Forbes India 15th Anniversary Special

China's New Role in The Making of Europe

In this rapidly changing context, the leaders of the European Union and China should rethink the significance of the trans-Eurasian links and open a new chapter in the relations between two of the world’s most ancient civilizations

Published: Jan 16, 2012 06:23:42 AM IST
Updated: Jan 18, 2012 07:03:15 PM IST

The redistribution of global power modifies the relations between the great powers and invites them to reconsider their diplomatic priorities. While in the aftermath of the Second World War the future of Europe has been proactively shaped by the U.S., or more precisely, by a group of American “Wise Men”, China is now in a position to have an unprecedented impact on the European integration, and, as Beijing fully develops its immense potential and becomes the world’s biggest economy in the coming decade, its capacity to influence will certainly grow.

In this rapidly changing context, the leaders of the European Union and China should rethink the significance of the trans-Eurasian links and open a new chapter in the relations between two of the world’s most ancient civilizations. The degree as well as the means of the Chinese action in Europe compatible with the internal constraints of the world’s largest developing country and congenial with the Chinese traditional principles of foreign policy will have to be seriously discussed by Beijing’s policymakers. In parallel, the realization and just evaluation of China’s new ability to influence will occupy more and more space in the European public debates and stand as an issue of the political campaigns.  

With a mutual trade in goods and services which already reached 432 billion Euros in 2010 the European Union and China form the second-largest economic cooperation in the world. This level of economic interdependence has been achieved in a very short period of time despite a Great Wall of mistrust separating two societies which have been evolving largely independently for millennia. And, as the speed of quantitative change exceeds the pace of qualitative transformation, time will certainly be needed to reduce the gap between trade and trust.   

Obviously, it is the Chinese people’s belief in the Chinese renaissance which conditions its success,  and, similarly, the Europeans’ faith in the renewal of Europe will determine its outcome, but while self-confidence remains the most powerful internal force, mutual reassurance has the advantage to strengthen it, and it is in that perspective that both sides should not overlook what mutual trust can bring to the two poles of civilization and, beyond, to the world.

The Chinese renaissance should be seen by Europe as a source of synergies. At the operational level, it is time for the European policymakers to build mechanisms to facilitate Chinese investment within the European Union – China will invest abroad more than $1 trillion by 2020 – , to grant China Market Economy Status – which will be, in any case, accorded to Beijing under the World Trade Organization rules from December 11 2016 –, to lift an inopportune and counterproductive arms embargo, to systematically consult China on security issues – the Middle East, nuclear proliferation – and to implement ambitious Sino-European cooperation in third countries – from Africa to Central Asia.

For decades, the West questioned the Chinese political system and its capacity to bring socio-economic progress to the Chinese people, but, in a striking reversal, while the 2008 financial crisis exposed Western hybris, the Chinese analysts are now trying to assess the nature and the significance of the Occupy Wall Street or the Indignants protests. In 2011, the Chinese media, academia and think-tanks have been especially expressing serious concerns about the viability of the European project and the effectiveness of the EU’s leadership.

Mutual trust will develop as Europe makes the effort to better understand the specificities of China’s governance and as China appreciates the complexity of the interactions between the European Union and its 27 members. The history of the European construction has been a series of collective decisions taken in the face of crises, and, when immediately after WW II Western Europe had to find the path toward reconciliation and to cope with the Cold War’s challenges, it entered the first moment of its political integration. By an agreement on two fundamental treaties – the Paris and Rome Treaties – , which led to the creation of the European Community, France, West Germany, Italy and the Benelux began a political experiment without any precedent, the peaceful integration of independent and sovereign nation-states.   

In this initial step of the European integration where, Monnet, Schuman, Adenauer, Spaak or De Gasperi, the founding fathers of Europe, demonstrated remarkable vision and courage, the U.S. was the main external support of the European renewal. At a time of devastation, despair and emptiness, “Stunde null” – Zero hour – as the Germans call it, the Marshall Plan contributed to  Europe’s economic recovery and encouraged a better coordination among European policies – the Organization for European Economic Cooperation, predecessor of the Organization for Economic Cooperation and Development (OECD) was created in 1948 to manage the Marshall Plan.

At the birth of the European Community, the young People’s Republic of China was busy with its First Five-Year Plan (1953-1957) and the Korean War illustrated the conflictual relations between the West and Maoist China.

The collapse of the Soviet Union marked the second crisis which forced the redesign of modern Europe. The 1992 Maastricht Treaty which established the European Union and provided the legal framework for the monetary union was Western Europe’s answer to the changes in Moscow and to the German reunification. The French President François Mitterrand conditioned his acceptation of one new Germany to the German adoption of the Euro. At this crucial point of Europe’s history the role played by the German chancellor Helmut Kohl has been decisive, and his capacity to put European interest above what was perceived by a large segment of the German population as their national interest enough to deserve the extraordinary title of Honorary Citizen of Europe – only bestowed before by the European Heads of State to Jean Monnet.

If it undermined Soviet statesman Mikhail Gorbachev’s grand strategy of the “Common European Home” which had, among others, François Mitterrand’s blessing, Washington did not oppose the creation of the European Union. However, long before the existence of the Euro, the Anglo-Saxon  narrative on the impossibility to implement this major political decision was already very common, for some could not even contemplate the idea of this truly post national enterprise, the transfer to a supranational institution of one of the main pillars of the modern State, its currency ; since January 1 2002 the Euro circulates, it has been by now adopted by 17 members of the EU, it is the second largest reserve currency in the world as well as the second most traded, and continental Europe shaped a global system in which genuine financial multipolarity could be a reality.

At the creation of the European Union, one decade after Deng Xiaoping’s “Reform and Opening-Up”, forced to handle the Tiananmen protests and their consequences, the People’s Republic of China was not yet in a position to affect the course of history in the far west of the Eurasian continent.  

With the Euro debt crisis, Europe is arguably at its third main turning points since the end of WW II. However, as it did previously confronting the most serious challenges, the continent will not de-Europeanize but, on the contrary, will deepen its union by operating more transfer of sovereignty to its supranational authorities in the field of budgetary and fiscal policies. In that sense, for the European federalists the Euro crisis is an opportunity and Brussels will subordinate the discussions on the enlargement to the existential imperatives of a more cohesive first circle of the European Union, the Euro zone.

At least two new elements characterize the current stage of the European construction, internally, the relative weight of Germany – both an effect of the reunification and of the positive impact of the Euro on the German economy –, externally, the China factor. If the Chinese leadership resolutely opts for a strategic and targeted policy to support the present and future role of the Euro in the world, if it encourages the Chinese companies to invest and to create jobs within the EU – as a company like Huawei is already doing –, it will become a significant contributor to the success of the European project.

The Chinese defense of the Euro is also an instrument to consolidate multipolarity and to pave the way to the internationalization of the Renminbi, in other words, to enter a world where the US dollar will have lost its absolute preeminence. In March 2010 on the occasion of a speech delivered at the Shanghai’s Lujiazui International Finance Research Centre on “The role of the EU and China in the world’s financial architecture of the 21st century” the former President of the EU Commission Romano Prodi made the following remarks: “When we started with the idea of the Euro, the top Chinese leaders showed great interest, when I asked why the creation of the Euro was so important for China while mentioning that the issue was not only about economics but also about politics, the then Chinese President Jiang Zemin said: “I want to live in a multipolar world”.   

In this new historical phase, the Sino-European relations are not only mutually beneficial but they have become mutually transformational. While an explicit and tangible Chinese support to the European integration would help Europe to defeat its fear of the globalization, Europe’s opening to the Chinese renaissance would weaken Beijing’s Sino-centric reflexes. Sino-European dialogue and solidarity can not completely eliminate nationalism and populism from the public debates but they can keep them at a relatively benign level.

Germany’s central position within Europe and the new role of Beijing in European affairs reinforce each other. In 2010 Berlin and Beijing issued a joint communiqué on “comprehensively promoting the strategic partnership between China and Germany” officially elevating their relations to a strategic level. Already 5% of German exports go to the Chinese market and while in 2010 the Sino-German trade reached 130 billion Euros (increasing by 35% from a year earlier and representing 30% of the EU-China total trade) it will be over 200 billion Euros within the next five years.

In an eurosceptic posture, David Cameron has already expressed that the United Kingdom will not back the efforts of the EU countries which aim to transfer more power to Brussels, and consequently, while the Euro zone will evolve toward more integration, the distance between London and the EU’s inner circle will increase. In these conditions, the “special relationship” between the U.S. and the U.K. which has been in the past a limitative factor in the Sino-European synergy will lose, to a certain extent, its capacity to affect the relations between the EU and China.  

In the context of the Cold War, the American assistance to Western Europe was also an instrument to contain the USSR and the spread of what was perceived as an antagonistic ideology, in the 21st century, the role of China as a catalyst for European integration should not be seen as a way to contain the U.S., but as a long term strategic action to create the conditions for equilibrium in a multipolar and globalized world system.

In that sense, China’s readiness to contribute to the consolidation of the European construction could be the most appropriate answer to the U.S. “return-to-Asia” whose intentions are not, according to Washington, the containment of any one but only a renewed engagement in a region of the highest significance. 

David Gosset is director of the Academia Sinica Europaea at China Europe International Business School(CEIBS), Shanghai, Beijing & Accra , and founder of the Euro-China Forum.

[Reprinted with permission from The China Europe International Business School.]

Post Your Comment
Required, will not be published
All comments are moderated
  • Abhiroop Koliyot

    great observations but make sure Europeans dont forget their moral obligations like freedom of speech and democracy for the people of china for the sake of economic cooperation

    on Jan 21, 2012