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EU-China ties acquire a new dimension

By Angele Kedaitiene | China Daily | Updated: 2022-03-28 07:32
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European Union flags flutter outside the European Commission headquarters in Brussels, Belgium, March 24, 2021. [Photo/Agencies]

The leaders of China and the European Union are expected to hold a virtual summit any time soon, which could become a new hallmark for relationships in these turbulent international times.

The summit, if held, will be seen as a high-stakes diplomatic effort to ease the escalating trade tensions, particularly over Lithuania, which allowed Taiwan to open a trade representative office under the name of "Taiwan" instead of "Taipei", and the Russia-Ukraine conflict, which poses the biggest security threat to Europe since the end of the Cold War.

The other issue the EU and China should discuss is the Comprehensive Agreement on Investment, negotiations on which were wrapped up in December 2020, because it is pending the approval of the European Parliament.

Having previously enjoyed good relations with booming trade and economic exchanges, China and the EU might want to work on issues of common interest, in order to resolve the existing differences and disparities.

What could these areas of cooperation be?

To begin with, it could be cooperation in overcoming the economic, social and health-related consequences of the COVID-19 pandemic, particularly because both China and the EU have expertise in pandemic prevention and control. This, as Chinese President Xi Jinping has said, will mean continuing to put people and life at the forefront, sticking to the scientific accuracy and dynamic clearing policy, and curbing the spread of the epidemic.

Second, the two sides can leverage their experience and resources to jointly combat climate change, especially to reduce the use of coal and increase the use of renewable and clean energy, in order to achieve the goals of the 26th UN Climate Change Conference, which was held in Glasgow in December 2021.

And third, a new geopolitical reality has emerged due to the Russia-Ukraine conflict, and China could play a major role as peacemaker and bring peace to Europe, enhancing its global standing in the process. China could also become the leader of a new economic, financial and trading bloc by uniting all non-dollar-denominated financial systems.

Given that China is the world's biggest exporter, any decision on global trade that it takes has the potential of driving sizeable flows of money and goods outside the dollar-denominated financial system, which in turn will boost the yuan's internationalization process.

With economic globalization facing many challenges, including unilateralism and trade protectionism, international uncertainties have increased and the situation may remain the same until the next European Parliament elections in mid-2024 followed by the US presidential election six months later. But despite two years and a few months being a short time for any country to consolidate its position on the global stage, China can do so by boosting mutually beneficial cooperation with the EU. To be sure, the EU will do the same.

According to Uri Dadush, a non-resident scholar at Bruegel think tank in Brussels, the EU has to overcome US pressure without souring trans-Atlantic relations, so as to develop a coherent trade strategy to capitalize on the opportunities offered by the Chinese market. And since the economic and trade strategies of China, the EU and the US will be conditioned by geopolitics, concerted diplomatic efforts will be needed to protect globalization and maintain global free trade.

As for China-EU trade relations, Dadush said they "should seek a political compromise that enables ratification of the CAI(Comprehensive Agreement on Investment)".

China's role as a leading economic power is huge. So if the Chinese and US economies are decoupled, it will signal the unraveling of the World Trade Organization and descent of the world into a dark age of protectionism, with declining global trade, according to Bruegel.

Why this cooperation, in general, the positive cooperation approach, is so important globally? Because an escalation of the tensions does not benefit anyone. The end of globalization and the shift to bi-polarity, tri-polarity, or something else, will cost the people welfare and ultimately lead to loss of international competitiveness and political legitimacy.

Globalization allows to remove the political differences due to the laws of the markets for goods, services and capital, and these opportunities are difficult to resist to continue production and promote innovations. Without trade in vaccines and personal protection equipment, there would have been many more COVID-19 victims, and economies would have struggled even more than they did to compensate for domestic supply disruptions. Mitigation of climate change and adaptation to it will also be much costlier without open and predictable trade.

A former European Commission official who knows the advantages of China-EU cooperation has said that relations between the two sides will depend on China's stance on the Ukraine crisis. According to her, while the EU and the US may overlook the trade in gas and oil, or other goods, between Russia and China, the military support would be a clear red line for the West. In the EU's eyes, neutrality is the minimum expected position, but China claims to maintain that.

Therefore, China and EU really have quite complicated ties, full of shared goals and differences, which acquire a new dimension.

The views don't necessarily reflect those of China Daily.

The author is a former officer of the European Commission.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.

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