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The EU-China Partnership: Balancing Between Divergence and Convergence

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 The EU-China Partnership
Balancing Between Divergence and Convergence

GUSTAAF GEERAERTS 1

Paper presented at the Final International Conference and Researchers’ Workshop A

New Dimension in Asia-Europe Relations: Exploring EU’s Global Actorness and Strategic
Partnership in Asia, Jean Monnet Network NEAR Project, 21-23 March 2019, Korea
University.

1 School of International Relations and Public Affairs, Fudan University.

1
 Abstract

The EU-China relationship is driven by two distinct underlying logics: a power based one
and a transformational one. The power-based logic is premised on a belief that because of
anarchy power politics and conflicts of interest cannot be entirely overcome. According to
this view intercourse between the EU and China will reflect their relative power positions
and display concerns about relative gains, making cooperation between them more difficult.
In contrast, a transformational logic reflects a more liberal/constructivist perspective. It
suggests that rules and shared norms can sharply reduce conflicts of interest and mitigate
concerns about relative gains through the creation of trust and reciprocal socialization,
making enduring cooperation between the EU and China more likely. The EU-China
relationship is thus clearly mixed, consisting of an array of cooperative and competitive
elements. At any given moment, the relationship can be pictured as residing somewhere along
a spectrum that extends from pure cooperation at one extreme to unrestrained competition at
the other. Diverging trends, which are mutually reinforcing, are pushing the relationship
toward competition, converging trends – also reinforcing each other – are promoting
cooperation. The direction in which the EU-China partnership can possibly evolve – more
competition or more cooperation – will be moulded by the relative strength of diverging and
converging trends.

Keywords: EU-China partnership – international order – economic security – divergence vs. convergence
– reciprocal socialization

INTRODUCTION
Since 2003 the EU and China acknowledge each other as strategic partners. Slowly but
steadily they have built a partnership, which embodies probably one of the most
structured relationships between two major powers in today’s world arena and constitutes
an important component in the reconfiguration of the international order triggered by the
rise of the emerging powers. Its significance lies not only in connecting two key order-
shapers in today’s world (Chen 2016), but also in the management of the antagonistic
quality of the relationship between actors with such different identities (Michalski and
Pan 2017). At the heart of their - at times acrimonious - relationship lie deep-seated
conceptual differences concerning norms, visions of society, modes of international
engagement and the organization of the emerging world order. The extent to which the
EU and China can bridge these deep-seated differences is decisive not only for their
continued mutual engagement, but also for the future development of the international
system as the new world order will be premised on accommodating actors with
significantly different normative outlooks. In that sense, it is positive that the EU and
China have managed not to allow bilateral disputes and occasional diplomatic skirmishes
to shatter the strategic partnership, and this at times when a number of internal and

2
external factors were expected to drive them apart. Throughout the past 20 years, the EU
and China have regularly reaffirmed the positive aspects of their bilateral relationship
both rhetorically as well as in action to the effect that new areas of cooperation have been
added and the structures of engagement have been strengthened. This is a significant
development. The management path of the ‘associative-antagonistic’ relationship
between such unlikely partners like the EU and China represents a building block for a
working order in a world, which is bound to be premised on accommodating the
normative outlooks of the ‘American-led hegemonic liberal order’ and those of the
emerging powers.

But what direction can the EU-China partnership possibly take? In an effort to
answer this question I am drawing inspiration from a recent study by the RAND
corporation on the state of the current international order. Following that lead I start from
the assumption that the EU-China relationship is driven by two distinct underlying logics:
a power based one and a transformational one (Mazarr et al. 2016). The power-based
logic is premised on a belief that because of anarchy power politics and conflicts of
interest cannot be entirely overcome. According to this view intercourse between the EU
and China will reflect their relative power positions and display concerns about relative
gains, making cooperation between them more difficult. In contrast, the transformational
logic reflects a more neoliberal/constructivist perspective. 2 It suggests that rules and
shared norms can sharply reduce conflicts of interest and mitigate concerns about relative
gains through the creation of trust and reciprocal socialization, making enduring
cooperation between the EU and China more likely. The power-based logic I assume to
be at work in two major diverging trends: (1) the changing global context of the
relationship between the EU and China and how this process affects their relative
positions in the global distribution of power and identities; and (2) a growing concern
about economic security in the EU-China relationship, feasibly leading up to an economic
security dilemma.The transformational logic, on the other hand, I presume to manifest
itself in two key converging trends: (1) the gradual institutionalization of the EU-China
partnership and its potential for reciprocal socialization; and (2) budding signs of mutual

2
On the complementarity of neoliberal institutionalism and social constructivism in
explaining/understanding cooperation under anarchy, see Hopf (1998: 188-191). Constructivists
and neoliberals agree that anarchy does not preclude cooperation among states. However, they
have very different understandings of how such cooperation emerges and is reproduced.
Neoliberalism starts from two major assumptions: there are potentially beneficial agreements
among states that have not been reached, and because of uncertainty due to anarchy they are
difficult to achieve. International institutions, whether in the form of regimes, laws, treaties, or
organizations, mitigate uncertainty and thus help creating conditions for cooperation.
Constructivists would rather start their investigation by looking into how states understand their
interests within a given issue area. The distribution of identities and interests of the relevant states
would then help explain whether cooperation is possible in the first place.

3
accommodation and convergence between the EU and China in their efforts to adapt
themselves to an international order that is in flux. The EU-China relationship is thus
clearly mixed, consisting of an array of cooperative and competitive elements. At any
given moment, the relationship can be portrayed as residing somewhere along a spectrum
that extends from pure cooperation at one extreme to unrestrained competition at the
other3. Diverging trends, which are mutually reinforcing, are pushing the relationship
toward competition, converging trends – also reinforcing each other – are promoting
cooperation. The direction in which the EU-China partnership can possibly evolve – more
competition or more coopereation – will be moulded by the relative strength of diverging
and converging trends.

THE CHANGING GLOBAL CONTEXT OF THE EU-CHINA RELATIONSHIP

The world within which the EU and China have to deal with each other is changing. The
unipolar moment is gradually giving way to a more complex international system
characterized by multi-layered and culturally diversified polarity or ‘new multi-polarity’
(Geeraerts 2011, 2013). In this process, China’s re-emergence and mounting influence -
and that of other emerging countries for that matter - is not only having an impact on the
Western developed nations’ position in the global distribution of capabilities, it also
constitutes a challenge to the values and organizational principles they stand for. The
successful economic growth of an idiosyncratic power as China is stretching the present
international order, which chiefly mirrors the Western worldview of liberal democracy
and free markets (Foot 2009; Layne 2012; Mazarr, Heath and Cevallos 2018). While for
more than half a century the United States, together with Europe, has watched over the
provision of global public goods such as monetary stability and free trade, and has
propagated the practice of liberal democracy, good governance, human rights,
international trade regulations, humanitarian intervention, and state-building, in the past
decade both the US’s and Europe’s authority as political drivers of global governance has
come to stand to the test (Acharya 2014; Kupchan 2012). As much as the US weighed by
debt and deficits is struggling to maintain its superpower status, the EU faced with
multiple crises is struggling to keep its act together.

In the meantime, China has risen to become the world’s largest economy in
purchasing power parity terms (Garcia-Herrero et al. 2017). Its stellar economic
development has increased its economic and political influence well beyond its borders
and is turning it into a more assertive player. Increasingly Beijing is also developing

3 This idea is adapted from Friedberg (2005).

4
different discourses of modernity and spelling out its own narratives of global governance
(Breslin 2013; Pan 2012; Schweller and Pu 2011). Part of these narratives question the
present global governance regime’s ability in providing economic and monetary stability
as well as its authority in setting norms of good governance. China’s successful re-
emergence is putting the Western liberal order to the proof and begs the question whether
Western liberal governance principles are here to stay or will be challenged by alternative
models (Ikenberry 2012; Kissinger 2014; Acharya 2014). This is all the more pertinent,
as the contestation of Western hegemony is part of a broader historical movement. The
so-called rising Rest, represented by the BRICS countries, has stepped up its efforts to
expand its international influence and is demanding a reform of the prevailing liberal
international order (Kupchan 2012; Chen 2016).

The changing constellation of world power is affecting the EU’s international

standing and appeal as a model of integration. The growing economic weight of Asia and
China’s re-emergence as a major economic and political force pose a challenge to the
EU’s status as a transformative power4 in the international order. Indeed, Europe is going
through a process of ‘de-centring’: the fact that most emerging countries – and China
foremost among them – “are accumulating sovereignty or the means to stronger
sovereignty, not sharing sovereignty as the European experience promotes, means that
the European region remains quite exceptional in both its political dynamics and its
strategic organization” (Kerr 2012: 72). The BRICS’ opposition to the liberal order poses
a particular challenge to the EU’s understanding of multilateralism as an organizational
concept for world governance and the norms associated with it. Effective multilateralism
is hard to practice “when powers such as China and Russia openly oppose the values and
principles upon which it rests. For the BRICS countries, an unconditional inclusion in
international organizations and multilateral regimes is not acceptable. Therefore, they ask
for some form of accommodation of the prevailing order to their concerns” (Michalski
and Pan 2017: 16:17).

When all the chips are down, the strength of the EU as an order-shaper is
dependent on the success of its economic and social model, as well as its capability of
effective collective action. On these accounts, the international status of the EU has
suffered setbacks in the last decennium due to the onset of multiple crises, chiefly the
sovereign debt crisis in the Eurozone, the refugee crisis and Brexit. The perception that
the EU’s economic governance model and its regulatory regime were not able to prevent
the sovereign debt crisis, seriously undermined the EU’s credibility in promoting its
economic and governance norms and principles. The more so as the EU remains unsure
about its role in the world, not only in terms of its security but also its influence as a

4 The concept of the EU as a transformative power was introduced by Grabbe (2006).

5
global economic force. In the end of the day, Brexit will diminish the EU’s size and
possibly its trade and security influence. In addition, the largely-decentralised EU falls
short in political capacity: it has difficulty to formulate coherent external policies, also in
the economic realm (its major area of competence), which combined with the grit of a
centralised China to deal with individual EU Member States rather than the EU as a
whole, creates a major imbalance in political leverage (Liu and Breslin 2016). The
manifest lack of internal cohesiveness and consensus among the EU member states,
together with the EU member states’ propensity to seek bilateral agreements with China,
is saddling the EU up with a collective action problem of sorts, which hampers its
performance as a foreign policy actor and order-shaper (Godement and Vasselier 2017).
Lastly, Europe’s neighbourhood is now in its most precarious state since the end of the
Cold War. Instead of having built a ‘ring of friends’ around it, the EU is now surrounded
by an ‘arc of instability’ (Chen 2016: 780).

GROWING CONCERN ABOUT ECONOMIC SECURITY THE EU-CHINA RELATIONSHIP

In the wake of the Great Recession and the Eurozone sovereign debt crisis, concerns about
the EU’s relative position in the global distribution of capabilities have increased. As the
EU now accounts for a lower share of world trade, investment, currency holdings, defence
expenditure, and development assistance, this deeper shift appears to have stepped up
apprehensions about the Union’s relative decline and its future economic security
(Youngs 2014). These concerns have also trickled down in the relationship between the
EU and China and engendered the growing politicization of economic affairs (Geeraerts
and Huang 2016). As Holslag (2015: 132) aptly observes: “Europe had been confident in
its leading edge, while China, feeling behind in its position in global production networks,
assumed that it had to catch up by building its own strong industries, strengthening
influence over global trade flows, and promoting an indigenous knowledge network. As
the balance of power started to shift with added fuel from the financial crisis, Europe
came to take its wealth less for granted, to interpret development as a matter of security,
and to consider defending its economy by political means”.

Faced with the prospect of a slow economic recovery and the fall-out of the
sovereign debt problem, political forces in Europe asking for turning the distorted Sino-
EU economic relationship into a level playing field have become much stronger
(Godement and Vasselier 2017). Through better market access, European exporters
should be well placed to increasingly sell their products on the rapidly expanding Chinese
consumer market and, in the process, remedy the EU’s trade deficit with China (Leas-
Arcas 2012). While China continues to be regarded as a promising export market and
destination for investment, the image of China as a fierce and unfair competitor have
gotten a strong foothold (Farnell and Crookes 2016). A contentious issue here is the poor
access to the Chinese services market. Unlike the other G20 countries, China is very

6
restrictive about direct investment in the modern services such as finance, telecom, media,
and logistics. Whilst total bilateral trade in goods reached €573 billion in 2017, trade in
services, is still about ten times lower at €68 billion (2016 figure) and remains an area
full of potential if China were to open its market more.5 Voices demanding China to take
up greater responsibilities in redressing bilateral trade imbalances and supporting a
sustainable global economy are growing louder and sounding more determined. A
growing part of the European business community feels thwarted about China’s trade
barriers, currency policy, and enforcement of intellectual property rights. Calls for more
assertive trade policies and trade defence measures are resounding all the more loudly
throughout the lobbying corridors in Brussels and the capitals of EU member states
(Godement and Vasselier 2017).

Economic security concerns figure prominently in the Joint Communication

Elements for a new EU strategy on China, which maps out the European Union's
relationship with China for the next five years and definitely implies a ‘tit-for-tat’ strategy
of pragmatic conditional engagement (European Commission and High Representative
2016). Identifying major opportunities for the EU's relationship with China, the document
stresses in particular the creation of jobs and growth in Europe as well as the promotion
of a greater opening up of the Chinese market to European business. Opportunities
mentioned include concluding a comprehensive agreement on investment, a Chinese
contribution to the Investment Plan for Europe, joint research and innovation activities,
as well as connecting the Eurasian continent via a physical and digital network through
which trade, investment and people-to-people contact can flow. At the same time, the
communication complains about the lack of progress in giving the market a more decisive
role in the economy in the key areas of concern to the EU. Recent legislative initiatives
have introduced new restrictions on foreign operators in China, which go against market
opening and the principles of reciprocity and a level playing field. Looking further ahead,
it mentions the possibility of a deep comprehensive Free Trade Agreement, but makes
this conditional on the successful conclusion of a comprehensive investment agreement
between the two sides and the implementation of conclusive reforms levelling the playing
field for domestic and foreign companies. In this regard, China must make significant,
time-bound and verifiable cuts in industrial over-capacity, most urgently in the steel
sector, to prevent negative consequences from unfair competition. Another ‘neo-
mercantilist’ flavoured priority is the strengthening the EU's Trade Defence Instruments,
notably through the swift adoption of the Commission's Trade Defence Instruments
modernisation proposal of April 2013. Meanwhile, the EU will continue to support

5 EU-China Relations factsheet (2018). https://eeas.europa.eu/sites/eeas/files/factsheet_eu-

china.pdf. Accessed 23 February, 2019.

7
China's economic and social reform programme through its many dialogues with China
in the expectation that this will facilitate market-led reform, including by eliminating
state-induced economic distortions and reforming state-owned enterprises.

The shift in the balance of economic power has clearly affected the EU’s relative
position vis à vis China and, in the process, put the relationship on a more realist footing
(Michalski & Pan 2017; Li 2016). While the EU has not lost in absolute terms, as its
overall trade balance is still positive, it is facing economic difficulty in sustaining its high
levels of welfare and consumption, and it is continuing to lose ground in terms of scale,
innovation, and job creation. Europe now recognizes that the very fundamentals of its
welfare, political integration, and social stability are at stake (European Commission
2010; EEAS 2016). China, notwithstanding its stellar economic development is equally
confronting major challenges. Faced with a structural economic slowdown, its transition
to a more sustainable pattern of development is complex and uncertain (Lardy 2011;
Pettis 2012). Moreover, China’s export-driven economic development has made it highly
sensitive to the turbulences and growing uncertainties in the global economy (Geeraerts
and Huang 2016). The concern of not being able to maintain and develop their socio-
economic system of choice and their relative economic power position in the global order,
is directly related to the threat of a potential domestic political crisis due to social
discontent. It is widely agreed that much of the Chinese Communist Party’s legitimacy
steams from the outstandingly successful economic rise and international establishment
of China as an economic power house since the Deng Xiaoping era – the so-called
‘performance legitimacy’ (Zhu 2011). To secure economic development, stability and
resilience, is therefore without doubt a top priority for the Chinese leadership and any
factors able to compromise these goals are to be considered a security concern (Holbig
and Gilley 2010; Yang and Zhao 2015).

So, both the EU and China are confronted with a diminished sense of confidence
in their economic future. According to Holslag (2015: 147) this “lack of confidence on
both sides has turned economic affairs into a security issue.” The problem with this
development is that it pushes governments on both sides to take protective measures and
develop policies to secure their relative positions in the global economy. As a result an
economic security dilemma may be developing. Whilst neither Beijing nor Brussels has
the intention to threaten the other side’s interests, and considers its own protective
measures as a legitimate and purely defensive policy, each perceives the other’s actions
as provocative and offensive, and therefore as a breach of trust. Hence the risk of
spiralling tensions between Europe and China becomes more likely.

Achieving mutual economic security will be a crucial test of both China’s and
Europe’s ability to adjust themselves successfully to the emerging multipolar world and
to secure their relative economic position in a changing and uncertain global economy.
As trade and investment will remain a major driver of the bilateral relationship, the

8
development of a more balanced economic relationship is necessary if they are to
overcome the creeping economic security dilemma. Whether this will succeed will very
much depend on domestic developments in China and the EU, especially both sides’
ability to maintain crucial growth and tackle development challenges. Safeguarding
economic security for both of them will hinge on an ability to maintain growth and
productivity, create jobs and increasing the livelihood of citizens (Geeraerts and Huang
2016). For their continuing prosperity, both are also mutually dependent on trade with
one another, and thus have a shared interest in regional and global stability facilitating
economic growth (Christiansen 2016) . Finally, economic security for both sides also
means meeting common global challenges in the shape of access to resources and climate
change (Bo, Biedenkopf and Chen 2016; García-Herrero et al. 2017).

INSTITUTIONALIZATION AS A SOURCE OF RESILIENCE AND RECIPROCAL SOCIALIZATION

While the EU-China relations have at times been severely strained and substantial
progress has been difficult to come about, bilateral disputes and diplomatic frictions have
never reached the point where further cooperation was no longer possible. One factor
explaining this resilience is that since 2003 these relations became “highly
institutionalized through the establishment of a ‘strategic partnership’” (Christiansen
2016: 41). Such partnership can be understood as a coordinated framework for political
cooperation, which in the case of the EU and China consists of an extensive web of
bilateral dialogues. The most important dialogue mechanism is the EU-China annual
summit, under the umbrella of which has developed a huge ‘dialogue architecture’
(Christiansen 2016: 41), bringing together Chinese and EU policymakers.

The scope of these dialogues is wide and evolves around three pillars: political
relations, economic relations, and social relations (Liu and Breslin 2016). Each of these
pillars is headed by a specific EU-China High-Level Dialogue: High-Level Strategic
Dialogue (2010), High-Level Economic and Trade Dialogue (2007), and High-Level
People-to-People Dialogue (2012). Under each of these headings there are a number of
distinct dialogues and a broad range of more specific working groups, which “are part
and parcel of the executive diplomacy involving officials from EEAS, the European
Commission and the Chinese ministerial bureaucracies” (Christiansen 2016: 41). While
the nature of the bilateral dialogues is deliberative rather than decisional they provide a
“platform for Chinese and EU policymakers to exchange views on topics of mutual
interest, to understand the different perspectives each side has, and to overcome potential
problems” (Ibid: 42).

Viewed from the perspective of liberal institutionalism (Keohane 1984) the EU-
China dialogue architecture provides a continual framework that “obliges both sides to
meet one another regularly and creates an administrative routine around these meetings,

9
involving agenda setting, chairing arrangements, review mechanisms and other
procedural elements that normalize and regularize bilateral relations”. This high degree
of institutionalization explains the resilience of the EU-China relationship even in the
face of serious frictions, “as have been the case on several occasions (e.g., antidumping
measures against Chinese made solar panels, extraterritorial application of the EU’s
Emissions Trading System) and indeed continuously (e.g., EU arms embargo imposed
after Tiananmen Square)” (Christiansen 2016: 43).

A clear signal of both sides’ willingness to strengthen the institutionalized

relationship is the 2013 agreement on an EU-China 2020 Strategic Agenda for
Cooperation (European Council 2013). The document lines out a framework for deeper
cooperation on four major issues: peace and security, prosperity, sustainable
development, and people-to-people contacts. While it is very ambitious and casted in
rather general terms, the 2020 agenda nevertheless indicates that processes of path
dependence and (embryonic) reciprocal socialization appear to be at work here. The EU-
China partnership has created a structure in which learning takes place among civil
servants at the functional levels as well as among political leaders and high-level
diplomats (Michalski & Pan 2017). It is the result of a sustained process of negotiation in
which representatives of both sides engage in information exchange, signalling of
perceptions and expectations, stipulation of mutually acceptable rules of the game,
positioning and alignment of norms and standards, and regular stocktaking of results and
problems based on joint agreed norms and standards. As such the partnership structure
makes possible the kind of regular social interaction that bolsters the diffusion of
knowledge, and shapes a context in which learning is likely to result in the construction
of common practices. For such a process to be sustainable, intercourse is to be based on
the principles of openness, mutual respect and reciprocity, as they make possible to move
beyond ‘we-they’ distinctions and ‘in-group projection’ – two features that still figure
prominently behind the scenes. Critical tools in bringing about reciprocal socialization
are small informal groups and personalized interactions as they create the kind of
interpersonal dynamics which are needed for true mutual learning and understanding. The
major aim of the process is to reach consensus, not unanimity. When dealing with actors
with such different identities as the EU and China (Geeraerts 2011, Pan 2012), a realistic
goal is to reach a broad agreement on a series of strategic issues and principles, while at
the same time allowing for a degree of deviation (Terhalle 2011).

Reciprocal socialization is a long-term undertaking. Little can be expected in

terms of substantive policy changes in the short run. However, it is the process in itself
that is important as it can shape a substantive strategic partnership in the long run. Over
time, as analyses and viewpoints are repeated and increasingly shared, officials are more
likely to gravitate toward a common diagnosis of crucial problems in the Sino-EU
relationship and their solution. An area of promise where broad consensus could be found
is climate change. Both China and the EU are deeply concerned by the issue. The topic is

10
of such importance that it cuts across many other aspects of the relationship. In this
regard, the ongoing combination of the Belt and Road Initiative (BRI) and the EU’s
Juncker plan for strategic investments within the EU-China Connectivity Platform offers
real opportunities to build infrastructure in a sustainable way, and for both the EU and
China to share their development experiences, standards, and expertise to their mutual
benefit as well as to the benefit of third parties. As such, it constitutes a practical
experiment in reciprocal socialization, which could evolve into a paragon of concerted
order-shaping with regional and global implications.

SIGNS OF MUTUAL ACCOMMODATION AND CONVERGENCE

The EU and China are very much in the same boat as they both face formidable challenges
in their domestic environment. The EU faces daunting challenges to revitalize the
economy, create jobs, overcome extremism and cope with a large wave of refugees from
a turbulent neighbourhood. China needs to come to terms with slowing economic
development and at the same time ensure sustainable development and protect the
environment. In the final analysis, this is a domestic responsibility, but in a world of
complex interdependence it can only be successfully taken up in a stable and predictable
international environment.

The bigger challenge for the EU and China, then, is to deal with a global
governance system that is evolving from a multilateral system centred around the US into
a more diffuse system resting on the three strong trading poles of China, the EU and the
US. Against a background in which the United States is increasingly drawing into
question its commitments to free trade and the global commons, the question is whether
the EU and China are willing and able to jointly support the multilateral system as the US
steps back from its hegemonic role (Demertzis et al. 2017). The EU and China both
clearly have an interest in supporting an open multilateral trading system, as success in
this endeavour would largely determine the boundary conditions for tackling their
domestic and regional challenges as well as overcoming the creeping economic security
dilemma between them. Still, it is an open question whether they can act in a coordinated
manner as the EU and the US have done in the past.

This is not a trivial question because the EU and China differ much more from
each other politically, economically, and socially, than do the EU and US. In the end of
the day, the EU and China have very different identities and their relationship reveals
deep-seated conceptual differences concerning norms, visions of power and governance,
modes of international engagement and the organization of the emerging world order
(Geeraerts 2011; Pan 2012). The EU is union of nation-states, a hybrid collective actor,
which to this very day has the highest level of integration among all associations of states.
As a substantially post-sovereign union, it feels at home with mutual interference in

11
domestic affairs, major transfers of sovereignty and strong rules-based international
institutions in governing world affairs. In contrast, China holds onto an understanding of
sovereignty built upon strict non-interference, regarding a strong sovereign state as a
guarantor of its national independence and a precondition for national ‘rejuvenation’. As
a result, China prioritizes the defence of state sovereignty and non-interference with
domestic affairs, and prefers international cooperation based on intergovernmental
consensus rather than the pooling of sovereignty under the heading of supranational
governance.

The EU and China also have different political, economic and social systems,
which leads “the two players to view the best way to manage domestic governance
differently, and also creates problems in EU-China co-operation in their efforts to shape
the outside world. Europe in general has embraced political liberalism, seeing democracy,
competitive elections, press freedom, vibrant civil society and human rights as basic
components of internal good governance. In China, with its strong statist tradition and a
twentieth-century revolution led by the Communist Party of China (CPC), a party-state
has been in place since the founding of the PRC. Its political system prioritizes party
leadership in the society” (Chen 2016: 784). Since Deng’s market reform and open-door
policy, the party became a driving force of China’s modernization and economic
development.

In light of the important differences between the EU and China, the crucial
question is how the two players possibly can jointly support and reshape the multilateral
system. Interestingly, Chen (2016: 788-89) points to two developments that are
facilitating convergence between the EU and China in their order-shaping efforts and
could lead to a more concerted relationship in the future.

The first is the return of the developmental agenda in Europe and the move beyond
developmentalism in China. With their advanced technology and economic
competitiveness, European countries developed high-level welfare systems and came to
place more emphasis on quality-of-life issues. However, the sovereign debt crisis and the
subsequent problems faced by many EU countries have pushed the growth and
development back on top of the agenda in the EU. As a result, the EU “is becoming more
modern, less post-modern and more like other countries in the world . Meanwhile, China
is moving beyond developmentalism to deemphasize growth and focus more on quality-
of-life issues. For example, given the unbearable level of heavy smog hanging over major
Chinese cities, the Chinese government is now under heavy domestic pressure to speed
up the process of improving energy efficiency and expand the use of clean energy” (Chen
2016: 789). These mutually converging tendencies are narrowing preference differences
between the EU and China, and creating the boundary conditions for a better concerted
relationship between them on wide-ranging bilateral and multilateral issues.

12
 The second development is the new pragmatism in Europe and growing globalism
in China. Facing internal problems and a turbulent neighbourhood, the EU is preoccupied
with finding solutions to internal growth and cohesion problems, as well as the task of
stabilizing its neighbourhood. As a result, the EU “is becoming more pragmatic in its
drive to transform the rest of the world and its relations with China” (Chen 2016: 789). A
few examples may suffice to illustrate this development.The EU member states all agreed
to the 2010 IMF reform, which allowed some voting rights to be transferred mostly from
Europe to China and other emerging countries. Trade disputes such as the solar panel
disputes, though initially very confrontational, were eventually solved through a
constructive compromise. Moreover, 14 of the 28 EU Member States decided to be
founding members of the China-sponsored Asian Infrastructure Investment Bank (AIIB),
disregarding the explicit opposition from the United States government. This is a most
important development as the AIIB can serve as a model for concerted order-shaping.
Substantially inspired by European experience and expertise, this new institution sets
high standards for its procedures. Public tenders for AIIB-financed projects must be
transparent, non-discriminatory and based on international standards. As such its
principles can offer a guideline for infrastructure projects under the umbrella of the Belt
and Road Initiative. Lastly, the EU’s new Global Strategy appears to suggest that “unless
they undergo structural reforms to better reflect the changed world order, the traditional
international financial institutions (TFI’s) risk losing their unique status as agenda-
shapers in their respective domains” (Ujvari 2016: 2). In all evidence, the EU is coming
to terms with the fact that, having grown disenchanted with the slow pace of reforms in
the IMF, World Bank, and WTO, emerging powers – with China in the driver seat – have
become more proactive in their attempts to step up their sway in international affairs and
that the time has come for constructive adaptation of extant global governance structures.

Meanwhile, Chinese foreign policy has taken a more globalist orientation, and the
country is now prepared to take on greater responsibility internationally. A crucial step in
this regard was taken in 2005 “when China endorsed the World Summit document which
embraced the idea of ‘responsibility to protect’, indicating that China is willing to accept
that certain crimes committed at home are not immune to international intervention,
which implies a loosening of its rigid view of state sovereignty. China has also supported
a number of UNSC resolutions under Chapter 7 of the UN Charter, which include
coercive measures such as sanctions and military interventions” (Chen 2016: 789). But
most impotantly, Xi Jinping is slowly but surely walking the talk on opening up China’s
economy and paying tribute to his recently assumed role as the prime advocate for
economic openness and international cooperation. Indeed, there are signs that the Chinese
economy is gradually shifting in the direction of a new growth model, one that is more
consumption oriented and driven by expansion in the services sector. The 2018 Shanghai
Import Expo was a timely reminder to the world of the rising importance of China’s
expanding consumer economy. China’s household consumer market has grown tenfold

13
from US$480 billion in 2000 to US$5.2 trillion in 2017. Further growth of US$1.8 trillion
is predicted by 2021, which is equivalent to the entire German consumer market (Dodwell
2018). Moreover, the World Bank recently has provided endorsement of China’s claim
of steadily opening up. Its annual Doing Business study – an authoritative and rigorous
assessment of the barriers that block access to the world’s markets – reports that China
now ranks 46th out of 190 economies worldwide (World Bank 2018). While still
reflecting substantial barriers in terms of market access, it compares with a ranking of
78th in 2017 and highlights intensive efforts in eliminating red tape for setting up a
business. In the eyes of China’s major competitors this might be too slow, but it
nevertheless represents substantial progress. At the end of the day, pushing through deep
economic restructuring is not only in China’s interest, as it will create avenues for
sustainable domestic growth, it will also auger well for the global economy. For Europe
an expanding Chinese domestic market raises the prospect of new export and investment
opportunities for its business, thus creating possibilities for alleviating the EU’s trade
deficit with China and shaping the settings for a more balanced trade relationship. An
important next step towards this end would be the successful conclusion of the
Comprehensive Investment Agreement.

In short, some modest signs of mutual accommodation and convergence between

the EU and China in their efforts to adapt themselves to the changing international system
appear to be unfolding. As they have both a keen interest in a sound management of the
evolving decentred multilateral order, the EU and China have good reason to explore
concerted efforts to provide both individual and joint contributions to the general global
public good. The challenge for the two of them is to build on their past successes and
make themselves greater contributors to a more peaceful, prosperous and just world at
large. Especially the EU-China Connectivity Platform offers a concrete possibility to
engage in mutually beneficial projects of infrastructure construction, which would not
only open up new ground for EU–China cooperation, but also offer the opportunity for
the two to join forces to promote stability and development in the vast areas in the
Eurasian continent between them. As was suggested in the previous section following a
transformational logic, the Connectivity Platform can be viewed as an experiment in
reciprocal socialization based on a sustained negotiation process that can bring the EU
and China closer together. Substantive results will take time to materialize. So far, the
meetings of the Platform have enabled progress on: (1) policy exchange and alignment
on the principles and the priorities in fostering transport connections between the EU and
China, based on the Trans-European Transport Network policy and the Belt and Road
initiative, and involving relevant third countries; (2) cooperation on promoting solutions
at the international level with a focus on green transport solutions; and (3) concrete
projects based on agreed criteria including sustainability, transparency, inclusiveness, and

14
a level-playing field.6 As to future progress, much will depend on the extend to which
analyses and viewpoints will evolve and become increasingly aligned, and successful
cooperative projects can be set up. If that would be the case, participants on both sides
are more likely to gravitate toward consensus and step up their engagement in concerted
order-shaping.

CONCLUSION
With the boundary conditions of their relationship in flux, cooperation between China
and the EU has become anything but easier. While they have many interests in common,
they are also competitors within the confines of an international order under stress. The
EU-China relationship is clearly mixed, consisting of an array of cooperative and
competitive elements. It is driven by two distinct underlying logics: a power based one
and a transformational one. The power-based logic is premised on a belief that because
of anarchy power politics and conflicts of interest cannot be entirely overcome.
According to this view intercourse between the EU and China is relfecting their relative
power positions and is bound to display concerns about relative gains, making
cooperation between them more difficult. In contrast, a transformational logic resonates
a more liberal/constructivist perspective. It suggests that rules and shared norms can
sharply reduce conflicts of interest and mitigate concerns about relative gains through the
creation of trust and reciprocal socialization, making enduring cooperation between the
EU and China more likely. The power logic feeds into two major diverging trends: (1)
the changing distribution of power and identities in the global system; and (2) the growing
concern about economic security in the EU-China relationship. Both trends tend to breed
concerns about relative gains and frustrate efforts at cooperation. The transformational
logic resides in two key converging trends: (1) the gradual institutionalization of the EU-
China partnership and its potential for reciprocal socialization, and (2) budding signs of
mutual accommodation and convergence between the EU and China in their efforts to
adapt themselves to the changing international order. Diverging trends, which are
mutually reinforcing, are pushing the relationship toward competition, converging trends

6Joint Agreed Minutes of the Third Chair's Meeting of EU-China Connectivity Platform
(2018). https://ec.europa.eu/transport/sites/transport/files/2018-07-13-chairs-
meeting.pdf Accessed 12 November 2018.

15
– also reinforcing each other – are promoting cooperation. The direction in which the EU-
China partnership can possibly evolve – more competition or more cooperation – is
moulded by the relative strength of diverging and converging trends. Building a
sustainable strategic partnership will not come easy. Growing concerns about economic
security and relative gains, as well as fundamental differences in their respective identities
and societal systems will continue to pose challenges on the road to concerted order-
shaping, and policymakers on both sides will need to engage in reciprocal socialization
if they are to overcome the hurdles that separate them. As they have both a keen interest
in a sound management of the evolving decentring multilateral order, some modest signs
of mutual accommodation and convergence between the EU and China appear to be
unfolding. Still, the partnership between the EU and China is bound to be a difficult
balancing act between diverging and converging trends. At any point in the future, the
resulting equilibrium is bound to reside somewhere along a spectrum that extends from
pure cooperation at one end to unrestrained competition at the other.

16
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