FOREIGN POLICY ANALYSIS

An analysis of the EU And US sanctions against China

submitted at the

IMC Fachhochschule Krems

(University of Applied Sciences)

Master programme

International Business and Economic Diplomacy

By: Olakunle Kolin OTARU

Supervisor: Jennifer Karntner

Submitted on: 10.06.2022

Table of Contents

Executive Summary/Purpose Statement :..........................................................................3

Introduction:......................................................................................................................3

EU objectives and Policies:.................................................................................................4

Chinas Objectives and policies:...........................................................................................6

U.S Objectives and policies:................................................................................................9

Policy Recommendations:................................................................................................10

Conclusion:......................................................................................................................11

Appendix:.........................................................................................................................11

Bibliography....................................................................................................................11
Executive Summary/Purpose Statement :

This paper presents and evaluates the data available on the European Union and

United States sanctions against china including, but not limited to, where they stem from, all

involved parties’ motivations and strategies as well as the general situation including the

success and failures of the implemented foreign policy strategies. The current policies of all

actors are also evaluated and lead to a deeper understanding of the mechanisms driving this

situation including the aims of the policies and the main factors driving the decisions. These

range from history between the actors, broken promises, retaliation, and human rights

violations allegation from the actors imposing the sanctions, the EU and the US, upon china.

Sanctions as a tool for foreign policy were discussed in the context of this case and finally,

Suggestions were made for future strategies affecting all involved parties.

Introduction:

The Eu and China have had a longstanding and mutually beneficial trade relationship

with one another since 1975 which was further strengthened by the establishment of a

strategic partnership in 2003. Both actors have benefitted significantly from this relationship

and not just economically but many other areas of mutual interest. However, this period of

bliss has seen constant deterioration since 2005 after multiple areas of discussion have

gained traction in the EU with rising pressure from Europeans for the EU to reassess their

China policy to make it tougher and more protectionist when dealing with Beijing. This was

initially mostly due to failure to lift arms embargos and a growing trade deficit in the EUs
trade with China and has continued to apply constant pressure on bilateral economic

corporation between the two actors.

Fundamentally, The two actors both have much to gain economically, however,

differing political regimes and values is an issue present at the heart of this conflict.

Furthermore, with issues like the Arms embargo imposed in 1989 against china by the

western Countries led by the USA, the US has slowly but inevitably become an active third

actor in initial China and EU Bilateral Relations. Since the involvement and influence of the

US on many matters affecting both the EU and china, promises have been made and broken

and some rash actions have arguably been taken on both sides aggravating the situation and

Deteriorating relations even further. (Men, 2008) So why has the EU in coordination with

the US, UK and Canada opted to impose sanctions on China? Well, this mostly stem from

human rights violation claims against some Chinese officials. “The Eu as a union of

democracies, the EU has a moral duty to speak up for human rights everywhere”. (Biscop,

2021) and “remains vigilant in the defence and advancement of universal human rights and

the integrity and functionality of the global human rights system”. (EU delegation to

Honduras, 2021)

This paper is going to evaluate the foreign policies of all three actors and their

development and as far as possible the reasons or reasoning behind these policies and also

assess their success and/or failure so far in achieving their intended goals as well as make

some recommendations of policies for the actors going forward.

EU objectives and Policies:

To begin with, the objectives of the EU are going to be looked at. Firstly, it should be

taken into account that the EU and China have a very strong trading relationship to the
extent that they are arguably economically dependent on one another with both parties

being the largest trading partners in goods in 2021 at nearly two million a day and therefore

both have very good reasons to keep a good relationship going with one another. Figure 1

(EU, 2022) The US is the EUs largest trading partner however and thee have significant

influence on EU foreign policy. (Fernando Delage, 2011) Different from EU-China relations,

EU-US relations are associated by common values, common cultural background, more or

less the same political regime and a long tradition of alliance which all make the EU-US

relationship more stable which make this a relationship the EU undoubtedly wants to

preserve. (Men, 2008)

Another thing to consider is how much Time has transformed Chinas Economic

status from that of a developing Country to a developed one which, from the EU point of

view, gives China an unfair advantage with certain special arrangements and differential

treatment that were linked to its economic status in earlier decades. China, now having

become an upper-middle income economy which did not go unnoticed by the EU, still

reaped the Benefits of an asymmetrical bilateral trade agreement up until 2019 during the

start of the COVID-19 pandemic. The “joint communication” of 2019 suggested different

Legal tools to level the playing field in the Trade relationship with China. In addition to this,

China has become a very important Global power with its increasing military prowess and

more assertive nature in its Region. At the same time, China transgressions in terms of

human rights from the perspective of the EU for which the integration of participating states

is linked to certain attributes including democracy and human rights which the EU is

obligated to uphold. (Jochheim, 2021) There have been multiple reports of severe human

Rights violations in the XUAR (Xinjiang Uyghurs Autonomous Region) including forced labor,

sexual violence, deliberate denial of basic needs, torture and more targeted mostly at
minorities in the region even though China continues to reject these claims. As a response,

The EU has imposed certain sanctions, including but not limited to, asset freezes and travel

bans on top officials in the region. (Tucker, 2021) These sanctions are arguably more

symbolic that anything else as they are too moderate to really foster any change. One factor

that affects and shapes Foreign policy decisions is public opinion and this move from the EU

could be seen as the EU attempting to satisfy public opinion as well as make China aware

that they are not okay with these allegedly discriminatory and human rights violating

actions in XUAR. The EUs vital interests are not directly threatened by Chinas alleged human

rights violations in XUAR hence the moderacy of the sanctions which china already reacted

rather strongly to. The EU should, and does care about human rights, however, it must

consider what is vital to its own interests and it simply doesn’t have enough leverage against

China to affect their domestic policies. (Biscop, 2021)

Chinas Objectives and policies:

The Chinese Government has been and continues to be more engaged as an

international actor, especially in the Asia-Pacific region and has concerned itself with three

major areas of activity, namely, dealing with regional instability and terrorism,

strengthening global arms control, and world economic development. Additionally, Beijing’s

leaders have generally embraced a more open foreign policy strategy become more

dependent on a “globalizing outside word” and have embraced a more prominent role in

international institutions such as the UN security council to further their Goals. (Bates Gill,

2005) Chinas Incredible growth, both economically and in areas of military capabilities, over

the past three decades as well as its continuous and deepening integration into the

international system have significantly increased Beijing’s influence in global affairs. The
balance of power has shifted and so in Chinas favor which is something the Chinese

Government would want to preserve and potentially further. The Chinese perception on

Europe significantly differs from the of the US in the sense that Chinese analysts view the US

as wanting to contain China’s rise and exhibit a high level of distrust whereas they view

European policymakers and their foreign policies as seeking to engage China and promote

its stable development. (Fernando Delage, 2011) The Relationship with the EU has as also

been relatively strong and has arguably fostered an interdependency of the two actors, at

least economically, and this despite differing values and a few major setbacks in bilateral

relations over the years, for example, the 2019 joint communication which effectively

leveled the playing field in the trade department in the EUs favor, the Arms embargo

imposed on China for the Tiananmen crackdown in 1989 and the broken promise to lift this

embargo after American and Japanese pressure forced the EU, and most notably Brussels,

to change its mind in 2005 and most recently sanctions against Chinese officials in XUAR.

(Fernando Delage, 2011)

In contrast, US-China relations, since opening up under Deng Xiaoping’s reforms in

the 1980s have experienced some heavy setbacks most notably, the Tiananmen Square

incident and the Arms Embargo that followed, after which Sino-U.S relations Stopped for

nearly a decade. Relations started to get better in 1997, and 2 years later the accidental

bombing of the Chinese embassy in Belgrade during a NATO intervention put a heavier

strain on the relationship as there were notable reactions and retaliations from China.

Tensions have been on the rise since China Joined the WTO and began trading with the U.S

in 2001. By 2006 China was the U.S’s 2nd largest trading partner and by 2008, china

surpassed Japan became the largest holder of U.S debt reached a whooping 1.3 trillion by

July 2013. Furthermore, in 2011, began to pivot its attention and resources from the Middle
east to Asia which involves military, political, and economic affairs in the Asia Pacific region.

This has set the U.S on a potential path to conflict with China which also has goals in the

region and ongoing disputes with Japan and Taiwan in which the US is obliged to intervene

in the event that direct conflict breaks out which would significantly deteriorate Sino-U.S

Relations even further. (Monroe, 2013)

In the situation with the Sanctions imposed on the Chinese officials in XUAR, the

Chinese countersanctions which were notably less moderate than those of the EU are a

clear display of power not just domestically and for its citizens but also on the international

field. The major reasons why China refuses to budge on the matter in XUAR and denies

these allegations is because of its vital interests in the region which include the “power of

the CCP, domestic stability, and the security of the Belt and Road which the XUAR is crucial

for advancement of these goals”. China is also aware that the EU has no direct stakes in the

region and likely would not want to risk a conflict with them over something that has little

relevance for the EU directly. Chinas swift growth as major world power also gives them the

advantage that their domestic policies cannot be affected by outside pressure to a large

extent. China also feels arguably justified in its actions and countersanctions as they were

not the primary aggressor but were reacting to the situation at hand. (Biscop, 2021)

To summarize, China has become a big player on the international field and become

a strong economic partner for both the U.S and the EU which makes all three actors

interdependent and closely links their fate which could be a good thing in keeping peace

between the actors but also has strong potential to go bad fast if situations continue to

escalate.
U.S Objectives and policies:

China is at the forefront of the U.S foreign agenda and there have been increasing

tensions between the two actors over the last two decades and there exists a growing

uncertainty in Washington on how best to deal with this growing superpower. The swift

modernization of the Chinese Peoples Liberation army in addition to the increasingly

aggressive stance China is taking against Taiwan are extremely alarming to the US. The

Energy race of which China is at the forefront and continues to make headway in Africa,

Latin America and the middle east also puts china in a position to directly challenge the US

policies in these regions. (Zaborowski, 2005)

China’s will to annex Taiwan, which sits in the "first island chain" of US Friendly

Territories that are an important part of US foreign policy puts both actors on a path to

direct conflict.

The Human rights violations allegations against China also presents the US with a motive to

strategically make some moves against in the form of sanctions against China in coalition

with its other allies in the EU and Canada. The US also has an explicit and implicit bias

against technology exports to China. (Bates Gill, 2005)

As previously mentioned, the US and China have established a functioning and

interdependent trade and economic relationship. The Trump Administration played a strong

hand when dealing with China doing so by making unilateral and unidirectional American

demands regarding certain issues like “discriminatory trade barriers, human rights and

religious freedom, pressure on Taiwan, issues related to South-China Sea etc.”. This has

evolved Sino-US relations from that of strategic partners to more strategic competitors.

(Gupta, 2021)
Policy Recommendations:

“Sanctions are much easier to use against your allies than against your enemies. A friend will

want to stay in your good books and is much more likely to modify his behavior than an

adversary, who will probably just harden his resolve to outdo you.” (Biscop, 2021) This state

proves true especially in the situation with the EU-US sanctions against China. The Trade

war between the U.S and China have cost both sides and have led to nearly no resolve. With

the EU on the other hand, despite deteriorating bilateral relations with China, there is

arguably more room for diplomacy than with their American counterparts. Even though the

EU has made statements following Chinese countersanctions, almost no major further

actions have been taken. The Comprehensive Agreement on Investment (CAI) concluded in

2020 between China and the EU to level the playing field for greater level of market access

for EU investors in China is potentially under threat of being axed which should following

the sanctions on both sides as there hasn’t been any further budge on either side. There

have been attempts to sooth the situation as China has let a UN official come to visit the

XUAR in hopes of achieving some concessions and moving forward with the CAI but the has

been no progress made. This is still an ongoing situation and is still difficult to tell in what

direction this is headed. (Barkin, 2022)

Compartmentalization which can be paraphrased as “cooperate when you can, push back

when you must” should be in all parties’ interests as opposed to “push back when you can,

cooperate when you must” which seems to be the case at the moment, and this can

inadvertently lead to more potential areas for cooperation being blocked out which is to no

one’s benefit. Real Diplomacy is the watch word here and there is room for concessions in

which maybe not every actor gets what they want but at least what they need. There should

also most definitely not be any further sanctions from either side as this will only lead to an
exacerbation of the situation. Finally, if the CAI follows through it could be a potential albeit

temporary solution to rising tensions. This is an Idealist perspective which might not hold

much water on the actual playing field of international politics due to its extremely complex

and volatile nature. (Biscop, 2021)

Conclusion:

In summary, all involved actors in this case all have their objectives and goals and

their policies in place to reach their goals as highlighted in this paper. The situation is also

incredibly complex involving multiple players and years of strained but ongoing

relationships, broken promises, and extreme changes. There is clearly a serious uncertainty

looming above all the actors and no one really knows how the larger situation is going to be

resolved if at all it will be. At the moment, aside from economic activities, bi/multi-lateral

relations within these actors are experiencing somewhat of a détente and in the uncertain

times we are in with the pandemic and related instances amongst other things, Global

cooperation especially from the larger powers would be and incredible feat if they could set

their differences aside. This, however, is an Idealist and optimistic approach to the situation

of which the chances of happening are quite minimal, albeit possible.

Appendix: 

Bibliography

Men, J. (2008, June). EU-China Relations: Problems and Promises. Jean Monnet/Robert

Schuman Paper Series Vol. 8 No. 13, 1-9.

Biscop, S. (2021). The EU and China: Sanctions, Signals, and Interests. Egmont: Egmont Royal

institute for International relations.

EU delegation to Honduras. (2021). REPORT OF THE EU HIGH REPRESENTATIVE FOR

FOREIGN AFFAIRS AND SECURITY POLICY 2021 ANNUAL REPORT ON HUMAN RIGHTS

AND DEMOCRACY IN THE WORLD. EU delegation to Honduras.

EU. (2022). EU CHINA #EUChina RELATIONS. EU.

Fernando Delage, G. A. (2011). China’s foreign policy: A European perspective. Madrid: CEU

Ediciones Universidad San Pablo.

Jochheim, U. (2021). EU-China relations in challenging times . European Parliament Research

Servce.

Tucker, J. (2021). The EU and PRC Exchange Sanctions . Institute for Security and

development Policy.

Bates Gill, G. W. (2005). China's Rise: Diverging U.S.-EU Perceptions and Approaches. Berlin:

Stiftung Wissenschaft und Politik( German Institute for International and Security

Affairs.

Monroe, E. (2013). U.S.-China Relations: A Brief Historical Perspective . U.S.-China Policy

Foundation.

Zaborowski, M. (2005). US-China Policy: Implications for the EU.

Gupta, M. (2021). US-China ties from Trump to Biden and its implications on India’s foreign

policy . New Delhi: International Journal of Advanced Academic Studies.

Barkin, N. (2022). Watching China in Europe - June 2022. German Marshall Fund (GMF).
Figure 1

(EU, 2022)