China is possibly the EU’s most ominous economic and trade challenge. At the same time, Beijing represents a formidable opportunity for many European companies as well as for EU aspirations to emerge as a global actor. The country continues to be viewed with suspicion across Europe due to the non-democratic nature of the Chinese regime, raising questions as to what use Chinese leaders will make of their country’s increased capabilities. Yet, it is precisely this authoritarian Communist China, informed by values and principles quite different from those of the EU and its member states, that has come to support the EU’s integration process – including key initiatives such as the European common currency. This dual significance of China for the EU – as both a daunting challenge and a formidable opportunity – has implications for the transatlantic relationship. There is great scope for joint EU-US cooperation on advancing a set of rules and principles in China and the surrounding region dear to Western public opinion. At the same time, the role that China plays in Europe – through the New Silk Road and the growing investments attached to this grandiose project – has the potential to drive a wedge between the transatlantic allies.
There are three trade and security issues that, according to our research, are likely to become top priorities for the next U.S. administration.
1) The next U.S. administration may need to find a compromise with the EU and China to avoid the emergence of competing trade blocs. This will be particularly pressing if the U.S. Congress fails to pass the TPP, and the United States and EU do not succeed in finding a compromise on the TTIP. Then, the China-led RCEP [Regional Comprehensive Economic Partnership] will get a boost, but also plans for an EU-East Asia trade agreement will be resurrected, increasing the prospect of a Eurasian trade deal which will exclude the United States.
2) The next U.S. administration may seek to avoid a transatlantic rift over market economy status (MES) to China. Washington has already declared that it will not grant Beijing the coveted MES. The EU, instead, is working on a compromise, which will entail recognition of market economy to Beijing, while reinforcing the existing trade defence measures to protect some European sectors considered of strategic significance. The compromise has three aims: avoid retaliation from Beijing; increase market access for European companies in the Chinese market; and send the message that Europe is more open than the United States – something that will undoubtedly attract more Chinese investments into the Old Continent.
3) The next U.S. administration may want to discuss security in Eurasia with China and Europe. The United States is disentangling itself from Central Asia and the Middle East, while China makes inroads into these regions through its Belt and Road initiative. Europe has strong security ties with Washington, but Brussels is also tempted to push forward security cooperation with Beijing, particularly in the Mediterranean and along the Arabian coasts, given the economic significance of Southern European ports and the Suez Canal for China’s maritime Silk Road and future Sino-European trade relations.
To read the full story, please see the interview to Dr. Casarini by Mercy A. Kuo, published in The Diplomat