The Endangered Asian Century
America, China, and the Perils of Confrontation
It is peak tourist season in China for European leaders. Shortly after the first bailout package to Greece in 2010, German Chancellor Angela Merkel celebrated her 56th birthday with Xi’an’s famous terra cotta warriors. She was accompanied by the usual coterie of German industry leaders who inked contracts in the tens of billions and has since cajoled her entire cabinet to join the annual pilgrimage to Beijing. Merkel took her eighth multiday tour this summer just weeks after the latest chapter in the financial crisis.
Chinese President Xi Jinping last visited Merkel on her home turf in 2014 during a high-profile visit to Berlin, where he sought to strengthen what is perhaps China’s strongest partnership in Europe. Speaking at one of Germany’s leading think tanks, he expressed his thanks for the country’s role in helping “Made in China” become more like “Made in Germany,” touting the widely recognized quality and craftsmanship of German goods, and praised the ties that bind Berlin and Beijing together as “two pillars of growth in Asia and Europe.” Trade with China helped Germany weather the global financial crisis and solidify its dominant position within the eurozone. During the course of only a few years, China has transitioned from an average export destination to Europe’s second most important trading partner after the United States.
Washington, however, has been slow to recognize these developments. In 2004, U.S. officials were surprised by a French and German bid to lift an arms export ban to China that was put in place after the Tiananmen Square massacre. More recently, the United States has blamed Berlin for maintaining a large trade surplus and keeping the euro undervalued—accusing Germany, in short, of acting like the China of Europe. This year, European enthusiasm for the Chinese-dominated Asian Infrastructure Investment Bank (AIIB) again caught U.S. policymakers flatfooted, which left U.S. President Barack Obama backtracking from his alleged initial opposition to the institution.
Yet after four decades of steady growth, Sino-European relations may now be moving past their peak. China’s assertive foreign policy differs from Europe’s own expectations of global order. The Chinese Communist Party’s old repressive tendencies, which are experiencing a revival, are also scaring away the investments in the economy and society that the country has relied upon. Global interest and engagement with China may be at a high point, but as Merkel pointedly asked China’s future leadersin 2010, “The question is: Can such a good thing last?"
Much of Europe followed the United States’ lead in formalizing relations with China in the 1970s. Two-way trade between the European Union and China has increased 30-fold since that time. When relations cooled after the Tiananmen Square massacre, European nations intensified their dialogue with China to support its domestic development and facilitate mutual commercial goals. There are now more than 60 official dialogues at the EU level, ranging from agricultural policy, human rights, and intellectual property protection to the use of satellite technology. Over the past decade, China has also established separate “strategic dialogues” with France, Germany, and the United Kingdom.
The rapid expansion of contact between Europe and China has raised eyebrows. A decade ago, George Washington University Professor David Shambaugh predicted that Brussels and Beijing would become centers of an “emerging axis.” Earlier this year, Hans Kundnani, research director at the European Council on Foreign Relations, argued in Foreign Affairs that Germany’s commercial stake in the East was evidence of a “post-Western” foreign policy. Both arguments, however, greatly overstate the character of the relationship. The ties between European nations and China have become increasingly comprehensive, yet they are far from special or even truly strategic. The disparities between the two sides’ preferences and objectives have only become more apparent. Europe’s lack of unity on a range of issues, as well as Beijing’s willingness to exploit these differences, suggests that this partnership will remain unequal.
STRENGTH IN NUMBERS?
The aftermath of the Iraq war has demonstrated the necessity of cross-national collaboration to solve both regional and global issues. And in the years that followed, European leaders have embraced what they call effective multilateralism as a strategy to solve world problems. China and other emerging powers have long been a focus of this effort to construct a more diverse world order, complete with joint action plans to address climate change, fund development projects, and resolve international security challenges. Chinese multilateral initiatives, such as the antipiracy mission around the Horn of Africa and the creation of the AIIB (despite the nation’s veto powers within the organization), have aligned with European hopes.
Much like plans for the European Union itself, however, grand ambitions have been tempered by reality. China’s assertive behavior near key trading routes in Asia has greatly concerned not only U.S. allies in the region but their European trading partners as well. The European Union is uneasy with China’s willingness to sidestep international law in order to establish its own sphere of influence. On issues such as climate change, development aid, or territorial disputes, the EU’s concept of multilateralism clearly diverges from Beijing’s when it comes to the power of big states over small states.
There is within the EU deeply ingrained disappointment with the direction of Chinese political reform. Ever since the Tiananmen Square massacre in 1989, European leaders have intermittently criticized China’s human rights record. Beijing has been quick to threaten economic retaliation following European leaders’ meetings with the Dalai Lama and is critical of any recognition of high-profile activists such as Nobel Prize laureate Liu Xiaobo or the artist Ai Weiwei. It is telling that only a third of people in Europe and the United States have a favorable view of China and its role in the world.
Tensions will only increase this November, when all foreign nongovernmental organizations operating in China must start abiding by a new national security law. New regulations are intended to root out “hostile foreign forces” and will require foreign organizations to work with a government-sanctioned sponsoring agency that is already established within the country. If implemented poorly, the law could very well stifle long-standing civil society initiatives that serve China’s own interests. For example, Europe’s social democratic parties have worked for nearly two decades in supporting sustainable development (limiting pollution and developing renewable energy) and social justice (improving China’s judiciary and tackling corruption).
There is also disenchantment in Europe’s commercial relationship with China. The two have always butted heads about intellectual property rights and market access with Beijing, but most Western businesses have accepted these issues as the costs of doing business in China. However, domestic competition and political uncertainty are encouraging European businesses to diversify away from the mainland. According to Stefan Mair, member of the executive board of the Federation of German Industries, “We had our pivot to Asia. Now a lot of companies are asking whether they shouldn't be swinging in another direction.” European investors and luxury brands such as BMW are taking a hit after Beijing’s recent devaluation of its currency.
China, too, has become increasingly disenchanted with Europe. European countries have long been China’s primary source of industrial technology, but China has limited access to a range of dual-use goods because of Western export restrictions. Even though it joined the World Trade Organization in 2001, China is still denied market economy status by the United States and Europe because of the government’s role in manipulation of exchange rates, protection of state-owned enterprises, and dumping of subsidized goods on the global market.
THE SEVEN-YEAR ITCH
Europe and China have thus long passed their honeymoon period. After Iraq, China hoped that a strong Europe could act as a counterweight to American unilateralism. Yet both the euro and Ukraine crises have exposed Europe’s underlying weaknesses and the durability of transatlantic ties. Now the economic honeymoonmay also be coming to a close, especially if China remains outside major trade deals, including the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, and lower growth rates and market volatility become the norm.
Washington’s policymakers tend to view U.S.-Chinese relations in isolation or discount the relevance of Europe. European nations have focused on regional integration, reconciliation, and providing technical assistance, but they are also major arms suppliers to U.S. allies in the region. However, Europe has yet to make a concerted effort to meet the strategic challenge of rising tensions in Asia.
Much of Europe’s relations with China instead appear to be bureaucratic exercises: summits are too often calibrated to maximize political impact rather than establish common strategic priorities on urgent issues; finalizing leaders’ travel schedules and setting formal agendas for summits also just take up a great deal of time; and the sheer number of joint communiqués weighs down efforts to forge a common purpose. What is needed is a more focused dialogue—not simply more dialogue.
China hosts the G-20 summit in November 2016, which will likely be one of Obama’s last foreign policy tests. He needs a credible partner in Europe to help resolve vulnerabilities in cyberspace and stabilize the global financial system but also test Beijing’s evolving views of global order. His successor will have to contend with the world order as it is but must also develop a vision with allies of how it should be. More work still needs to be done to convert common interests into collective action—or else let the waning summer of Europe-China relations slip by.