Selected Analysis

China’s Economic Realism: The EU Experience

By Acriti Mathur & Yashna Agarwalla /Geopolitical Monitor/ – Realism as a theory of international relations has been useful in theorizing the political behavior of many countries at the international level. The traditional or the neorealist conception of realism is focused on a militarist conception of security. Therefore, states behave in different ways on the basis of how they perceive what security means to them. Security is therefore based on national interest. Therefore, the conception of security here is ‘narrow’ and states work towards ensuring that such a conception of security is not only left uncompromised, but advantages are also secured. The liberal world order depicts that the mode of ‘economy’ is a means through which interdependence and the diffusion of realist tensions can take place. This makes states move towards a common policy, and this ‘web of interdependence’ disables the direction of states making relative gains on the security front. The mode of economy then has a positive effect on parties involved, guaranteeing at least some benefits to all those involved.

Why then is the Chinese mode of economic interaction, ‘realist’? Though the acceptance of globalization as an ‘objective requirement’ led to the integration of the Chinese economy with the world, it also led to the development of the ‘Made in China’ phenomenon. With the presence of a world dominant manufacturing sector, China’s rise can be attributed to the moving up in the value chain and an established dependency between other states and China. This ability to dominate economically means that China is actually transcending from that acceptance of liberal world order and creation of what Hu Jintao called as hexie shehui or the ‘harmonious society’, to one where it is shaping norms that would lead to fulfilling national interest. As stated by Ng Eng Hen, the Singaporean defence minister, China has been an important part of the Asian growth story in the current times and this actually makes China prone to “set norms and rules for the global system.”

Be it the Chinese emphasis upon the One China Policy, or other issues related to its sovereignty, or censorship of incidents like Tiananmen Square, the Chinese leadership has brought about its stance toward domestic issues with clarity. This also leads to the reshaping of liberal norms wherein countries have no option of opposing the Chinese stance because of the economic ties they have with China. Elisabeth Braw highlights that when favorable investments tied to the Chinese state clash with the beliefs of a liberal nation-state, the decline of such an offer based on ‘patriotic duty’ is ‘unlikely.’ China in such a way shapes the norms of a world order and this is being characterized by ‘sharp power.’ Therefore, as stated by Nana de Graff et al, “interdependence and the potential for cooperation does not necessarily implicate co-optation.” Contestations over the conditions of interdependence may take place. This reshaping of norms indicates the presence of economic realism in Chinese foreign policy as these are norms which fulfil Chinese national interest based on coercive or sharp power.

China’s Economic Realism and the EU

The European Union (EU) is a case in point. The intermeshing of economies between China and the EU has depicted a case for ‘economic’ realism. Economic ties, which have been the primary determinant behind the flourishing of China-EU relations, have also led to asymmetrical interdependence. The growing trade deficit between EU and China in favor of the latter has become a major cause of concern for the EU nations. The problem of the trade deficit between the two, combined with China’s efforts to side-line the multilateral framework of the EU in favor of building individual partnerships with the member-states, has shattered the disillusions of various European leaders. Beijing’s increase in diplomatic overtures toward sub-regional groupings like the 16+1 framework within the EU has also reinvigorated the existing fault-lines in the European continent.

The internal security challenges that the EU has been grappling with in the past decade have not just eroded its capability to influence matters in the global arena, but also made apparent the political discord within the Union itself. The withdrawal of the United Kingdom (UK) from the EU, the migration crisis, an assertive Russia and the continuing economic implications of the sovereign debt crisis have made the EU more vulnerable to China’s practice of economic realism. Earlier, there was a belief in Chinese policymaking circles that the assertive normative policy followed by the EU was backed by its economic strength; but that perception saw a marked change following the sovereign debt crisis.

It is also essential to note that the EU is a bloc comprising 27 member-states who have different security perceptions of China, and this has resulted in the lack of a coordinated or uniform strategy with respect to China. The younger member-states are eager to utilize investments from Chinese firms, and this is best exemplified by the Central and East European countries which are using these investments to stabilize their economies. As these countries become more and more dependent on China, they are becoming more reluctant to take up stances that can hamper their economic ties with the Asian giant. The developed member-states are warier of Chinese economic investments and are also apprehensive about the Belt and Road Initiative (BRI) project pursued by Beijing. The BRI project has particularly highlighted the divisions and tensions existing inside the EU, with the Balkan countries along with Italy, Greece and Hungary in favor of the project and reactions from others ranging from ambivalence to total opposition. For instance, France has been especially prominent in expressing its displeasure about the increased footprints of the Chinese economy in the European continent. Such fears regarding the impact of Chinese economic realism on EU solidarity have been gaining a foothold in recent years.

Even before the pandemic, there was a push towards a more multifaceted and pragmatic approach as a result of these fears. The EU had earlier sought to adopt a more normatively flexible policy, which allowed the EU to prioritize engagements with China on issues that can build convergences between the two in the long-term. This normatively flexible policy was adopted because the EU had come to realize that it needs to pick and choose its battles with China, whose negotiating power has increased manifold since the start of their relationship. This pragmatic engagement followed by the EU has not tempered China’s aggressive stance. China’s unwillingness to deliver on promises of market reform, accompanied by the security issues relating to Chinese investments and infrastructure projects in the European continent, has resulted in the conceptualization of a more assertive policy on the part of the EU.

As part of the EU’s more assertive stance, China was labeled as a ‘systemic rival’ in a March 2019 report of the European Commission, and efforts are being made to rebalance the EU’s position vis-a-vis China in order to re-emphasize the importance of a multipolar world order operating on the basis of liberal values. Yet there is a growing awareness that the EU needs to recalibrate its approach toward China, as the US is no longer playing the role of the guarantor of the international world order. Thus, a more assertive policy vis-a-vis China was envisaged to make China understand that it cannot take the world’s largest trading bloc so lightly.

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