Posted by: mulrickillion | November 15, 2011

Decision Time or the Moment of Truth for China and the EU?

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Vice Premier Wang Qishan reminds Belgian Crown Prince Philippe Meet to push for China’s full-market status.

By Kerry Brown, China Brief, Vol. 11, Iss. 21, Nov 11, 2011 —

For the EU, and in particular the Eurozone, the last three months have been a never-ending trial by fire. Emergency summits have taken place almost weekly across the usual key parts of the EU power terrain—Brussels, Paris, Berlin and Rome. This turmoil managed to cause the postponement of the slated visit by European Council President Hermann Van Rompuy for the biannual high-level summit to China, originally planned for the October 25. For once, the postponement was not due to Chinese fury over a head of an EU member state meeting the Dalai Lama such as in 2007. Rather, Van Rompuy ”could not travel to China…because he was needed for a series of EU meetings.” When informed of the postponement in a phone conversation, Premier Wen Jiabao reportedly replied to Van Rompuy, ”the Eurozone crisis is not just closely related to the unstable recovery of the global economy against the backdrop of the international financial crisis but was also a result of the long term accumulation of internal problems” (Xinhua, October 21).

The Eurozone crisis brings into sharp relief the change in power dynamics between the EU and China. It also raises, for the Chinese and others, big questions about the unity of EU political decision making, even in a period of great need. The crisis has clarified China’s new expectations of Europe, and has made the Europeans think very hard about what they might want from the Chinese—and at what cost. Finally, the crisis reveals the immediate need for institutional reform in Europe, which has been concealed persistently under the EU’s highly aspirational language. Beijing now seems to feel it can comment openly on this issue because of the evident failure of many EU structures in coping with the burgeoning economic crisis.

In early November, the G20 met in France to have another go at solving the problems. The suffering however never seems to stop. The massive bailout— meant to deal with the instability of the Greek economy and its inability to service its massive debts—agreed to on October 27 provided only a few hours of calm. On November 1, the Greek Prime Minister George Papandreou’s declaration that he would be holding a referendum in order to let the public pass—or turn down—the terms of the bailout again threw the Eurozone, the markets and the political leadership of the EU and its member states into turmoil. On November 8, Papandreou had announced not only that the referendum would not be happening but that he was resigning.

There have been two levels in the Chinese response to the Eurozone crisis. The first has been a pragmatic acknowledgement that seeing one’s second largest trade partner—$49.4 billion in trade up to the end of July—come close to collapse is not desirable (Xinhua, October 16). On this level, Chinese officials have expressed great confidence that the EU leadership can deal with the current problems. China’s International Trade Representative Gao Hucheng stated “China is confident that Europe has what it takes to weather the current crisis” (Straits Times, October 7). Ministry of Foreign Affairs spokesperson Liu Weimin echoed this a few days later when he said China supported President of the European Commission José Manuel Barossa’s ”Road Map” for Euro stability issued a few days earlier (Xinhua, October 13). On another level, however, Beijing sensed a clear opportunity to place a few truths on the line to a partner who they had sometimes found morally hectoring, disunited and overly complicated. Premier Wen himself stated the Euro crisis showed up the ”long term accumulation of internal problems within the EU and the Eurozone,” which needed “fundamental financial reforms in addition to emergency bailout measures” (Xinhua, October 21). . . .

The Jamestown Foundation: Decision Time or the Moment of Truth for China and the EU?

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