Extensive China-EU Economic Linkages Persist Despite Growing Divide on Democracy and Human Rights

Introduction

Trade is the most important element of the relationship between China and the European Union (EU). Although the COVID-19 pandemic has weakened the global economy, the EU remains China’s largest trading partner and China is the EU’s second-largest trade partner. In 2021, bilateral trade reached $828.1 billion, a 27.5 percent increase on the previous year (China Org, February 2). However, the China-EU divide over democracy and human rights, as reflected in the increasingly open differences between European countries and China on Taiwan and the One-China principle, appears likely to endure.

The political divide between China and the EU cannot be covered up by diplomatic homilies. For example, Zhang Ming, China’s ambassador to Brussels (2017-21), spoke of “win-win cooperation,” “communication and mutual respect,” and “splendid civilization of China and Europe” (PRC Mission to EU, December 18, 2021). However, intensifying divisions were further clarified in mid-September 2021, with China’s sharp riposte to the EU’s criticism of its record on democracy and human rights in its most recent China strategy paper (European Parliament, September 16, 2021). China is also furious at Lithuania’s decision last year to allow a “Taiwan” Representative Office in its capital, Vilnius, which has resulted in retaliatory sanctions by China and further escalated tensions (Global Times, August 10, 2021).

Following the EU’s adoption of its new China strategy, Beijing alleged that “unwarranted comments” on China’s political, economic, social, and foreign policies, and accusations against China on issues related to Hong Kong, Xinjiang, and Taiwan were “based on prejudice and lies.” Beijing said they constituted “gross interference” in China’s internal affairs and a violation of basic norms in international relations as well as the EU’s commitment to relevant issues (PRC Mission to EU, September 16, 2021). Beijing also denounced the EU for playing up ideological differences and highlighting “systemic rivalry”—a concept that the EU first invoked in 2019 (European Commission, March 12, 2019; PRC Mission to EU, November 15, 2021). The concept implies that the EU’s political system, ideologies, and values are at variance with those of China (European External Action Service (EEAS), September 6, 2020). The PRC Mission to the EU pointed out that different political systems and development paths “did not and shall not” hinder bilateral cooperation, and stressed that shared interests between Europe and China “far outweigh their differences.” The Chinese government advised that Brussels should ensure that China-EU relations “are not hijacked by ideologies and geopolitics” (PRC Mission to EU, September 16, 2021). For its part, the EU described China as both a negotiating partner and an economic competitor. In response, China’s Foreign Minister Wang Yi sees Europe as having a “cognitive split” in its policy in simultaneously perceiving China as both partner and opponent (South China Morning Post, December 30, 2021).

Shifting EU-China Ties

China’s anger at Europe’s stance on democracy and human rights indicates how the relationship has shifted since the EU published its first China strategy paper in 2003. At that time, the EU envisaged itself as having “a major political and economic stake in supporting China’s successful transition to a stable, prosperous and open country that fully embraces democracy, free market principles and the rule of law” (European Commission, September 10, 2003). Brussels even asserted that it had “much to offer” China, given its own experience in integrating former communist countries from Central and Eastern Europe into the EU.

By 2016, the unprecedented scale and speed of China’s economic and military rise had astonished Brussels. Nevertheless, the 2016 EU China Strategy (EUCS) linked the EU’s prosperity with sustainable growth in China, which was premised on China’s role as Europe’s biggest trading partner, and as an attractive investment destination. “China needs the EU as much as the EU needs China,” claimed the strategy paper (European Commission, June 22, 2016). At that time, Brussels took the view that it should help “define an increased role for China in the international system” (European Commission, June 22, 2016).

Since the publication of the 2003 EUCS, Brussels has continually affirmed that its approach is grounded in democracy and human rights, but has also taken pains to stress that it accepts the One-China principle. So why has the latest EUCS riled China to such an extent? The main reason is that it perceives limits to former strategies premised on engaging China, and clearly recognizes the PRC as a one-party communist state that does not share the Union’s “democratic values such as individual freedom, freedom of speech, and freedom of religion” (European Parliament, September 16, 2021). The 2016 and 2019 strategies did not make such a definitive statement on China’s political system. The 2021 EUCS underscores that the long-term tradition of democracy in Hong Kong, Macau, and Taiwan demonstrates that democracy is valued by the Chinese people and that China’s track record of human rights violations expose its failure to fulfill its bilateral and multilateral commitments in these areas (European Parliament, September 16, 2021). EUCS 2021 also stresses that any change to cross-strait relations must not be made against the will of Taiwan’s citizens.

Insecurity in the Maritime Domain and Dependence on Trade

While the 2016 and 2019 strategy papers expressed concern about China’s unilateral revisionist military moves in the Taiwan Straits and the East and South China Seas, as late as 2019,  the EUCS only referred to Taiwan in a footnote (European Commission, March 12, 2019). However, now Brussels worries that insecurity in the Taiwan Straits and South China Sea could affect Europe’s trading ties with Asia.  After meeting with the foreign and development ministers of G7 countries in January 2022, Josep Borrell, who took over as the EU’s High Representative for Foreign Affairs and Security Policy in December 2019, told journalists that China represented a strategic and ideological challenge. The EU must ensure freedom of navigation in the Sea through which 40 percent of its exports pass. “This part of the world is the aorta vein of the economics of Europe,” Borrell stated (EEAS, December 11, 2021).

Despite the EU’s concerns for freedom and sovereignty in the maritime domain, trading ties remain the highest priority for both sides. Shortly before the EUCS 2021 was published, Ambassador Zhang Ming asserted that their economic interdependence made for amicable and stable ties (EuropeanSting, August 9, 2021).Generally, since the publication of EUCS 2021, China’s indignation at the obvious political differences between them runs parallel to its wish to keep on good political terms and sustain relations with Brussels (PRC Mission to EU, November 19, 2021).

In fact, since the EU and China first presented their policy papers on each other in 2003, disagreements over democracy and human rights and the fact that 21 out of the 27 EU countries are members of NATO have not restricted progress in deepening the trading relationships between China and Europe. Despite the EU’s concern about the imposition of the National Security Law in Hong Kong in June 2020 (China Brief, July 29, 2020), Beijing and Brussels signed the Comprehensive Agreement on Investment in December 2020 (European Commission, December 30, 2020; Global Times, December 30, 2020).

Lithuania, Taiwan, and the One-China Principle

Another issue that has sparked China-EU tensions is the recent policy shift of the former communist country Lithuania, also a NATO member, on Taiwan. Last July, Lithuania allowed the opening of a “Taiwanese Representative Office” in Vilnius, the first of Taiwan’s de facto embassies to be called “Taiwan” rather than “Taipei,” which Beijing deemed a violation of the One-China principle (China Brief, January 28). China thundered against this “ flagrant violation” of the spirit of the communiqué on the establishment of diplomatic relations between China and Lithuania, which “severely undermines” its sovereignty and territorial integrity (PRC Embassy in Lithuania, August 28, 2021).

Significantly, at the China-EU High Level Strategic Dialogue, which took place virtually on September 28, Wang confirmed China’s “principled position” on Taiwan-related issues, stressing that the One-China principle reflected the consensus of the international community and the political basis for the development of relations between China and the EU. “If the foundation is not firm, the ground is unsteady,” Wang stated. According to the official Chinese report, Borrell said that “the EU always adheres to the One-China policy, which is an important cornerstone of EU-China relations. The EU will not conduct official exchanges with Taiwan” (PRC Embassy in Belgium, September 28, 2021).

In contrast, the EU press release of the Borrell-Wang meeting reported that the EU would continue to consistently apply its One-China policy. At the same time, the EU and its member states have expressed growing interest in developing unofficial cooperation with Taiwan, a like-minded and important regional economic partner (EEAS, September 28, 2021). In January, Brussels backed Vilnius in its clash with Beijing, filing a complaint in the World Trade Organization (WTO) alleging that China has used trade restrictions as a form of economic coercion against Lithuania over the Taiwan dispute (Euronews, January 14; WTO, January 31).

Chinese and European Illusions Collide

These exchanges show why the China-EU relationship is under strain. Earlier, China’s papers on the EU all stressed the importance of the One-China principle, but none of them saw a fundamental conflict of interests between China and the EU. China’s 2003 paper averred that “neither side poses a threat to the other” (China Org, October 2003). The 2014 document hailed the tie between China and the EU, “the world’s most representative emerging economy and group of developed countries respectively,” and  “two major forces for world peace as they share important strategic consensus on building a multi-polar world”(China Daily, April 2, 2014).

China’s 2018 paper on the EU envisaged both contributing to multi-polarity and economic globalization.  China and the EU shared common interests in “upholding world peace and stability, promoting global prosperity and sustainable development and advancing human civilization, making the two sides indispensable partners to each other’s reform and development”  (China Daily, December 18, 2018).

Since publishing its first EU policy paper in October 2003, China has emphasized mutual respect, equality, and the One-China principle as the foundation of China-EU relations (PRC’s State Council Information Office, October 2003). The EU adheres to the One-China policy while continuing to develop its relations with Taiwan and supporting the constructive development of cross-strait relations (European Commission, June 22, 2016). After meeting with Wang Yi in July 2021, Borrell said that the EU believes it should respect China, does not want to confront China, and will not participate in any form of new Cold War (Xinhua, July 16, 2021).

Explaining the discord over democracy and human rights, Beijing has highlighted cultural differences between the EU and China as important representatives of Western culture and Asian culture respectively. Beijing’s 1991 White Paper on human rights was the first official Chinese document to recognize the concept of human rights and to highlight the idea of state-steered development as a key tool in their advancement (PRC’s State Council Information Office, November 1991). Beijing’s subordination of human rights to state  interests  has since long been clear. Addressing the Belt and Road Forum in May 2017, President Xi Jinping advocated development as the “master key to solving all problems” (CGTN, May 15, 2017). In short, Beijing challenges the primacy and universality of individual human rights as asserted in the 1948 Universal Declaration of Human Rights (United Nations). In August 2021, China’s new White Paper on human rights hailed the achievement of “moderate prosperity” in China as a “milestone in the history of global human rights” (Xinhua, August 12, 2021).

The EU’s illusions about playing a potential role in introducing democracy to China have dissipated under Xi, who has reasserted the primacy of the Chinese Communist Party’s (CCP), centralized power, and pledged that China will become a global power by mid-century under the party’s leadership (China Daily, November 4, 2017). In highlighting that China is following “the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” China’s 2018 EU paper of 2018 underscored the growing political divide between Brussels and Beijing (China Daily, December 18, 2018).

Authoritarian China, a Global challenge, Threatens the EU

By 2016, the EU had noted China’s emergence as an international power. In May 2020, Borrell warned that the Union must adopt a “more robust” strategy to deal with an increasingly assertive China (Euractiv, May 25, 2020). On July 30, 2021 Borrell affirmed that despite differences with the U.S., the EU would always be closer to Washington than to Beijing: “We will always be closer to a country that has the same political system as ours, a market economy, a multi-party will always be closer to a country that has the same political system as ours, a market economy, a multi-party democracy with concurrence in elections, than a single-party country” (South China Morning Post, July 30, 2021).

FM Wang tried to ease the tension at a virtual meeting with Borrell last July, and in August, on an official visit to France, claimed that common interests far outweighed differences (Xinhua, August 30, 2021). Wang also emphasized that neither China nor the EU sought global hegemony and that both adhere to, and practice multilateralism (PRC Embassy in Belgium, July 16, 2021). Two months later, during a visit to Italy, Wang stressed that China and the EU should be “partners” and “collaborators,” rather than “rivals” and “competitors” (China Daily, November 1, 2021).

However, as noted above, to Beijing’s annoyance, on January 27, the EU launched a case against China at the WTO over China’s “discriminatory practices” against Lithuania. It alleged that China had blocked imports from and exports to Lithuania since December 2021 in response to the opening of a Taiwanese Representative Office in Vilnius (Euractiv, January 27). Dismissing China’s so-called  “coercion” of Lithuania as “groundless,” China’s Foreign Ministry asserted that the “problem between China and Lithuania is a political not an economic one.” However, Beijing downplayed its importance as a sticking point in EU-China ties, by avowing that “they are issues between China and Lithuania, not China and the EU” (PRC Ministry of Foreign Affairs, January 27).

Conclusion

Strong trading ties are likely to persist despite the growing political gap between the EU and China. Neither side wants to push their relationship to the breaking point, if only because of their all-important economic ties with one another.

All told, the war of words over systemic rivalry, democracy, human rights, Taiwan, and the One-China principle could represent a unique type of Cold War between China and the EU as major international trading partners but geopolitical rivals, trying to reshape the global order in accordance with their differing values, interests, and aspirations.

Anita Inder Singh, a citizen of Sweden, is a Founding Professor of the Center for Peace and Conflict Resolution in New Delhi. Previously, she was a Fellow at the National Endowment for Democracy and has taught the international relations of Asia and Europe at the graduate and doctoral levels at Oxford and the London School of Economics and Political Science. Her articles have appeared in many publications, including The Guardian, The Far Eastern Economic Review, The Wall Street Journal Asia, and Nikkei Asian Review. Her books include The United States, South Asia and the Global Anti-Terrorist Coalition (2006). She is currently writing a book on the United States and Asia. More of her work may be viewed at: www.anitaindersingh.com.