Beijing calls the shots in ties with EU

Date: 02/05/1996

By Elizabeth Wise

BEIJING is having a hey day. Its newly announced partnership with Russia is making headlines around the world and it has signed a multi-billion-ecu trade agreement with France despite political objections in Paris.

Chinese President Jiang Zemin showed his muscle when he and Russian counterpart Boris Yeltsin signed agreements last week covering a joint nuclear power station, energy supplies, intellectual property and space.

Zemin's eagerness to demonstrate his country's new links with Moscow - which included joining Yeltsin in warning the West not to try to dominate the post-Cold War world - was, however, largely seen as an effort to thumb his nose at Washington, with whom China has been on bad terms since Clinton received the president of Taiwan last June.

The message was also directed at Europe, which has borne the brunt of recent harsh comments from Chinese leadership. In March, Vice Premier Qian Qichen scoffed at EU criticism of his human rights record, calling it “Cold War politics” and adding: “We hope that the Union can refrain from doing something that is no longer relevant.”

But despite the Union's condemnation of Beijing's treatment of orphans, dissidents, prisoners and Taiwan, both sides are too interested in each other's economic potential to risk a breakdown in relations.

Last month, when subjects of mutual rancour were getting in the way of a pending sale of French Airbus planes to Beijing, French Premier Alain Juppé and Chinese Prime Minister Li Peng agreed to drop their plans to make dinner speeches critical of each other in Paris and just sign the trade deal.

EU trade officials have stepped up their efforts in China, following similar paths to those they trod in Japan. Six months after bringing Trade Minister Wu Yi to Brussels to scold European business for not investing enough in China, Trade Commissioner Sir Leon Brittan will lead a troupe of corporate executives on a visit to Beijing this Sunday (5 May).

For China, the motivation to diversify trade into Europe is high while ties with Washington are not at their best. For the Union's part, although officials hate to admit it, increasing EU-Asia initiatives such as the Asia-Europe Meeting (ASEM) in March are motivated partly by a desire not to be left out of regional benefits provided by the Asia-Pacific Economic Cooperation (APEC) forum which links the US to Asian powerhouses.

China does not regard Europe as its superior. Before the ASEM summit, Beijing demanded that the EU abolish its own “protectionist” regime and drop plans to include human rights in summit conversations. Beijing has also turned a deaf ear to demands from several EU governments for the release of dissident Wei Jingsheng.

It does not have much to fear. With one-fifth of the world's population and a mystique that awes the other four-fifths, China is not likely to bend easily to the demands the EU makes of it - nor those made by anyone else, including the World Trade Organisation (WTO), where it seeks membership.

In response to demands that China open its industrial and tightly closed agricultural markets before WTO talks in July if it wants to improve its chances, Beijing says it has met all entry requirements, and that it will not agree to promises it cannot deliver or tariff cuts that would hurt its own industry. Instead, it frequently retorts that the WTO is not a world body without China.

The EU has championed China's WTO membership bid, arguing the country's size merits it. The Union's 'constructive engagement' policy, aimed at turning China into a democratic society, is also based on the belief that it is in Europe's interest to encourage China to join as many international clubs as possible.

With China now the Union's fourth largest export market (and fourth largest supplier) and two-way trade reaching volumes of nearly 40 billion ecu, it is not surprising that the Commission's long-term China policy stresses the country's importance to European trade. “An active role for EU business in China, where US and Japanese competition is already fierce, is essential,” said a recent Commission policy document.

The Commission's approach also underlines China's importance to the Union's security interests, notably in treaties on conventional weapons and nuclear proliferation. The Commission also recognises China's potential impact on the world environment and has made a policy of trying to work with Beijing on protecting global resources.

China's ties with some individual EU member states also need to be sorted out before Sino-European links are clarified.

Long-cool relations with the UK over the control of Hong Kong are gradually warming. British Foreign Secretary Malcolm Rifkind travelled to China in January and promised “firm and sustained dialogue” with Beijing, pledging to “look to the future rather than look back”.

German Chancellor Helmut Kohl has been amongst the most adamant advocates of improved relations with China and the rest of Asia, stressing its vast markets for industry. He raised eyebrows in Germany, however, when, last winter, he became the first leader to meet the Chinese military since the suppression of students in Tiananmen Square in 1986.

Some EU officials have also been watching the Sino-Russian summit amid concern over its military implications. Could Russia, irritated at NATO plans to take in ex-Communist nations, team up with China to counter NATO expansion? Beijing seems less interested than Moscow. Western diplomats in Beijing play down the possibility of a new Sino-Russian axis, if for no other reason than they both need capital and technology from the West.

That alone ought to spur the EU on to develop trade ties as quickly as possible.