Wed, Apr 10, 2019 - Page 9 News List

The EU is facing a choice between China and the US

By Philippe Legrain

Europeans cannot agree on how to handle a rising China.

While EU leaders were gathering in Brussels to discuss a more assertive common approach, Chinese President Xi Jinping (習近平) was visiting Rome.

Xi was there to mark Italy’s independent endorsement of the Belt and Road Initiative, his US$1 trillion pan-Eurasian infrastructure investment plan that aims to bolster China’s economic and political influence.

So much for a unified EU stance.

How, then, should the EU engage with China? As the US and China stumble toward a new Cold War, each wants the Europeans in their camp.

US President Donald Trump’s administration barks at Europeans to follow its aggressive lead in confronting China over trade, technology and security, while China woos the EU by pointing to their shared interest in defending the multilateral trading system, the Paris Agreement and the Iran nuclear deal against Trump’s attacks.

Ideally, the EU ought to chart its own course, but as long as it remains weak and divided, it will struggle to do so.

Until recently, the EU considered China a strategic partner — and primarily a source of growth and jobs — but its new draft China strategy, developed by the European Commission and the EU’s External Action Service, is tougher and more nuanced.

China is now regarded simultaneously as 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 pursuit of technological leadership and a systemic rival promoting alternative models of governance.”

Like their US counterparts, albeit less vehemently, European policymakers increasingly fret about the challenge from an authoritarian, statist and technologically dominant China.

The centralization of power in Xi’s hands and the overtness of his “Made in China 2025” industrial policy, which seeks Chinese dominance in 10 key high-tech sectors, have dashed earlier European hopes for political and economic liberalization.

Europe’s politicians are increasingly receptive to business complaints that China is buying up EU firms and their technologies, while denying reciprocal access to Chinese markets.

Given this, the EU ought to be a natural ally for the US in seeking to open Chinese markets and safeguard foreign investors’ intellectual property, but Trump has no time for allies, labels the EU “a foe” and is threatening a trade war with Europe over its huge trade surplus with the US, notably in cars.

EU policymakers hate Trump’s unilateral protectionism and his “America First” worldview, and they do not trust him, rightly believing that Trump could readily cut a deal with China at the EU’s expense.

As a result, the EU is understandably loath to line up behind Trump’s China policy.

That provides an opening for China, which makes all the right noises about multilateralism and has a genuine interest — at least for now — in sustaining the open, rules-based international system.

Furthermore, it engages seriously with the EU; Chinese Premier Li Keqiang (李克強) was due in Brussels yesterday for the annual EU-China summit.

However, at the same time, China is undermining the EU by negotiating with European governments bilaterally and playing them off against each other.

In this regard, China has established the so-called “16+1” forum to engage with 16 nations in central and eastern Europe, 11 of which are EU members.

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