Wanted: a European China policy
September 4th, 2012
10:37 AM ET

Wanted: a European China policy

By Guy de Jonquières, Special to CNN

Editor's note: Guy de Jonquières is a senior fellow at the European Centre for International Political Economy. The views expressed are his own.

There has never been a time when it mattered more for the European Union to be able to speak firmly, coherently, and constructively to China. Sadly, however, the German government and the European Commission appear to be doing their best to undercut the EU’s ability to wield international influence and its ambitions to be taken seriously in Beijing.

Europe has, of course, never rivaled U.S. clout in Chinese eyes, partly because it lacks hard power. And steadily increasing frustration with the EU’s cumbersome decision-making and frequent internal divisions is causing Beijing to bypass Brussels and deal directly with national capitals.

That is true even in trade, the one area where the EU has long packed an international punch. As well as being China’s biggest export market, the union is legally required to act as one on trade policy. Yet Beijing has taken to openly snubbing the Commission, which negotiates on behalf of the EU, sometimes even ignoring its requests for meetings.

On a visit to China last week, Angela Merkel, the German chancellor, delivered another blow to the EU’s tattered unity and authority by urging the Commission to desist from a threatened anti-dumping investigation into Chinese exports of solar panels and seek a negotiated settlement instead.

Some have hailed her intervention, unprecedented for an EU leader, as statesmanlike. The evidence suggests otherwise. German producers have led the anti-dumping demands. It is inconceivable that they could have pursued their campaign without close consultation with, and almost certainly approval by, Berlin, which also pays them hefty subsidies.

If Merkel has undergone a Damascene conversion on this issue, surely the place to make her case is Brussels, not Beijing. It is hard to avoid the suspicion that her choice of platform was influenced by last week’s announcement of large Chinese orders for German products, boosting Germany’s flagging export-dependent economy and, no doubt, Merkel’s hopes of re-election next year.

Whether or not such suspicions are well-founded, Merkel’s behavior can only encourage the belief in Beijing that, rather than having to deal with the EU collectively, it can get its way by buying off vote-seeking European politicians one by one with promises of economic and commercial rewards. That is an open invitation to push divide-and-rule tactics further.

While political expediency may have led Merkel to kowtow to Beijing, the reverse is true of the Commission which, since last year, has struck a get-tough stance towards China on trade. There is nothing wrong with that in principle. The problem is that Brussels’ offensive risks backfiring, because it has chosen the wrong battlefield, for the wrong reasons.

The economic case for anti-dumping duties on solar panels is weak. They are relatively low-technology mass-produced items, and a ferocious price war is causing even Chinese producers to bleed red ink. Apart from the fact that penalizing imports would deny EU consumers the benefits of price competition, this is not the sort of industry in which Europe has a viable long-term future.

Furthermore, if Brussels hopes to cow China into submission, its offensive is badly mistimed. Beijing is wrestling with a difficult leadership transition, a slowing growth rate and the aftershocks from the Bo Xilai affair. At such times, domestic pressure to hit back hard against foreign saber-rattling, as Beijing has threatened to do, is especially strong. A damaging spiral of tit-for-tat conflict could swiftly ensue.

China’s temptation to fight fire with fire can only be increased by tepid political and business enthusiasm in Europe for the Commission’s hard line. In addition to Germany’s equivocation on dumping, Brussels’ proposal to challenge alleged subsidies to China’s telecommunications equipment makers has won no EU industry support, while its calls for EU-wide scrutiny of inward investments – with an obvious eye to China – has sunk like a stone.

Those initiatives have fallen flat partly because the Commission has put its own institutional amour-propre ahead of the EU’s genuine commercial interests. Fearing member governments would cut it out of dealings with China, it has sought to re-assert its authority – with them and in Beijing – by showing that acting tough pays off. That is starting to look like a reckless, and ultimately self-defeating, gamble.

China’s rise, its growing integration with the world economy and its sheer unpredictability are all set to have a steadily growing impact on Europe, to which the EU must find effective responses – not just in bilateral trade, but across an ever wider range of areas. But if Europe wants Beijing to take it seriously, it needs to start getting serious about China.

That means replacing the disarray, bluster and opportunistic posturing that characterizes what passes for EU diplomacy with a clear and consistent strategy that both transcends the narrow interests of individual members and commands their united support. That is a formidable task, to which Europe’s leaders have so far shown themselves unequal. But unless it is tackled, China is likely to continue to treat the EU and its dreams of global influence with well-deserved disdain.

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Topics: China • Economy • Europe

soundoff (8 Responses)
  1. marc

    How totally condescending to portray china as acting any differently than anyone else would. Europe can't get their act together and speak with one voice to the sinister and evil chinese despite the chinese not using any weaponry or espionage on Europe, and I suppose its still all china's fault.

    September 4, 2012 at 3:36 pm | Reply
  2. Alban

    Marc: your comment would be perfectly right if the blog had said any of the things you mention. But it said them and could not have made clearer that the fault lies entirely with Europe. Perhaps you thought you were commenting on a different article?

    September 5, 2012 at 6:15 am | Reply
  3. WalTeRvMurrAY

    Great article

    September 5, 2012 at 4:25 pm | Reply
  4. j. von hettlingen

    It's a dilemma! On the one hand various member-states within the EU want a stronger union and they are willing to give up to a certain degree their sovreignty. The single currency is a good example. Yet when it comes to national interests, realpolitik prevails. Each country competes against each other on the international stage for business contracts and other gains. Their leaders have to defend national interests tooth and nail. Who will blame them! Revenues are rare nowadays.

    September 6, 2012 at 5:24 pm | Reply
  5. Hahahahahahahaha

    Like the US policy? Tax cuts for the rich to create jobs in India and China!!!!!!!!! Hahahahahahhhaa

    September 7, 2012 at 9:31 am | Reply
  6. Seriously

    I think Europe spoke loudly and clearly when they burnt the Summer Palace to the ground.

    September 13, 2012 at 3:25 pm | Reply

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