EU-China Rivalry and Sanction Policy
Abstract
Relations between China and the EU underwent significant alterations in 2020 and 2021. Despite their tight cooperation in trade and economics, the EU can no longer neglect the wider transatlantic economic and security interests, relying solely on the protection of the US. Along with the geopolitical risks associated with the Taiwan Strait and the South China Sea and forceful diplomacy practiced by China, the EU is concerned by Beijing’s strict internal policies, especially in terms of human rights violations in Xinjiang, Tibet, Inner Mongolia and Hong Kong. This ultimately resulted in the imposition of bilateral sanctions, effectively terminating the ratification of the EU-China Investment Agreement. The 2021 September resolution adopted by the European Parliament on the EU-China Strategy, as well as the subsequent report in October concerning cooperation and political ties with Taiwan are also of particular notice. China is a partner of the EU on global issues, however, due to conflicting interests and different approaches, they find themselves as economic competitors and systemic rivals.
Davit Pipinashvili
Trade, the most significant aspect in EU-China relations1, grew even through the COVID-19 pandemic. In 2020, China overtook the US becoming the EU’s largest trading partner, with trade turnover amounting to €586 billion ($710 billion).2 The same year saw the signing of the agreement on cooperation on, and protection of, geographical indications (GI) between the EU and China.3
Despite this, through 2020-2021, EU-China relations worsened due to several factors: the discussion on the origins of the COVID virus and inadequate actions taken on behalf of the Chinese party to inform the West regarding potential threats; a relatively aggressive foreign policy stance during the pandemic; crack-downs on protests in Hong Kong and oppressive actions towards local opposition forces; repressive policies of Beijing towards residents of Xinjiang, resulting in EU sanctions; concerns among groups in EU elites regarding over-dependency on China, especially in terms of strategic dimensions of the economy; rising tensions in the South China Sea and the Taiwan Strait, further deteriorating the already volatile geopolitical environment in the wider region.
First, the article focuses on the existing differences in approaches adopted by China and the EU, as well as problematic issues, resulting in sanction wars; then, the analysis shifts to the Taiwan Strait and the South China Sea issue; finally, the resolution of the European Parliament on the new EU-China strategy is discussed.
The EU and Chinese political systems are rooted in different ideological bases. This is combined with a diverging views on and models of economic development. Today’s world is a global stage where international dominance is sought after by countries and economic blocks, however, the real competition is between two systems – the Western liberal market economy and the Chinese (communist) state capitalism. The booming world of digital technologies has also become a frontline between China and the West.
The rapid economic growth of China brought into focus new tasks for the US, EU and various individual EU member-states.4 Within the framework of the Belt and Road Initiative, Beijing attempts to utilize all the available leverages to strengthen its investment policy in the EU countries (energy, infrastructure, etc.), which would provide China with some influence over strategic assets in said states. Simultaneously, Europe discusses the limitation of Chinese investments, as to bar China from becoming a dominant power on the European market. The Global Gateway plan proposed in December of 2021 by the European Commission is a response to these developments, representing an alternative to the Chinese Belt and Road Initiative.5 The plan, costing €300 billion and entailing the mobilization of state and private investments into infrastructure, digital networks, healthcare, the green economy, education, etc. provides beneficiary countries with access to an alternative pool of resources, including financial resources.6
On March 22nd of 2021 the EU sanctioned China for the first time in the last 30 years. The EU’s reasoning considered human rights violations taking place across the globe. The sanctions covered individuals and legal entities from China, North Korea, Libya, Eritrea, South Sudan, and Russia.7 Four individuals and a single legal entity from China came under sanctions. Their assets were frozen, with entry into the EU restricted.8 EU’s reasoning was based on the human rights violations taking place in the Xinjiang-Uygur* region, where ethnic minorities are persecuted on religious basis. This, according to the EU, is the result of Beijing’s repressive policies. Nevertheless, it is often the case that sanctions imposed upon ‘great power’ states are more symbolic in nature. Therefore, in the short-term prospect, major changes are not to be expected in relation to China.9
Beijing condemned the imposition of sanctions by the EU. On March 22nd of 2021, the Chinese Foreign Ministry summoned the EU ambassador, demanded explanations and notified them of retaliatory sanctions that China imposed in response. The Chinese Foreign Ministry noted that the information circulating in the West regarding the Xinjiang-Uygur region is misinformation, aimed at discrediting China.10 On June 22nd of 2021, 44 countries called on China to allow access to the aforementioned region to independent observers. Additionally, UNHRC’s joint statement criticised Beijing over human rights violations in Hong Kong and Tibet.11
Hong Kong is one of the key issues over which the EU and Chinese approaches differ. After the end of British rule over Hong Kong, the administrative region was returned into Beijing’s jurisdiction, with the “One Country, Two Systems” approach adopted by China. After crack-down on democratic protests and repression of local political opposition in Hong Kong in 2019-2020, Beijing adopted the Law on Safeguarding National Security in Hong Kong. This significantly restricted local self-rule in the region, damaging EU-Chinese relations.12
Tibet is also a complex issue for China. International human rights organisations published numerous documents regarding human rights violations taking place in Tibet. Political protest of the Tibetan people has been going on for many years, however, the situation escalated in 2008 in the town on Lhasa, which was stormed by government forces. The European Parliament adopted a resolution, which condemned Beijing’s punitive actions against the Tibetan protesters.13 The December 2021 statement of the EU delegation to China also mentions human rights violations, calling on Beijing to respect the fundamental rights of all ethnic groups, including in Xinjiang, Inner Mongolia and Tibet.14
It is clear that, starting from spring of 2021, the EU began to toe Washington’s line in relation to China. In turn, Beijing also responded with sanctions on 5 EU politicians, including MEPs. By May it was apparent that the European Parliament would not ratify the Investment Agreement, due to the aforementioned developments.15
Towards the end of 2020, Beijing and Brussels declared a ‘grand breakthrough’, signing the Comprehensive Agreement on Investment (CAI). The agreement entailed access for EU companies to several segments of the Chinese market including: telecommunications, air and sea travel, manufacturing of electric vehicles, financial services, etc. Said segments have traditionally been limited for international capital. China took upon itself the obligation to ensure that Chinese-controlled state companies do not receive preferential treatment, limiting the activity of European companies. As a result, European manufacturers would be placed under virtually identical conditions to those on their domestic, European market. The Document also ensured the annulment of discriminatory demands, with a balanced framework for the protection of foreign investments.
The CAI was lobbied by: the European Commission, France, and Germany. China was still unhappy about the prospects of further deepening of the EU-Chinese economic relations. Additionally, the European Parliament is populated by the influential groups that are critically inclined towards Beijing. Therefore, when the EU imposed sanctions on China, with reciprocal sanctions being put into place, the European Parliament refused to ratify the document, adopting a resolution that ‘froze’ the process. This reconfirmed the fact that separating politics from economics is rather difficult in the modern world.16
On April 1st of 2022 a bilateral video-summit was held between the EU and China, which was mostly focused on the Ukraine crisis. It was noted that Brussels would closely watch Beijing’s actions, so that China does not provide help to Russia in avoiding sanctions. The president of the European Commission, Ursula Von Der Leyen, also stated that even a slightest support for Moscow would result in a huge reputational hit for China. However, there is no clear-cut answer from the Chinese party, let alone promises. EU leaders only noted that they agreed to deescalate tensions with China. Beijing’s position is that China makes decisions independently, with no internal meddling permitted.17
Along with Hong Kong, Xinjiang and, Tibet, Taiwan** and the South China Sea*** issues remain the points of greatest contention between Western states and China. In this regard, Washington is traditionally very active as the most loyal ally to Taiwan in terms of military and security dimensions.18 Nevertheless, the changing geopolitical configuration of the recent years saw the EU gradually increase attention to Taiwan and the South China Sea. This, naturally, leads to a rise in tensions with Beijing, especially considering the imposition of aforementioned sanctions. The situation further deteriorated after the militarisation of the region by China. Brussels is concerned about the deterioration of the security environment in the South China Sea, opting for peaceful solutions of disagreements, calling on Beijing to ensure unrestrained shipping across the high seas.
Officially, the EU and its member-states recognise the “One China principle”, respecting the sovereignty and territorial integrity of the People’s Republic of China. However, despite having no formal diplomatic relations with Taiwan, they still actively cooperate with Taipei on an informal level.
In September of 2021, the Taiwan issue was included in the joint report of the EEAS under the name “EU Strategy for Cooperation in the Indo-Pacific.” The document outlines that China’s demonstration of its military capabilities significantly increased tensions in the South and East China Seas, as well as the Taiwan Strait. This may have a negative impact on EU’s security and economic prosperity. It was also noted that authoritarian regimes in the region threaten democratic principles, which means that Brussels must ensure further strengthening of ties with Japan, South Korea, and Taiwan, with the latter outlined in the strategy as a regional partner of the EU.
On October 21st of 2021 the European Parliament adopted a report, with a majority of 580 votes against 26 votes, Regarding EU-Taiwanese Political Relations and Cooperation. The document discusses the geopolitical context of the island, condemning Chinese militaristic rhetoric and actions, along with other manifestations of provocative behaviour (spying, cyber-attacks), which threaten the existing status quo over Taiwan, undermining stability in the Indo-Pacific Ocean region. All of this may lead to an escalation of the situation. Taiwan’s democratic lifestyle and the Island’s location were also noted in terms of the global supply chain of high tech goods, outlining Taiwan as a significant strategic bridge for European democracies in the region. Focus was made on the fact that Europe’s prosperity is directly tied to Asian security. Thus, if China’s actions against Taiwan and in the South China Sea go beyond economic bounds, this will have a negative impact on the EU-China relations.19
The European Parliament advised the European Commission to express concern over the threat of China’s military intervention in Taiwan, which, according to the de-facto Minister of Defence of the island, may occur by 2025.20 The violation of Taiwanese airspace by 150 Chinese fighter jets and bomber and reconnaissance aircraft that occurred in October of 2021 was also condemned.21 The European Parliament reminded the European Commission that China, akin to other authoritarian regimes, poses a threat to European democracies due to its disinformation campaigns, which have only grown in scale due to the pandemic. Therefore, the EU and Taiwan have common interests.
The report presented in the European Parliament was assessed by Beijing as a violation of the “One China principle” and as a confrontational step; it was noted that the Chinese people are ready to protect Chinese sovereignty and territorial integrity.22
In September of 2021 the European Parliament adopted a resolution on the New EU-China Strategy,23 which describes China as a significant EU partner and, simultaneously, a ‘systemic rival’ and an economic competitor. Along with the traditional themes of Xinjiang, Tibet, Inner Mongolia, and Hong Kong, concern was expressed over the new Chinese strategies: Going Global, Made in China 2025, China Standards 2035, as well as the 16+1 mechanism and the Belt and Road Initiative. Said strategies solidify China as a global economic and political actor, which poses a significant political, economic and technological challenge to the rules-based international order, multilateralism and democratic values. According to the recommendations of the European Parliament, more coordination is required between the EU Blue Dot and Build Back Better World mechanisms, which provide an alternative to the Chinese Belt and Road Initiative.****
Expressing concern over the barriers faced by EU businesses on the Chinese market, the European Parliament is concerned about the rise of Chinese capital in terms of the strategic assets and significant infrastructure of the EU. The resolution discusses the risks associated with the sharing of new technologies and intellectual rights with the Chinese, as well as the rise of the so called “digital authoritarianism” and “technological sovereignty” with the view of reducing the EU’s dependency on China.
Within the context of regional security, the EU is concerned about the modernisation of China, its rising military potential and expansionist policies in the South and East China Seas and the Taiwan Strait. Additionally, there are hybrid threats posed by China, entailing corporate espionage and cyberattacks aimed against EU-based companies. According to Brussels, this necessitates the intensification of cooperation with democratic partners including within the framework of NATO and the G7 transatlantic formats.
The resolution outlines the necessity to cooperate with China by holding open dialogue over global issues such as: environmental protection and climate change, nuclear disarmament, post-pandemic economic revival, the global healthcare crisis, reforming of international organisations, the North Korean nuclear programme, Afghanistan and fighting terrorism, space exploration and aerial-space industries, mutual support in times of natural disasters, etc. Brussels expresses readiness to cooperate with China over all of the above-mentioned issues, continuing negotiations within the open dialogue format. Despite this, the European Parliament underscores that the existing ideological and value-based differences between China and the EU make it impossible to view Beijing as anything but a systemic rival.
When it comes to China’s position, Beijing clearly views the resolution as a bundle of unfounded accusations against Chinese economic, foreign and security policies, which is assessed as an attempt to interfere in China’s internal politics. Beijing believes that ideological differences and geopolitics must not get in the way of EU-Chinese relations, especially over global issues. It was also noted that mutually beneficial cooperation bears strategic significance, for both China and the EU, which ultimately works for the ensuring of stability on the international arena.24
EU-China relations are currently very tense. China is increasingly criticised over the situation in Xinjiang-Uygur, Tibet, and Inner Mongolia. The EU openly expresses its dissatisfaction over the low levels of China’s economic ‘openness’. Recent years also saw increasing criticism over the issue of the Hong Kong Administrative Region and the events unfolding over the Taiwan Strait. The EU is highly likely to continue toeing the Washington’s line in terms of their China policy and transatlantic interests. China remains EU’s partner on global issues, however, they also have conflicting interests across a variety of fields. China and the EU are in economic competition, acting as systemic rivals.
The resolution of the European Parliament on the new EU-China strategy focuses on cooperation with China where possible, remaining steadfast and principled when it comes to issues of contention. It is clear that China underestimated the EU’s role as a global political actor – termination of the ratification process of the Comprehensive Investment Agreement, imposition of sanctions and showing support for Taiwan act as a definitive confirmation of the EU’s position. Beijing did not think that its policies and Western criticism over human rights violations would entail such an influence on the political elites of the European Parliament.
Considering the war raging between Russia and Ukraine, the EU does not possess a clear evidence of Chinese military support for Russia or of its support to Moscow in terms of sanction evasion. It is not yet known whether Brussels has a contingency plan for the case where China openly supports Russia in one way or another.
Notes:
* Uygurs – a Turkic ethnic minority in North-Western China, Sunni Islam.
** Taiwan – an island off the coast of continental China, de-facto sovereign state (Republic of China). Not recognised as an independent entity by the People’s Republic of China, as well as most of the world, including EU member-states. Beijing is adamant regarding Taiwan being an integral province of China.
*** Parties to the South China Sea dispute over the Spratly and Paracel Islands: People’s Republic of China, Taiwan, Vietnam, Philippines, Malaysia and Brunei. The South China Sea represents a significant artery of international trade, funnelling energy to Asian giants while supplying Europe with Asian-made goods and products. The South China Sea also holds pivotal importance in terms of rapid deployment of naval fleet in both the Pacific and Indian oceans.
**** Blue Dot Network (US-Japan-Australian initiative) and Build Back Better World (G-7 initiative) are economic mechanisms focusing on transparency in international cooperation, infrastructure projects, etc. considered as an alternative to China’s Belt and Road Initiative.
* Davit Pipinashvili – Envoy extraordinary and minister plenipotentiary at the Georgian Embassy to the People’s Republic of China
Contents
Peaceful Neighbourhood -Georgia’s Role and Vision
Lasha Darsalia
Russias Revisionist View Regarding the European Security Architecture Causes of the Crisis and the Goals of the Kremlin
Ana Chitaladze
EU-China Rivalry and Sanction Policy
Davit Pipinashvili
New Enlargement Policy – The EU’s Renaissance
Lika Chipashvili
Military Alliance of the US, UK, and Australia (AUKUS) Minilateralism and Georgia’s
Imedi (Ivi) Alshibaia