China, a challenge for Europe? The Dilemma Between Coordination and Competition

China presents a challenge for Europe on many levels – for European countries individually, but especially for the European Union (EU). The largest challenge for the EU lies in developing strategic and coordinated policies towards China while member states and the Chinese government primarily focus on their bilateral relationships. A coordinated approach would however strengthen the EU’s bargaining power and increase efficiency.

In the EU’s relationship with China, the economic dimension has always had high priority. Today, the EU is China’s largest trading partner, while China is the EU’s second largest trading partner, giving a strong impetus to evolve this relationship – currently visible in the negotiations on a bilateral investment agreement or in the decision over whether China should be granted Market Economy Status. However, in questions like these, European countries and the European Union as a decision-making entity are divided. One the one hand, since the Treaty of Lisbon came into force, trade and investment fall under the Community competencies, meaning that the EU negotiates trade agreements on behalf of the member states. Hence, coordination is indispensable on a EU level in order to reach an agreement. On the other hand, even though the EU Institutions are in the lead of the legislative process on trade matters, it is the member states or even more precisely companies in the member states – and not the EU – that trade with China. Therefore, the relationships of individual countries with China remain highly significant.

However, China can easily gain from these divisions and greatly profits from concluding deals with individual countries rather than awaiting a coordinated approach. In early 2015 the lack of coordination was particularly evident as European countries rushed to join the AIIB after the UK unilaterally announced its participation. In fall 2015, within weeks Xi Jinping visited the UK, and the French President Hollande and the German Chancellor Merkel visited Beijing, the European leaders outdoing each other in their courtesy towards China and their efforts to seal as many trade deals as possible. Furthermore, China collaborates with Central and Eastern European countries separately within the 16+1 forum, angering European officials, who perceive this as another attempt to split member states and thereby hampering a common approach towards China.

Arguably the ‘Coordination-Challenge’ might well be self-inflicted and exacerbated by the decision-making procedures, the set-up of the EU and individual priorities of member states. However, this fact does not make the effects less significant. The following policy recommendations can support the EU in developing a coordinated approach towards China. First, the EU should develop a coherent and common China strategy. Second, in order to do so the EU Institutions, most notably the Commission, need to take and exert effective leadership. Finally, such a strategy needs to include a more open and less pretentious approach towards China and be based on sound area expertise in order to avoid misunderstandings and misconceptions.

The gains of such a coordinated approach following a concise strategy would surely pay off for individual countries as well as for the EU in the long run as coordination would enhance the EU’s collective bargaining power and thereby facilitating better trade deals for all countries individually.


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