China Power

Why China Soured On Europe

Ten years ago the EU-China heralded a new strategic partnership. How did relations get so bad?

This year the European Union (EU) and China are celebrating the tenth anniversary of their strategic partnership. Much has changed since Premier Wen Jiabao and European Commission Chairman Romano Prodi launched a “new era” of bilateral relations in 2003 with grand talk of an enduring Sino-European relationship. Despite all the changes in the bilateral relationship that  have come about as a result of the global financial crisis,, the implementation of the Lisbon Treaty and China’s leadership transition, the strategic partnership is still in place.

Even so, the grand expectations are gone. China may have once hoped the EU might play a focal role in Hu’s multilateral “harmonious world” policy. However, the failure of policymakers in Brussels to withstand American pressure on lifting the arms embargo stifled the relationship in its infancy. Foreign policy isn’t the only area where Beijing and Brussels have struggled to find common ground. Though foreign direct investment in Europe is increasing, it still represents about 1 percent of the EU’s total inward FDI.

These disagreements point to two ongoing trends undermining the relationship. First, the European market has declined in importance since the onset of the financial crisis. Second, in China’s view the EU quickly adds protectionist measurements to industries in which Chinese companies begin to gain advantage in, as seen recently in the spat over solar panels. On the other hand, European businesses find it fiendishly difficult to pry open the all-important Chinese domestic market.

China has responded to these fissures with vitriol. At a recent EU-China academic meeting in Brussels in mid-June, a retired Chinese official berated the audience about the EU’s mistrust of China. Frustration boiled over into another session where a group of Chinese participants shouted, “the EU always wants to shut China up.” Some of this anger was caused by the discussion of internal reform in China. When one Western participant advocated recruiting “benign” Chinese agents of reform to try and bring about a more pro-European viewpoint in Beijing, Chinese participants fired back:

“Why do you Europeans always want to create trouble for us, and then leave us to clear up the mess. You suffer nothing, we are the ones left with the problem after all your impractical suggestion.”

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In 2009, Wang Xiaodong and his fellow nationalist bloggers penned Unhappy China, which became a modest bestseller in the People’s Republic. The “unhappiness” in this book was mostly about China being the sweatshop of the world, where elites happily colluded with the outside world to continue denying China cultural and political status. Unhappiness has now turned to anger, at least amongst some constituents. One academic in Beijing told me in 2010 that China had grown weary of the EU’s moralizing, lofty stance towards it. Another complained that the Lisbon Treaty had failed to even solve the EU’s internal contradictions, so how could European nations preach to China on governance?

Whatever the merits of these criticisms, it seems that the dynamics of the relationship between the EU and China have fundamentally changed. They both operate from a legal basis created in 1985, which is almost wholly about their interaction as economic partners. But these days, their dialogues embrace everything, and they are grappling for a new political vision of how to proceed. Frustration seems to be etched in the DNA of both sides, and yet, of course, they cannot walk away from each other. In lights of this, it is time for EU and Chinese leaders to do a much better job of dealing with their evident problems. We have the diagnosis now – indigestion on trade, emaciation through lack of substantial, balanced political dialogue. Now we need to find the way to cure it. Any offers?