU relations, guided by the two policy papers, “which promote the development of an overall strategic partnership between China and the EU” (European Commission, 2003b).

Throughout 2003-05, real progress in EU-China relations was also achieved in numerous other fields. In 2004, the EU became China’s biggest trading partner and China emerged as the EU’s second largest trading partner (just behind the US). Both sides signed agreements on the Galileo program, gave so-called “Approved Destination status” for mainland tourists to visit Europe, enhanced cooperation on the peaceful use of nuclear energy, and signed joint declarations on non-proliferation and arms control, as well as on climate change. Yet the two major issues of greatest concern to Beijing were left unsolved: the arms embargo and the issue of recognizing China as a full market economy.

The year 2005 was not a very good year for the EU-China “honeymoon.” The British government, during its Council presidency in the second half of the year, gave up the attempt to lift the arms embargo because of China’s passing of a controversial anti-secession law. Britain’s attempts to grant China full market economy status were also unsuccessful. People started to say that the “honeymoon was over”; it was even argued that the preceding years had been an imagined honeymoon without a marriage. The major argument was whether there had been real qualitative change in the bilateral ties at all. Did the development of the relationship during 2003-05 really reflect a major upgrade of EU-China relations from comprehensive partnership to strategic partnership, or had this just been the outcome of a natural evolution of the progress of the EU-China relations over the last ten years? Both sides talked about the strategic partnership in their documents, yet failed to clearly define their common strategic interests and to abolish the arms embargo (see Song, 2009a: 115-131; 2009b: 175).

EU-China Relations in a New Period of Transition

From late 2005 onwards, both sides started to rethink their bilateral relationship. This was reflected in the eighth EU-China summit held in Beijing in September 2005. According to the joint statement of the summit,

[l]eaders of the two sides reviewed the development of China-EU relations and celebrated the 30th anniversary of the establishment of diplomatic relations. Both were of the view that the past three decades had seen great changes in China and the EU and a progressive deepening of the relationship, which is fast maturing into a comprehensive strategic partnership. They believed that the strengthening of the relationship had been of great value to the long-term interests of China and the EU, to cooperation between Asia and Europe, as well as to peace, stability and development in the world at large. The leaders now wished to look ahead to the future, developing the strategic relationship through concrete actions. (European Commission, 2005)

It is very important to note that the EU and China would like to develop the strategic partnership “through concrete actions” instead of just talking about it.

Major steps by the EU and China to engage in a more pragmatic bilateral relationship came about at the ninth EU-China summit in Helsinki in September 2006 and the tenth EU-China summit held in Beijing in November 2007. Both sides continued to talk about the EU-China strategic partnership and at the same time paid more attention to the concrete subjects of bilateral cooperation. As compared with the previous joint statements, the joint statement of the 2006 Helsinki summit included 36 detailed items covering many concrete issues that the EU and China would like to work on together. The joint statement of the 2007 Beijing summit covered even more ground, mentioning 47 issues on which the EU and China had reached agreements (European Commission, 2006a; 2007). The most important measure was the agreement to launch negotiations on a new Partnership and Cooperation Agreement to encompass the full scope of their bilateral relationship. This would include enhanced cooperation in political affairs, in order to reflect the full breadth and depth of the comprehensive strategic partnership between the EU and China. Negotiations on this agreement were officially launched in January 2007.

One of the EU’s very concrete steps was to review its China policy and to prepare a new updated policy paper. In May 2006, the EC started a public consultation procedure to get feedback from the public as well as different institutions. The new policy paper came into existence in October 2006, with two documents referring to the EU-China relationship in general, and to trade and investment in particular (European Commission, 2006b). The policy papers were approved by the European Council in December 2006 (European Council, 2006).

Compared with the previous five documents since 1995, the 2006 documents used much tougher language on China. On the one hand the documents reaffirmed that “[a] closer, stronger strategic partnership is in the EU’s and China’s interests.” But on the other hand it referred to China as “the single most important challenge for EU trade policy.” As the documents mentioned, the EU’s fundamental approach to China was to remain one of engagement and partnership. But with a closer strategic partnership, mutual responsibilities were expected to increase. The partnership would have to meet both sides’ interests and the EU and China needed to work together as they assumed more active and responsible international roles, supporting and contributing to a strong and effective multilateral system. The goal should be a situation in which China and the EU would be able to bring about their respective strengths to offer joint solutions to global problems (European Commission, 2006b). The Council’s conclusions strongly supported the EC’s documents and emphasized that “[t]he Council is strongly committed to the maturing of the EU’s comprehensive strategic partnership with China. For this partnership to develop to its full potential, it must be balanced, reciprocal and mutually beneficial.” The Council reaffirmed the great value provided by ongoing dialogue with China at many levels. But it also stated that the dialogues “must be focused and deliver practical results, with benchmark setting and with follow-up mechanisms” (European Council, 2006).

In December 2007, the Council of European Union adopted a Guideline on the EU’s Foreign and Security Policy in East Asia, with particular reference to Northeast Asia (European Council, 2007). In economic terms, it reaffirmed the challenge posed by China, indicating that “the current trend of trade imbalance between China and the EU is not sustainable in the longer term. Issues related to market access and intellectual property rights also persist.” In terms of security, specific threats were seen to come from North Korea’s nuclear program and the attendant risks of proliferation, as well as the dispute across the Taiwan Straits. And, in more general terms, it noted:

the potential for competitive nationalism in the region: With China’s economic development and active diplomacy, the strategic balance in the region is shifting. Despite growing regional economic interdependence, the uncertainties generated by such geopolitical changes, combined with unresolved historical and territorial disputes, have the potential to create tensions. Rising energy demand and the desire for energy security can compound these tensions. (European Council, 2007)

Along with the review of its China policy by the European institutions, there were also debates among think tanks and academics in Europe. The Centre for European Reform published a policy report in May 2008 entitled “Can Europe and China Shape a New World Order?” (Grant and Barysch, 2008). It claimed that “both the EU and China are helping to shape a new international order. For many European observers of international affairs, it is obvious that power is shifting from west to east, and that the world is becoming increasingly multipolar” (p. 1). “If China and the EU manage to build a friendly and fruitful strategic partnership, they can do a lot to bring about a multilateral world” (p. 7). But the current EU-China partnership is not strategic (: 17). A strategic partnership between the EU and China should focus on a small number of critical subjects such as climate change, non-proliferation, Africa, and global governance (p. 69). Furthermore, a policy report by the European Council on Foreign Relations published in April 2009 is more critical (Fox and Godement, 2009). The paper strongly criticized the EU’s policy towards China. The report described past EU policy as “unconditional engagement” and “a policy that gives China access to all the economic and other benefits of cooperation with Europe while asking for little in return.” It was suggested that this policy has failed to achieve long-lasting progress on the most pressing issues on the EU’s agenda with China. The authors of the report made the case that EU member states and the EU institutions should move towards a more realist, interest-based strategy of “reciprocal engagement” in their dealings with China, and pool their resources and leverage into a common European effort. Britain’s House of Lords’ European Union Committee launched an inquiry into EU-China relations in 2009. More than 20 governmental officials and scholars provided written and oral evidence on the issues. Most of them disagreed that the EU and China had been the strategic partner. The report of the Committee, published in 2010, concluded that “[t]here needs to be an effective strategic relationship between the EU and China, based on trust and mutual respect. Such a relationship does not currently exist beyond trade matters” (United Kingdom House of Lords, 2010: 6).

Beijing did not review its EU policy until the EC had launched its new China policy papers. The EU documents led to big debates in China on how to interpret EU-China relations and how to react to the EU’s adjustments of its China policy. Chinese officials and academics generally had more positive view of EU-China relations. According to the Chinese official point of view, the Sino-EU relationship developed so quickly to cross three steps, i.e. “China and EU established long-term and stable constructive partnership facing the 21st Century in 1998, comprehensive partnership in 2001, and comprehensive strategic partnership in 2003” (Zhang, 2009: 3), and “has jumped from constructive partnership to comprehensive strategic partnership” (Yang, 2009: 1). Some Chinese even argued that “[t]he EU-China relationship is much broader and deeper than the US-China relationship” (Grant and Barysch, 2008: 19).

Many other Chinese analysts believed that the EU documents reflected a major change of EU policy towards China. It was seen to reflect new characteristics, such as much tougher dictions, more pressure on China, more rigorous demands from China, fewer allusions to responsibilities, and a hardening of ideological standpoints (Feng, 2008; Mei, 2009; Yang, 2006). According to the Chinese analysis, the reasons for these changes basically emerged inside Europe. First, there were changes in the political leadership of major EU member states such as Germany, France, and Britain. New political leaders, such as Angela Merkel and Nicolas Sarkozy, were seen to have less long-term strategic foresight and more ideological bias against China than their predecessors. Second, an imbalance of political psychology among Europeans was detected, due to China’s economic and political rise. Europeans were seen to worry about China’s rising economic strength and political influence which might undermine the role of Europe in the world. Third, it was suggested that the failure of Europe’s political ambition to reform China had contributed to a dampened assessment of bilateral ties. Economic problems within Europe, fears about the economic competition with China, improvements of transatlantic relations, and a lack of a coherent EU policy towards China were also decisive factors (Cai, 2009; Li, 2007; Lu, 2009; Shen, Q. 2009; Shi, 2008; Zhang, 2007; Zhao, H. 2008). In 2008, the problems between China and European countries reconfirmed these Chinese views about the EU.

Other Chinese analysts held a more optimistic view on the EU’s China policy and the bilateral relationship. According to their position, the new EU policy papers should not be regarded as a fundamental change in European policy towards China. They argued that the new policy papers were pragmatic, balanced, and constructive. The main dynamics of the EU to use tougher tones were seen to prepare the negotiations with China on the Partnership and Cooperation Agreement. Sooner or later the relationship would be back on track, due to common interests (Feng, 2006; Wu, 2006; Wu, J. 2009; also see Mei, 2009; Yang, 2009).

The global financial crisis of 2008-09 intensified the debates in China about the state of EU-China relations. Contending opinions appearing in the Chinese media included the following propositions:

1. Europe is not important for China: for a long period of time the dynamics of the Sino-Europe relations was to promote trade and technological transfer, as well as to balance the strategic pressures from the US. Nowadays, China no longer needs secondary technology from Europe and Europe’s role in balancing the US is not valuable. China should thus pay more attention to the US and Russia, because Europe has entered into an era of virtual capitalism, tends to be more localized, and has thereby ceased to be a useful partner for the US or China (Shen, 2009).
2. The partnership between the EU and China is not in doubt: China has to work with the EU although it is not an easy partner, because of the importance of EU-China cooperation in trade, climate change, renewable energy, environmental protection, and many other policy fields (Feng, 2008).
3. The financial crisis provides new opportunities for EU-China cooperation because it reflects the decline of the US and strengthens the common interests of the EU-China to establish a new global financial order (Pang, 2009).
4. The financial crisis osculated Sino-US instead of EU-China relations. From 2006 onwards, economic frictions between Europe and China appeared to be worsening. The financial crisis exacerbated this tendency, with China becoming a main target of European protectionism. China and the US faced similar problems but their tight financial interlinkage weakened trade disputes (Lu, 2009; Wu, W. 2009).

The Chinese government has not officially mentioned the need to readjust its EU policy, despite the fact that the 2003 policy paper is in need of updating (MFA, 2003). The events in 2008, especially the postponement of the 11th EU-China summit, forced China to rethink its relationship, particularly in regards to the way of coping with a more contrarian EU.

The resumed 11th EU-China summit on 20 May 2009 in Prague had only a very short joint communiqué, which stated that the EU-China relationship “is now much deeper and stronger, founded on a global, strategic, and mutually beneficial partnership,” and indicated that “the two sides restated their firm commitment to pursuing the EU-China comprehensive strategic partnership and their willingness to work together for their mutual development, in forward-looking manner based on the principles of mutual respect, equality, mutual trust, reciprocity and win-win cooperation” (European Commission, 2009). Premier Wen Jiabao strongly emphasized the concepts of sincerity, responsibility, confidence, trust, and faith (言必信,行必果,無信不立,國之交止於信) (MFA, 2009a). This clearly shows that China is still deeply concerned about the sincerity and commitment of the EU to furthering the development of EU-China relations.

During the 12th EU-China summit in Nanjing in 2009, both sides continued to talk about their “comprehensive and strategic partnership” and “comprehensive strategic partnership” (European Council, 2009). But as Zhang Zhijun, the Chinese vice minister of foreign affairs, mentioned in the press conference before the summit, one of the major tasks of the meeting was to “enhance China-EU strategic mutual trust, strengthen support for each other’s development path, further deepen understanding of the strategic meaning of China-EU relations and make clear the basic principles of mutual respect, equal treatment and win-win cooperation in order to consolidate the political foundation of bilateral ties” (MFA, 2009b). On November 29, 2009 Premier Wen met with European Commission President Jose Manuel Barroso ahead of the EU-China summit. His major concern was how to make the EU-China relationship more “strategic, comprehensive and stable” (MFA, 2009b). All these remarks showed that the Chinese side worried about the uncertainty of the further development of EU-China relations.

Major Challenges to the EU and China

The 2009 Nanjing summit indicated that the bilateral relationship was back on track. However, none of the major problems between the EU and China—the arms embargo, the recognition of China’s full market economy status, trade frictions, human rights, contestation over intellectual property rights—have been addressed or solved. Both sides have gradually come to realize that these problems are normal and inevitable due to the huge volume of their economic transactions, their different political systems, and their ideological differences. In the process of transition in EU-China relations, it has become more pertinent to address the following challenges in the bilateral relationship.

Defining EU-China Relations

Since 2003, the EU-China relationship has been defined as a “strategic partnership.” So far, there is no clear common understanding of what is “strategic” in their mutual relations. According to the EU, the strategic partnership with China refers to partnership in security areas (anti-terrorism, non-proliferation, Africa). Yet the European Security Strategy fails to give the security relationship with China high priority. In it, Europe’s relationships with the US and Russia clearly dominate over other “strategic partnerships” with Japan, Canada, China, and India (Solana, 2003). Furthermore, looking at the European Commission policy paper in 2006, there are several instances that have been deemed to be of “strategic” importance:

1. East Asia: It is clear that the EU has a significant interest in the strategic security situation in East Asia. It seeks to build on the increasing effectiveness of its foreign and security policy and its strategic interest in the region by drawing up public guidelines for its policy.
2. Taiwan: The EU has a significant stake in the maintenance of cross-Straits peace and stability. On the basis of its One China Policy, and taking account of the strategic balance in the region, the EU seeks to continue to take an active interest, and to make its views known to both sides.
3. Non-proliferation: Non-proliferation represents a key area for the strategic partnership (European Commission, 2006). The Council conclusions of December 2006 added Africa as an additional element: “The Council intends to begin as soon as possible the structured dialogue on Africa with China as agreed at the September 2006 summit. This is an area of key strategic interest to both the EU and China” (European Commission, 2006). In the Council Guidelines on the EU’s Foreign and Security Policy in East Asia of December 2007, there is no clear wording on the strategic partnership with China. What the EU worries about is a shift in the “strategic balance in the region,” due to China’s economic development and active diplomacy. The EU is less worried about Japan because “as the longest established free market democracy in the region, Japan is already an important partner in this respect, sharing many EU values.” The problem is China. “The policy choices of China, now emerging as a global player, are of strategic importance to the EU, which is developing a strategic partnership with that country” (European Council, 2007).

According to the Chinese explanations, the EU-China comprehensive strategic partnership covers almost everything. On May 6, 2004, Premier Wen delivered a speech in Europe entitled “Vigorously Developing the Comprehensive Strategic Partnership between China and the European Union,” giving a clear definition of this comprehensive strategic partnership. By “comprehensive” he meant that cooperation between both sides is to be comprehensive, wide-ranging, and multi-level, covering areas as diverse as the economy, science and technology, politics, and culture. It is also bilateral and multilateral as well as governmental and non-governmental. By “strategic” he meant that bilateral cooperation is of a long-term and stable nature, that it transcends the differences in ideology and social systems, and is free from the interference of a single event that occurs at a certain period of time. By “partnership” he meant that the cooperation between both sides is one of equality, mutual benefit, and “win-win” results and, on the basis of mutual respect and mutual trust, the two sides seek common ground on major issues while setting aside their differences on minor ones and endeavoring to expand their common interests. The development of such a relationship between China and the EU not only conforms to the mutual interests of China and the EU, but also contributes to peace, stability, and common progress in their respective regions and the world at large (MFA, 2004).

It is clear that there is big gap between the EU and China on the understanding of their strategic partnership. It is much less important for the EU but it is deemed to be very important for China, with the Chinese government emphasizing that there is no fundamental strategic conflict between the two sides.

The 2006 EC policy paper correctly stated that “with a closer strategic partnership, mutual responsibilities increase. The partnership should meet both sides’ interests and the EU and China need to work together as they assume more active and responsible international roles” (European Commission, 2006). It shows another big gap between the EU and China—a gap of expectations. Europe’s expectation is for China to take on more responsibilities not only on bilateral matters but also in regional and global affairs. China expects the EU to be a strategic partner, and as such sees no reason for the arms embargo to continue and for recognition of full market economy status to be withheld (Chen, 2006).

Both sides have not found a way to narrow these gaps. They continue to talk about their comprehensive strategic partnership without clearly defined common strategic interests. Both sides pay more attention to a unilateral understanding of strategic importance (the importance of the EU for China or the importance of China for the EU), without bilaterally defining common mutual strategic interests. Premier Wen’s call to make EU-China relations “more strategic” before the 2009 EU-China summit shows that Beijing has realized the problem (MFA, 2009a).

Positioning the EU and China in the World

Both the EU and China agree that the EU-China relationship is not just the bilateral one but that it also has significant international and global characteristics. It is a relationship between the biggest (and most powerful) developing country and biggest developed economy. Both sides have the ambition to play a more active role in global affairs. But at the same time neither has been the one calling the shots yet. Defining their position to themselves and others is still a major challenge for EU-China relations.

Most Chinese are intent to regard China as a regional instead of global power. As a developing country and a society in transition, the Chinese leadership pays more attention to domestic issues than global ones. Only in recent years has China begun to be more active in Asian regional affairs. As one of the five permanent UN Security Council members, China has tended to follow majority opinions on most Security Council votes. The argument here is that China may underestimate its capabilities in global affairs, or is reluctant to take on more international responsibilities. Another argument is that the outside world, and especially the EU, overestimates the capabilities or willingness of China to play a more active role and to take on more responsibilities outside of China or Asia. Many Europeans believe that China will dislodge America as the world’s biggest economy before 2030 (Grant and Barysch, 2008: 2-3). Some analysts, such as Jacques in When China Rules the World (2009), went further than this by inquiring what a future China-influenced international order might look like. The result of this overestimation is twofold and seemingly contradictory. On the one hand, Europe wants China to play a more active and responsible role in world affairs according to “universal principles.” On the other hand, they regard China’s economic growth and active diplomacy as threats to European interests and the so-called “European model.”

Undoubtedly, the EU is a major economic power and active trading partner. But is it a global political power? The answer is no. The EU and its member states lack a coherent set of foreign policies and their capacity to be a player in non-economic affairs is limited. The EU’s interest in Asia is mainly economic. The EU may have political preferences in the region but it cannot play a significant role in the provision of regional security and stability. The tensions on the Korean peninsula and Taiwan Straits are cases in point. The EU emphasizes its strategic concerns in the region, but the best it can hope to achieve is to play a positive role in the region as a civilian, normative, or social power. The EU has not realized or known how to play this role (Song, 2009c).

China has tended to overestimate the EU as well. Since Cold War times, China has continuously emphasized that it would like to see a strong, powerful, and united Europe to engage actively global affairs. It assumed that after the Cold War the EU would become an independent actor of the US. This feeling gained ground again in the wake of the US invasion of Iraq. China assumed that with the backing of French and German leaders, as well as the head of the EC, the arms embargo would be lifted and recognition of full market economy status be granted, due to an assumed European willingness to establish strategic ties with China.

Yet both sides misread the other’s intentions, interests, and expectations of each other. There are two ways to overcome the problem: deeds can be brought in line with expectations, or expectations will have to be reduced. There is no doubt that the second option is better. Both sides have realized their mutual challenges but have not reached common agreement on how to overcome them (Chen, 2006; Zhou, 2004).

Dealing with Challenges from Third Countries

Both the EU and China recognize the importance of EU-China relations for their internal development and external influence. But neither China nor the EU and its member states puts this relationship as their first priority in foreign policy. Relations with the US and their respective neighbors take precedence.

For China, Sino-US relations have clear strategic dimensions. China’s main security concern is in East Asia (Taiwan and North Korea) in which the EU plays only a marginal role. China would not like to challenge the US position in the Asia Pacific, but the US tends to regard China as a potential threat. In economic terms, the US is not only the second trade partner of China but also is a bigger contributor of FDI than the EU. The 2008-09 global financial crisis had a great impact on China’s external economic relations but Sino-US economic ties increased in their interdependence and strategic nature. In 2008, trade between China and America amounted to US$ 333.38 billion (13.03% of China’s total trade, as compared to US$ 425.578 billion in EU-China trade), with China exporting goods worth US$ 252.30 billion to the US (17.66% of Chinese exports, as compared to US$ 292.88 billion to the EU). In 2009, the Sino-US trade was US$ 298.26 billion (13.51% of China’s total) with China’s exports reaching US$ 220.82 billion (18.38% of China’s total). Although the EU27 replaced the US as the number one exporting market for China in 2007, the US and Canada together overtook the EU27 as the number one export market for China in 2009.

Not only America but also East Asia is a very important factor challenging EU-China relations. Although China puts its relationship with the developed countries as its first priority, official documents—such as the political reports of the 16th and 17th Communist Party congress—suggest that China’s relations with its neighbors are becoming more important in practice (Song, 2009d). China’s trade with Japan and South Korea is larger than with the EU. China’s trade with Japan and South Korea amounted to US$ 454.897 billion in 2008 and US$ 385.08 billion in 2009. Looking at the economic ties between China and East Asia as a whole, it can be concluded that the region is more important for China than the EU. In both 2008 and 2009, China’s trade with East Asia 14 consisted of nearly 40% of its total foreign trade and more than 50% of China’s trade with Asian countries (see Tables 1.1 and 1.2).

	Total trade	%	Export	%	Import	%
China	2561.632	100%	1428.546	100%	1133.086	100%
Asia	1365.952	53.32%	663.295	46.43%	702.657	62.01%
Japan	266.785	10.41%	116.134	8.13%	150.651	13.30%
South Korea	186.113	7.27%	73.951	5.18%	112.162	9.90%
Hong Kong	203.666	7.95%	190.743	13.35%	12.923	1.14%
Taiwan	129.217	5.04%	25.878	1.81%	103.340	9.12%
ASEAN	231.117	9.02%	114.142	7.99%	116.974	10.32%
East Asia	1016.898	39.70%	520.848	36.46%	496.050	43.78%
EU-27	425.577	16.61%	292.878	20.50%	132.699	11.71%
USA	333.738	13.03%	252.297	17.66%	81.440	7.19%
Canada	34.520	1.35%	21.789	1.53%	12.731	1.12%

 

Table 1.2 China’s Foreign Trade in 2009 (billion US$)
	Total trade	%	Export	%	Import	%
Source: General Administration of Customs (GAC), PRC, www.ChinaCustomsStat.com
China	2207.219	100%	1201.663	100%	1005.555	100%
Asia	1172.049	53.10%	568.597	47.32%	603.452	60.01%
Japan	228.848	10.37%	97.911	8.15%	130.938	13.02%
South Korea	156.232	7.08%	53.68	4.47%	102.552	10.20%
Hong Kong	174.945	7.93%	166.233	13.83%	8.712	0.87%
Taiwan	106.228	4.81%	20.505	1.71%	85.723	8.52%
ASEAN	213.011	9.65%	106.297	8.85%	106.714	10.61%
East Asia	879.264	39.84%	444.626	37.00%	434.639	43.22%
EU-27	364.042	16.49%	236.284	19.66%	127.758	12.71%
USA	298.259	13.51%	220.816	18.38%	77.443	7.70%
Canada	29.701	1.35%	17.675	1.47%	12.026	1.20%

For the EU and its member states, the transatlantic relationship remains “essential and unique” (Solana, 2003) and serves as the foundation of Europe’s foreign policy and external relations. The EU has engaged in strategic partnerships with more than ten countries and regions, but NATO remains core to Europe (Solana, 2003; European Council, 2008). “Privileged” relations have also been established with Russia, which is “a key partner of the EU in its immediate neighborhood” (European Commission, 2004) and a “major factor in our security and prosperity” (Solana, 2003).

Another very important factor is Africa, which has emerged as one of the most important strategic factors in EU-China relations (see European Council, 2006; also Solana, 2007). China does not share this assessment, although it agreed to have a dialogue with the EU on Africa. Some European observers have argued that the EU, China, and Africa are a “trilateral partnership in theory, a bilateral one in practice” (ECDPM, 2007).

Despite the numerous challenges and obstacles, the foundation of EU-China relations has not changed. Economic ties with the EU remain important for China, especially regarding technology transfer, high-tech cooperation, and FDI. Both the EU and China seek a new world order based on multilateral cooperation among the major players in the global economy. China also wants to learn from European experiences in regional integration, the provision of social welfare and social security system, as well as other policies with relevance to China’s domestic political and social development (see Song, 2008).

One of the problems between China and the EU is a lack of coherence in the EU’s foreign policy. EU member states each have their own priorities and it proved almost impossible to have a coherent EU-China policy except on trade. The Lisbon Treaty has provided a good opportunity for the EU to develop a more effective foreign policy, due to the creation of a more permanent president of the European Council and the post of a high representative for foreign affairs and security policy. But rapid change should not be expected anytime soon. According to the Lisbon Treaty, the president of the European Council and the high representative have similar and often competing tasks and responsibilities. The Common Foreign and Security Policy shall be put into effect by the high representative and by member states. The major challenge of coordinating EU policies and member states’ interests remains.

The EU and China are two important players in the global economy, with great diversity in their level of economic development, their political systems, ideologies, and values. They share similar ideas on multilateralism or even multipolarity, but are faced with a huge gap of understanding. Against this background, cooperation, friction, and competition will continue to be normal in EU-China relations. Both sides need to promote more mutual understanding with each other, to define their relationship in a more realistic and pragmatic way, and to position their real comprehensive partnership.