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China, EU patch up relationship - for now

May 27, 2009

The EU remains uneasy, and divided, over dealing with Beijing
Business Times (Singapore)
May 26, 2009

THE European Union (EU) and China worked hard at
mending fences at a summit in Prague last week in
what policymakers describe as a bid to strengthen
a relationship threatened by differences over
human rights, climate change and bilateral trade.

The meeting, initially scheduled to be held last
year but postponed over Beijing's opposition to a
meeting between Tibet's spiritual leader the
Dalai Lama and French President Nicolas Sarkozy,
did manage to give the appearance that both sides
were back to 'business as usual'.

The only trouble is that 'business as usual'
between the EU and China means volatile ties: the
relationship has always been marked by periods of
calm and cooperation, interspersed with anger, tensions and strain.

After a cooling off period following the
postponement of last year's EU-China summit, both
sides have once again embarked on the path of
reconciliation. Earlier this year, a high-ranking
Chinese buyers' mission toured Europe as part of
a government-sponsored shopping spree- cum-charm
offensive designed to defuse tensions with the
EU. The EU-China summit in Prague went off without any quarrels in public.

But as an increasingly self-confident and
assertive China seeks a strong voice in global
affairs - including through a change in
representation and increased voting rights in
bodies like the International Monetary Fund and
the World Bank where Europeans are
over-represented - the EU remains uneasy, and
divided, over dealing with Beijing.

Any talk of a 'G-2' bringing together the US and
China - and excluding Europe - is shrugged off as
'nonsense' by EU policymakers. Europe, they
insist, is still the world's leading trader, huge
economic power and an important global player.
'Do not underestimate Europe,' a senior EU
official recently told this correspondent.

Europeans in turn wax lyrical about China's
'responsible contribution' to easing the global
crisis through domestic financial stimulus
packages and contributions to regional and global
financial institutions but then voice fears that
China does not pay enough attention - or show enough respect - to Europe.

Many former communist eastern European states are
more critical of China on issues like human
rights while France, Germany and Britain try and
tread a fine line between their commercial
interests and pro-democracy concerns.

To some extent, Europe's mixed response to
China's emerging clout is due to wider European
fears and worries about globalisation and the
threat it poses to Europe's political standing
and economic prosperity. For many in Europe,
China symbolises globalisation and all the
dangers of job losses, diversion of investments
and increased competition that go with it.

Chinese policymakers, meanwhile, rage against
Europe's focus on human rights and its tendency
to lecture partners on the virtues of democracy
and the rule of law. At the same time, however,
Chinese officials are eager to learn from
Europe's experience in dealing with challenges
Beijing also faces with regards to regional
inequalities, poverty alleviation, health sector
deficiencies and environmental pollution.

Still, the focus is more often on where the two
sides do not see eye to eye: Brussels and Beijing
have been at odds over Europe's criticism of
China's human rights record, Beijing's policies
towards Sudan's Darfur region and Burma/Myanmar.
A spate of trade squabbles have also rankled
relations between the two major trading powers.

However, with the worst economic downturn in
nearly 80 years affecting both sides, the EU and
China are struggling hard to upgrade their
relationship. Embattled European exporters still
need access to Chinese markets and for all their
complaints about the surge in Chinese exports to
the EU, competitively- priced Chinese products
have acted as a brake on EU inflation and
interest rates, provided cheap inputs for
European manufacturers and remain a boon to European consumers and retailers.

China, meanwhile, is equally dependent on its
sales in Europe and European investments - as well as European technology.

As Chinese Premier Wen Jiabao said after the
Prague meeting, 'we both recognise that it is
important for us to work together, to ride out
the storm and make our contribution to an early world economic recovery.'

The next few months could bring more
disagreements, however. The meeting in Prague did
not take any major decisions on climate change,
leaving discussions on the issue until another
summit later in the year in Beijing which comes
just weeks before talks in Copenhagen aimed at
reaching a global climate deal to succeed the UN's Kyoto protocol from 2012.

EU policymakers say China must commit to
significantly reduce its carbon dioxide (CO2)
emissions by 2020 through cleaner energy. But
Beijing is demanding that tougher targets are set
for developed nations and is seeking aid from
countries such as those in Europe to fund any new green technologies.

China has its own long list of demands in
dealings with Europe. In Prague, Mr Wen urged the
EU to recognise China's market economy status,
lift its arms embargo against Beijing, relax
restrictions on exports of high-tech products to
China and politely asked Brussels to refrain from
criticising China's foreign and human rights policies.

EU policymakers say friends should be able to
criticise and advise each other, even on
sensitive issues. Interestingly, however, at
least some Europeans now recognise that to secure
change in China, such criticism should be behind closed doors.
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