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Europe’s budding strategic take on EU-China connectivity

Gustaaf Geeraerts / Dec 2019

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Geopolitical shifts are transforming the globalized economic order that has flourished in the post-Cold War period. This trend runs deep and raises fundamental questions such as the rivalry between different economic models, the competition for technological leadership as well as control over physical and digital connectivity. As the EU now accounts for a lower share of world trade, investment, currency holdings, defence expenditure, and development assistance, this shift has also stepped up concerns about the Union’s relative decline and its future economic security.

Steadily, these concerns are trickling down in the EU-China relationship, leading up to a logic that merges economic with strategic considerations. As a result, concerns about relative gains are becoming more prominent, making cooperation between China and the EU more involved. While the EU has not lost in absolute terms since its overall trade balance is still positive, the economic basis for sustaining its high levels of welfare and consumption is eroding. Europe has come to realize that the fundamentals of its socioeconomic system of choice are at stake.

Against this background, Europe’s initial enthusiasm for the Belt and Road Initiative (BRI) has abated. In the eyes of a growing number of critical observers, BRI is not only undermining the EU’s internal cohesion, but it is also creating fierce competition for European companies in terms of trade, investments and market access in Europe and Asia. European policymakers also increasingly realise that the impact of BRI goes beyond the European continent and is affecting the power balance and stability in Asia.

Besides, China’s growing influence is not only having an impact on the Western developed nations’ position in the global distribution of capabilities. It also constitutes a challenge to the values and organisational principles they stand for. China’s growing economic clout has increased its political influence well beyond its borders and is turning it into a more confident player. Beijing is also developing alternative discourses of modernity and spelling out its narratives of good governance. These narratives question the present global governance regime’s ability to provide economic and monetary stability, as well as its authority in setting norms of good governance.

Realising this, the EU has adopted a more alert attitude toward China’s growing influence. Earlier this year the EU issued a landmark communication that Beijing was a systemic rival in some areas, as well as a competitor and potential partner in others. This change in attitude also affects Europe’s perception of BRI, which has turned more ambivalent. To be sure, the EU remains very much interested in engaging with and participating in BRI, hoping to shape the initiative among others through the EU-China Connectivity Platform. This platform proffers concrete possibilities to engage in mutually beneficial projects of infrastructure construction, which would not only open up new ground for EU–China cooperation but also create opportunities for the two to join forces to promote stability and development in the vast areas in the Eurasian continent between them. Seen from that angle, the Connectivity Platform stands for an experiment in reciprocal socialisation, possibly bringing the EU and China closer together.

However, along with opportunities, European policymakers are also increasingly becoming aware of the challenges posed by BRI. Last spring, EU ambassadors in China issued a report critical of BRI saying that it is unsustainable in its economic, environmental, social and financial aspects. The report also pointed out problems of discriminating against foreign businesses, the lack of transparent tender procedures, and the limited market access for European businesses in China. EU concerns about China’s expanding influence in Asia, Central Asia, and Europe are definitely on the rise.

To better secure its own political and economic interests, the EU has launched a new strategy for connecting Europe and Asia. The strategy’s emphasis is on sustainable, comprehensive and rules-based connectivity. Investments should respect labour rights, avoid political and financial dependencies, and guarantee a level playing field for businesses. The strategy offers Asian and European states an alternative for BRI and indicates how the EU wishes to engage with them and what they can expect.

Seemingly, the EU means business. Testifying to this is the recent signing by the EU and Japan of an ambitious agreement to build infrastructure and set development standards in joint projects around the world. It is a riposte to China’s growing assertiveness in regional and global order-shaping. In line with the principles laid down in the EU’s new connectivity strategy, the EU-Japan agreement calls for transparent procurement practices, the ensuring of debt sustainability and high standards of economic, fiscal, financial, social and environmental sustainability.

As the geopolitical competition in Eurasia is set to increase, with China, Russia, the United States and the EU competing for influence, the new connectivity strategy shows the EU’s ambition to be part of the game. The infrastructure drive resonates a broader EU push to transform itself into a truly strategic player.

This strategic move has implications for EU-China connectivity. Growing concerns about economic security and relative gains, together with fundamental differences in their respective identities and societal systems, will continue to pose challenges on the road to concerted order-shaping. Chinese and European policymakers and officials, but also scholars and think-tankers, will need to engage in mutual consideration and learning if they are to overcome the conceptual gaps between them. EU-China connectivity is bound to be a delicate balancing act between diverging and converging trends. At any point in the future, the resulting equilibrium will reside somewhere along a spectrum that extends from pure cooperation at one end to unrestrained rivalry at the other.

 

Gustaaf Geeraerts

Gustaaf Geeraerts

December 2019

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