Cause and Effect in European Politics and Law

The Year of the Dragon - Happiest for China, What About the EU?

Adelina Marini, February 14, 2012

Europe has made a dear sacrifice because of the debt crisis in the eurozone - its foreign policy weight. This is one of the main conclusions which the European Council on Foreign Relations (ECFR) is making with its annual European Foreign Policy Scorecard 2012. Even dearer it looks against the backdrop of the EU relations with China - until recently deemed as a market for the European exports but now considered an investor in the chronically ailing European economies, whose perspectives are dim and not promising. The big twist actually happened on October 21st last year when the EU decided to postpone the planned for 25th of October 2011 regular EU-China summit.

The postponement was due to Greece, for which urgently a second bailout had to be developed but the negotiations with the troika (the Commission, ECB and the IMF) were not going smoothly and its report was not expected to be ready for the European Council, initially planned for October 17-18. The eurozone and EU summits was rescheduled for October 23rd, during which the expected decisions on Greece and the increase of the rescue fund were not taken which forced the holding of another summit on October 26. It is precisely for this context that the summit with China had to be rescheduled.

In the meantime, after October 26th it became clear that a mass shuttle had been launched, with the aim to seek money for a rescue injection for the eurozone through the rescue fund, not anywhere else but in China. The problem, however, was that this shuttle was not European but was led by separate member states. As the ECFR writes in the introduction to the annual assessment of the European foreign policy scorecard, Europe has lost its weight because it let the IMF to interfere in its rescue. "It [Europe] was the object of IMF intervention and went cap in hand to China and Russia to ask them to contribute to the bailout of the eurozone economies". The metaphor with the cap in hand is more than self speaking for the position which Europe took in the eyes of the rapidly gaining economic and geopolitical might China.

And while the US who, in spite of their not less debt and economic problems, quickly redirected their strategic priorities to the Pacific region, Europe still suffers, again according to the ECFR's analysis, from renationalisation of foreign policy. And regarding China, this is particularly clear from Angela Merkel's visit in the beginning of February when she, standing on a totally equal footing with Chinese Premier Wen Jiabao (the two largest export countries in the world, often having common positions within the G20 when global imbalances are discussed), managed to wrench out a clearer commitment on behalf of Beijing to the European troubles. Alas, nothing specific in terms of a sum, ways or conditions but nonetheless - a major progress. Or, in other words, Mr Merkel cleared the way for the visit of misters Barroso and Van Rompuy in Beijing on February 14th.

The issues included on the agenda for the summit in the Chinese capital city are broad and continue to evoke the metaphor of the cap in hand. The economic situation between the EU and China was among the leading topics, together with the strategic partnership between the two countries; trade issues and deepening of investment relations between the EU and China; global issues, the G20 in particular and climate change; and, of course, foreign policy challenges in the Middle East, Iran and the immediate neighbourhood of the EU.

In a purely economic perspective the EU has still not lost much of a territory. Since the establishment of bilateral relations with China in 1975, trade relations has expanded from 4 bn euros in 1978 to 395 bn euros in 2010. The EU still is the biggest destination for Chinese exports and is the second supplier of China after Japan. And for the EU China is the second largest trade partner after the United States and is on the verge of surpassing Washington. In 2010 the EU has imported goods worth 282 bn euros from China which is a 31% growth compared to the levels of 2009, and has exported to China goods worth 113 bn euros, with 37% more than 2009.

Europe continues to be one of the first five sources of foreign direct investment in China - 7.1 bn euros in 2010. Chinese investments in Europe are also growing rapidly since 2008 onwards, i.e. the time of the crisis.

From the statements of European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy before the beginning of the summit it becomes clear that this 14th summit will be more or less on the surface and it is highly unrealistic to expect concrete results, which will be another minus for the common foreign policy. "The EU and China, as two major economic partners, share a responsibility for addressing the challenges of our time. By working more closely together, the EU and China can make a difference and reap mutual benefits for our economies and address the needs of our peoples. I am looking forward to having in-depth discussion with Prime Minister Wen on our bilateral cooperation and on global and international issues on which we need to engage actively with each other", President Van Rompuy said.

And according to Barroso, "the foundations of our relationship are tried and tested but our common wish is to take it even further. We face common challenges and the world needs cooperative and responsible partnerships to overcome them. It is now, more than ever that we must act together. I believe that a forward-looking and growing EU-China partnership can represent an important pillar for global stability and prosperity".

These words clearly show that misters Barroso and Van Rompuy will focus mainly on those common grounds that would not require from the European leaders to take decisions on behalf of the member states. And I will again quote the ECFR because their assessment is articulated indeed very precisely: "Europe hoped to strengthen its approach to China in 2011, but Europe's crisis turned in China's opportunity, with member states competing with each other for Chinese markets, investments and cash".