NICHOLAS FOGG
China Today
September 2019
We live in a world of disruption. Climate change is heating the planet. Donald Trump has initiated a trade war with China that is throwing world markets into disarray. Artificial intelligence is changing the very nature of work itself. But amidst this turmoil, one island of stability and progress appeared to be the European Union, a coming together of the many countries of Europe into a single economic block.
China signed a comprehensive strategic partnership with the European Union in 2003 and, as recently as April 2019, the annual summit of China and Europe reaffirmed this partnership and pledged cooperation in fighting climate change and maintaining the rules of international trade.
But now this island of European stability is under siege. Boris Johnson has just become Prime Minister of the United Kingdom, running on a platform to withdraw Britain from the European Union. Populists, encouraged by the example of Donald Trump, have gained power in some European nations and are a significant block in the European Parliament. Europe is at the brink, and China and the rest of the world will have to carefully assess the implications of this new addition to the world’s disruptions.
Europe and China’s relations go back a long way. The Han dynasty in 100BCE proposed sending an envoy to the Roman Empire, and the famous Silk Road was a trade route between Asia and Europe from that time until the 15thCentury. Modern Europe’s framework, however, is a more recent development. It began to be realised after World War II. In 1950, the French political economist, Jean Monnet, formulated the Schuman Plan, named after the French Foreign Minister, to create the European Coal and Steel Community. Robert Schuman himself expressed the ideal:
- Through the consolidation of basic production and the institution of a new High Authority, whose decisions will bind France, Germany and the other countries that join, this proposal represents the first concrete step towards a European federation, imperative for the preservation of peace.
From the start, the project was a movement towards the distant goal of federation but also a means towards locking peace into the economic and political system. This latter has been a resounding success. It is unprecedented in historical memory that no conflict has occurred between the 28 nations that became members of the European Union.
Schuman’s dream of a European federation appeared to be moving on apace. Common legal structures and a single currency had been established. Open frontiers exist between many of the member nations and people move freely throughout the bloc. There is even a two-track system, enabling different arrangements for countries less enthusiastic about integration, but, more recently, the project has gone awry, its liberal certainties threatened by the rise of populism, a tide with global manifestations.
European populists have achieved power in Hungary (Victor Orbán), Poland (Jarosław Kaczyński), Italy (Matteo Salvini) and Austria (Norbert Hofer). Other parties have exploited populist feelings to make a considerable impact including Marine Le Pen’s National Rally in France, Nigel Farage’s Brexit Party in the UK. Geert Wilders’ Freedom Party in the Netherlands and Alexander Gauland’s AfD Party in Germany.
A persistent theme of populism is that the old political establishments have become detached from the aspirations of ordinary people: what Jan-Werner Mȕller defines as “rigid rules and legal frameworks beyond the reach of democratic decision making.” The refugee crisis that began in 2015, as over one million migrants from Africa and the Middle East sought refuge in Europe, presented the EU with an issue beyond the normal remit of a controlled response. The populist response to this crisis has been to castigate the EU as a self-serving, over-reaching and remote body.
The European Commission is frequently perceived as an unrepresentative body, handing down diktats to a subservient populace. This apparent lack of accountability has, perhaps inevitably, led to the growth of, to use the contemporary phrase, “fake news,” as the EU is castigated for all manner of ills for which it is not responsible. Those who feel they have been left behind in the rise to prosperity and those who feel nostalgia for a lost and often illusory past seem particularly susceptible to this process.
Analyses of “Leave” voters in the UK’s Brexit referendum show that they tended to be more elderly and less educated and affluent than “Remain” voters. In a sympathetic assessment, Dr. Lisa Mckenzie of the London School of Economics advocated an understanding of their motivation. Her research had taken her to the former mining towns of the East Midlands, which voted heavily for “Leave”:
- These communities were heavily industrialised, and filled with skilled manual labour jobs for both men and women. They were wiped clean by de-industrialisation, and left void of work and investment for decades.
Such a predicament is undoubtedly sad for its victims, but it has little to do with the European Union, which has been a major force in bringing economic aid to distressed areas. It is in such situations that populism has thrived. At its core is the claim that populists alone represent the people against the self-interested social, economic and political structures. Such attitudes led to the seizure of the Conservative Government’s agenda by Brexiteers like Boris Johnson. Not surprisingly, in the wake of this chaos and inertia, other Euro-sceptic parties now pursue explicit exit strategies. The stability that seemed permanent as recently as five years ago now looks distinctly shaky.
A Great Britain outside of the European Union will certainly pose many problems for China. London is the offshore clearing hub for trading the renminbi currency: what happens if London no longer is a leading financial centre? Will a weakened Britain, shut out from Europe, turn inevitably to the United States and fall in with Trump’s anti-China coalition? Is that why Trump has been so vocal in supporting Brexit? Within the European Union, Britain has long been a promoter of close ties with China. It was, for example, the first major Western power to join the Chinese-led Asian Infrastructure Bank. Without Britain’s moderating voice in the European Union will European populists turn against China as they have against refugees?
The UK’s incoherent Brexit policy is, thus, one of the greatest threats to the European project. And the European project, in turn, is a key part of China’s engagement with the world trading system.
China has a great stake in the European Union maintaining its coherence. The European Union is China’s biggest trading partner with over one billion euros in trade between the two parties done every day on average. The benefits of China-EU trade are mutual: A survey of 2,000 German businesses conducted by Commerzbank in May 2019, for example, showed that while 61 per cent expect a gloomier economic outlook, 30 per cent now regard China as a more reliable trading partner than the USA (17 per cent) or the UK (8 per cent). This must be in part a reaction to China’s positive response to its trade war. Tariffs have been raised to an average 20.7 per cent on US exports, but they have been cut to an average 6.7 per cent for the other nations with which it trades. “While Trump shows other countries nothing but his tariff stick, China has been offering carrots,” commented Chad Brown of the Peterson Institute for International Economics. “Everyone else is enjoying much improved access to China’s 1.4 billion consumers.” The EU and China have demonstrated that there is a future in a multilateral and cooperative global trading system. Hopefully others will return to that view.
Nicholas Fogg, a former Master at Marlborough College in the United Kingdom, advises the InterAction Council on European, Middle Eastern and British politics.