The EU meets China: united we stand?

The EU delegation has prepared an unusually full agenda for the annual EU-China Summit that begins in Beijing today. It wants results on reducing the 170 billion euro trade deficit, it will pressure China to revalue its currency, and will try to appeal for help on climate change and the Iran nuclear issue. But there is a real danger that the EU delegation will go home empty-handed, and the Chinese will hijack the event to lecture about Taiwan and a recent ‘incident' with the Dalai Lama.

After the Chirac-Schroeder era of trade diplomacy came to an end, many of the EU's new leaders have begun to converge toward a value-based approach on China, putting human rights on par with trade interests. Nicolas Sarkozy's visit to China this week has focused on promoting bilateral France-China ties, but the French President also argued for ‘progress' on human rights, and warned that energy and environment issues could divide, as much as unite, China and Europe. German Chancellor Angela Merkel made a ‘bold' move in September when she received the Dalai Lama in the Chancellery, upsetting the Chinese government, who cancelled a series of high-level meetings in retaliation.

However, while the trade-focused China policy is being rethought, Europe's political elite continues to be unconvinced that a value-based China policy would be feasible. Angela Merkel has been under fire from her social democrat coalition partners, including both former Chancellor Gerhard Schroeder and Foreign Minister Frank-Walter Steinmeier, who all advocate the old engagement line. To no great surprise, big business across Europe is also apprehensive of any move that may create difficulties on the China market.

To discourage the EU from hardening its line on human rights, the Chinese will most likely continue to use their "divide and rule" tactics. If one digs deeper, the differences between the French and German interests are already obvious. France holds only just above 1% of the Chinese market, while Germany's stake is over 5%. This means that France's economic relationship with China is dependent on a few high-profile deals. The Chinese know this, which might explain a spate of suspicious cases of economic nationalism or judicial high-handedness in China against two major French firms. The EU's trade commissioner has just sprung to their defence.

But the irony is that EU countries do not need to be taken hostage by China's economic games - China needs Europe at least as much as European countries need China. Beijing's single most important national interest is to guarantee its global economic footprint. Meanwhile, Europe's key long-term interest is attracting Chinese capital. If Brussels can't negotiate a viable quid pro quo with China on the 170 billion euro trade deficit, nothing will prevent a deterioration of relations, and that is not in China's well-considered interest either. So Europeans just need to coordinate their approaches, and China needs to understand that principles are not for sale.

European attempts to arrive at a common China policy have also been made difficult by the US government's policies. In the wake of the Iraq war, Gerhard Schroeder and Jacques Chirac tried to tilt EU policy towards Beijing by moving toward lifting the 1989 arms embargo. But before their policy had got very far, Washington put its foot on the brake and enlisted the help of its allies to block the move. More recently, the Bush administration has moved closer to Beijing as it needs to ensure that North Korea delivers on a denuclearization deal. Ironically, Chinese diplomats are now telling the EU that they lag behind the US in meeting China's requests on condemning Taiwan's referendum proposals for UN membership.

So why should the EU let itself be taken hostage over issues such as meeting the Dalai Lama, a major spiritual leader after all, or of lording over the political process on the island of Taiwan? Why should the EU accept that China regularly alludes to the European colonial past in Africa, and creates difficulties for some investors in China? Were Europeans to speak collectively their mind, would relations with China vanish into thin air? And if we go along with every political request, will our trade deficit shrink? These are different areas of the relationship, which should be dealt with on different grounds. Only European disunity creates opportunities for linkage and pressure.

Europe may find that by staying the course on a reasonably united policy towards China, it advances its own agenda for a mutually beneficial relationship. If its political leaders compete against one another with Beijing, they'll only create illusionary relationships. We must not allow China - or any powerful and strong-minded partner - to pick out a European leader or country and isolate it. This point should be made in the EU-China summit in Beijing today, because every European head of government may one day be in Angela Merkel's present predicament.