How should the EU manage its relationship with China?

The lack of EU coordination over the announcement of applications to join the Chinese-led Asian Infrastructure Investment Bank (AIIB) in March highlighted again the long-standing difficulty the EU has in finding a single voice to deal with China. A united front is less important than is commonly thought, but greater consultation and communication should be a priority to avoid strategic European interests being sacrificed to short-term national gain.

As an ideal, a unified China policy makes sense and, as analysts have pointed out, it would give the EU more clout. But it is simply unrealistic given current EU internal dynamics, and the starting point for European policy makers should be to admit this. Otherwise, Europe will only ever operate in two modes when it comes to China: unity where this is achievable, and a default mode of bilateral competition between member states. This latter scenario could become increasingly common. Europe’s interests – and the longer-term interests of member states – may be better served by working out alternative mechanisms which lie between the two.

Though China is clearly prioritizing relations with the US and its Asian neighbours, the frequency of recent high-level interactions suggests that Europe may again matter for Beijing more than the immediate post-2008 crisis decline in European authority might have suggested. This interest was symbolized by last year’s visit to EU institutions by Xi Jinping, the first by a Chinese president.

With this mind, some say that Beijing finds the lack of a unified EU voice a problem and that it would prefer to have one point of contact, and others that China plays a cynical game of divide and rule between member states and EU institutions. Neither is on the mark. The March announcements by the UK and other European states of their applications to become founder members of the AIIB reflected a lack of EU coordination, not China trying to divide the EU. And while there are signs of Chinese efforts to encourage European unity on at least some issues, Beijing appears as capable of dealing with the complexity of EU decision-making processes as anyone.

A flexible approach to key issues

Looking forward, the EU and its member states will need flexibility and adaptability to respond to ongoing innovations in Chinese foreign policy and the shifting distribution of power. Even when common policy positions cannot be developed, greater communication and coordination than seen over the AIIB would at least help shape positions which go beyond default competition between member states. This approach should be applied to three current issues.

First, there is Xi’s signature foreign policy initiative, the Silk Road-inspired ‘one belt one road’ land and maritime logistics and communication networks connecting Asia, Europe and Africa. Europe – at the western end of Eurasia – clearly figures in these. The geography of the vision makes it particularly relevant to Central Europe (the land routes, or ‘belt’) and the Mediterranean (maritime routes – confusingly, this is the ‘road’). Given the importance of this vision in China’s current foreign policy, the responses of member states should be complemented by proactive discussion and consultation at the European level.

The second is the changing trade and investment agenda. The issues for Europe are how to deal with Chinese desire to use commerce to contribute to its domestic reform and economic upgrading, and the expected continued growth in Chinese investment into Europe. Such growth is increasingly likely to come from private and medium-sized enterprises rather than state-owned behemoths. The immediate priority for the EU is working towards the best deal possible in the EU-China bilateral investment treaty negotiation while reflecting the fact that investment promotion is carried out at the national level.

Third, the European response to AIIB was an example of where the interests of EU member states are actually broadly aligned, but diverged from the line taken by Washington. As China’s rise creates more opportunities than threats for Europe, strategic tension with the US might feature more regularly, and greater discussion about the implications of this is needed within the EU, as well as in dialogue with the US.

There are differing dynamics across each of these issues, but on all it will be challenging for the EU to identify comprehensive common positions.  But in advance of the EU-China summit at the end of June, and following the first visit to Beijing by new EU foreign policy chief Federica Mogherini in early May, it is more important than ever that EU officials work out how to develop a nimbler and more focused policy towards China.

This article is published in collaboration with Chatham House. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Tim Summers is a Senior Consulting Fellow, Asia Programme (based in Hong Kong).

Image: Pedestrians walk under red lanterns which was recently installed as Chinese New Year decorations, at Pudong Financial Area in Shanghai, January 24, 2014. REUTERS/Aly Song.