Beijing Transforms EU-China Ties by Transforming the Context

The announcement by Beijing that it will pledge a multi-billion euro investment in Europe’s new infrastructure 315 billion euro’s fund at a summit on June 29 in Brussels, signals not only a milestone in financial diplomacy, injecting dramatic vitality to EU-China ties at the expense of the US.

It is also the latest step in China’s efforts to shape regional, macro-regional and global economic governance by peaceful means, challenging the US, embarked on a policy of containing China at the South East Asia Sea and at the Asia Pacific in military terms.

Beijing’s move deserves EU’s active action, among other things, in order to persuade Washington that in fact there is no Chinese threat to its security, and on the contrary, a series of economic measures aimed at peaceful development encompassing not only EU-China ties, but also the Eurasian landmass as well as the Asia Pacific.

China understood as a chance for common prosperity

Beijing’s latest move follows major EU governments’ decision to join the Beijing-led Asian Infrastructure Investment Bank (AIIB) last March. But China’s plans are even more comprehensive in geostrategic scope, including macro-regional dimensions as well, integrating the Silk Road policy, also known as One Belt One Road (OBOR).

It encompasses Eurasia’s hinterland including Central Asia, a region where specifically Beijing has projects worth more than $ 50 billion, plus the maritime route including the South China Sea, the Indian Ocean and the Mediterranean.

As a whole, the Silk Road Fund is endowed with $ 40 billion aimed at revamping the old routes connecting Asia to Europe, carrying goods and ideas across Eurasia over centuries, nowadays including some 60 countries.

Such comprehensive plans reinforce the idea of China’s «peaceful rise», first made public by Chinese strategist Zheng Bijian at the Boao Forum, in 2003.

Zheng explained in subsequent articles that: «China will not follow the path of Germany leading up to World War I or those of Germany and Japan leading up to World War II, when these countries violently plundered resources and pursued hegemony. Neither will China follow the path of the great powers vying for global domination during the Cold War. Instead, China will transcend ideological differences».

On the other side, specifically, in its latest move, Beijing’s pledge of a multi-billion dollar investment in Europe’s 315 billion euros new infrastructure fund is both inclusive and grand strategy-oriented, since albeit its figures are not known yet-it will presumably be in the billions-, it is expected to come with a request to the EU for return investment in China’s westward infrastructure effort – the OBOR initiative – setting up important energy and communications reaching Greece from Central West and South Asia.

Zheng’s vision, more than a decade ago, seems more real than ever. As he stated then, Beijing: «advocates a new international political and economic order, one that can be achieved through incremental reforms».

On the other side, it has been noted by some Western observers that beyond idealism, some of these China plans will predominantly benefit several Chinese firms, particularly midsized ones, more than foreign countries.

But rightly said, in view of China’s size, several Central Asian countries and some small EU countries might benefit more than China exactly due their size. Also, presumably, the interrelation of all these projects will bring common benefit and good will and collaboration with foreign companies in areas where Chinese counterparts lack experience and capabilities.

New approaches are needed

If China’s peaceful rise concept is not believed by US State Department’s strategists (still willing to see the new superpower’s emergence through Cold War lenses), it might be strongly argued that all the infrastructure and financial plans show that China is acting as a responsible global player, cooperative in the international arena, not behaving as a «free rider», as frequently accused by the Obama administration in recent years.

More important is the lack for many years of refined knowledge among EU’s political and bureaucratic élite to cope with China’s synergies. Indeed, most of Eurocrats were born in the Euro-Atlantic era and principally by that very fact are mentally less prepared to act in a post-American world.

In other words less prepared to see all the potential of new China-led initiatives. The 1985 EU-China trade and cooperation agreement plus seven legally binding agreements document signed by Brussels and Beijing have been governing bilateral relations for most of the four decades.

The overview propelling that agreement is Eurocentric in nature, encompassing a «change through trade» approach. Nothing contradictory here, except by the fact that several Eurocrats have thought that a way to contribute to a democratic and open society in China is a possible goal to reach via the transformational powers of trading with Europe.

Now the idea is back under a new guise, in the most potential positive way in a continent whose leaders have domestically been unable to tackle the economic crisis and show at some points, clear signs of lack of unity as EU partners. Just think for example at the prospect of Greece or Britain’s potential exit from the EU, to the perplexity of Xi Jinping’s administration, eager to see stability at home and abroad among its closest trading block partner.

As the European Commission announced it last November, the 315 billion euro Investment Plan (also known as Juncker Plan following European Commission President’s name) is aimed at mobilizing European growth again and get more people back to work. Presumably, when Beijing announces its contribution in Brussels, by the end of the month, with specific details to be announced in Beijing in September, China, will have won higher prestige among many European citizens in the year of the 40th anniversary of the establishment of bilateral relations.

Recent Facts and figures

2015 it is the year to turn back and see that one decade after the EU-China trade and cooperation agreement was signed, in 1985, Europe enjoyed a trade surplus with China, in those times a big Third World country largely isolated and communicated by modest infrastructure.

Now its economy is over three times what it was in 2005. According to International Monetary Fund purchasing power parity estimations last December, China’s economy it is worth $17.6tn, lower than the EU block, worth $ 18.5tn (both higher than the US, worth $17.4tn).

In 2015, as in most recent years, the EU is China’s biggest trading partner while China is now the EU’s biggest trading partner, just behind the United States. Immersed in an impressive bilateral trade well over 1 billion euros a day, China might well become the EU’s first trading partner within this decade.

Surprisingly enough, in the last year EU’s closest US ally, Britain, has been clearly assessing its own interests in tune with the new Asia Pacific era, distancing itself from Washington’s views.

One innovative measure is London’s decision to become the first country in Europe to open a yuan-denominated money market fund. Another more than technical and clearly geopolitical attitude has being distancing itself from US position of non-adherence to the Asian Infrastructure Bank.

London’s adherence to the bank last March was hastily followed by several European capitals as if they were no partners but competitors trying to get a seat first. Brussels had little special to say about a move of both historic and geostrategic significance. Now, with the prospect of prime minister Li Keqiang visiting Brussels this month to announce China’s compromise with Juncker’s plan, a new engagement can be forestall.

A broader scope is needed

Several former European leaders have all tried to explain in Europe the need to act without internal divisions for a common foreign policy and long-term projects with China. Now the big moment has come, but more is necessary.

Beijing defines China and Europe, whose bilateral relation reached strategic partnership status in less than two generations, as ‘civilizational partners’. China’s driving force is showing a Eurasia path, including Russia as a major partner.

Under the present circumstances of economic crisis and volatile security prospects, it is a fact that should be taken into account as soon as possible in Brussels and in the main EU capitals for the development of a cooperative Eurasia including all the members of the macro-continent.

China is about to alter dimensions of the geostrategic context and it is advisable to consider both realistic and imaginative new routes of action. Actually it is a pressing issue.


Augusto SOTO | SCF

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