domingo, 22 de julio de 2018

domingo, julio 22, 2018

The youth and the rich old man

Amid tensions with America, China is turning to Europe

It may not get the comfort it seeks



A REMARKABLE summit between the European Union and China in Beijing on July 16th marked a turning-point in Chinese views of the EU. Rules and laws bind the EU’s 500m citizens together, albeit scratchily at times. Chinese leaders are sniffy about polities that espouse rule of law as a founding principle. The Communist Party prefers to talk of “rule by law”. Rules are tools by which the strong exercise power over the weak. American talk of a rules-based order, notably, strikes China as the purest hypocrisy—a figleaf covering a superpower’s lust for dominance. Unable to bully its way past America, China has often tried to press European governments to bend or break rules that it found inconvenient, seeing the Old Continent as cash-strapped, malleable and easy to divide.

Yet face to face with European bureaucrats this week, President Xi Jinping and his team agreed, in effect, that the one thing worse than an American-led world was one with no rules at all. The cause of this shift, as with so much else, is President Donald Trump. Western governments have spent 20 years telling Chinese leaders that a rules-based global order is not a plot to contain China, but a source of stability that has enabled their country’s rise. Rather than chafe at American-led security alliances in Asia, China has been urged to see how it gains when its exports steam along sea lanes open to all. When Chinese envoys grouse about a world trade and financial architecture designed in Western capitals after the second world war, they have been reminded how globalisation has powered China’s growth.

On paper the big achievement of the China-EU summit was a Chinese agreement that the World Trade Organisation (WTO) must be reformed if it is to survive these Trumpian times.

The meeting also unblocked talks about the further opening of Chinese and EU markets to bilateral investment and trade (see Briefing). But the real drama involved China’s reasons for making those concessions.

In closed-door remarks conveyed to Beijing-based ambassadors from the EU’s 28 member countries, Mr Xi said that China feared a trade war with America but would not flinch from one. He accused Mr Trump’s administration of behaving as if it were taking part in a freestyle, no-rules boxing match. Going beyond his public rhetoric about China as a champion of an open global economy, Mr Xi told his guests that China and the EU could not watch the old order being destroyed, and a vacuum being created.

For his part Donald Tusk, who as president of the European Council represents EU national governments, privately told his hosts that even as they met in Beijing, they needed to reflect on a meeting happening at the same time in Helsinki between the American and Russian presidents, and on threats to the post-war global order. He said that order had brought peace to Europe, prosperity to China and ended the cold war between East and West. Mr Tusk repeated those fears at the summit press conference. Nodding to the meeting between Mr Trump and Vladimir Putin, he declared that “the architecture of the world is changing before our very eyes”. He urged Europe, China, Russia and America “not to destroy this order but to improve it”.

Earlier this year China dreamed of forging an anti-Trump coalition with Europe, which is China’s second-largest trade partner, exchanging goods worth $667bn in 2017. Chinese officials discreetly urged EU counterparts to distance themselves from American complaints about China’s trade tactics and join them in complaining about a welter of American tariffs, slapped on Chinese goods and European steel alike. That was an error. European officials explained that though they disagreed with Team Trump’s tactics, they agreed with the substance of America’s grumbles about China’s forced transfers of technology, uneven protection of intellectual property and state subsidies for its firms.

A new approach

Stung, China changed tack. At the summit in Beijing the prime minister, Li Keqiang, said that talks with the EU on reforming trade rules were not aimed at America, Russia or any other country. Instead Mr Li talked up moves to open China’s economy to Europe, including allowing BMW, a German carmaker, to take a controlling stake in a local partner. He announced a doubling of fines for anyone abusively extracting trade secrets from business partners.

Alas, those warm words fall on sceptical ears. In June almost half of respondents to a business-confidence survey by the European Chamber of Commerce in China said they expected regulatory obstacles to increase in the next five years. Jean-Claude Juncker, president of the European Commission, the EU’s executive arm, noted in Beijing that European direct investment into China had hit a low of €6bn ($7bn) in 2017, compared with €30bn invested by China in the EU. The green light given to BMW proves that China “knows how to open up” when it wants to, Mr Juncker added waspishly.

Chinese interest in the EU hit a peak in 2003, at a moment when it looked as if the union was getting a constitution, a foreign minister and a full-time president, and was defying America over the invasion of Iraq. That honeymoon ended a few years later as Europe proved unwilling to challenge American hegemony. At a policy conference in Sweden in 2009 a Chinese participant captured the mood when he called America a strong man and China a teenager, but Europe a decadent “rich old guy”.

China spent years pressing the EU to lift an arms embargo imposed after the crushing of the Tiananmen Square protests in 1989, to keep quiet about Chinese garrison-building in the South China Sea and to support China’s claim to “market-economy status” at the WTO, which would make it harder for Europe to accuse China of dumping. Chinese envoys unblushingly told EU diplomats to grant these concessions because “we should be given this.” Disputes over the South China Sea, trade and market-economy status meant that EU-China summits in 2016 and 2017 ended testily without joint statements.

Yet at this year’s summit China did not mention the market-economy topic. The once-burning issue of the arms embargo has also been largely shelved. In the words of François Godemont of the European Council on Foreign Relations, a think-tank, China’s urgent concern is propping up a profitable status quo in the global trading system: “What they have they want to keep. That’s the ‘big ask’.”

Keeping the status quo, China now sees, involves defending the rules-based order. Still, differences lurk. China may now accept that the WTO needs fixing, but its motives are not Europe’s. In talks this week between Liu He, Mr Xi’s economic adviser, and Jyrki Katainen, a vice-president of the European Commission, Mr Liu appeared to view stronger trade rules as mainly a way to restrain America. The EU wants to shore up the global trading system to bear China’s fast-growing weight.

Wang Yiwei of Renmin University, who worked at China’s mission to the EU in Brussels, pinpoints perhaps the most important point of difference. China sees Mr Trump as a herald of America’s future as an angry, deindustrialised power, he says. But Europeans hope that Mr Trump is an aberration: “They are waiting for the mid-terms, or another president.”

That leaves China quietly testing Western unity where it can. Days before the EU summit, Mr Li, the prime minister, was in Bulgaria for a meeting of the “16+1” group of former communist countries from east and central Europe. Eleven of its members belong to the EU. Founded at China’s urging in 2012, the group saves China the bother of courting some of Europe’s smaller countries separately and offers those tiddlers an annual meeting with China’s prime minister.

The group increasingly frustrates its larger members, notably Poland, which only sent a deputy prime minister to the recent meeting. Officials in Brussels and Berlin view “16+1” as a bid to divide Europe and thus the West. That is not impossible. For now, though, a united Europe has its uses. China is impatient for great-power status. Rules-free conflict with the West will not help it get there.

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