Chinas EU trade policy: A Gift Horse or a Trojan Horse?

Article published on Jan. 5, 2004
community published
Article published on Jan. 5, 2004

This article has not been vetted by an editor at Paris HQ

Café Babel spoke to Peter Nightingale, Chairman of the Euro-China Business Association and Chief Executive of the China-Britain Business Council. He tells us of the trade relations beetween the both entities.

The word trade implies a sense of fair exchange. But when used in the context of Chinas EU trade policy, how fair an exchange are we talking about? When China declared its intentions to turn the EU from its third largest to its primary trade partner in the run up to the EU Summit in Beijing on 30th October this year, it might have thought it was making a magnanimous proclamation. There are however, many who view this intention with more than a little suspicion.

One only has to think of the trade relations China has shared with the US, resulting in Chinas estimated $125bn trade surplus with the US, and allegations by the US of unfair trade, to appreciate from where these misgivings might derive. Are those concerns justifiable, that underneath the apparent concessions made by China in its policy paper, there is more simply, a desire by China to exploit competition between EU member states?

Café Babel spoke to Peter Nightingale, Chairman of the Euro-China Business Association and Chief Executive of the China-Britain Business Council.

Café Babel: What do you think are the most significant concessions made by China and the EU during the Summit, concerning trade relations?

Peter Nightingale: The most significant thing to come out of the discussion, was the agreement between China and the EU, that EU Schengen Convention countries should receive Authorised Destination Status (ADS) for tourists from China, which has huge implications for both Chinese and EU tourism. Another significant issue was Chinas decision to take part in the European Galileo Space Programme. The fact that China is going to put money into the European programme is very important. In addition, the EU and China are going to develop dialogues on certain industrial sector subjects and Intellectual Property Rights protection, which is of course of vital interest to practically every foreign investor in China. I think in the case of the ADS issue, it is entirely to the EUs benefit.

Two weeks before the Summit, China published its first EU policy paper in which they declared their intention to turn Europe from their third largest to their primary trade partner. What should the EU reaction be to these intentions?

I think what has happened since China joined the WTO, is that it realises that the EU is an important player on the international stage. The EU is responsible for all trade policy matters for EU member states, and therefore China knows that it has to negotiate and co-operate with the EU in the all-important area of trade matters. Of course the EU itself has also just produced a strategy paper for China and the two want to balance each other out. Obviously, in each case the originator of the strategy puts forward things that it particularly wants to see, but it is good that both sides are engaging in negotiation and dialogue in a serious way.

At present there is a lot of competition between EU member-states in China, for example, between Germany and France over the construction of the Beijing-Shanghai railway. Do you think that the intentions stated by China in the policy paper were aimed so as to benefit from this competition?

I think you have to take that at two levels really. If you take it at the EU level, I am sure that China wants to balance its interests and advantages between Asia, the United States and the EU. Of course it will obviously encourage competition between the major trading blocks in order to get the best deal for whatever its negotiating, which is what anybody else would do. I think it does the same at European Union member-state level. Negotiating with different member states to get the best price is a business decision that I think any country or business would take. I think that is quite normal.

What political steps will need to be taken in order to achieve a common EU trade policy toward China?

In so far as the EU is responsible for negotiating trade policy matters on behalf of all member states with China, there is a common policy, so I dont think that is really an issue. What is more of an issue is, of course that some member states are stronger in some business sectors than others, so individual EU member states have different objectives in terms of trade policy with China. However, the way to get those objectives realised is by working through the EU. This ensures that member states are lobbying the EU to negotiate with China, in order to achieve certain trade objectives that will suit either individual or groups of member states, and on the whole, the industry sectors across the entire European Union evenly.

Do you believe that by improving trade relations between the EU and China there will be an improvement on the issue of Chinas human rights, as so many EU-officials believe? How could Western enterprises influence Chinese politics in this field?

I think generally speaking, it is for politicians and governments to try to influence each other, in the fields of things like human rights. But I think there is absolutely no doubt that the Chinese have benefited enormously by the very large amount of responsible foreign companies investing in China, bringing with them what they to believe to be best practice in their industry, and this has improved these areas in China enormously. There are dozens of examples of extremely good practice being established in China as a result of this, and I think it has really propelled the issues of human rights in China enormously. I think that this is the influence that business can bring to bear on the Chinese political system, a system that would not have made the great strides it has over the past 25 years, without the impact of foreign business investment.