China and Europe in 21st Century Global Politics : Partnership, Competition or Co-Evolution [1 ed.] 9781443856027, 9781443852562

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China and Europe in 21st Century Global Politics

China and Europe in 21st Century Global Politics: Partnership, Competition or Co-Evolution

Edited by

Frauke Austermann, Anastas Vangeli and Xiaoguang Wang

China and Europe in 21st Century Global Politics: Partnership, Competition or Co-Evolution Edited by Frauke Austermann, Anastas Vangeli and Xiaoguang Wang This book first published 2013 Cambridge Scholars Publishing 12 Back Chapman Street, Newcastle upon Tyne, NE6 2XX, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2013 by Frauke Austermann, Anastas Vangeli, Xiaoguang Wang and contributors All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN (10): 1-4438-5256-2, ISBN (13): 978-1-4438-5256-2

To all young Chinese and Europeans

⥞㔉ᡰᴹѝ⅗䶂ᒤ

TABLE OF CONTENTS List of Tables ............................................................................................. ix Acknowledgements .................................................................................... x Foreword ................................................................................................... xi Klaus Segbers Introduction ................................................................................................ 1 Frauke Austermann and Wang Xiaoguang Theme I: High Politics and Security Relations Chapter One .............................................................................................. 20 On the Obstacles to Greater Commitment in Sino-European Relations: A European View Anastas Vangeli Chapter Two ............................................................................................. 43 China-EU Cooperation on UN Peacekeeping: Opportunities and Challenges: A Chinese View He Yin Theme II: The European Sovereign Debt Crisis Chapter Three ........................................................................................... 62 The Interaction Between the European Debt Crisis and EU Integration: A Chinese View Wang Liang and Shi Wentao Chapter Four ............................................................................................. 76 Chinese Responses to the European Debt Crisis: Saving Europe, Saving China, or Both? A European View Antonia Hmaidi

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Theme III: Energy and Environmental Issues Chapter Five ........................................................................................... 104 Environmental Policy in a Changing Environment: A European View Maximilian Rech Chapter Six ............................................................................................. 131 Renewable Energy Policy Evolution in China and its Implications for EU-China Climate Change and Energy Cooperation: A Chinese View Li Xinlei Theme IV: Soft Power and Public Diplomacy Chapter Seven......................................................................................... 160 Mutual Perception and Soft Power in EU China Relations: A European View Julia Soeffner Chapter Eight .......................................................................................... 183 Public Diplomacy and the Co-Evolution of China and Europe: A Chinese View Wang Haiping and He Zhigao Conclusion .............................................................................................. 201 Contemporary China-Europe Relations: Simultaneous Partnership and Competition Equals Co-Evolution Anastas Vangeli and Frauke Austermann List of Acronyms and Abbreviations ...................................................... 212 Contributors ............................................................................................ 215

LIST OF TABLES Table 1.1 Proposed Model for Analyzing Sino-European Relations ........ 21 Table 1.2 Attitudes towards Oneself and Each Other with Regards to Issues Concerning Core Norms and Values .................................... 26 Table 1.3 Attitudes Towards Each Other's Role in Global Politics .......... 32 Table 1.4 Attitudes in the Case of China’s Emergence as an Actor within Europe...................................................................................... 35 Table 6.1 Top Five Countries: Total RE Capacity (2011) ...................... 132 Table 6.2 Institutional Mechanisms of the EU-China Environmental and Energy Cooperation ................................................................... 147 Table 8.1 European Public Opinion on China ........................................ 187 Table 8.2 Chinese Public and Elite Opinion on the European Union ..... 187 Table 8.3 Numbers of Confucius Institutes and Classrooms in European Countries (2010) ............................................................................... 192

ACKNOWLEDGEMENTS This edited volume is based on the papers presented during the First Workshop on China-Europe Relations in Global Politics, which was organised by the German-Chinese Graduate School of Global Politics (GSGP) based at Freie Universität Berlin and its partner Renmin University of China. The Workshop took place on 5-6 March 2012 at the School of International Studies at Renmin University of China. Without this Workshop, whose third edition is currently being prepared, this book project would not have been possible. The editors would therefore like to express their deepest gratitude to the Professors, colleagues and friends who made the Workshop and this edited volume possible: Professor Klaus Segbers from the Center for Global Politics at Freie Universität Berlin; Professor Chen Yue and Professor Yan Jin from Renmin University of China, Konrad Adenauer Foundation Beijing, in particular Thomas Awe and Regina Edelbauer; Daniela Schmidt from the Graduate School of Global Politics; and Pan Haiyan from the School of International Studies at Renmin University of China. Furthermore, the editors would like to thank Professor Albrecht Sonntag and Professor Shen Wei from ESSCA School of Management in Angers, as the Workshop triggered the GSGP’s participation in the UACES Collaborative Research Network on EU-China relations (see www.uaces.org/china). Special thanks go to Li Xinlei and Ren Lin from the GSGP as well as Jiang Wei, Yu Bowen, Sun Xiao, Long Yu and Hao Xiaomen from Renmin University, who organised the Workshop with us. We would like to thank Cambridge Scholars Publishing, especially Carol Koulikourdi, as well as our excellent anonymous reviewers and Louise Levicky for their feedback on our book chapters. We are indebted to our families and friends for their unconditional support. Finally, we are grateful and proud to have attracted such talented young scholars who presented their research during the First Workshop on China-Europe Relations in Global Politics, and who reworked their papers into the book chapters of this volume that you, our readers, are about to enjoy. Frauke Austermann, Anastas Vangeli and Wang Xiaoguang in October 2013

FOREWORD KLAUS SEGBERS In a globalising world, which is increasingly driven by markets and commoditisation, previous patterns of (dis)order are losing their relevance. This is particularly the case for a state-based mapping of the world. Flows take over from a border-fixated diplomatic bargaining, and scapes replace national and related collective identities. However, we are still in a period of transition. States still do play a role. Governments still do act—though with decreasingly efficient performances. And to some extent, governments try to find solutions to block their emerging irrelevance. In this context, the European project deserves special attention. While it all started as an attempt to prevent further disastrous violent conflicts on the continent, over time, this project has turned into something else: into a trial-and-error based attempt not to block, but to regulate globalisation. Over the same time period, in the 60 years following the end of the Second World War, another project was also gradually taking form: China. Liberated from traumatising experiences like fragmentation and colonisation, at first it tried to catch up outside the logic of the bipolar Cold War. This produced little progress, and led to dramatic failures such as the Great Leap Forward and the Cultural Revolution. An equally historic rapprochement was enabled by a weakened United States, toward the end of the Vietnam War, and by a daring volte toward liberating the domestic economy, after Deng Xiaoping’s initiatives in 1986/92. These changes coincided with the collapse of the USSR and the end of the East-West Conflict. From that point on, the global configuration underwent significant changes: the Soviet Union and its system of extensive development, coupled with weak budget constraints, disappeared. The USA, while still the dominant power in relative terms, entered a declining trajectory. The EU took the path of integrating ever more policy fields, (too) often shaped by short-term and domestic considerations; and China undertook an authoritarian modernisation, with a comparatively limited interest in global matters.

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Obviously, both the European and the Chinese ways demand particular attention. And it is good news that we have a new generation of scholars devoting attention to these two paths of development, and, especially, their interaction. This volume certifies that we are witnessing a growing number of young scholars, well-educated in both comparative approaches and methods, and equipped with profound area-grounded knowledge. This is precisely what we need: scholars knowing the old cartography of the world, but who are open to participating in the re-mapping so urgently needed to understand what is going on in global affairs now; scholars who are aware of their own value-based road-signs, yet also interested in interaction with peers in other societies with partly different judgments; and scholars who are entrepreneurial enough to foster their research, and to distribute their results, through established academic organisations where possible–and by-passing them when necessary. Some of the authors you find in this book were, or are, members of the German-Chinese Graduate School of Global Politics, based in Berlin, as part of the Center for Global Politics of Freie Universität Berlin. I am proud that we have been able to attract these young folks, and also curious to find out where their future way will lead them. I wish them luck and success. And you, the reader, will find plenty of interesting and surprising insights on the current changes and interaction of the two biggest political projects we are facing right now–the European, and the Chinese one. Klaus Segbers Professor for Political Science Director, Center for Global Politics Freie Universität Berlin

INTRODUCTION FRAUKE AUSTERMANN AND WANG XIAOGUANG China and Europe: Key Actors in Global Politics, Domestically Challenged When thinking of its place in global affairs, China can look back on a long history. Notwithstanding periods of disintegration, China has belonged to the most advanced civilisations worldwide during the past millennia. The geopolitical balance, however, shifted with the rise of Europe about 500 years ago. With the Scientific Revolution, Enlightenment and Secularisation and eventual Industrialisation, Europe came to dominate the world, not least through violent means such as colonisation, including parts of China. Despite enormous set-backs due to two World Wars, Europe re-built and re-invented itself after 1945. The key project has been European integration. As a result, today’s European Union has become the largest economic block worldwide, with its own currency and a diplomatic service in the making. It also recently welcomed its twenty-eighth member state, Croatia, on 1 July 2013 (De Launey 2013). In contrast to traditional military powers such as the US, the EU has innovatively explored new ways of civilian and normative power to realise its global ambition and influence (Manners 2002). Meanwhile, after the fall of Imperial China at the beginning of the twentieth century, following revolutions, resistance to foreign invasions, and civil wars, the People’s Republic of China (PRC) was founded in 1949. After three turbulent decades which included the Great Leap Forward and the Cultural Revolution, ever since the end of the 1970s, China has performed an unprecedented comeback – from one of the economically poorest and politically most isolated countries worldwide towards the most important of contemporary emerging states. The People’s Republic of China (PRC) has become the second largest economy in GDP terms after the US, and is projected to soon overtake it (Economist 2010; Fogel 2010). It has also displaced Germany as the leading exporting nation (WTO 2010). This renewed influence has brought

Introduction

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about fresh self-confidence. This has for instance translated in China demanding more of a say in global politics such as in the framework of international organisations which have thus far been dominated by representatives of European or Northern American countries (IMF 2013). In comparison to Europe, however, China is still more focused on its own domestic development, notably its economic growth and industrialisation. Although China has been increasingly active in global affairs, it is still at best a “partial power” in many respects (Shambaugh 2013). Overall, both China and Europe are now key actors in contemporary global politics. Nevertheless, their recent respective developments have not come about without problems. For almost a decade, European integration has faced considerable difficulties. Fundamental issues such as the democratic deficit and the Union’s finalité in terms of widening and deepening have slowed enthusiasm for “one Europe” (Fischer 2000). As a result, the Constitutional Treaty was rejected by citizens of founding members of the Union (Taggart 2006). The financial crisis which broke out in 2008 has had disastrous consequences in a number of EU member states. It has even put Europe’s common currency and the European integration project as a whole into question (see for example Keutel 2012). Despite a multitude of summits, crisis meetings, emergency measures, and proposals for mid- to long-term solutions, a genuine way out of the crisis is still not in sight at the time of the writing of this chapter.1 At the same time, China has been regarded as an important partner in easing the economic difficulties on the European continent. Although certainly not untouched by the on-going global economic downturn, the PRC has managed to navigate relatively safely through the financial crisis, especially compared to the US or Europe. As a result, China’s relative global influence has increased and the global geopolitical map may have been durably changed. It should however not be forgotten that the great transformation of the past three decades has vastly changed Chinese domestic politics, society, and cultural values. This has certainly not happened without problems. China is aiming to realise its long-planned urbanisation. In the past decades, hundreds of millions of peasants have moved from the countryside to cities and this migration will continue in the years to come. Massive urbanisation will impact on the Chinese economy, on the public service system, and on socio-political structure (G. Wang 2011). Maintaining the formidably high economic growth rates of the past years is not sustainable. Hence, the PRC’s leadership seeks to shift the 1

Mid 2013.

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development pattern of the Chinese economy towards more durable growth rates and towards social welfare (Economist 2013a). Environmental pollution as well as food safety problems and their consequences are important issues that have caused public discontent and that could even be a trigger for social instability (Zhang et al. 2010). Over the past few years, public protest against environmental pollution has become one of the most important sources of contentious politics in China (Deng and Yang 2013). The domestic drive to increase geopolitical security makes China’s leaders seek closer collaboration with regional partners, such as in the framework of ASEAN or the Shanghai Cooperation Organisation. Nonetheless, tensions remain. The PRC’s neighbours do not easily accept Beijing’s drive to realise its national interests or to establish its regional leadership (Nathan and Scobell 2012). This is apparent notably in relation to the Diaoyu/Senkaku islands dispute, but also with major neighbours such as India (cf. Kaplan 2010). While China seeks to establish a new position in global politics, all the above-mentioned issues make the previous and the current Chinese leadership focus much energy on keeping up political stability in and around the country. China is struggling to maintain economic development and political adaptation so as to handle its increasing internal challenges. The process of economic and political transition, which involves rebuilding the party-state and state-society relations, remains challenging (Shambaugh 2008). China’s future trajectory has many options. The way China as well as Europe will pursue their development and build up their international status is still uncertain (Shambaugh 2011). Nonetheless, the institutions and experiences of the EU when it comes to social integration, cohesion, and security are certainly interesting for China to learn from (Song 2010).

Sino-European Relations: Partnership, Competition or Co-Evolution? While both China and the EU are facing immense domestic challenges, they are still key actors in contemporary global politics. The hegemonic structure of global politics, dominated by the United States, is more and more questioned by the academic community in International Relations (Chomsky 2003). As a result, the nature and development of the relationship between China and Europe has an increasingly important bearing on contemporary global politics. Both Chinese and European leaders have realised this. As a consequence, the initiatives to formalise,

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Introduction

legalise and institutionalise relations between China and Europe, that is the European Union as well as its member states, have been plenty. Having established diplomatic relations in the year 1975, China and the European Community (EC) concluded a Trade and Cooperation Agreement about ten years later (Chen 2009). Relations were frozen by the EC after the 1989 Tiananmen incident. This date marks the EU’s imposition of an arms embargo that continues up to the present day (Tang 2005). Despite the diplomatic consequences of 1989, China-Europe relations quickly normalised in the 1990s (Ash 2007, 192). Economic prospects in both regions were decisive for this rapprochement. On the Chinese side, it was the consolidation of the Special Economic Zones (SEZ) and further economic liberalisation in China, which was also pushed with a view to prepare for WTO membership. On the European side, the conclusion of the common market with the Maastricht Treaty, the decisions to considerably enlarge the EU and to even establish a common currency were crucial. However, economic ties were just a bridge to develop relations more generally and to diversify them. Thus, high-level dialogues in the areas of environment, science and technology, and even human rights have since been held regularly. In 1998, the first EU-China Summit was held in London, and in 2003, the EU’s first formal Strategic Partnership was established with the PRC (Cirlig 2012). With relations flourishing up until a few years ago, scholars have dubbed those years the “golden period” of harmonious EU-China relations (Shambaugh, et al. 2007, 303-338). Nonetheless, competition and conflict have recently increased: intervention and responsibility in crisis regions such as Libya or Syria, burden-sharing in climate change, human rights and sovereignty issues, market access, export limitations on rare earths, potential dumping and protectionism, most recently with the solar panel case, and intellectual property rights are key areas of conflict. With this backdrop, are China-Europe relations still a win-win situation with a genuine Strategic Partnership or does the changing geopolitical balance imply more competition? To describe and explain international relations, scholars often make use of the categorisations “cooperation and conflict” (Majeski and Fricks 1995). This simplification can be a useful analytical tool. Moreover, despite increasing global interdependence, outright violent conflict and wars are certainly still not a thing of the past. To describe China-Europe relations, these two classic IR terms are however not that appropriate. With the exception of the nineteenth century Opium Wars and the successive ‘Unequal Treaties’ between China and European powers, China-Europe relations have not been marked by outright wars or

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threatened by violent conflict—certainly not over the past three decades. The reasons are manifold. Two of the most important ones are the Cold War and China’s special role therein, notably after the Sino-Soviet Split in the 1960s. Back then the Western world and China had similar positions when it came to opposing the Soviet Union. This was despite the fact that their systems were obviously different (that is Communism versus Capitalism) as well as their basic standpoints as to how to cope with the Soviet Union’s geopolitical influence. Ever since the Cold War ended, economic interests, together with a relatively low security interest due to geographic distance and the United States’ security interests in Asia, have dominated the Europe-China agenda (Rogers 2012, 10-14). Taking into consideration the brief account of China-Europe relations over the past four decades, notably the honeymoon of the early 2000s and the recent problems, the dyad “partnership versus competition” is a more appropriate analytical tool to describe China-Europe relations of the early twenty-first century. However, “partnership and competition” is also a categorisation of two ends of a scale which disguises the many nuances of any relationship between two states or other entities in international relations. Moreover, given the rich diversity particularly of China-EU relations, we not only observe frequent shifts from partnership to competition and vice versa but also that both characterisations may apply simultaneously. This can for instance be the case across different policy domains. Thus, while relations in the financial domain are marked by cooperation, especially with China supporting the EU to find a way out of the debt crisis, trade relations have soured. The EU recently imposed anti-dumping measures on China as it suspects that the PRC’s government has subsidised solar panel production to an extent that is against the rules of free trade under the WTO. China responded by imposing anti-dumping measures on certain chemicals and by launching its own investigations relating to wine imports from Europe to China. Despite official denials a trade war between China and the EU seems to be looming (Economist 2013b). In a similar vein, China may simultaneously be a partner of one EU member state and a fierce competitor of another. Since the second half of 2008, trade relations between Germany and China have flourished despite the debt crisis. They accounted for one third of all EU-China trade. Moreover, German investment in China accounts for one quarter of the entire investment of the EU in China. As a consequence, Germany overshadows all its European peers in terms of economic ties with China. This also became obvious when the new Chinese premier Li Keqiang chose Germany as the destination for his first visit to the EU (Tichauer

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2013). Meanwhile, French products were boycotted in China. This was due to former French president Sarkozy’s threat not to attend the opening ceremony of the Olympic Games in Beijing in summer 2008, as well as to meet the Dalai Lama at the end of that year. This was a sign of protest against Beijing’s minority policy in Tibet and the unrest in Lhasa and other Tibetan cities in spring 2008 (Blecher 2009). During the more recent dispute on solar panels, France has been regarded by China as the leader of the lobbying activities targeting the European Commission to make the EU impose anti-dumping measures on China. China subsequently made similar anti-dumping investigations for wine imported from the EU to China. France is clearly the biggest European wine exporter to China. The action can hence be regarded as a kind of retaliation (Hook 2013). In order to explain the simultaneity of partnership and competition in Europe-China relations, Putnam’s theory of two-level games is helpful. In his seminal article “Diplomacy and Domestic Politics: The Logic of TwoLevel Games”, published in 1988, Putnam argues that outcomes at the international level, such as the nature of a relationship of two entities, are the result of negotiations at the domestic as well as at the international level. A state’s preferences are domestically formed through negotiations of societal actors within the state. Governments then interact and bargain with other states at the international level with a view of securing and implementing the interests back home (Putnam 1988). The brief account of the development and the current state of EU-China relations shows that the nature of this relationship is closely linked to the respective aboveoutlined internal challenges and pressures in both regions. These vary across policy areas, across time, and as far as the EU is concerned, they also vary across member states—and across European states that are not members of the EU. Given this complexity, a simple dyad of partnership and competition does not seem sufficient. In his book “On China”, the former US Secretary of State Henry Kissinger recently labelled China-US relations as a case of “co-evolution”. To him, both the US and China “pursue their domestic imperatives, cooperating where possible, and adjust their relations to minimize conflict” (Kissinger 2011). This description seems to be an appropriate summary of China-Europe relations in current global politics as well. A third overarching research question hence brings together the themes of this book: are Sino-European relations another case of “co-evolution”?

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Structure of the Book This book comes at a time when China-Europe relations are becoming ever more important, given global interdependence, the rise of China, the changing architecture of the EU and, last but not least, the role of China in the European debt crisis. The book is a contribution to determine if Europe-China relations constitute a cooperative partnership, a competition, or a co-evolution. Due to the development and the diversity of China-Europe relations, research on this topic is by nature a multi- and interdisciplinary endeavour. This has many advantages. Analysing Sino-European relations can contribute to theoretical and empirical advances for a multitude of disciplines in the social sciences. Most obviously, it allows us to understand China and Europe better and can hence contribute to Area Studies sub-disciplines such as European Studies or Sinology (cf. Algieri 2002; Scott 2007). The current case of anti-dumping measures on Chinese solar panels or disputes regarding intellectual property rights can deliver interesting insights for International Law (Snyder et al. 2012). Recent work on the different perceptions of Europe in China and China in Europe helps us understand sociological and cultural mechanisms in different areas in the world (Wang and Popescu 2011; Stumbaum 2012). The vibrant exchanges and collaboration in the field of science and technology, such as renewable energy or urbanisation, can even generate knowledge that is useful beyond the social sciences, such as engineering.2 Most fundamentally, however, China-Europe relations are a promising case study to advance the discipline of International Relations (see for example Shambaugh et al. 2007; Crossick and Reuter 2007; Men and Barton 2011; Kerr and Liu 2007). It links the new phenomenon of emerging economies in global politics, notably China, with that of a supranational organisation, the European Union. Both the emerging countries which are commonly referred to as “BRICS” as well as the centralisation of state sovereignty in the form of supranational organisations are two crucial phenomena of contemporary global politics (Armijo 2007; Perkmann and Sum 2002). It is for this reason that the book’s overarching research question of Sino-European relations being a case of partnership, competition, or coevolution is close to the research agenda of political scientists specialising in International Relations. The multi- and interdisciplinarity is enshrined in 2

The EU-funded Science and Technology Fellowship in China (STF China) was an initiative that fostered such disciplinary spill-over effects, see STF 2012.

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Introduction

the book through its division into four themes: firstly, High Politics and Security Relations; secondly, the European Sovereign Debt Crisis; thirdly, Energy and Environmental Issues; and finally, Soft Power and Public Diplomacy. The book is authored by Chinese and European scholars in equal numbers. For each section there is one contribution from a European author and one contribution from a Chinese author. We thereby hope to enrich the still low but increasing number of works on China-Europe relations by giving a balanced perspective for each of the themes discussed in this book. One chapter of each section is of a more general-theoretical nature, the second one is more specific in nature, such as in the form of a case study. Early-stage researchers and young scholars from China and Europe make up the team of contributors to this book, giving it a futureoriented and innovative outlook.

Synopsis by Chapter The book’s first theme deals with the High Politics and Security Relations between China and Europe. Anastas Vangeli from Renmin University of China contributes a European view on the first theme. Given the current political difficulties, notably the end of the “honeymoon” period and the continuing European debt crisis, Vangeli investigates the obstacles to a greater commitment for a partnership between Europe and China. His basic argument is that the self-perceptions that the EU and China hold and the attitudes that they have about each other, notably as global actors, are not congruent: China is quite self-confident about its own role as a rising player at the international stage. China is however also conscious that it is still a developing country and hence limited when it comes to the impact that it can and that it should have on the world stage. Europe, by contrast, is quite sceptical about the potential of China as a rising power. While the EU is currently frustrated about its own impact on global politics, notably due to the debt crisis, it still seeks to exert influence as a “normative power”. Examples are (potential) interventions in crisis regions, the EU’s development aid, or its criticism of China regarding human rights. Meanwhile, Vangeli finds that China is altogether disillusioned about the EU’s potential as a global actor—notably as one that accepts the rise of new powers such as China, and the fact that China’s politics are based on different concepts and ways of pursuing foreign policy. This incongruence is fundamentally based on domestic insecurities and self-doubts that both China and the EU have to face. It leads to incompatible and partly conflictual action and hence a rather

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gloomy prospect for developing a genuine strategic Sino-European partnership. Vangeli illustrates this by giving a round-up of the most important political and diplomatic issues in recent EU-China relations. In the first theme’s second chapter, He Yin from China Foreign Affairs University provides a Chinese perspective on arguably the highest of political fields: security and defence policy. More precisely, he investigates the opportunities and challenges of China-EU cooperation in UN peacekeeping operations. In his view, UN peacekeeping missions provide an opportunity for developing a partnership based on Beijing’s and Brussels’ basic common interest in such missions. They are enthusiastic (China) and experienced (EU) international peacekeepers. Moreover, they share common views regarding the promotion of multilateralism in global politics so as to balance the US’s influence and to defend international institutions. Finally, Europe and China are, in the author’s view, both great powers. They hence have the competence and the capabilities in terms of both hard and soft power to decisively contribute to the success of UN peacekeeping operations. Despite such common ground, there are however conceptual disagreements with regards to Westphalian norms. While Beijing cherishes the norm of national sovereignty, Brussels is much more willing to compromise this norm for the sake of the “responsibility to protect” (R2P). There are also different views on the actual goals of peacekeeping, such as giving priority to institution building (“liberal peace”) or rather to economic development (“developmental peace”). These are two reasons why security relations between the EU and China are not yet mature. The author finally argues that although Sino-European cooperation on peacekeeping is not impeccable, there is room for improvement. Such cooperation could benefit not only bilateral political relations, but also world peace. The book’s second theme has a particular focus on the consequences of the European Sovereign Debt Crisis on Europe-China relations. Providing a Chinese perspective, Wang Liang and Shi Wentao from Tsinghua University argue that the Euro-crisis is not a fundamental threat to European integration. For once, the crisis was triggered by external factors, such as the bankruptcy of Lehman Brothers. Furthermore, the authors hold that the Euro-crisis is due to the weak economies at the periphery. Core countries, that is the engines of European integration such as Germany or France, are not as economically threatened as Portugal, Italy, Greece, or Spain. While Wang and Shi do not deny that such countries urgently need to improve their competitiveness, they also take the view that the only way out of the crisis would be deeper integration. More specifically, to ease the Euro-crisis and to save the European

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economy, policy changes should focus on economic and financial policy integration. The authors particularly emphasise that the EU needs to introduce strict fiscal discipline. To this end, the European Central Bank (ECB) and central institutions should have more power to coordinate collective action and to build market confidence such as by becoming a “lender of last resort”. In addition, the authors suggest setting up a PanEuropean financial regulatory and audit agency to supervise the member states of the Euro zone. In terms of such centralisation measures, Wang and Shi believe that the EU can actually learn from China. In general, China can certainly be a constructive partner in the endeavour to put an end to the Euro-crisis. However, the Euro-crisis is still the internal problem of a group of developed countries. China is not in the position to “save Europe”, being an EU-external actor that is several thousand kilometres away and, on top of that, itself a developing country with many domestic issues to tackle first. Giving a European view on the European sovereign debt crisis, Antonia Hmaidi from the Graduate Institute of International and Development Studies, Geneva, tackles the same issues raised by Wang and Shi. She seeks to answer two questions: first, why Chinese involvement in measures to mitigate the impact of the Euro-crisis has been volatile and inconsistent; second, she examines why China has favoured FDI, bilateral government talks, as well as measures channelled via the IMF over ChinaEU measures, that is, Beijing talking to Brussels directly. Using Liberal International Relations theory as a lens, Hmaidi argues that the hesitant and inconsistent reactions of the PRC to the Euro-crisis have been the result of domestic pressures. These pressures are both ideas as well as interests. Hmaidi’s study is empirically rich. She backs her arguments with a myriad of sources that reflect Chinese opinion, both at the elite- and at the general level, from newspaper articles, academic papers, to top Chinese leaders’ speeches, and micro-blogs. Domestic interests have evolved in the course of the crisis. Thus, notably in 2010 and 2011, the belief that “saving Europe means saving China” was very common. Supporting Europe to put an end to the crisis is hence an integral national interest for China. A strong Europe is also in the interest of China’s preferred multi-polar structure of global politics, notably to keep its main rival the US in check. Finally, it helps realise China’s ambition to boost its international status. However, in order to help Europe, China clearly gives preference to negotiating with individual member states directly rather than with Brussels. One main reason is the lack of “one voice” of the EU’s China policy; another is that China generally prefers to deal with nationstates rather than with supranational organisations. Nonetheless, the need

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to “help Europe” has increasingly been questioned. In the course of the crisis, voices became louder about the fact that the gloomy situation was essentially Europe’s fault. Its welfare system for instance is too generous in the eyes of many Chinese. In congruence with Wang and Shi’s findings, Hmaidi shows that it would not only be too risky for China to invest in countries such as Greece but being a developing country, China is also not in the position to help Europe solve its problems. Moving on to the third theme of the book, Energy and Environmental Issues, Maximilian Rech from Freie Universität Berlin contributes a chapter on Sino-European “Environmental Policy in a Changing Environment”. The “changing environment” that Rech refers to is to be found at the domestic level. The author argues that Sino-European international environmental cooperation can by no means ignore the innerChinese and inner-European negotiations and bargaining related to green technology, mitigating climate change, and decreasing waste. The chapter builds on a theoretical framework of Ideal-Type Rational Choice theory, Rational Choice theory with regard to global commons, as well as New Liberal theory and the Two-Level Game. This theoretical framework helps explain action in both China and Europe in response to energy and environmental policy challenges. Rech shows how domestic actors from businesses to NGOs to regular citizens shape state preferences. There are obvious differences in this process, in particular due to the fact that the EU is based on a liberal democratic system while China is an authoritarian state. This not only has theoretical but also methodological implications, such as a more heavy reliance on secondary sources for the case of China. Nonetheless, the author argues that domestic bargaining is decisive in both Europe and China to explain policy outcomes. The chapter explains in particular how the respective domestic actors shape Chinese and European policies to tackle the triple challenge of (1) transaction costs, (2) distribution conflicts, and (3) the free-rider problem. It does so via two case studies: waste management and climate change negotiation. The prevalence of utility-maximising domestic actors in shaping preferences in these two areas and beyond supports this book’s overall theme, notably the third scenario of co-evolution: China and Europe “pursue their domestic imperatives, cooperating where possible, and adjust their relations to minimize conflict”. Rech emphasises that the latter, that is cooperation and the eventual creation of a genuine Sino-European green partnership, however requires “bold action”, also at the international level. Complementing this with a Chinese view, Li Xinlei from Freie Universität Berlin has studied the link between China’s renewable energy policy change and its implications for climate change and energy

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Introduction

cooperation between China and the EU. Starting from the puzzle that China is one of the biggest polluters and at the same time the biggest investor in renewable energies (RE), Li finds that the PRC’s “green transformation” has taken place in three steps: first, China launched a tendering policy in 2003. This allowed for large-scale RE projects in the PRC; second, China introduced feed-in tariffs in 2005 to keep the RE sector profitable; third, China has been working on developing a quota system since 2009 until today. The author finds that parallel to that, EUChina cooperation in the energy sector and to mitigate climate change has also evolved in three phases: first, institutional cooperation for clean energy was launched between 1994 and 2002; second, a number of more formalised dialogues and partnerships in the area followed between 2003 and 2008; third, climate change and energy collaboration became a key pillar of Sino-European Cooperation in 2012 through the establishment of regular top-level meetings. This reveals a congruence of domestic agendasetting in both Europe and China which in turn makes further bilateral cooperation in the future highly likely. The fact that such cooperation has been bureaucratically institutionalised through a myriad of projects and institutes supports this viewpoint. However, the author also finds that partnership and competition co-exist in the area of energy and climate change. The most recent and arguably prominent case is the imposition of European anti-dumping measures against Chinese solar-panels. Li argues that this is a major reason why China seeks to further develop its domestic RE market. Despite the recent trade frictions, Li finds that the PRC has not ceased to strengthen dialogue with its European counterparts; at the toplevel and also through business-to-business consultations. The fourth theme of the book then goes back to the roots of ChinaEurope relations. It investigates the role of culture by focusing on two prominent issues in global politics: Soft Power and Public Diplomacy. Providing a European view, Julia Soeffner from Freie Universität Berlin has contributed a chapter on mutual perception and the role of soft power in EU-China relations. The author takes a Constructivist approach and elaborates on the self-perception of the EU and China respectively, as well as their world views. She notably investigates the sources that shape these views. In line with the literature on Normative Power Europe, the author holds that the EU generally sees itself as a force for good in the world that is based on values such as individualism, human rights, freedom, and democracy. Key philosophers from Greek Classical thinkers to JeanJacques Rousseau and Thomas Hobbes but also the Christian religion— and its secularisation—are the cultural sources for these values that the EU considers not only to be European but also universal. This in turn is a

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justification for the EU to promote such values in the world. China does not deny their validity. However, it subordinates them to values such as harmony, collectivism, hierarchy, and prosperity of society as a whole. Such ideas are rooted in Confucian thought, arguably the most influential philosophical strands in China. When it comes to international relations, China insists that safeguarding these values is always a domestic affair. It sharply criticises any interference of other states, or of the EU. This is one reason why the perception of China in Europe tends to be negative. In order to mitigate this and also to find out about the EU’s soft power influence on China Soeffner tests whether Chinese decision-making has come closer to the EU’s basic values. Three cases of European-Chinese interactions are examined: firstly, the interaction of the EU and China in international organisations; secondly, the human rights dialogue between China and the EU; and thirdly, public diplomacy initiatives such as cultural exchanges. Overall, the prospect of a Sino-European partnership in these fields is rather negative. For Soeffner, the only potential way to bring China and Europe culturally closer together is people-to-people exchange, such as through study programmes or other direct interaction of Chinese and Europeans. The book’s final chapter by Wang Haiping from Shanghai International Studies University and He Zhigao from Freie Universität Berlin gives a Chinese view on soft power and public diplomacy in SinoEuropean relations. The two authors dig deeper into the possibility of cultural exchange raised by Soeffner and link it to the book’s overall theme of co-evolution of EU-China relations. However, their focus is on China’s potential to exert soft power over Europe. The authors show how Chinese public diplomacy, that is, foreign policy with the general public, civil society, and other stakeholders as a target and not just governments, is now seen as a key tool by Chinese leaders to promote a benign coevolution of China-Europe relations. The authors contextualise this development by exploring the recent interest shown by Chinese leaders in the concept of soft power, which Joseph Nye has defined as influence of one actor over others not by physical force, such as armed forces, but by attraction; by making China a popular country in the world. A catchphrase that has frequently been used by Chinese leaders over the past months is the “Chinese Dream”. It has some similarities to the “American Dream” that has made the United States of America such a popular country in the world. While the Chinese Dream certainly deserves further observation and investigation, its actual meaning is still not clear. Wang and He therefore investigate in their chapter more concrete public policy measures, namely the use of educational measures, notably the Confucius

14

Introduction

Institutes and study exchange programmes. The Confucius Institutes are centres located in cities all over the world, notably in Europe, for foreigners to learn the Chinese language and to understand and appreciate Chinese culture. Their growth over the past few years has been impressive and their design reveals the potential to be a successful public diplomacy tool. Yet, the Confucius Institutes’ exact impact on improving China’s image in the world and notably on the European continent needs long-term investigation. Wang and He agree with Soeffner in that direct people-topeople exchange of Europeans coming to China and Chinese coming to Europe is arguably the most effective way to mitigate misunderstandings and to improve Sino-European relations from the bottom-up. Overall, the book demonstrates that China and Europe are certainly willing to develop their relations into a genuine partnership. In the various chapters, it emerges that there is substantial common ground to provide a fundament for such partnership, such as in the will to implement peacekeeping operations; the determination to develop renewable energies and to mitigate climate change; the wish to end the financial crisis; or the objective to foster Sino-European people-to-people exchange. However, there are a number of obstacles in the way that make the current partnership fragile and its future prospects not as rosy as they were during the “honeymoon” period. Both the Chinese and the European authors of this book agree that there are still fundamentally different understandings as well as prioritisations of key concepts that condition their relationship, such as cultural values or international norms. While looking at EuropeChina relations from many different angles, most authors found that interests and ideas negotiated and bargained at the domestic level in both China and Europe are decisive to understand the respective preferences of China and Europe. Due to the systemic, political, cultural, and developmental differences of Europe and China, these domestic bargaining processes are at times very different, even opposing. They hence may lead to diverging preferences as well. The result is regular competition between China and Europe across policy areas, across time, and across member states of the EU. Given the simultaneous presence, first, of a will for partnership, second, unavoidable competition, and third, the prominence of domestic pressures, Henry Kissinger’s concept of “coevolution” seems appropriate to describe China-Europe relations in the first half of the twenty-first century: both China and Europe “pursue their domestic imperatives, cooperating where possible, and adjust their relations to minimize conflict”.

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Fogel, Robert. 2010. “$123,000,000,000,000*.” Foreign Policy, February. http://www.foreignpolicy.com/articles/2010/01/04/123000000000000. Hook, Leslie. 2013. “China Takes Aim at France with EU Wine Export Probe.” Financial Times, June 5. http://www.ft.com/cms/s/9229031acdb1-11e2-8313-00144feab7de,Authorised=false.html?_i_location= http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F9229031acdb1-11e2-8313-00144feab7de.html&_i_referer=#axzz2Yju36PJe. IMF. 2013. "IMF Members' Quotas and Voting Power, and IMF Boards of Govenors." http://www.imf.org/external/np/sec/memdir/members.aspx. Kaplan, Robert D. 2010. “Geography of Chinese Power: How Far Can Beijing Reach on Land and at Sea, The.” Foreign Affairs 89: 22. Kerr, David, and Fei Liu. 2007. The International Politics of EU-China Relations. Oxford; New York: Oxford University Press. Keutel, Anja. 2012. “Die Europäische Union zwischen einheitlicher Integration und Abstufung.” University of Leipzig 5. Serie Europa – Europe Series. http://www.uni-leipzig.de/~lews/wp-content/uploads/20 12-05onl-Keutel-Integration.pdf. Kissinger, Henry. 2011. On China. New York: Penguin Press. Majeski, Stephen J., and Shane Fricks. 1995. “Conflict And Cooperation in International Relations.” Journal of Conflict Resolution 39 (4) (December 1): 622–645. Manners, Ian. 2002. “Normative Power Europe: A Contradiction in Terms?” Journal of Common Market Studies 40 (2): 235–258. Men, Jing, and Benjamin Barton. 2011. China and the European Union in Africa: Partners or Competitors? Farnham, England; Burlington, Vt.: Ashgate. Nathan, Andrew J., and Andrew Scobell. 2012. “How China Sees America.” Foreign Affairs, September 1. http://www.foreignaffairs. com/articles/138009/andrew-j-nathan-and-andrew-scobell/how-chinasees-america. Perkmann, Markus, and Ngai-Ling Sum, ed. 2002. Globalization, Regionalization and Cross-Border Regions. Basingstoke: Palgrave. Putnam, Robert D. 1988. “Diplomacy and Domestic Politics: The Logic of Two-Level Games.” International Organization 42 (03): 427–460. Rogers, James. 2012. “ORF South China Sea Interview.” http://www. observerindia.com/cms/sites/orfonline/modules/southchina/attachment s/issue8_1343821958608.pdf. Scott, David. 2007. “China-EU Convergence 1957–2003: Towards a ‘Strategic Partnership’.” Asia Europe Journal 5 (2) (June 1): 217–233. Shambaugh, David. 2013. China Goes Global: The Partial Power. Oxford: University Press.

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Shambaugh, David. 2011. “Coping with a Conflicted China.” The Washington Quarterly 34 (1): 7–27. Shambaugh, David L. 2008. China’s Communist Party: Atrophy and Adaptation. University of California Press. Shambaugh, David, Eberhard Sandschneider, and Hong Zhou. 2007. China-Europe Relations. Perceptions, Policies and Prospects. New York: Routledge. Snyder, Francis, Albrecht Sonntag, and Wei Shen. 2012. The “Visible Hand” European and Global Perspectives on Financial Market Regulation and Economic Governance. Brussels: Bruylant. Song, Xinning. 2010. “European ‘Models’ and Their Implications to China: Internal and External Perspectives.” Review of International Studies 36 (03): 755–775. STF. 2012. “Science and Technology Fellowship Programme. Background.” http://www.euchinastf.eu/?q=node/6. Stumbaum, May-Britt U. 2012. “How Does Asia View the EU.” NFG Working Paper (1/2012) (March). https://asianperceptions.eu/sites/ default/files/NFG_Working_Paper_01_2012.pdf. Taggart, Paul. 2006. “Keynote Article: Questions of Europe - The Domestic Politics of the 2005 French and Dutch Referendums and Their Challenge for the Study of European Integration*.” JCMS: Journal of Common Market Studies 44: 7–25. Tang, Shao Cheng. 2005. “The EU’s Policy Towards China and the Arms Embargo.” Asia Europe Journal 3 (3) (October 1): 313–321. Tichauer, Peter. 2013. “Botschafter Shi Mingde: Fakten Und Weniger Schlagzeilen.” Owc.de. January 7. http://www.owc.de/2013/07/01/ botschafter-shi-mingde-fakten-und-weniger-schlagzeilen/. Wang, Guogang. 2011. “Urbanization: Core of Chinese Economic Development Mode Transition (Chinese original: ѝഭ㓿⍾ਁኅᯩᔿ 䖜ਈⲴ䟽ᗳ).” Economic Research Journal 12: 70–81. Wang, Zhengxu, and Bogdan Popescu. 2011. “Knowledge Breeds Affects: Understanding EU’s Internal Complexities Help Increase Chinese Perception of the EU and Europe.” Chinese Views of EU: Policy Papers Series 2. WTO. 2010. “Trade to Expand by 9.5% in 2010 After a Dismal 2009, WTO Reports.” International Trade Statistics. March 26. http://www. wto.org/english/news_e/pres10_e/pr598_e.htm. Zhang, Junfeng, Denise L Mauzerall, Tong Zhu, Song Liang, Majid Ezzati, and Justin V Remais. 2010. “Environmental Health in China: Progress Towards Clean Air and Safe Water.” The Lancet 375 (9720): 1110–1119.

THEME I HIGH POLITICS AND SECURITY RELATIONS

CHAPTER ONE ON THE OBSTACLES TO GREATER COMMITMENT IN SINO-EUROPEAN RELATIONS: A EUROPEAN VIEW ANASTAS VANGELI Introduction In its early years, the Strategic Partnership between China and the European Union (EU) left little room for anything but optimism: the economic exchange between the two regions blossomed; diplomatic meetings, most notably the annual EU-China Summits, resulted in numerous joint statements and declarations; meanwhile much of the political and any other discrepancies between the two sides were put on hold. Beijing-Brussels cooperation solidified in the wake of the American display of hegemonic tendencies and the launch of the war in Iraq in 2003 to both the EU’s and China’s disapproval. At the height of the SinoEuropean relationship, European leaders even pushed for lifting the infamous arms embargo on China. This initiative, however, did not translate into policy measures. Nonetheless, the overall enthusiastic discourse that once surrounded Sino-European affairs has since been toned down. A mainstream perception is that the promising enthusiasm has yet to be translated into a solid and mature Strategic Partnership. Moreover, sceptical stances about the possible transition of the relationship from carefree honeymoon to quarrelsome marriage have received a central position in the discourse on the Sino-European partnership.1 What are the reasons for such a divergence, and the wearing out, or as Holslag (2011) puts it, the “elusion of the China-EU axis”? The answer to 1

For more on the point of post-honeymoon troubles, see Shambaugh 2010.

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this conundrum is neither simple nor monolithic. In recent years China and the EU have been involved in numerous trade disputes, collided over politically sensitive issues, and failed to coordinate on issues of strategic importance. The two sides consider their relations of only secondary or even tertiary importance. China’s and Europe’s respective relations with the US and their neighbourhoods still come first. Moreover, European and Chinese policymakers lag much behind their business counterparts when it comes to working together.2 This chapter does not aim to assess the state of the Sino-European relationship in its totality. Instead, its purpose is to discuss the actual and potential obstacles to deeper commitment and to materialising the promise of a Strategic Partnership. The elements of this discussion are primarily sought in the ways China and Europe see themselves and each other on the global stage, and the ways in which they (inter)act. First, it looks at the factors that inform the domestic and foreign policies of the two sides, and their respective domestic concerns and self-perceptions. Secondly, it examines at a greater length the responses to the foreign policy behaviour of the other side. Here, the chapter employs a qualitative analytical model that considers two sets of variables in order to assess the Sino-European relationship and the potential obstacles (see Table 1.1). It looks at Europe’s and China’s self-perception, and the perception of the other, in the context of three cases: the effects of European normative power on the Sino-European relationship; the interaction between the two sides on global issues; and the growing role of China as an actor within Europe. Table 1.1 Proposed Model for Analyzing Sino-European Relations Aspect Towards EU Towards China

China’s attitude

EU’s attitude

Profiling China and the European Union The relations between China and the EU are greatly determined by their inherent cultural, socio-economic and institutional predispositions. In 2 This is also seen in the official discourse between the two sides. As Holslag (2011) shows, in the joint statements issued by Chinese and European diplomats concerning the Sino-European Strategic Partnership, the biggest portion of the talk is on trade and economic cooperation, while the rest of the components of the Strategic Partnership receive little attention.

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Chapter One

this respect, “uniqueness” is an important aspect (Men 2010). Out of the four ways in which China and the EU are unique, that Men outlines, two are especially relevant for developing my argument: a) China and the EU walk different “roads”: one is the “socialist road with Chinese characteristics”, the other is the “capitalist road with European characteristics”. Moreover, they run on two different reformist agendas as they are both in different stages of development, China being the largest developing country in the world and the EU being a Union of a number of developed countries (Men 2010, 6-9). In addition, China and the EU have different historical legacies, and their respective political cultures are shaped by different narratives and ways of reading history. These notions are important in defining China’s and the EU’s domestic imperatives and foreign policy priorities, and their respective policy agendas. China, for one, prioritises the maintenance of the country’s economic development while maintaining, in turn, the stability of the one-party political system. It is primarily through economic development that the state can bring harmony to its people, although the overall pursuit of legitimacy is more varied and nuanced than this (Gilley and Holbig 2009; Bradford and Posner 2011). The Communist Party of China (CPC) sees itself as the sole actor that can properly manage this process. Moreover, state sovereignty in the Chinese view is a sacred political value and a leading principle. The state has exclusive rights and insurmountable power within its own premises. This enables its maximum efficiency in fulfilling development objectives. This is also the main source of legitimacy for the Chinese political elite, which has assumed a paternalistic, eudemonic model of leadership. It is also the leading idea behind Chinese foreign policy, especially its normative aspects. This is an approach that Bradford and Posner call “minimalist developmentalism” (2011). The Chinese government has successfully pursued economic growth and has drastically alleviated poverty across the country. Nonetheless, it has been unable to prevent the dramatic and ever more visible adverse effects of its policies, such as the stratification of society, rising inequality, the snowballing of corruption, and crony capitalism (Whyte 2012; Wong 2012). China’s economy is slowing down and faces a potential fall into the middle-income trap (Woo 2012; Eichengreen et al. 2013). Moreover, China struggles with a chronic shortage of energy supply and relatively inefficient energy usage (Kennedy 2010; N. Zhang, Lior, and Jin 2011). Contingent to the energy issue is the deterioration of the environment, which is now one of the leading causes of social unrest and political

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contention (Bloomberg News 2013).3 Politically speaking, despite the growing pains and the challenges, the Party has remained in power and in general it has won the confidence of the people. However, China sees growing and ever more visible discontent. China is also undergoing a generational shift and a change in values of its constituency. Moreover, China has never been more open to the world, and has never had such lively internal debates owing to the boom of broadband Internet and social media. The Chinese government is increasingly worried about “preserving political stability”. This function entails measures varying from propaganda and censorship to methods of coercion, especially in the aftermath of the wave of political change in Northern Africa, the Middle East, and in neighbouring Myanmar. The public debate has dealt increasingly with the question of legitimacy, and the need for political reform.4 All of this makes China what some Chinese foreign policy pundits call a “pragmatic” and an “inward-looking” state. In a way, these are two characteristics of a typical modern state; one that sees the world beyond its borders primarily through the lens of its domestic imperatives and as a battlefield for realising its narrowly defined “national interest”. Moreover, China often denounces foreign pressure to commit to international agreements by relying on the “China first” and the “most populous country” argument (Zhu 2010). Since the Chinese government works for the benefit of one fifth of the human population, what happens in China is also a matter of global significance. Therefore the international community should have smaller expectations of Chinese leaders and their commitment to international agreements (ibid.). This argumentation is along the lines of David Shambaugh’s take on China as an international actor: one that acts “with an odd combination of hesitancy and truculence” and “remains internally oriented, self preoccupied, pursuing a largely narrow selfinterested foreign policy” (Shambaugh 2010). All of these factors greatly condition China’s domestic and foreign policy orientations. Recently, analysts have labelled China’s foreign policy “a low priority” due to Beijing’s “continued preoccupation with economic growth and internal stability” (Jakobson 2013). Others have even

3

According to a Chinese official “[t]he major reason for mass incidents is the environment, and everyone cares about it now. […] If you want to build a plant, and if the plant may cause cancer, how can people remain calm?” (Bloomberg News 2013). 4 On the point of domestic politics and concerns, see Nathan 2013; C. Li 2013; Su 2013.

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Chapter One

questioned the actual existence of a coherent Chinese foreign policy (Wang 2013). For the leaders of the European Union, on the other hand, the longterm priorities are advancing the integrated liberal economic model, social welfare, human rights and presumptive pacifism, while expanding the Union, building stronger supranational institutions, moving beyond state sovereignty, and stimulating active citizenship (Bradford and Posner 2011). Moreover, an important aspect of the sense of purpose of the EU is spreading its socio-political model abroad; primarily in its immediate neighbourhood, but ideally speaking even in the geographically remotest parts of the world.5 This is the foundation of the concept of “normative power Europe:” Europe which is a foreign policy actor “constructed on a normative basis” has a predisposition to “act in a normative way in world politics” (Manners 2002, 252). The European pursuit of normative power plays an important role in the Sino-European relationship as well. Yet, at the current juncture, the EU’s overall policy-making agenda is subordinated to its own domestic imperatives, that being the recuperation from the shocks caused by the 2008 financial crisis. As the ECFR’s6 scorecard on European foreign policy expresses it, “for the third year in a row, European leaders continued to devote more time to worrying about Europe’s financial health than its geopolitical role” (European Council on Foreign Relations 2013, 9). The public debate in Europe is surrounded by a clout of alarmism, and often a fatalistic sentiment. In the words of Javier Solana, the EU’s former High Representative for Foreign and Security Policy, the current situation is nothing less than an “existential crisis” (Solana 2013). The debate on the crisis stretches well beyond finance, but has implications for a whole range of economic and social policies. Several of the EU member states have amassed frightening amounts of debt, resorted to ineffective and unpopular austerity policies. As a consequence, they are dealing with social upheaval and indignation. This situation has resulted in turbulence in the Euro zone and the emergence of grave discord over the future of the Union. The supranational decisions made in Brussels, 5

As the Treaty of Lisbon (2007, paragraph 24) puts it: “The Union's action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law.” 6 European Council on Foreign Relations

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Frankfurt and elsewhere have stirred anti-EU sentiment in the affected states, and divisions between member states. In many areas, and especially visibly in foreign policy-making, the Union sees enduring difficulties in achieving a common position, as national interests keep colliding. Overall, Europe is seeing a generational shift in its politics moving from being primarily integrationist towards being more nationalistic and Euro-sceptic (Frieda 2013; Torreblanca and Leonard 2013). Finally, over the past few years, the EU has dealt with a crisis of values at home. Political ideals such as liberalism, democracy and postnationalism, once taken for granted, are now under threat due to rising populist and far-right leaders rallying on illiberal platforms. They have a growing representation in the European Parliament, in national parliaments, and governments (see for instance Langenbacher and Schellenberg 2011). Of particular importance is the situation in Hungary, where the right-wing government led by Viktor Orbán and the FIDESZ party has instigated a comprehensive revision of the legal and political framework, installing a regime that is often compared to past European administrations. The EU Commissioner for Home Affairs Cecilia Malmström has labelled the situation in Hungary “a disgrace for Europe” and has warned of the rise of the right wing in other European countries. In this sense, Europe does not only have the immense task of promoting its values abroad; first of all, it needs to reinforce them at home.

Normative Dead Ends As we have seen in the overview above, China and the EU have divergent senses of purpose, divergent worldviews, and ultimately, divergent paths of action in the international arena. These can be succinctly labelled as a path of “minimalist developmentalism” (China), which is exclusivist and does not plead to be replicable, and the “pacifist social welfare model”, often led by the plea for universalism (for Europe, see Bradford and Posner 2011). According to Bradford and Posner, China and Europe are both exceptionalist actors when it comes to their positioning on the global stage. Therefore, China and Europe are poised to have misunderstandings on issues regarding norms and values. Such misunderstandings are more likely when normatively charged foreign policy actions of the one side directly challenge the policies of the other. Of special importance are instances when certain positions of the one side aim at domestic concerns of the other.

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Chapter One

The most illustrative example for this are exercises in normative power undertaken by the EU with regards to Chinese domestic affairs.7 European politicians frequently discuss human rights and liberties, minority rights, media freedom and democratic prospects, as well as economic liberalisation in China. All of these issues are divergent, if not conflicting with the set of norms or values on which China is based. Finally, even the act of questioning China’s domestic affairs itself is challenging the Chinese rhetoric of non-interference in one another’s domestic affairs. Table 1.2 summarises this divergence of attitudes: Table 1.2 Attitudes towards Oneself and Each Other with Regards to Issues Concerning Core Norms and Values Aspect Towards EU as a normative actor

China’s attitude EU interferes in Chinese domestic affairs and negatively affects China’s image abroad

EU’s attitude EU needs to promote/protect EU’s core values

Towards China as a normative actor

China needs to maintain its sovereignty, stability as well a favourable image abroad

China as a one-party state lacks proper institutions that protect/promote EU’s core values

One particular case that mirrors this situation is Tibet. The Tibetan issue is prominent in the debate in Europe in general, since it is framed as an issue of self-determination and a struggle for minority rights. This has been additionally fuelled by the “exoticisation” of Tibet and Tibetan Buddhism in the European public discourse (see Anand 2007). Nonetheless, for China, Tibet is a “core interest”, an exclusively internal issue, and as such a matter outside the scope of foreign policy. The Chinese Ministry of Foreign Affairs listed Tibet as one of the crucial political issues between the two sides. It explicitly requested that the EU officials “not […] have any contact with the “Tibetan government in exile” or provide facilities to the separatist activities of the Dalai clique” (Ministry of Foreign Affairs of the People’s Republic of China 2003). 7 A particular moment in time when the EU stepped up its normative power actions towards China was the issuing of the communication entitled “EU-China: Closer Partners, Growing Responsibilities” in 2006, which presented a long list of issues, political and economic, for China to tackle (European Commission 2006). Many of these issues are still not solved today.

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However, throughout the recent past, this has done little to discourage the EU’s critical voice on the issue. Tibet gained special prominence in 2008, at the time when the riots in Lhasa escalated and attracted global attention. In relation to this, the French president Nicolas Sarkozy held a meeting with the Dalai Lama at the time when France chaired the Presidency of the Union. This led to an outcry from official Beijing. Ultimately, the confrontation between the two sides led to the temporary suspension of the annual EU-China Summit and a serious decline in political dialogue. Ever since, European politicians have avoided directly confronting China and Tibet and particularly meeting the Dalai Lama or representatives of the Tibetan government in exile. Moreover, some national-level governments, such as the British government, have significantly toned down their criticism on Tibet, motivated by business interests in China (Fox and Godement 2009). Yet the highest representatives of the European Union, such as the Head of the European External Action Service, Catherine Ashton, have maintained their interest in the political developments in Tibet and have criticised the coercive measures taken by the Chinese government (Ashton 2012). Similar developments can be seen in the issue of Chinese dissidents and their treatment by the EU. The EU sympathises with the cause of Chinese dissidents due to its universal commitment to the idea of human rights and liberties. Moreover, many of the Chinese dissidents claim to promote these values and find their inspiration in the European political and cultural tradition. Finally, a significant portion of the EU’s member states were founded on anti-Communist platforms and current political elites hailing from these countries are comprised of former dissidents, and are predisposed to look favourably on anti-Communist dissidents elsewhere. Beijing on the other hand sees any kind of expression of solidarity with Chinese dissidents as a violation of the non-intervention principle and interference with Chinese domestic affairs. While numerous political activists have faced legal prosecution in China, only some individual cases attract the attention of outside actors. With regards to Sino-European relations, two very notable cases in recent years have been the ones of the Nobel Peace Prize Winner in 2010, Liu Xiaobo and Ai Weiwei. Liu is one of the most famous contemporary Chinese writers and intellectuals, who attracted the scorn of the government when initiating the movement Charter08 (inspired by Vaclav Havel’s Czechoslovakian anti-Communist movement Charter77). He is currently serving a sentence for inciting subversion. In the wake of the award of the 2010 Nobel Peace Prize to Liu, the Head of the EEAS, Ms Ashton, demanded his release from prison (European Union 2010). The

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case of Ai Weiwei, who was detained for a period of several months, was intensely discussed in the EU, too. The European Parliament requested China to reveal his whereabouts (European Parliament 2012). Later on, his release was also a pretext for Catherine Ashton’s speech on human rights in China. Official Beijing rejects criticism on human rights issues. This cannot only be ascribed to a culturally embedded repulsion towards external criticism and hard interpretation of the concept of sovereignty. In fact, as China grows, so grows its aversion to succumbing to the rules imposed by the West. At the same time, China has a newfound willpower (and often the means) to change the rules of the international order and to promote an alternative normative model.8 European demands for reforms, or the sanctions against China, are seen as a sign of covert paternalism, called “condescending” and, ultimately, a threat to the well-being of the People’s Republic of China and a challenge for the one-party rule. Moreover, Chinese authors argue that such criticism lacks proper understanding of China: The Chinese authorities view human rights in a different way from Western countries. While Western countries are only concerned about a handful of so-called dissidents, the Chinese government is responsible for the well-being of 1.3 billion people […] It is natural that out of 1.3 billion people, there will be a few who are unsatisfied with the government or the society in which they live. The important thing is whether most Chinese citizens feel their lives are improving and that the country and society are making progress by strengthening democracy and the rule of law. […] For the Chinese government, its primary goal is to ensure that the economy continues to grow so that all citizens can shake off poverty and live a better life. Other goals come secondary to this. In the process, it is impossible to satisfy and attend to the interests of everyone (Tong 2012).

Moreover, even when there are no real threats towards China’s sovereignty, stability and security, leaders in Beijing take European criticism as a blow to China’s strenuous efforts to accumulate soft power. As Ramo argues, China’s weakest point today is its unfavourable image abroad and its incapacity to produce a consistent narrative about itself: China’s problem is more complex than whether or not its national image is “good” or “bad”, but hinges on a more difficult puzzle: China’s image of 8

Looking further back in the past, Forsby identifies four markers of the political identity of the Chinese state: Sino-civilisationism, Confucian philosophy, dynastic centralism, Han-ethnocentrism (Forsby 2011).

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herself and other nations’ views of her are out of alignment. This imbalance makes it difficult for China to build the store of international trust that is essential for reducing the costs of the next, complicated phases of reform. This image bifurcation gives ammunition to China’s enemies while, at the same time, eroding China’s ability to sort helpful criticism from harmful attacks and respond effectively. [...] China’s view of herself often teeters between self-confidence and insecurity, between caution and arrogance. [...] For a nation obsessed about territorial sovereignty, China has let its “image sovereignty” slip (Ramo 2007,12-13).9

Hence, China is troubled by political support for causes that are divergent or conflicting with the ones of the CCP. Even more so, it is troubled by the potential revoking of the image of brutal totalitarianism and backwardness that China’s leaders are trying to avoid. To give an example, the anger over Sarkozy’s meeting with the Dalai Lama in 2008 was fuelled by the fact that this happened after the Olympic Games. China took the Olympic Games as its bid to elevate national dignity and gain the sympathies of the global public, so as to ultimately rebrand itself. By embracing the harshest critic of the ruling elite, the carefully assembled image of China as a cosmopolitan nation was strained. Sarkozy’s meeting with the Dalai Lama was hence seen as an attempt to vilify Beijing, and to obstruct China’s international charm campaign. Beyond Tibet and the issue of Chinese dissidents, there are many other instances where Beijing sees Brussels’ stance as less than friendly, and especially damaging for China’s image projection. Above all, however, the Chinese government is especially frustrated due to two particular issues: first, the endurance of the arms embargo imposed by the EU in the aftermath of the Tiananmen events in 1989; and secondly, the nonrecognition of China’s full Market Economy Status (MES) ahead of the expected date in 2016. These two issues are of great symbolic significance for China’s pursuit of soft power via the doctrine of peaceful rise and harmonious development. Essentially, the arms embargo is another reminder of the unfavourable image of pre-reform China that Chinese foreign policymakers want to overcome. Meanwhile, without the MES, China lacks international verification of more than thirty years of Reform and Opening up Policy. This is a crucial source of credibility and legitimacy at home.10 Chinese diplomats and scholars consider these “two 9

See also the chapter by Wang and He in this volume. The EU continues to accuse China of unfair trade practices and takes antidumping measures in cases when under-priced Chinese imports drive domestic companies out of the market (Leal-Arcas 2010). In 2012 and 2013, for instance, the European Commission proposed high duties on Chinese solar panels as it was 10

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burning issues” an important obstacle for greater commitment to Sino-EU relations (see Ye 2010). The different foundations, worldviews and circumstances of China and Europe ultimately result in dead ends on normative issues. Seemingly, these dead ends are the outcome of both the self-confidence and insecurities of both sides, as well as the mutual lack of understanding. Rising China is ever more firmly claiming the right to its own path of development, with little preparedness to absorb external criticism on politically sensitive issues. This is complemented by the constant sense of urgency when it comes to domestic imperatives, and the complex task of polishing its own image abroad. On the other hand, Europe claims the universality of its own core values, and tries to advance them abroad, often at the expense of the trust of its partners, in this case China.

At the Intersection of Global Politics China and the EU often bring their discord outside the domain of their bilateral relations. This is a somewhat new development, as it occurs as a consequence of China’s increased involvement in global affairs, itself an effect of the newly found economic power, and as the country slowly breaks away from Deng Xiaoping’s guidance of “keeping a low profile and hiding one’s brightness” (Deng 2013). Hence, as Beijing gains a growingly important voice on a number of global issues, its divergences with Brussels become more apparent. One global politics area where the EU and China have little overlap is the treatment of the so-called “rogue regimes”, “pariah states” or, “governments that have difficult relations with the West”. These are cases in which China’s principles of respecting sovereignty and not interfering with third parties’ internal affairs are incongruent with the EU’s ideals of human rights protection and democratisation. Hence, while the EU often assumes a pro-active diplomatic position to pursue its agenda (BBC 2012), China often uses its permanent seat in the United Nations Security Council (UNSC) and other multilateral mechanisms to impose a kind of limitation on extensive interventionism. This can be seen in the recent cases of the Iran nuclear talks and especially the civil war in Syria.

determined that such panels were an (illegally) subsidised and under-priced export good (Blenkinsop 2012). Against this background, Premier Li Keqiang adopted a sharp rhetoric during his European trip in spring 2013. He denounced the antidumping and anti-subsidy campaigns as a manifestation of trade protectionism and an obstacle to Sino-European cooperation (Donahue and Nicola 2013).

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The EU is one of the most vocal critics of Iran’s nuclear programme and its regime in general. It has imposed harsh sanctions on Tehran and consistently pressures the Iranian government over its nuclear activities (BBC 2012). By contrast, China has refrained from commenting on Iran’s domestic affairs and has positioned itself as a potential mediator, in maintaining and even increasing its oil imports from the country. China and Iran have one of the most significant energy trade relationships in the world, complemented by strong overall economic and military ties. In the case of Syria, where the internal tensions escalated into a full- fledged civil war, China (along with Russia) has been active in halting a USproposed and EU-backed UNSC resolution that would have enabled proceeding towards intervention (Wong 2012). Aside from strategic issues in third countries, climate change is one of the central issues in the contemporary EU-China relationship. It is officially one of the pillars of their Strategic Partnership (Freeman and Holslag 2009; Freeman and Holslag 2010). Climate change is an important pillar of European foreign policy. The EU sees climate change as a security issue of utmost urgency and as a chance for advancing global governance and multilateralism. It positions itself at the forefront of the battle against global warming and has sought to assume the leadership and the role of moderator of the international dialogue. China, on the other hand, holds that international agreements should establish differentiated standards for developing countries. Developed countries should keep in mind that rapid change in greenhouse gas (GHG) emission standards is likely to derail them from the economic growth track. The two sides collided at the United Nations Climate Change Conference in Copenhagen in 2009, and have only recently been able to make a move beyond the dead-end at the United Nations Climate Change Conference in Durban in 2011 (Spiegel 2011). Recently, China has been a vocal opponent of the EU-imposed airline carbon emission tax (AFP 2013).11 Such a tax was originally introduced by the EU as a check on China’s growing role in GHG emissions as its air traffic develops. This development only reiterates the impression that the two sides are far from taking joint action. Another instance where the EU shows open discontent with China’s behaviour is international development and aid. In recent years, China has emerged as an important player in the field of international development. A paradigmatic case for this is Africa, where the mutual benefit principle combined with non-interference rhetoric gained Beijing lucrative deals and access to resources in many African countries. China has gained 11

Also see the chapters by Rech and by Li in this volume.

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considerable approval of both the local elites and the populace. Yet, the EU, which has been involved in the continent longer than China when it comes to promoting democracy and dealing with elementary humanitarian issues, sees the Chinese emergence in Africa as directly undermining and even reversing its efforts (Hellström 2009; Alden and Large 2011; Chin and Takur 2010). Table 1.3 Attitudes Towards Each Other's Role in Global Politics Aspect Towards EU’s role as a global actor

China’s attitude The EU’s support of political change in rogue states violates the principle of noninterference and could potentially mean support for political change in China

EU’s attitude The EU needs to promote/protect its core values in the world The EU needs to be a global leader on climate change and demand higher commitment from others

The EU’s positions on climate change are inconsiderate towards developing countries Towards China as a global actor

China should promote non-interference China should represent and advance the interests of the developing world on issues such as climate change

China befriends and protects questionable regimes China obstructs European efforts by rallying the developing world on issues such as climate

In this context, the EU also sees China as a challenger of its normative model and the efforts to spread its values abroad. Referring to its developing country identity, China is not alone on the international scene, and is gradually mobilising other governments of developing countries in the objections to the predominant system of so called “Western values”. China’s state-developmentalist platform appeals to the leaders of the developing world because in that model: the goals of strengthening state capacity, promoting social cohesion, maintaining territorial integrity as well as political independence, resisting encroachments on national sovereignty, achieving economic growth to

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bankroll material progress, and advancing the indicators of human development (e.g., gross domestic product per capita, maternal and infant mortality, life expectancy, literacy, etc.) receive top priority over human rights, democracy, and unregulated markets (Chin and Takur 2010, 122).

While this section predominantly portrays the ways in which China challenges EU foreign policy on global issues, it is important to notice that the attitudes of the EU are in many ways inconvenient for China. First, there is the clear compromise of some of China’s immediate interests—as a latecomer to the global race for energy resources, it does not have much choice aside from dealing with regimes such as Iran, or Gadhafi’s Libya in the past, which are considered rogue by the EU. Finally, the support for the EU of democratisation or over-throwing single-party regimes is in a way an extension of the bitter politics of normative power effects. Table 1.3 summarises the above-outlined attitudes of China and the EU as actors in global politics.

China’s Arrival in Europe So far, this chapter has shown that normative power Europe remains an external challenge for China with a potential effect on domestic affairs. Vice-versa, rising China resembles one of the most complex external challenges for the EU and its member states. Moreover, China has gradually become a domestic policy concern for officials in Brussels. This is visible especially in the field of investment, and in China’s multi-level foreign policy approach towards Europe. Through the increasing Chinese investments in Europe, but even more so through the expectations and speculations about potential future investments, China has substantially increased its presence and influence on the continent. The reception of China’s growing economic role in Europe is however often met with scepticism. Many Europeans usually perceive it as a signal of the inevitable decline of the West, and envision a dystopian future in which Europe kowtows in front of Beijing, loses its dignity, and fails to preserve its culture and values (Scurati 2011; Fox and Godement 2009). China’s economic presence in Europe has been more visible ever since the onset of the European Sovereign Debt Crisis in 2007/2008, a theme that is covered in the chapters by Wang and Shi as well as Hmaidi in this volume. The European Council on Foreign Relations (ECFR) has discovered a trend of rapidly changing attitudes towards China among EU member states. In 2009 there were roughly four camps: the member states who did not have their own China policy but followed the policy of the Union

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(“European followers”); the member states that were primarily concerned with Chinese unfair trade and dumping (“accommodating mercantilists”); the member states who pushed for further opening of the Chinese market (“ideological free-traders”); and finally those who criticised China on both economic and political terms (“assertive industrialists”; see Fox and Godement 2009). Applying the same methodology as the report in 2009, the ECFR found that the landscape in 2011 was different. Only a handful of “frustrated market-openers” remained close to the original course of the Union’s foreign policy and dared talk to and confront China on both politics and economy. The vast majority of the member states are now prioritising attracting Chinese deals rather than rectifying Chinese trade practices. Moreover, the group of “cash-strapped deal seekers” have adopted a silent and quite uncritical attitude on most of the points of friction between Brussels and Beijing (including political issues). They effectively fulfil the expectation that separation of business and politics is crucial for maintaining a good relationship with China (Godement et al. 2011). The bifurcation of the EU’s China policy is also a function of China’s multi-layered policy towards Europe. For one, China prioritises its bilateral ties with the EU’s core member states, such as with Germany (Kudnani and Parello-Plesner 2012). The Sino-German “special relationship” (a term introduced by Chancellor Merkel in 2012) has a strong economic foundation as their two-way trade already accounts for one third of the total volume of Sino-European trade and Germany. Unlike the rest of Europe, Germany enjoys a trade surplus with China. Some authors regard China and Germany as two complementary actors, and even label them “conjoined twins” (Saunders 2013). On the political end, China often treats Berlin as a proxy for Brussels. This can be seen for instance in the selection of Berlin as a location of the first visit to the European Union of Li Keqiang, the incumbent Premier of China. This very friendly approach is reciprocated by the German side as well, as Germany has significantly separated business and politics when dealing with China, and moreover, has assumed the position of a mediator in disputes between China and the EU (Donahue and Nicola 2013). Table 1.4 summarises the ambiguous dimension in the attitudes of China on the one hand, and the EU and its member states on the other.

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Table 1.4 Attitudes in the Case of China’s Emergence as an Actor within Europe Aspect Towards EU

China’s attitude The EU needs to embrace Chinese investment, eventually separate business and politics Individual member states (core and peripheral), and non-EU states of Europe are easier to deal with than the EU

Towards China

China should use opportunities for deal making and branching out on different levels Working with individual countries is of benefit for the whole EU

EU’s attitude The EU needs to consolidate its common China policy and not let business interests to prevail over political ones

Fear of China potentially using a “divide and conquer” strategy by focusing on individual countries and areas

Despite the existing complications related to the ambiguity of the EU and its members, EU-China relations have become even more complex recently. Aside from nurturing its tight relationships with Europe’s heavyweights, an important dimension of China’s European policy has been its relationship with Europe’s peripheral countries. In 2012, China established a sub-regional partnership with 16 countries of Central, East and Southeast Europe (CESEE). Only eleven states of this group are member states of the EU. The partnership is intended to advance the cooperation between China and post-Communist Europe by circumventing the EU framework. In Europe, this has been met with suspicion and has been labelled a part of Beijing’s “divide and conquer” strategy for the continent, or a replica/duplication of China’s experience in the developing world (Bolzen and Erling 2013). In China, however, foreign policy analysts singled out the collaboration with the CESEE as the “highlight” of the recent development of Sino-European relations (Liu 2013). In this respect, it is important to mention that China has been actively working on improving its ties with the states that are not part of the EU, thereby extending its influence on “wider Europe”. Further examples for this strategy are the recent conclusions of free trade agreements between China and Iceland as well as China and Switzerland. Chinese leaders

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framed these as a blueprint for similar future agreements with other European states as well as with the EU. They have also used them as a symbolic asset against the allegations of protectionist behaviour towards the EU (Y. Zhang 2013). The effects and the potential impact of the increased activity of China in Europe has received due consideration in the European public debate. Timothy Garton Ash compared Chinese investment in Europe with informal colonisation and contemplated the idea of a “Chinese lobby” within the EU. Such a (hypothetical) Chinese lobby would be comprised of a few states that are heavily indebted to China who would act on behalf of Chinese interest within European institutions (Garton Ash 2011). Another argument along these lines has been put forward by Daniel Gros in 2011, who believes that potential Chinese investment in the European Financial Stability Facility (EFSF) might split Europe on that question: while any China-EU deal would primarily benefit the seventeen Euro zone countries, an eventual political consensus would have to be reached among all 27 members of the Union. While a “China lobby” or an open split induced by China is unlikely to happen in the near future, there are apparent signals that China could affect the EU’s foreign policy. The German Commissioner for Human Rights, Markus Löning, has for instance argued that due to the priority given to business interests, Europeans are turning a blind eye on human rights issues when it comes to China and have abandoned the EU’s core principles (Handelsblatt 2013). On the other hand, as China gains a more significant role in Europe, it is going to feel less and less welcome. Given the sceptical overtone of the public debate in Europe, it is to be expected that the separation of business and politics among European governments is only of a temporary nature. Sensitive issues such as human rights, minority rights, and selfdetermination in China could serve to legitimise European politicians before their own constituency.

Concluding Remarks Sino-European relations today are a function of several developments. As a precondition, both the EU and China have domestic imperatives that make them relatively insecure towards their own foreign policies in the first place, and especially towards their mutual partnership. Running on divergent sets of values and norms, they are predisposed to encounter points of friction, with different intensity, and in different contexts. These points of friction are reached inadvertently, and somewhat inertly. The EU

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takes action on Chinese domestic affairs such as Tibet or political prisoners, not out of spite, but because that is what the EU essentially does elsewhere. China, on the other hand, has a political system that is not designed to cushion such actions. It will hence inevitably see such remarks as threatening; both to the stability of its institutions, and to its international image. China will also be challenged by European actions elsewhere in the world and on global issues. Along the same lines China will actually remain a hindrance to such European policies, precisely because it promotes a different model and different set of values. Finally, as China increases its presence everywhere around the globe (and in outer space), it is expected that Europe will be one of its destinations as well. This will not be well received by many Europeans. All of these trends are very unlikely to be changed; they might be only toned down in the future. They do not have the capacity to fully change the overall course of the Sino-European partnership, but to merely slow it down and to make it less navigable. Often, the largest portion of the damage done is on the level of political discourse. Under such circumstances, it is hard to envision a faster track of cooperation, but rather an inert co-evolution in an increasingly competitive field of play. On the other hand, one needs to accept that the Sino-European partnership is still in its nascent stage, and is hence poised to fluctuate. These initial mirroring insecurities might not essentially be overcome, but fitted into the partnership framework.

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Shambaugh, David. 2010. “Beijing: A Global Leader With ‘China First’ Policy.” Text. Yale Global. June 29. http://yaleglobal.yale.edu/ content/beijing-global-leader-china-first-policy. Solana, Javier. 2013. “A New Chance for European Politics by Javier Solana – Project Syndicate.” Project Syndicate. May 29. http://www. project-syndicate.org/commentary/exploiting-europe-s-new-politicalcycle-by-javier-solana. Spiegel. 2011. “The World from Berlin: The Durban Climate Agreement ‘Is Almost Useless’.” Spiegel Online, December 12. http://www. spiegel.de/international/world/the-world-from-berlin-the-durbanclimate-agreement-is-almost-useless-a-803158.html. Su, Zhenhua. 2013. “China at the Tipping Point? Authoritarianism and Contestation.” Journal of Democracy 24 (1): 26–40. Tong, Lixin. 2012. “Putting Majority of People First.” China Daily. January 26. http://usa.chinadaily.com.cn/opinion/2012-01/26/content_ 14493171.htm. Torreblanca, Jose Ignacio, and Mark Leonard. 2013. “The Continent-Wide Rise of Euroscepticism.” Policy Memo. London: European Council on Foreign Relations. http://ecfr.eu/page/-/ECFR79_EUROSCEPTICISM _BRIEF_AW.pdf. Wang, Zheng. 2013. “Does China Have a Foreign Policy?” The New York Times, March 18, sec. Opinion. http://www.nytimes.com/2013/03/19/ opinion/does-china-have-a-foreign-policy.html. Whyte, Martin King. 2012. “China’s Post-Socialist Inequality.” Current History 111 (746): 229–234. Wong, Edward. 2012. “New Communist Party Chief in China Denounces Corruption in Speech.” The New York Times, November 19, sec. World / Asia Pacific. http://www.nytimes.com/2012/11/20/world/asia/newcommunist-party-chief-in-china-denounces-corruption.html. Woo, Wing Thye. 2012. “China Meets the Middle-Income Trap.” Journal of Chinese Economic and Business Studies 10 (4): 313–336. Ye, Jiang. 2010. “The Dragon Has Two Burning Issues It Wants Europe to Resolve First.” Europe’s World. http://www.europesworld.org/New English/Home_old/Article/tabid/191/ArticleType/ArticleView/ArticleI D/21645/language/en-US/Default.aspx. Zhang, Na, Noam Lior, and Hongguang Jin. 2011. “The Energy Situation and Its Sustainable Development Strategy in China.” Energy 36 (6) (June): 3639–3649. Zhang, Yuan’an. 2013. “Closer Look: In Germany and Switzerland, Li Chooses His Friends Carefully.” Caixin. May 27. http://english. caixin.com/2013-05-27/100533383.html.

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Zhu, Liqun. 2010. “China’s Foreign Policy Debates.” Paris: European Union Institute for Security Studies.

CHAPTER TWO CHINA-EU COOPERATION ON UN PEACEKEEPING: OPPORTUNITIES AND CHALLENGES: A CHINESE VIEW HE YIN1 Introduction The unipolar feature of the post-Cold War world order dominated by the US has faded in the last decade, and it has been replaced by a multipolar system populated by regional powers. What kind of bilateral relations will China and the EU forge as the new rising regional powers? How will China-EU relations affect global politics? Questions like these are so big and general that it will take the academic community years to agree on a few points. However, when focusing on small and specific issues that draw both Beijing’s and Brussels’ attention, we may find it easier to understand China-EU relations and their impact on the world. United Nations (UN) peacekeeping is such a specific issue. An enquiry on China-EU cooperation on UN peacekeeping can provide a special and more focused angle for observation of China-EU relations in the twentyfirst century. This chapter intends to analyse the opportunities for China and the EU to cooperate on UN peacekeeping operations and the challenges both great powers will face in the course of such cooperation. The chapter is divided 1

He Yin is Associate Professor in the China Peacekeeping Police Training Center (CPPTC) of the Chinese People’s Armed Police Forces Academy. The views expressed here are the author’s personal opinions. They do not represent the views of the CPPTC or the Chinese Ministry of Public Security. The author thanks the editors and their anonymous reviewers for their excellent suggestions and critiques. Thanks also go to Christopher Len for his helpful comments.

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into four sections. The first section introduces what has happened and what is happening regarding China-EU cooperation on UN peacekeeping. The second section analyses the three key opportunities for cooperation on UN peacekeeping that China and the EU might have. The third section discusses the three major challenges that might hinder the cooperation. The last section concludes the chapter. When cooperating with China on UN peacekeeping, the EU has two “faces”. One is the EU as a regional organisation trying to put together a clear integrated political position on UN peacekeeping. The other “face” is an EU represented by more than two dozen EU member states, whose policies on UN peacekeeping vary but can still collectively form a vague picture. This chapter does not intend to discuss how one “face” differs from the other. Instead, attention is paid to how one “face” complements the other one. Therefore, the term “EU” in this chapter generally refers to the regional grouping as well as its member states.

China-EU Cooperation on UN Peacekeeping There are different opinions expressed when it comes to China-EU relations (Scott 2007; Zhao 2008; Crossick and Reuter 2007; Narramore 2008; Fox and Godement; Ye 2011; Feng 2011; Zhou 2011). China and the EU are two great powers. Provided that they adopt a cooperative attitude when dealing with their bilateral relations, this would not only shape their security outlook but also affect world peace and international security. Fortunately, both Beijing and Brussels have recognised the importance of such cooperation. The establishment of the EU-China Summit mechanism, as well as other dialogue channels, has lifted ChinaEU bilateral relations to a strategic level. The Joint Statement of the Ninth EU-China Summit held in 2006, for instance, stipulates that: Leaders of the two sides agreed that the past decade had seen significant changes in the EU and in China and a progressive deepening of the relationship, which was maturing into a comprehensive strategic partnership. They believed that the strengthening of the relationship had been of great value to the long-term interests of China and the EU, to cooperation between Asia and Europe, as well as to peace, stability, and development in the world at large (China and European Union 2006).

Security cooperation is an indispensable and also the most sensitive part of a Strategic Partnership, and has long been a heated topic in the conversations between Beijing and Brussels. So far there have been few concrete achievements in cooperation on traditional security due to a lack

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of strategic mutual trust. The EU arms embargo imposed on China more than two decades ago has not yet been lifted. Beijing’s and Brussels’ once high-profile cooperation on the Galileo Satellite System in mid-2010 has faced a deadlock since the pro-China leaders in Europe left office and the pro-US ones came to power in key member states such as France and Germany. The active role of many key EU member states in the North Atlantic Treaty Organization (NATO) also keeps China doubtful of Europeans’ interest in multilateralism. These are key examples of how the China-EU relationship has yet to reach its full potential in the security sphere. However, when it comes to a non-traditional security area such as antipiracy off the Somali coast and UN peacekeeping, the situation seems to be much better. Take UN peacekeeping as an example: China’s increasingly active participation in United Nations peacekeeping operations (UNPKO) since 1999 has attracted attention and support from the international community, particularly from the EU and its member states (International Crisis Group 2009; He 2007; Gill and Huang 2009). Beijing and Brussels have expressed their willingness for cooperation through words and deeds, including political support, policy consultation, doctrinal discussion and personnel training. In March 2004, the visiting EU High Representative for the EU’s Common Foreign and Security Policy Javier Solana talked about the similarities between China and Europe regarding peacekeeping. He welcomed China’s contributions in his speech at Tsinghua University in Beijing (Solana 2004). In September 2006, during his meeting with Chinese Premier Wen Jiabao in Beijing, the then Italian Prime Minister Romano Prodi expressed his appreciation of China’s active participation in the UNPKO (PRC Ministry of Foreign Affairs 2006). When it comes to academic discussion, the most significant event has been the four China-UK joint peacekeeping doctrinal seminars, which were held on an annual basis between 2000 and 2003. As well as this, China and Sweden co-sponsored the Beijing International Seminar on Challenges of Peace Operations (Zhuang 2005). China and EU member states have also had good cooperation on peacekeeping training. The UK and France have been providing peacekeeping training assistance to the People’s Liberation Army (PLA) and the Chinese police. Chinese peacekeeping trainers have participated in training courses, academic workshops and seminars held in the EU member states including UK, France, Germany, Sweden, Italy, Spain, Norway, Denmark and Finland. The China Peacekeeping Police Training Center (CPPTC) has established formal cooperative relationships with

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partners in the UK and France. Chinese peacekeeping training institutions and their EU counterparts have often exchanged visits.

Opportunities for China-EU Cooperation on UN Peacekeeping China-EU cooperation on UN peacekeeping is full of opportunities. This chapter does not intend to go through all of them. Instead, the analysis will focus on three key opportunities that may facilitate China-EU cooperation on UN peacekeeping. To be specific, these three key opportunities are as follows: (1) both China and the EU have an interest in UN peacekeeping; (2) both sides seek to promote multilateralism; and (3) both sides are competent partners, “great powers” in terms of their hard and soft power to influence the process and result of UN peacekeeping.

Common Interest in UN Peacekeeping The first and also the most significant opportunity is that both China and the EU have a great interest in UN peacekeeping. This is reflected in their political support as well as their significant contribution of peacekeepers and financial means to the UN peacekeeping regime. Since China was admitted to the UN and assumed its seat as a veto-wielding permanent member of the UN Security Council (UNSC) in 1971, its attitude towards UN peacekeeping has changed from unswerving opposition in the 1970s, to gradual recognition in the 1980s and symbolic participation for most of the 1990s, to increasingly active participation since 1999 (He 2007, 9-11). One can say that as China keeps rising, it has a growing interest in UN peacekeeping and is therefore increasingly willing to support the UN peacekeeping regime. China has on many occasions expressed its pro-UN position. In June 2005, the Chinese government issued its first comprehensive position paper on UN reform, in which it insists: The United Nations plays an indispensable role in international affairs. As the most universal, representative, authoritative inter-governmental international organization, the UN is the best venue to practice multilateralism, and an effective platform for collective actions to cope with various threats and challenges. It should continue to be a messenger for the maintenance of peace, and a forerunner for the promotion of development (PRC Ministry of Foreign Affairs 2005).

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As of 30 June 2012, China has 1,928 troops and police officers registered in the on-going UNPKO (UN Department of Peacekeeping Operations 2012). China’s effective assessment rate in budget contributions towards UN peacekeeping for 2013 is 6.65 per cent, an increase by 69 per cent compared to the previous year (UN General Assembly 2012). Although the EU initiated a dialogue regarding cooperation with the UN in the early 1990s, it took Brussels more than a decade to issue a formal position on the UN’s authority in international peace and security. In December 2003, the European Council adopted the European Security Strategy (ESS). It is the first ever common strategic document of the EU. The ESS stresses the importance of the collective system of the UN. It reads: The fundamental framework for international relations is the United Nations Charter. The United Nations Security Council has the primary responsibility for the maintenance of international peace and security. Strengthening the United Nations, equipping it to fulfil its responsibilities and to act effectively, is a European priority (European Union 2003).

As of 30 June 2012, the 27 EU member states have 5,922 troops and police officers registered in the on-going UNPKO (UN Department of Peacekeeping Operations 2012). The EU member states’ effective assessment rate in contributions towards UN peacekeeping for 2013 fiscal years is 36.9 per cent, which means a decrease by about 10 per cent compared to the previous year (UN General Assembly 2012). Although China’s contribution of 1,928 peacekeepers only ranks sixteenth among the 120 Troop and Police Contributing Countries (TPCCs), its share is significant for a developing country. Moreover, Beijing is contributing more support troops such as transportation units, engineering units and medical teams than any other TPCC.2 Compared to the EU, Beijing’s effective assessment rate in contributions towards UNPKO is not very significant yet, but it has increased tremendously since 1999, from 0.1 per cent to 6.65 per cent. When the United States withdrew their peacekeeping troops from Somalia in 1993 and adjusted their policy on UNPKO, many EU member states followed suit. Since then, they have lost their enthusiasm for contributing large numbers of peacekeepers to UNPKO. Nevertheless, if the EU was regarded as a TPCC, its contribution of peacekeeping 2

Anonymous official of the Chinese Ministry of Defence, interview by Yin He, Beijing, September 28, 2012.

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personnel would rank fifth among the 120 TPCCs. Moreover, EU member states contribute about two fifths of the effective assessment for UNPKO. In general, the EU and its member states still have a great interest in the UN peacekeeping regime. As the above figures show, both Beijing and Brussels are active UN peacekeepers. This indicates that both the EU and China wish to see a strong and effective UN peacekeeping regime. They hence have a common interest in UN peacekeeping. Besides their own support for the regime, both Beijing and Brussels have always been eager to encourage others, especially influential great powers and international organisations, to stand together with them behind the blue helmets.

A Common Ground on Multilateralism The second key opportunity is that both China and the EU promote multilateralism. Multilateralism is a word rich in meaning. It is defined in a variety of ways. There are conceptual differences in different parts of the world (Bouchard and Peterson 2010). Some researchers believe that China’s multilateralism is a “harmonious sovereignty-based pluralism”. The EU, by contrast, pursues a “constrained norm-based multilateralism” (Klein et al. 2010). Nevertheless, Beijing and Brussels share common ground regarding multilateralism. Both China and the EU have repeatedly expressed their support for multilateralism through joint official statements. These have most notably been the result of the various China-EU Summits. During the 2006 Helsinki Summit, for example, Chinese and EU leaders expressed their “support for a fair, just and rules-based multilateral international system with the UN playing a central role” (China and European Union 2006). Although both China and the EU claim to be advocates of multilateralism, they have different interpretations of the multilateral strategies adopted by either of them. For Beijing, Brussels’ multilateral strategy is a balance to US unilateral agitation. Thus, some EU member states, particularly Germany and France, stood up against the US’s unilateral action against Iraq in 2003. This act assured Beijing that the Europeans could be an important partner in promoting multilateralism internationally. For Brussels, Beijing's support for multilateralism not only means that Beijing is an indispensable partner; it is also an implication that rising China is willing to embrace the existing multilateral international institutions. It is also a sign of its peaceful re-emergence. In brief, Beijing’s and Brussels’ most significant common ground concerning multilateralism is their mutual opposition to unilateralism. This serves as

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the most important factor to draw the two sides together to cooperate on multilateral issues such as UN peacekeeping.

Competent Partners The third key opportunity for China and the EU to cooperate on UN peacekeeping is due to the fact that both of them are great powers, as they both have significant resources at their disposal. This ensures that both sides can treat each other as important and equal partners with regard to UN peacekeeping. Both China and the EU have significant competence in terms of their hard and soft power to influence the process and result of UN peacekeeping. As far as hard power is concerned, the most significant is that both China and the EU member states have adequate material resources and personnel reserves. Moreover, both Beijing and Brussels have special influence in their respective “worlds”, developing and developed. When it comes to soft power, both sides have their strong points with regard to cultural attractiveness as well as successful stories of development. Both China and the EU are important international aid donors to peacekeeping. Although still a developing country, China has provided financial and material aid to relevant regional organisations to strengthen their peacekeeping capabilities as well as to war-torn UNPKO host countries and regions to support their peace-building efforts (He 2007, 38). The EU has long been a leading donor. The European Commission and the EU member states combined constitute the biggest world donor, spending millions of Euros on international development aid, humanitarian aid and crisis response. Besides similarities, China and the EU also have many differences regarding competence. These differences can easily be seen as barriers to cooperation and partnership. However, many of them can actually be utilised as opportunities for cooperation. In other words, their differences can be interpreted and eventually exploited as complementing comparative advantages so as to construct a cooperative relationship. China’s biggest advantage lies in its increasing enthusiasm for UN peacekeeping. As mentioned above, since the end of the 1990s, China has become more and more active in contributing personnel to the UN peacekeeping regime. In contrast, most EU member states have become less and less enthusiastic in contributing peacekeepers to UN-commanded peacekeeping operations. Although the EU today still contributes more peacekeepers to UNPKO than China, the latter’s growing profile has generated a lot of political capital for interacting with international

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partners including the EU. China’s comparative advantage regarding enthusiasm for UN peacekeeping is particularly visible in Africa, where most of the UN resources for peacekeeping are allocated. In December 2011, 71,606 UN peacekeepers, accounting for more than 70 per cent of all the UN peacekeeping personnel deployed worldwide, were in Africa (UN Department of Peacekeeping Operations 2011). As of 31 December, there were 1,532 Chinese troops and police officers working under the command of the UN on the African continent, while the number of UN peacekeepers from the EU in Africa was merely 249 (UN Department of Peacekeeping Operations 2013). The EU’s biggest advantage lies in its experience in and knowledge of UN peacekeeping. As Western norms, cultures and values have played a dominant role in the establishment of the UN peacekeeping regime in the first place, the EU is more than familiar with UN mechanisms. Other countries outside the sphere of Western civilisation such as China may sometimes find it difficult to understand the rules and procedures of UN peacekeeping. Furthermore, many EU member states have accumulated rich experience through their participation in UN peacekeeping for more than half a century. China, by contrast, did not begin peacekeeping operations until 1990 when it sent its first team of peacekeepers to the United Nations’ Truce Supervision Organization (UNTSO) in the Middle East. Although China has learnt a lot about UN peacekeeping through field practice and international exchange in the past two decades, it is still in a learning position compared to the EU, which has long been regarded as a “teacher of peacekeeping”. To sum up, there are three key opportunities for China and the EU to deepen their cooperation on UN peacekeeping in the future. Although there exist opportunities, the challenges that may affect China-EU cooperation on UN peacekeeping should not be ignored. The next section will address these challenges.

Challenges to China-EU Cooperation on UN Peacekeeping There are three major challenges that might undermine China-EU cooperation on UN peacekeeping. The first is Beijing’s and Brussels’ different understanding of political terms such as the Westphalian norms. The second is their different norms with regard to the practice of peacekeeping. The third is that there is not yet a mature partnership between China and the EU in the area of security relations.

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Different Understanding of Norms Beijing’s and Brussels’ differences in understanding Westphalian norms, particularly national sovereignty, pose great challenges for their cooperation on UN peacekeeping. Beijing adheres to a version of traditional Westphalian norms. Most notably it insists on non-use of force and non-interference in the internal affairs of other states. However, as a normative power, the EU prefers to promote post-Westphalian norms, which requires certain concessions regarding national sovereignty (Manners 2002; 2008). Despite being flexible under special circumstances, given the EU and some of its member states’ reluctance to refrain from interfering in China’s internal affairs, such as concerning the Taiwan Question and affairs in Tibet, Beijing is unlikely to compromise its stance on adherence to traditional Westphalian norms. Differences in understanding of the Westphalian norms is one of the most important reasons why Beijing and Brussels cannot agree with each other on many international issues including certain issues surrounding peacekeeping operations. Beijing’s and Brussels’ different understanding of the Westphalian norms is reflected in their different attitudes towards international intervention, most notably, “the responsibility to protect” (R2P). Although Beijing has in principle endorsed R2P by supporting the 2005 World Summit Outcome, it has never given the green light to actions of interfering in the internal affairs of other states in the name of R2P (Liu 2009). This would imply disregarding UN authority as well as the basic principle of national sovereignty. According to the 2005 World Summit Outcome, R2P has three pillars: Pillar One: Each individual state has a responsibility to protect its population from mass atrocities. Pillar Two: The international community has a responsibility to assist the state to protect its population. Pillar Three: If the state fails to protect its citizens from mass atrocities and peaceful measures have failed, the international community has the responsibility to intervene through coercive measures. But military intervention is the last resort (UN General Assembly 2005).

China insists that most of the weight of R2P should fall on “Pillar One”. On 24 July 2009, the Chinese Ambassador to the UN Liu Zhenmin made a statement at the plenary session of the General Assembly on the question of R2P, insisting that:

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Chapter Two The government of a given state bears the primary responsibility for protecting its citizens. The international community can provide assistance, but the protection of the citizens ultimately depends on the government of the state concerned….there must not be any wavering over the principles of respecting state sovereignty and non-interference of internal affairs. The concept of “R2P” applies only to the four international crimes of “genocide, war crime, ethnic cleansing, and crimes against humanity”…it is necessary to prevent “R2P” from becoming another version of “humanitarian intervention” (Liu 2009).

China is very cautious due to its concern that the concept of R2P might be abused. The military intervention in Libya led by NATO in 2011 proved Beijing’s worries that countries can take advantage of the R2P principle to implement their political agenda. In other words, in the Libyan case, R2P became an instrument for NATO to misinterpret, or even abuse the UNSC Resolution 1973 on Libya. Moreover, China was deeply concerned about the civilian casualties caused by the NATO airstrike and said the UNSC should draw lessons from the handling of the Libyan issue (Wang 2012). Along with the US and other Western states, the EU has long actively promoted R2P and is at the forefront of implementing this norm. Besides endorsing the 2005 World Summit Outcome, the EU and its member states have expressed their support for R2P through various other instruments including the European Consensus on Development, the ESS and EU parliamentary resolutions referencing R2P. Article 37 of the European Consensus on Development, for example, stipulates that: The EU also strongly supports the responsibility to protect. We cannot stand by, as genocide, war crimes, ethnic cleansing or other gross violations of international humanitarian law and human rights are committed (European Union 2006).

The principle of R2P is related to the EU’s post-Westphalian norms. To Brussels, R2P serves as a sharp tool to penetrate the wall of traditional Westphalian norms regarding national sovereignty. Therefore, differing from Beijing, which stresses the importance of “Pillar One” of R2P by emphasizing the protection role of internal authorities, Brussels prefers “Pillar Two” and “Pillar Three”. The EU hence promotes the responsibility of external forces. Although Beijing and Brussels have agreed on a basic political attitude that the implementation of R2P should be done within the framework of the UN, they also disagree over when and how to implement R2P.

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Beijing’s and Brussels’ other big difference in peacekeeping-related political terminology concerns their different understanding of peacekeeping. To be exact, Beijing and Brussels have different definitions of the term “peacekeeping”. When talking about peacekeeping, Beijing generally means UN-commanded peacekeeping, while the EU may mean not only UN-commanded operations, but also authorisation and command by the UNSC, by regional organisations, or pivotal state-commanded peacekeeping. Certain EU member states may even regard their participation in coalition operations as peacekeeping behaviour.3 Hence, Beijing prefers to give peacekeeping a narrow definition while Brussels adheres to a broader definition of peacekeeping in order to legitimise its international intervention activities. In contrast to Beijing’s persistence on UN-led peacekeeping operations, Brussels has in recent years begun to attach importance to conducting peacekeeping within its own regional framework. Besides taking over the command and implementation of the International Police Task Force (IPTF) in Bosnia and Herzegovina from the UN at the end of 2002, it deployed its troops to Eastern Congo in June 2003. Furthermore, it took on the responsibilities related to the reconstruction and economic development pillar of the United Nations Mission in Kosovo in June 1999. It also launched a peacekeeping operation in Chad in March 2008, and it deployed the European Union Rule of Law Mission in Kosovo in December 2008. Finally, as of 24 June 2013, the International Security Assistance Force (ISAF) listed on its website that the EU member states had contributed a total of 23,490 military and police personnel to the NATO-led mission in Afghanistan (International Security Assistance Force. 2013), while at the same time, all the EU member states had only contributed 4,761 peacekeeping personnel to UN-led peacekeeping operations (UN Department of Peacekeeping Operations 2013). Beijing can give the green light to UNSC authorisation to peacekeeping operations commanded by regional organisations or pivotal states under certain circumstances. It can sometimes even give support to such peacekeeping efforts, for example by providing financial and material support to strengthen the peacekeeping capabilities of the African regional and sub-regional organisations. However, it refuses to directly participate in any peacekeeping operations commanded by actors other than the UN. Therefore, one can imagine when officials from Beijing and Brussels sit down to discuss the doctrine of peacekeeping that they sometimes mean 3

For example, some of the EU member states participated in the NATO operation in Kosovo in 1998 and US-led invasion of Iraq in 2003.

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different things and have different points of reference. While Brussels can boast that it has substantially contributed to peacekeeping beyond the UN framework, Beijing has reasons to doubt Brussels’ purposes, in particular regarding its role to encourage disintegration in places like Kosovo and Southern Sudan. Beijing’s and Brussels’ difference in defining peacekeeping can impede their efforts to take their cooperation on UN peacekeeping to the next level.

Different Peacekeeping Norms China and the EU also have different norms regarding the implementation of peacekeeping. The biggest difference in the two norms rests on a question: for a war-torn peacekeeping host country, which should come first: democratic institutions or economic development? The EU has long insisted that, to achieve sustainable peace in a conflict-affected country, priority should be given to institution building according to Western standards. The 2006 European Consensus on Development stipulates that “[p]rogress in the protection of human rights, good governance and democratization is fundamental for poverty reduction and sustainable development” (European Union 2006). Furthermore, the Treaty of Lisbon regarding this issue reads as follows: The Union’s action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy […] (European Union 2007).

Liberal democracy is usually accompanied by another liberal norm: market economy. Some believe these liberal norms can be expressed in one term, “liberal peace” (Paris 2004; Taylor 2007; Salih 2009; Richmond and Franks 2007; Mac Ginty 2009). “Liberal peace” has two pillars: Pillar One: Political institution building enjoys priority. Pillar Two: The market commands economic development.

Some believe that Western norms, cultures and values have played a dominant role in the establishment of the UN peacekeeping regime. As a consequence, the main mandate of multi-dimensional peacekeeping operations in the post-Cold War era is to diffuse the norm of liberal peace (He 2013). However, forcibly implanting a democratic system of government in countries with pre-existing governing systems tends to result only in a “virtual peace”, with superficial democratic institutions

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without substantive grassroots support (Richmond and Franks 2007). As Amy Chua has pointed out, when liberal democracy and liberal market go together in societies with ethnic problems, they can even breed hatred (Chua 2004). Unlike the EU’s assertiveness in promoting liberal peace, China still keeps a “low profile” in expressing its perspective about approaches to peacekeeping. Unlike Brussels, Beijing does not have any type of liberal norm-promoting agenda when engaging in peacekeeping missions in certain countries as well as in the framework of the UN more generally. Except for making contributions to peacekeeping under the umbrella of the UN, China’s relations with peacekeeping host countries are in principle bilateral in nature, although occasionally it is pushed to act more persuasively such as in places like Sudan (He 2013). As a matter of fact, Beijing does not agree that any kind of “development model” or “norm” can be drawn from its own success story of the past three decades as each country has its own unique characteristics and situation (Li 2009). However, the effect of both China’s successful development story at home and its aid and investment activities abroad, implies that an alternative approach to peacekeeping may exist. Although China itself might still be unaware of such an approach, others, including the EU, seem to have already noticed the influence of a potential Chinese approach to peacekeeping (Berger 2007). China’s peacekeeping norm is abstracted from both its successful domestic economic development-oriented strategy and from its special aid and investment behaviour towards other developing countries, in particular, conflict-affected regions in Africa (He 2013). According to Steven Kuo, this norm is called “Chinese peace” which can be contrasted with Western “liberal peace” (Kuo 2012). However, many basic elements of China’s peacekeeping norm are not “made in China”. Other developmental states such as Singapore and South Korea successfully practiced this economic development-oriented strategy before China. Moreover, the “service for resources” investment model that China practices in Africa and elsewhere today is learned from Japan (Brautigam 2009). Therefore, it would be more accurate to call China’s peacekeeping norm “developmental peace”. Developmental peace has two central pillars: Pillar One: Economic development enjoys priority. Pillar Two: Both the Government and the market have a say in economic development.

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Liberal peace and developmental peace differ greatly from each other. They may even be in conflict with each other. Most notably, the former attaches priority to political institution building while the latter insists on an economic development-oriented approach. Moreover, according to liberal peace, the government’s interference in the economic sphere is prohibited, while developmental peace gives the government an indispensable role in economic affairs. As liberal peace has already been legitimised as an international norm, it will be hard for the EU to accept China’s developmental peace. Beijing and Brussels still have lot of work to do with regard to compromising their different understandings of UN peacekeeping.

An Immature Partnership To sum up, a China-EU partnership, including a partnership on UN peacekeeping has yet to develop. China-EU relations are not mature enough for concrete cooperation on security issues. There is a causal relation behind the most important reason for this. The EU’s process of integration has not reached such a level that it can act as a full sovereign state-like international actor in its interactions with other sovereign actors. It is hard for the EU to put together a coherent approach to engage with China on security issues, both traditional ones including arms trade as well as non-traditional ones including UN peacekeeping. China understands this well and expects considerable development regarding China-EU cooperation on UN peacekeeping in the future. On 19 November 2009, the EU appointed Catherine Ashton as its first High Representative of the Union for Foreign Affairs and Security Policy. This shows Brussels’ efforts to develop a coherent EU foreign policy. However, so far little cooperation on concrete UN peacekeeping issues between Beijing and Brussels has taken place. The existing interactions are largely limited to general official discourse such as announcements related to cooperation within the UN in a series of China-EU Summit outcomes. Therefore, to date, most of the China-EU cooperation on UN peacekeeping has merely taken place at a lower level, between China and some individual EU member states.

Conclusion As both China and the EU are important players in the international arena, their cooperation in UN peacekeeping operations can benefit not only their bilateral relations, but also the UN peacekeeping regime and

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world peace at large. With China and the EU becoming increasingly important in the eyes of each other in the twenty-first century, the issue of UN peacekeeping will very likely become a key avenue for cooperation between the two sides. Achieving fruitful China-EU cooperation on UN peacekeeping is however a huge task for both China and the EU. They have to explore how to make good use of the existing opportunities and at the same time seek to reduce the negative influence of the challenges they face. In an era when international cooperation on political and security issues is still much more difficult to achieve than cooperation on economic affairs, it is unrealistic to expect much to happen between China and the EU in the security area, including UN peacekeeping. Nevertheless, cooperation between China and individual EU member states will continue and possibly even expand. The significance of such a development should not be ignored because it sets a solid foundation for China-EU cooperation at the high political level. Also, opportunities and challenges are not always in conflict with each other. Challenges do not always hinder cooperation. They may imply opportunities. Take China and the EU’s different norms on peacekeeping as an example: China’s “developmental peace” and the EU’s “liberal peace” may actually be complementary to each other in the peace process of a conflict-affected country (He 2013; Kuo 2012). From this perspective, China-EU cooperation on UN peacekeeping has the potential to improve significantly.

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Crossick, Stanley, and Etienne Reuter. 2007. China-EU: A Common Future. New Jersey: World Scientific. European Union. 2003. “A Secure Europe in a Better World: The European Security Strategy.” Council of the European Union. http://www.consilium.europa.eu/uedocs/cmsUpload/78367.pdf. —. 2006. The European Consensus on Development. Official Journal of the European Union. http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri=OJ:C:2006:046:0001:0019:EN:PDF. —. 2007. Treaty of Lisbon. Official Journal of the European Union. http://europa.eu/lisbon_treaty/full_text/index_en.htm. Feng, Zhongping. 2011. “Xinxingshi Xia Oumeng Duihua Zhengce Ji Zhongou Guanxi Fazhan Qianjing (The EU’s Policy Towards China and Development Prospects of China-EU Relation Under the New Situation).” Xiandai Guoji Guanxi (Contemporary International Relations) 2: 1–5. Fox, John, and François Godement. “A Power Audit of EU-China Relations.” London: European Council on Foreign Relations. Gill, Bates, and Chin-Hao Huang. 2009. “China’s Expanding Role in Peacekeeping: Prospects and Policy Implications.” Policy Paper 25. SIPRI Policy Papers. Stockholm: Stockholm International Peace Research Institute. http://books.sipri.org/files/PP/SIPRIPP25.pdf. He, Yin. 2007. “China’s Changing Policy on UN Peacekeeping Operations.” Asia Paper. Stockholm: Institute for Security and Development Policy. http://www.silkroadstudies.org/new/docs/Silkro adpapers/2007/YinHe0409073.pdf. —. 2013. “Zhongguo Jueqi Yu Guoji Guifan Tixi (China Rising and International Norms System).” In Xinzhanlue Yanjiu (New Strategy Research), 3:29–44. Beijing: Jiuzhou Press. International Crisis Group. 2009. “China’s Growing Role in UN Peacekeeping.” 166. Asia Report. Beijing/New York/Brussels: International Crisis Group. http://www.crisisgroup.org/en/regions/asia/ north-east-asia/china/166-chinas-growing-role-in-unpeacekeeping.aspx. International Security Assistance Force. 2013. “International Security Assistance Force: Key Facts and Figures.” http://www.isaf.nato.int/ images/stories/File/Placemats/20130624_130624-mb-isafplacemat.pdf. Klein, Nadia, Wulf Reiners, Zhimin Chen, Junbo Jian, and Ivo Slosarcik. 2010. “Diplomatic Strategies of Major Powers: Competing Patterns of International Relations?” E-Paper. Mercury. http://mercury.unikoeln.de/fileadmin/user_upload/E-paper_no2_r2010.pdf.

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Kuo, Steven C. Y. 2012. “Beijing’s Understanding of African Security: Context and Limitations.” African Security 5 (1): 24–43. Li, Junru. 2009. “Shenti ‘zhongguo Moshi’ (Be Careful in Using ‘Chinese Model).” Xuexi Shibao, July 12. Liu, Zhenmin. 2009. “Statement by Ambassador Liu Zhenmin at the Plenary Session of the General Assembly on the Question of Responsibility to Protect.” UN Representation of the PRC. http://www. china-un.org/eng/hyyfy/t575682.htm. Mac Ginty, Roger. 2009. The Liberal Peace and Post-War Reconstruction: Myth or Reality? London: Routledge. Manners, Ian. 2002. “Normative Power Europe: A Contradiction in Terms?” Journal of Common Market Studies 40 (2): 235–258. —. 2008. “The Normative Ethics of the European Union.” International Affairs 84 (1): 45–60. Narramore, Terry. 2008. “China and Europe: Engagement, Multipolarity and Strategy.” The Pacific Review 21 (1): 87–108. Paris, Roland. 2004. At War’s End: Building Peace after Civil Conflict. Cambridge: University Press. PRC Ministry of Foreign Affairs. 2005. “Position Paper of the People’s Republic of China on the United Nations Reforms.” Beijing: PRC Ministry of Foreign Affairs. http://www.fmprc.gov.cn/ ce/ceun/eng/xw/t199101.htm. —. 2006. “Premier Wen Jiabao of the State Council Holds Talks with Italian Prime Minister Romano Prodi.” PRC Ministry of Foreign Affairs. http://www.fmprc.gov.cn/eng/wjb/zzjg/xos/gjlb/3311/3313/t27 2823.shtml. Richmond, Oliver P., and Jason Franks. 2007. “Liberal Hubris? Virtual Peace in Cambodia.” Security Dialogue 38 (1) (March 1): 27–48. Salih, M.A. Mohamed. 2009. “A Critique of the Political Economy of the Liberal Peace: Elements of an African Experience.” In New Perspectives on Liberal Peacebuilding, edited by Edward Newman, 133–158. Tokyo; New York: United Nations University Press. Scott, David. 2007. “China-EU Convergence 1957–2003: Towards a ‘Strategic Partnership’.” Asia Europe Journal 5 (2) (June 1): 217–233. Solana, Javier. 2004. “The European Union and China: Strategic Partners.” Speech March 17, Beijing, Tsinghua University. http:// ue.eu.int/ueDocs/CMS_Data/docs/pressdata/en/discours/79736.pdf. Taylor, Ian. 2007. “What Fit for the Liberal Peace in Africa?” Global Society 21 (4): 553–566. UN Department of Peacekeeping Operations. 2012. “Troop and Police Contributors Archive (1990-2012): Contributions by Country.”

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Un.org. http://www.un.org/en/peacekeeping/resources/statistics/contrib utors_archive.shtml. —. 2011. “Monthly Summary of Contributions (Police, UN Military Experts on Mission and Troops, as of December 31).” http://www. un.org/en/peacekeeping/contributors/ 2011/dec11_1.pdf. —. 2013. “Monthly Summary of Contributors (Police, UN Military Experts on Mission and Troops, as of June 30).” http://www.un. org/en/peacekeeping/contributors/2013/jun13_1.pdf. UN General Assembly. 2005. “2005 World Summit Outcome.” United Nations. http://www.who.int/hiv/universalaccess2010/worldsummit.pdf. —. 2012. “Implementation of General Assembly Resolutions 55/235 and 55/236.” Report of the Secretary-General. New York: United Nations. http://www.un.org/ga/search/view_doc.asp?symbol=A/67/224. Wang, Min. 2012. “Statement by Ambassador Wang Min, Deputy Permanent Representative of China to the United Nations, at the Security Council Briefing on the Libyan Issue.” UN Representation of the PRC. http://www.china-un.org/eng/hyyfy/t930694.htm. Ye, Jiang. 2011. “Zhongou Quanmian Zhuanlue Huoban Guanxi Mianlin Xintiaozhan (The New Challenges for China-EU Comprehensive Strategic Partnership).” Guoji Wenti Yanjiu (International Studies) 3: 1–9. Zhao, Huaipu. 2008. “Dangqian Zhongou Guanxi Qianxi (An Analysis of the Current China-EU Relations).” Waijiao Pinglun (Foreign Affairs Review) 5: 17–24. Zhou, Hong. 2011. “Zhongou Guanxi de Renzhi Cuojue (Misperception of China-EU Relation).” Guoji Wenti Yanjiu (International Studies) 5: 34–43. Zhuang, Maocheng. 2005. “A Synopsis of Beijing International Seminar on Challenges of Peace Operations: Into 21st Century.” In London. http://www.challengesforum.org/Global/Reports/Seminar%20Reports/ Beijing%202004/Synopsis%20Beijing%20Seminar%202004.pdf.

THEME II THE EUROPEAN SOVEREIGN DEBT CRISIS

CHAPTER THREE THE INTERACTION BETWEEN THE EUROPEAN DEBT CRISIS AND EU INTEGRATION: A CHINESE VIEW WANG LIANG AND SHI WENTAO Introduction Prior to the international financial crisis of 2008, the economic situation in the EU was relatively stable. The Gross Domestic Product (GDP) of the Euro zone members increased by 5.2 per cent. The fiscal deficit accounted for only 0.8 per cent of GDP, and the public debt was 66 per cent of the GDP (European Commission 2010a, 42-43; 184-185). According to the Maastricht Treaty, the fiscal deficit of each member state must not exceed three per cent of GDP, and public debt must not exceed 60 per cent of GDP. The economies of the Euro zone countries seemed to be on the right track and the integration of the monetary policy seemed to be a successful project. However, when it comes to the onset of the debt crisis, it is important to note that certain exogenous factors greatly influenced the developments. The subprime crisis in the US snowballed into a global financial crisis, following the collapse of Lehman-Brothers in September 2008. At first, European financial regulatory authorities assumed that toning down the interdependence between the European and the American economy would help Europe mitigate the adverse consequences of the crisis (Saltmarsh 2008). After all, the European economy was still stable at the time of the initial impact. However, as soon as the crisis spread across Europe, the Euro zone countries were the first to experience economic recession. In response, most Euro zone countries adopted expansionary fiscal policies to uphold their economic growth rates, leading to a sharp increase in their public debt ratio (Baldacci and Kumar 2010). In 2009, influenced by the subprime crisis, the GDP growth rate of the Euro zone countries

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plummeted to unprecedented lows (Eurostat 2010c). Although the European economy recovered slowly, pre-crisis levels were hard to achieve. European policymakers hold that when governments amass excessively large amounts of public debt, they should curtail public spending, including welfare. However, in some countries, cutting welfare expenses was a rather difficult task. From 2007 to 2010, the proportion of the 27 EU countries’ government expenditure as a share of GDP rose from 46.9 per cent to 50.7 per cent, and expenditure on social security rose from 19.5 per cent to 21.7 per cent (Eurostat 2010b). On the one hand, Southern European countries increased their government expenditure to maintain and to even raise welfare levels; on the other hand, they used expansionary fiscal policies to stimulate the real economy. The EU Economic Recovery Plan put forward in December 2008 estimated a spending of 200 billion Euros, accounting for 1.5 per cent of gross GDP of EU (Eurostat 2010a, 29). Nevertheless, by 2009, when the debt crisis entered an alarming phase, the EU and its members were actually spending five per cent of gross GDP on fiscal stimulus measures (European Commission 2009, 5). This largescale stimulus plan worsened both the Euro zone’s fiscal deficit and its members’ government spending to GDP ratio. In 2009, 14 out of 16 Euro zone members exceeded the red line of fiscal deficit proportion of three per cent. The nation with the largest deviation from the regulation was Greece, whose fiscal deficit was 13.6 per cent. In addition, in 2011, twelve out of the 17 Euro zone members exceeded the maximum allowed government debt to GDP of 60 per cent. Yet again, the most extreme case was Greece, where public spending reached 133.9 per cent (Eurostat 2010c). Comparing the different situations of the European economies before and after the international financial crisis, one can see a large gap. The adoption of expansionary fiscal policies increased the deficit and debt levels, which had previously been decreasing. One could say that it was the global financial crisis that obliterated the Euro zone countries’ efforts to reduce their deficits and debt. Therefore, this crisis cannot be regarded as a negative effect of European monetary integration policy per se because in addition to the high public spending in the Euro zone countries, exogenous factors played an important role.

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The European Debt Crisis and its Effect on EU Integration The European Debt Crisis as a Crisis of the Periphery European economic integration after the Second World War achieved a great success. This success is often linked to efforts of cooperation primarily between France and Germany but also often including Britain. In this sense, Germany, France and Britain can be regarded as core countries of the EU. In comparison, the rest of the EU member states have less influence on the internal economic and political dynamics within the Union. Looking at past examples, such as the Empty Chair Crisis of 1966, one can argue that when a crisis involving core members occurs, it can significantly affect the integration process, and potentially delay the process of integration (Hoffmann 1966; Ludlow 1999). This is not the case when a crisis happens in marginal countries. In this case, the on-going debt crisis could not undermine the integration process, since it did not originate in the core countries. One example is the current situation in Hungary with Prime Minister Viktor Orbán initiating laws that are against basic EU principles (Schult 2011). While the European Commission has launched investigations, this crisis does not threaten EU integration as a whole (ibid.). In that sense, the Euro-crisis should not be seen as a fundamental threat to integration. After all, at least in the beginning, it unveiled as a crisis of the European periphery. The most burning case was that of Greece. Ireland, Portugal, Italy, Spain, Cyprus and others were considered to be alarming. However, when the European Financial Stability Fund (EFSF) was founded on 9 May 2010, the crisis was reframed not as a problem of the individual member states’ economies, but as a matter of safeguarding the future of the Euro zone (Chen 2010, 4). By that time, only Greece’s credit rating had been downgraded by three leading credit rating agencies, and the GDP of Greece accounted for only two per cent of gross GDP of the EU (27 members in total), and 2.6 per cent of the Euro zone’s GDP (16 members in total, as Estonia had not joined yet). In fact, at the beginning of the crisis, many overlooked the potential perils due to the relatively small size of the affected economies. By the beginning of 2012, Germany, one of the engines of European integration, had maintained a very high credit rating and its GDP accounted for more than a quarter of the Euro zone’s GDP. Germany’s share in the European economy, combined with all those still held AAA

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credit ratings such as the Netherlands, Luxemburg, or Finland, accounted for 35.5 per cent of the Euro zone’s gross GDP (European Commission 2012). Countries with the highest GDPs have managed to keep their AAA credit ratings, and did not enter recession. France’s credit rating was downgraded in January 2012, but the market was not significantly shaken and saw only slight changes in the short run (Kemble-Diaz 2012). Loan interest rates rose insignificantly and the French stock market lost only a fraction of its value. In that sense, even though there were some differences between their respective economic performances, the core countries of EU integration maintained stability, which, as a consequence, preserved a relatively stable integration process.

The European Debt Crisis and the Externality Problem Activities that completely take place in a nation’s judicial limits, but which are to provide welfare for residents outside the judicial limits, can be regarded as transboundary externalities (Young 1994, 23). Externalities defined in this way widely exist in the spheres of politics, economy and security. The externality problem can be seen as the beginning of integration, because “governments always want to eliminate or control it, so that it cannot be harmful” (Chen 2001, 39). Theoretically, the Euro zone sovereign debt crisis can be classified as a transboundary economic externality problem. Owing to the tight economic connection between European countries, a sovereign debt credit rating downgrade can potentially be transmitted to each country in the Euro zone. Due to the lack of an effective system for the prevention of crises and to provide mutual aid, sovereign debt downgrading could spill over to all the countries in the Euro zone. To illustrate, signs for an economic recession and inflation caused by counter-crisis measures have appeared in the Euro zone: in the second quarter of 2011, there was no fundamental turn for the better in the European sovereign debt crisis. More and more countries were hit and nine countries in the Euro zone experienced downgrading by credit rate agencies in January 2012 (Spiegel 2012). The European sovereign debt crisis goes beyond specific national boundaries and has become a permanent problem which European countries must face collectively. In theory, there are four solutions to eliminate and to control these externality problems: disconnection, interiorisation, policy coordination, and integration (Chen 2001, 310). Out of these four solutions, current European countries will certainly not choose disconnection because of their already high and irreversible

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economic interdependence. On the other hand, the level of European integration has not been high enough to adopt interiorisation to solve this crisis. The only two viable approaches are policy coordination and further integration. Comparing policy coordination and integration, integration is “the strictest international system that interiorises external problems to a certain degree, and will not cause huge arrangement costs generally affiliated with interiorising measures” (Chen 2001, 311). European countries are inclined to choose integration when facing the externality problem, not because it is the only solution, but due to the particular historical and political context. Having in mind the investment in and the benefits from the process of European integration in the last six decades, the on-going debt crisis does not change this predisposition. Therefore, the main trend of deeper integration will not change fundamentally.

The EU Debt Crisis and the Integration Insufficiencies Disunited Financial Policy The Euro zone was established based on the idea of an optimal currency area which was brought out by Mundell (McKinnon 2002). However, compared to the ideal type of a monetary union, the Euro zone in practice still has certain deficiencies. In the first place, it lacks a common fiscal policy. In the existing administration structure, the European Central Bank (ECB) administrates the common monetary policy but fiscal policy-making is still kept at the national level. The divergence between the unified monetary policy and diverse fiscal policies resembles an alignment challenge for the different Euro zone members. With respect to monetary policy, which has been deeply influenced by the German Federal Bank, the ECB prioritises controlling inflation and holds a comparatively scrupulous attitude to increase the market liquidity (Scheller 2006). This inclination is suitable for affluent economies such as Germany, but undoubtedly harms less well-off countries. Rich countries prefer a stable currency policy, while poorer countries would rather opt for stimulating economic development. The Greek economy, for example, is not very competitive. Pursuing a loose fiscal policy, the Greek government amassed an enormous amount of debt in order to develop its economy. A lot of resources were used to maintain relatively high welfare. The growth rating of Greece was four per cent before the debt crisis, which reassured the Greek government with regard to its own ability to repay the debt (OECD 2011, 119). On the other

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side, the stable economies carried out prudent fiscal policy and flexible labour market policy to reinforce economic competitiveness. The growth in these countries was export-driven. Such contrary policies obviously intensified the imbalance inside the Euro zone (European Commission 2010b, 3). It is a general rule that fiscal and monetary policies need to be synchronised in times of crises. As Cui argues: ‘Both-loose’ fiscal-monetary policy is suitable when total social demand is severely deficient, huge deflationary gap exists and economy runs to the bottom […] ‘both-tight’ fiscal-monetary policy suits the overheated economic situation in which total demand exceeds total supply […] ‘tightloose’ policy depends on the economic problem a country faces (Cui 1999, 40).

However, it needs to be re-emphasised that due to the plurality of fiscal policies in the Euro zone countries but also due to the different purposes of monetary policy and fiscal policy as such,1 the combination of the two is hardly effective, especially in times of crisis. Thus, before joining the Euro zone, poorer countries could depreciate the value of their currencies in order to stimulate economic development, a measure that could not be taken anymore once they joined the monetary union.

The Euro Zone as an Imperfect Currency Area If the economic situations of Euro zone countries were fairly similar to each other, a completely unified monetary policy could work better. However, there is a large gap between the highly developed countries of Western and Northern Europe, and the troubled periphery. Since current monetary policy is more influenced by the core EU member states, which are at the same time highly developed countries, it cannot provide the best possible effects of a unitary monetary policy. This is also complicated by the political arrangement of the EU, and a myriad of other factors. During an economic crisis, the United States, whose debt situation is worse than that of most European countries and the EU as a whole, can issue more currency through its Federal Reserve System (Fed). In practice this means that medium-term and long-term interest rates have been kept down and the loan cost for the real economy has been decreased, to complement the expansionary fiscal policy (Fu 2011, 11). 1

Monetary policy aims to counter inflation and keep currency stable; fiscal policy serves for promoting economic growth and solving employment.

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Meanwhile, the highest institution dealing with monetary policy in the Euro zone, the ECB, faces a comparatively smaller challenge, but its response has been far from coherent or sufficient. It not only raised interest rates twice in 2011, but also refused to purchase treasury bonds issued by individual Euro zone member states. While according to Fu “the balance sheet of a central bank ought to surpass the constraints by financial balance budget”, the ECB did not use this method (2011, 11). This contributed to the deepening of the crisis. The reason for that is the limited authority of the ECB. Since its establishment, the ECB has focused on curbing inflation. The different needs across member states have not been of primary importance. Hence, the potential for crisis situations has been underestimated (cf. Dominguez 2006, 67-68). This problem is certainly not insurmountable. If the EU granted more authority to the ECB, expanded its mandate and pushed it to consider those situations by all sorts of options and propose countermeasures, current dilemmas would be eased. Put differently, and coming back to the overall theme of this chapter, the solution to the crisis means a deeper level of European integration. Besides the questions above, it is still uncertain whether some of the troubled early Euro zone countries such as Greece or Italy can bring down their inflation rates and fiscal deficit to reach the standards stipulated in the Stability and Growth Pact (SGP) and agreements among the EU Member States that serve as a blueprint for the functioning of the Euro zone. Empirical research on some members of the Euro zone from 2002 to 2007 shows that those two dimensions, especially the fiscal deficit to GDP ratio are difficult to bring to the standards stipulated in the SGP (Jiang and Ye 2009). Consequently, it is difficult for those countries which did not reach the standards of joining the Euro zone before joining to improve their records afterwards (Jiang and Ye 2009). This shows that the aforementioned misbalance will endure for a long time and achieving more balanced Euro zone will be a long term process. In addition, the optimum currency area theory emphasises the importance of labour mobility, since it replaces exchange rate fluctuation with free flow of production factors (Mundell 1961). Recently, labour mobility, especially from Southern to Northern Europe, has surged (Adam 2013). However, achieving a higher level of labour mobility remains a challenge for the Euro zone’s members. Owing to the particularity of labour as a production factor, mobility is restrained in practice by differences in language and culture, habits and customs, and social security.

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Scarcity of Cross-Country Bail-Out Measures In the early stages of the establishment of the Euro zone, the founding countries did not manage to set up a mechanism for coping with crisis situations and aiding each other. They instead formulated only soft obligations for member states. Currently, aid commitments are based on multilateral agreements between donor countries and recipient countries, and as such are not part of the EU’s institutional system. Delayed responses occur due to prolonged bargaining. The debt crisis has thus exposed the inadequacy of relying on the ECB and SGP alone. The EU (especially the Euro zone countries) must establish aid mechanisms at the beginning of each crisis to contain the lack of confidence and speculation inclination of the markets. After the debt crisis broke out, the EU offered assistance to those countries in crisis through joint work with the IMF on three occasions, until it finally released a huge sum through the European Financial Stability Facility (EFSF) and the European Financial Stability Mechanism (EFSM; Alessi 2013). However, this did not prevent the crisis from spreading to other countries. Market trust played a large role in the fast expansion of the crisis. Since it is common for Euro zone countries to issue new treasury bonds to repay older ones, once potential investors lose trust in the debt-paying ability of the countries issuing bonds and demand compensation for the risks, market interest rates will fluctuate, resulting in the inability of these countries to issue further bonds, thus producing a snowball effect (Radulescu 2012). In light of this process, bailouts should be used before involved countries get into deeper trouble. Unfortunately, the complex administration structure of the Euro zone makes it impossible to negotiate bailout deals beforehand. When bailout negotiations slow down due to poor market confidence, the feedback by rating agencies worsens as well, making market fluctuation hard to control. Even though the EFSF has been set up, its aid funds “always need two to three months after the breakout of a crisis” (Chen 2011, 56). The ECB is able to purchase bonds of countries which are deeply affected by the debt crisis from secondary markets to bail them out. However, it regards this measure as unconventional, and still predominantly insists on stabilising the currency and counter inflation (cf. Belke 2010). In other words, “[t]he European Central Bank cannot solve the euro crisis” alone (Melander and Rose 2013).

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Concluding Remarks The immediate priority to solve the European debt crisis is to control its scale and level. In the long term, an improvement of the degree of integration in EU economic administration can prevent similar problems in the future. First, if the EU wants to consolidate faster and more thoroughly, it needs to instil fiscal discipline. This could be done through introducing and executing sanctions against the countries that violate the common law. At the same time, the EU needs improved monitoring and financial coordination between member states. Additionally, it should follow the requirements of the SGP, to make respective fiscal policies adhere to unified standards. Second, the EU needs to grant the European Central Bank and the EFSM more authority; ideally, both should play a “lender of last resort”role in order to restore market confidence. Third, the EU needs to set up a transfer system to mitigate unequal growth and economic misbalance. Here, the EU can relate to China. China and the EU share a lot of similar challenges, such as the differences in the level of economic development across provinces and regions. However, China relies on a strong central government to deal with transfer payments between regions. Although many problems remain, transfer payments can to some extent equalise the regional income differences so as to maintain the political unity of the People’s Republic (Wang 2002). The differences in levels of development of the Euro zone members are hard to balance, and a “lack of financial transfer payment relief mechanism will make it likely for these countries to generate financial problems, and increase the potential risk of a debt crisis” (Shi 2011, 25). Such a payment system can provide financial support if a problem occurs in certain areas in time. Fourth, the EU needs to strengthen its financial supervision, and set up a new pan-European financial regulatory and audit agency. In light of the crisis that was exacerbated by the three major rating agencies’ uncertain hype, setting new regulatory agencies and systems will strengthen the supervision of transnational financial activities. Fifth, the EU needs to transform temporary relief measures into a permanent crisis management mechanism. Therefore, the “Treaty on the functioning of the European Union” (article 125 “no relief”) or other applicable emergency terms (article 122 “special events cases help”) should be modified so as to speed up the implementation of economic management, and to enforce a quicker pace of European integration (article 48 “simple revision programs”).

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Sixth, in the long run, the EU’s competitiveness must be strengthened to solve the debt crisis. Fiscal and monetary levers can only act as a temporary solution but not as a permanent cure. Improving the international competitiveness of the Euro zone countries should thus have priority with a European 2020 strategy that “proposes” smart growth, sustainable growth and inclusive social growth of social and economic development framework (Lu 2011, 77). To realise this strategy, further adjustments of the EU governance structure to reach a higher level of integration are needed. Overall, the measures to solve the debt crisis will inevitably lead to deeper EU integration. Although this may be a long term process, during which diverging national interests and needs have to be reconciled, with further development, a new economic governance system could provide a new format for the EU. After overcoming the crisis, this system could potentially bring the level of integration to new heights. Finally, one must not omit the question of the role of China in the European debates on the crisis. For one, policymakers and scholars frequently question whether China can eventually “save Europe” (see for example chapter 2.2. of this volume). Yet, before discussing this question, one must take into account the existing differences in development between Europe and China, and the divergent reform tasks of their respective systems. While the EU needs to strengthen the systemic arrangements of integration, China works towards moderate decentralisation (Zhang and Zou 1998). With regards to the European sovereign debt crisis itself, the Chinese government’s attitude is cautious: Chinese Vice Foreign Minister Fu Ying (2011) said at the Lanting Forum, [h]ow can China, a country with a per capita GDP of a little more than 4,000 dollars, help Europe whose per capita GDP is higher than 30,000 dollars? (Fu 2011).

In general, China sees the main causes of the European debt crisis as rooted in domestic sources, and as primarily a domestic European concern. As shown in this chapter, at its root lie the defects of the EU economic governance structure. While the danger of some of the Euro zone countries possibly defaulting is bad news for Beijing, overall, the problem can only be solved at the European level. Meanwhile, China could play a constructive role in this process. As a partner who has close economic ties with the EU, China should attach importance to strategic opportunities during the European debt crisis, restore market confidence, and not just provide financial aid.

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—. 2012. “National Accounts and GDP.” Eurostat. http://epp.eurostat. ec.europa.eu/statistics_explained/index.php/National_accounts_%E2% 80%93_GDP. Eurostat. 2010a. Europe in Figures–Eurostat Yearbook 2010. Statistical Books. Luxembourg: European Commission. http://epp.eurostat.ec. europa.eu/cache/ITY_OFFPUB/KS-CD-10-220/EN/KS-CD-10-220EN.PDF. —. 2010b. Government Finance Statistics—Summary Tables 1/2010. Statistical Books. Luxembourg: European Commission. http://epp. eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-EK-10-001/EN/KSEK-10-001-EN.PDF. —. 2010c. “EU Economic Data Pocketbook, 1/2010.” 1/2010. Luxembourg: European Union. http://epp.eurostat.ec.europa.eu/cache/ ITY_OFFPUB/KS-CZ-10-001/EN/KS-CZ-10-001-EN.PDF. Fu, Ying. 2011. “Sino-EU Partnership Is Difficult but Still Going Ahead.” Speech. Ministry of Foreign Affairs of the People’s Republic of China. Fu, Yong. 2011. “The Monetary Policy is the Debt Crisis of the Foremost.” Financial Expo 12. Hoffman, Stanley. 1966. “Obstinate or Obsolete? The Fate of the NationState and the Case of Western Europe.” Daedalus 95 (3): 862–915. Jiang, Yanxia, and Chenyi Ye. 2009. “An Empirical Research on the Endogeneity of Optimum Currency Area—Based on Economic Development in the Euro Zone.” Contemporary Economy & Management 2. Kemble-Diaz, William. 2012. “Market Analysts React to French Downgrade.” The Wall Street Journal, November 20. http://on line.wsj.com/article/SB10001424127887324352004578130642025155 804.html. Lu, Jun. 2011. “On the ‘Europe 2020’ Strategy: Insights and Suggestions.” Chinese Journal of European Studies (01). http://en.cnki.com.cn/ Article_en/CJFDTOTAL-OZZZ201101004.htm. Ludlow, Piers N. 1999. “Challenging French Leadership in Europe: Germany, Italy, the Netherlands and the Outbreak of the Empty Chair Crisis of 1965-1966.” Contemporary European History 8 (2): 231– 248. Manmohan S., and Emanuele Baldacci. 2010. “Fiscal Deficits, Public Debt, and Sovereign Bond Yields. Working Paper.” International Monetary Fund. http://www.imf.org/external/pubs/ft/wp/2010/wp1018 4.pdf. McKinnon, Roland. 2002. “Mundell, the Euro and Optimum Currency Areas.” In Money, Market, and Mobility: Celebrating the Ideas of

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CHAPTER FOUR CHINESE RESPONSES TO THE EUROPEAN DEBT CRISIS: SAVING EUROPE, SAVING CHINA, OR BOTH? A EUROPEAN VIEW ANTONIA HMAIDI1 Introduction The European Debt Crisis (EDC) has been dominating the news since mid-2010. A lot of the discussion on the European crisis has been centred on the People’s Republic of China (PRC; hereafter: China). As the world’s second biggest economy and one of Europe’s most important trading partners, a key question is whether and in how far China would support the Euro zone in tackling the crisis. This discussion is often introduced by explaining how China, whose largest trading partner is the EU, could be adversely aˆˆected by the crisis (Bradsher 2010). However, China’s contributions so far have not met Western expectations in scope and form. Currently, China is said to hold about 26 to 28 per cent of its global foreign currency reserves denominated in Euros (Casarini 2011). While some commentators hold that most of these are bonds from “safe states”, others speculate that a significant proportion might also be from Greece, Spain and Italy. In addition to the political reasons and bargaining processes mentioned below, economic reasons, that is, a higher risk premium, are cited (Casarini 2011). Up until February 2012, when Angela Merkel visited China, China had not invested directly in the European Financial Stability Framework 1

I am indebted to my advisor Prof. Dr. Jörn-Carsten Gottwald (RUB), Dr. Gabriele Spilker (ETH Zurich), the participants of the International Relations Workshop at the Swiss Association for Political Science Annual Conference 2013, and the anonymous reviewers for their helpful comments and suggestions.

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(EFSF; Caijing 2011). Instead of big investments in the EFSF, China favoured bonds of individual crisis states. It usually bought such bonds after high-level diplomatic talks. These talks were generally held behind closed doors. However, their set-up, as well as decisions made afterwards, suggests that China agreed to buy government bonds in exchange for concessions made by individual governments (see for example BBC 2011). Furthermore, China supported the involvement of the International Monetary Fund (IMF) and decided to channel a big share of its funds for Europe through the IMF. It lobbied for the IMF to take a more proactive role. This lobbying was often accompanied by calls for a furthering of IMF reform (Mo 2012). China has also shown a preference for direct investment over financial contributions. Instead of committing money, it has shown a strong interest in investing in European companies and infrastructural projects (Xinhua 2011). Fu Ying, Vice Foreign Minister of China, summarised the Chinese eˆˆorts as follows: China is no ‘old-fashioned power’. China has no intention to seek power through financial means. China-Europe cooperation benefits both sides. As Europe tackles the sovereign debt crisis, China has contributed to IMF resources, purchased bonds issued by European countries, increased imports and expanded investment in Europe to support Europe to create jobs and restore growth, from which China can also benefit. China will continue to work with the international community and Europe to fight the crisis (Fu Ying 2011).

While China has indeed proposed and carried out a lot of measures to help the Euro zone, a comprehensive strategy has not surfaced so far. Chinese commitment seems unstable and dependent on situational factors. Statements by Chinese leaders usually emphasise the Euro zone’s own strength, but are also highly volatile in the phrasing of China’s commitment and contributions. My research questions thus are: -

Why was Chinese involvement in European rescue measures volatile and inconsistent? Why did China react in a way that favoured overseas direct investment (ODI), bilateral government talks, and the involvement of the IMF instead of more direct China-EU measures?

I argue that domestic pressures were important in determining China’s strategy vis-à-vis the Euro zone crisis. By tracing these pressures, I employ a variation of Liberalism coined by Schirm (2009) and adapted to the Chinese non-democratic system wherever necessary. I use Chinese

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newspaper articles (in English and Chinese), Chinese academic papers, oƥcial government speeches, opinion pieces, and other sources portraying Chinese public opinion (such as micro blogs) as primary sources. In addition, I utilise Western newspaper articles and Western scholarship on Chinese domestic opinions and decision-making, as well as China-Europe relations. The majority of the research was carried out between September 2011 and July 2012, the time frame of the study is thus from the end of 2009 (the beginning of the European debt crisis) until July 2012. This chapter will be structured as follows: First, I will introduce the theoretical framework put forward by Schirm (2009). I will then look at domestic ideas in section three, and then focus on domestic (economic) interests in section four. Section five will summarise my findings in an attempt to answer my research questions.

Theoretical Framework Liberal theory as an International Relations theory elaborates the insight that state-society relations–the relations of states to the domestic and transnational context in which they are embedded–have a fundamental impact on state behavior in world politics (Moravcsik 1997, 513).

As Schmidt and Heilmann point out, Chinese foreign economic policy is increasingly determined by domestic actors. Liberal theory explicitly puts the spotlight on this domestic interaction. It thus seems very suited to the current context, which is not a crisis situation for China, and which involves foreign economic policy without an important security component (Zhang 2008). Liberal Theory has three major variants: Ideational, Commercial and Republican Liberalism. In this chapter, I will employ a variant of Liberalism coined by Schirm (2009, 2011). I adapt it to fit the Chinese political system where necessary. This analysis will focus on ideas and material interests prevalent in society. It is thus a combination of Ideational and Commercial Liberalism, based on the assumption that both short-term material considerations and long-term ideas can influence government preferences and actions (Schirm 2009, 504). Interests and ideas interact with each other in pluralistic societies. This interaction can be both competitive and non-competitive (Schirm 2009, 504). It has been shown that the Chinese-foreign policy decision-making process is increasingly open, and that more and more actors play a role in shaping foreign policy (Schmidt and Heilmann 2011). Nevertheless, China

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is a one-party state, with only limited pluralism in the Western sense of the term. For that reason, when employing a societal approach to China, special attention has to be paid to the question of whose ideas and interests matter in Chinese foreign policy. Schirm defines ideas that are relevant for global economic governance as follows: “Ideas are path-dependent and value-based collective expectations on how politics should govern the market” (2009, 505). The definition I will employ in this study will be an expansion of this concept. I will call ideas those notions in society that are path-dependent and thus usually slow to change. In addition, the ideas I will base my arguments on will be those prevalent in society, which are used by politicians to gain public support (Schirm 2011, 8). Schirm calls interests “material economic considerations of domestic groups which can alter rapidly” (2009, 504), based on the assumption that the international and domestic level interact economically by changing the costs and benefits of transnational economic exchange, which, in turn, influences the government’s foreign policy (Moravcsik 1997, 528).

Ideas In this section, I will focus on ideas prevalent and consistently mentioned in primary literature from the time under study (2009 to 2012). While this list is not exhaustive, I included every idea to which I found at least three references from different authors in my research. All of these ideas can be subsumed under “National Interest” and “Perceptions of China versus EU.”

The National Interest Debate Economic Development: Saving Europe is Saving China The belief that saving Europe is essentially a means to save China was very common especially in 2010 and in the first half of 2011 (Qiu 2012). Jia Qinglin, chairman of the National Committee of the Chinese People’s Political Consultative Conference stressed during his Greece visit in October 2011 that a prosperous, stable Europe is of great importance to the world’s stability and development, as well as to the healthy, stable development of the Chinese economy (as cited in Mu 2011).

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In addition, Wen Jiabao was cited by multiple sources at the beginning of 2012 to have said: “Saving Europe is saving China”. Many of the blog posts referred to in this section can be seen as a direct reaction to Wen Jiabao’s statement, seeing their temporal proximity. Baidu reported in 2012 that the belief that “saving Europe is saving China” has faded and provides a wide range of news statements reflecting this (Baidu 2012).2 However, in the discourse of Chinese officials, such rhetoric has persisted. Indirect references to political elites citing this as reasons for China’s rescue measures for Europe are abundant on the web, sometimes even with snide references and often more or less explicitly stating that this belief is wrong: “Are the leaders’ funds all in Europe?” (Anonymous 2012), “The elites are selling out the interests of the people of their own country for appreciation by people overseas” (Luorixundao 2012). Hanjiangchunmeng (2012) includes a detailed explanation of why this view is wrong. His explanation includes the idea of Europe as a developed nation and the idea of the suˆˆering of the Chinese people, since China is still a developing nation. I will expand on this in more detail later. The idea that rescuing Europe is rescuing China thus seems to have prevailed among elites at one point. This idea is mainly economic in nature. The basic argument is that with China’s export-orientation and global economic integration, saving Europe is important for China’s domestic economy. There is also some evidence that the Chinese leadership has tried to appeal to this idea: by saving Europe, China is in essence saving itself. The Chinese leadership has used this argument to justify its commitment to EU bailout funds, most recently in February 2012. However, it seems that this idea might not be compatible with other facets of nationalism also mentioned in the national interest debate.

Greater International Status The pledge for higher Chinese status at the international level influences domestic ideas regarding the Euro zone in various, sometimes even opposing ways. First, Schmidt and Heilmann claim that multipolarity is seen by the Chinese as a positive trend (2011, 20). A Spanish newspaper comments that China prefers a G3 to a G2, citing financial reasons, but also seeks “historical revenge” for earlier humiliations (Colombani 2011). China wants to see a stronger European continent to counter American hegemony. This is even more prevalent in the financial

2

Chinese original: ‘㓹㫏㳚⯙㗗㓹冒⶚‘㗗⍹㖷Ḯ.

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sector. Chen Fengying from the China Institute of Contemporary International Relations said: I think China should support the EU on tackling the crisis, because we’d like to see diversity in the global financial market, with the euro playing an important part (Chen 2011).

Second, the idea of Chinese influence in Europe is mentioned. A possible gain in influence through investments was even cited as a benefit in online posts that overall criticised Chinese involvement in the Eurocrisis. Opponents often doubted that Chinese investment in Europe would bring with it more influence for China (diliushaokui 2012). Third, the idea of Chinese influence in the IMF is often mentioned. The crisis is sometimes seen as an opportunity for China to fight for a larger say in the IMF (Wu 2011). Chinese mention of the IMF usually involves its bid for further IMF reform to strengthen the role of China and other developing nations. Thus, money should be channelled through the IMF (PBC 2012). China sees itself as the main representative of emerging markets and developing countries, and its rhetoric usually reflects this. Fourth, and opposed to the first idea, China is seen as being able to replace Europe and build a bipolar system with the US: A gradual collapse of the Euro zone would forebode the end of the European-American system, and the emergence of an American-Chinese system. This is the first time that China has the possibility for a peaceful rise (An 2012).3

Diliushaokui (2012) agrees with this view and sees Europe as being firmly rooted within the “old system”. In his opinion, after being saved by China, Europe would try its best to prevent China from rising and cooperate with the US, China’s main rival. He also asserts that a disintegration of the Euro zone (and the EU) would have short-term negative consequences, mostly of an economic nature. However, in the long term it would be beneficial for China. The fifth and final idea is related to economic interests. As Europe does not behave in line with Chinese economic interests and “belittles” China such as through its anti-dumping measures and its refusal to grant China Market Economy Status, China should not help Europe. After all, Europe

3

Chinese original: 㫏⃫⋢䘬徸㶸ⳑ㸫栬妨䛨㫏伶ỻ䲣䘬买乻炻侴伶ᷕỻ䲣䘬 㴖䍘炻ἧᷕ⚥䫔ᶨ㫉℟㚱Ḯ␴⸛ⳃ崟䘬⎗傥⿏.

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“can’t have it both ways” (Xie 2011). Related, but secondary to this is the removal of the EU’s arms embargo on China. Greater international status can thus be used both to support China’s involvement in solving the Euro zone crisis, and to oppose it. The Chinese government has tried to use this idea to justify its strategy in getting involved more frequently. Meanwhile, the Chinese public and large parts of academic elites seem to be leaning towards greater international status so as to justify not getting involved.

Ideas and Perceptions towards China versus EU China as a Developing Country Despite China’s impressive growth rates and its economic size, Chinese leaders have stressed throughout the crisis that the PRC is still a developing nation: Although China’s total GDP and external trade are among the largest in the world, the basic reality about China—a populous country with a weak economic foundation and uneven development—has not changed (as cited in Fang 2010a).

This was noted by Wen Jiabao in a speech before the Greek Parliament on 3 October 2010. Similar statements were also uttered by Li Keqiang in 2011 (Li 2011). This idea is especially interesting since Jakobson and Knox mention that whether China is still a developing nation or already a major power is one of the substantial divisions among Chinese foreign policy scholars (Jakobson and Knox 2010, 40). In addition, the perception of China as a developing nation translates into citizens having moderate welfare expectations (see for example (Frazier 2006, 59). The extensive welfare system of Europe that leads to a high standard of living is often cited by Chinese as a key cause of the European Debt Crisis (Ou 2012). In conjunction with the high risk that Qiu Lin perceives in buying Greek government bonds, he thinks that an investment would be unfair to the common people. They have sacrificed their welfare and spending for the purchase of these foreign exchange reserves. Spending this money to save the high welfare and spending of Westerners would be truly selfless, but not aˆˆordable to China (Qiu 2012). Chen Dongqi, Deputy Head of the National Development and Reform Commission’s (NDRC) macroeconomic research institute said: “Compared to spending money to save Europe, a better choice would be to spend domestically to stimulate spending and build a social welfare

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system” (Chen 2011). Large parts of the Chinese population agree with such sentiments. Jiang Shixue, a researcher at the Chinese Academy of Social Sciences (CASS), is even more explicit: Although China’s economic strength has greatly increased since it adopted the reform and opening-up policy more than three decades ago, it is still a developing country. Measuring with the international poverty line, China has more than 200 million poor people. Senior citizens in China do not enjoy lavish pensions like their European peers. Also, China’s foreign exchange reserves are created by exporting goods produced by low-paid laborers at a high environmental cost. It is unrealistic for China to save European nations with its hard-earned money (Jiang 2011).

Similar statements were not made before 2011. Qiu argues that investment would be unfair, partly because the risks are high, and there is a good chance that such an investment might incur losses (2012). The perception that there is most probably not a satisfactory solution to the Euro-crisis is relatively new. It only occurred in 2011 (see e.g. Kashyap 2011). In addition, the Euro zone crisis is seen as a direct result of the Great Financial Crisis of 2008/2009. Since this crisis is seen as being caused by the West, Chinese government leaders and common people alike have expressed the view that the West should also take care of its self-made crisis (Ou 2012). All statements, made by members of influential think-tanks and government oƥcials alike, show that the Chinese leadership perceives these views as accepted by a wider population. In how far they actually shape government policy is very hard to ascertain. However, towards the end of 2011, the Chinese government enacted policies to strengthen domestic demand (Tian 2011). These are in line with these ideas. It therefore does seem possible that they played a decisive role in determining government policies. After all, they were voiced at the time the policies were made, by people known to have an influence on Chinese foreign policy.

Preference for Individual States before EU Institutions A second line of perception towards the EU has shaped mainly how the Chinese government has pledged its support. Concessions and therefore pledges of support have generally been made to individual countries, following high-level bilateral talks. The preference for engagement with individual member states instead of the European Commission does not lie

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in a general rejection of the European idea and/or European institutions. Instead, it is based on practical experience and a desire to represent China’s interests in the best possible way (Noesselt 2011, 1). Schmidt and Heilmann even argue that the concentration on nationstates instead of supranational EU institutions is not only rooted in practical experience, but also in the Chinese way of thought (Schmidt and Heilmann 2011, 150). This way of thought focuses on the preservation of national sovereignty and is highly state-centric or nation-centric in its nature. Power politics and competition between nation-states is seen as the core of the Realist school of International Relations, which has greatly shaped the way Chinese scholars and leaders think of the world. This preference has become very visible during the Euro-crisis. The most important pledges and commitments made by China have followed high-level bilateral talks, not talks between China and supranational EU institutions. The case of Greece in October 2010 is telling in this respect. Following negotiations in Athens, the two sides decided on trade, maritime and tourism cooperation (Mu 2010). China also oˆˆered to buy Greek government bonds (Fang 2010b; Melander and Papachristou 2010). Following this, Greek Premier Papandreou said: “Greece supports the idea that the [EU] should recognize China’s full Market Economy Status” and commented that the EU should lift its arms embargo on China (Mu 2010). Such discourse is notable since the recognition of full Market Economy Status and the arms embargo are the most important points of contention between China and Europe (Schmidt and Heilmann 2011, 150154). They have been linked with possible bailout measures by Chinese government members more than once (see e.g. Chen 2011). Israel Rafalovich shows that this bilateral engagement is not a one-way street: Because of the lack of cohesion on the continent, China has an open door to deal bilaterally with individual member states to exploit their divisions. As of today, European politicians prefer short-term visibility to coordination at EU level and there is little sign that they will be able to overcome their internal divisions (Rafalovich 2012).

Giving priority to a bilateral rather than a regional approach has been visible throughout the crisis. It can be understood as a Chinese reaction to infighting within Europe. “The Chinese ‘do not see who really speaks for the Euro’” (de Vergeron 2007, 8). They hence use bilateral talks and agreements to further their own interest. If Europe was to speak unanimously and develop a common China policy, such tactics by China would be unlikely to work.

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In 2012, China also signed a deal with 16 countries of Central, East and Southeast Europe (CESEE) which was not very welcome by Brussels. Moreover, China has been developing close economic ties with non-EU member states as well, such as Iceland and Switzerland. This illustrates that China does not put special credence in the EU as a supranational institution. CESEE’s proximity to the rest of the EU market, combined with the relatively low cost structures, is attractive for China (Nicolas and Thomsen 2008). These countries are thus influenced by the same determinants as other kinds of Chinese investment (Wang et al. 2012). This shows that China does indeed treat Europe just like any other part of the world. In addition, Godement and Parello-Plesner argue that China uses bilateral instead of multilateral channels of influence in order to build a “China lobby” (Godement and Parello-Plesner 2011, 2). Such a lobby should be able to block decisions against its interests at the EU level. This is remarkably similar to what many commentators see happening in other parts of the world, especially in Africa. Overall, the public and large parts of the elite seem to agree with the government’s policy of treating Europe like any other continent. They welcome the tactic of using China’s size, large internal market and increasing importance in bilateral negotiations instead of being relegated to something like a “junior partner” of the EU. As the government is better able to represent its own interests when dealing with individual, smaller states, this strategy also caters to Chinese public and elite nationalism.

Interest Groups In this section, the role of the financial sector and of export-oriented companies will be analysed by looking at their interests and eventual policy outcomes. The inclusion of interest groups is based on the concept of “fragmented authoritarianism” that is especially researched in the domain of economic policy (Lieberthal and Lampton 1992, 5). It has devoted most of its attention to the structural allocation of authority and the behavior of officials related to policy process, especially those behaviors that have characterized the reforms (Lieberthal and Lampton 1992, 7).

The concept implies that the reform process has led to increased bargaining among the constituent units. The inclusion of financial institutions stems from the characterisation of China as a “fragmented authoritarian” system. Such a system is dominated by interactive processes of negotiations, bargaining, exchange and consensus-building. Both financial entities dealing with state money and “private financial” entities

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are part of the bureaucracy. The Communist Party is responsible for all high-level personnel decisions, and many bureaucrats move back and forth between official government posts and posts at financial institutions. Therefore, including “private financial” entities, and assuming that they have a measure of influence over policy decisions seems prudent. A similar rationale also applies to large, state-owned enterprises (SOEs) that are primarily owned by the state. Here, managers are appointed according to the nomenclatural system and are party officials (Liou 2010, 196). Considering SOEs to be part of the bureaucracy hence makes sense. The inclusion of small and medium enterprises (SMEs) in the bureaucracy is less obvious. However, insofar as the SMEs considered in this chapter are organised in the Ministry of Commerce (MofCom)’s trade associations, their interests are represented by the MofCom as well. MofCom is clearly a part of the bureaucracy.

The Financial Sector In this section, I will distinguish between financial entities mainly dealing with state money, that is the People’s Bank of China, the China Investment Corporation (CIC), the Export-Import Bank (Exim Bank), and the China Development Bank (CDB). These are presumed to have a more direct influence on foreign policy, but also to be more influenced by political considerations when defining interests. Government interests are included here because the purchase of government bonds is one of the most prominent policy decisions discussed. In addition, the Chinese financial sector is highly state-oriented as a whole. Furthermore, I will look at other financial institutions and their interests, and how these pertain to the Euro zone crisis. The most important state financial entity is the central bank, that is, the People’s Bank of China (PBoC). It plays a role not only in executing government decisions, but also in preference formation. The PBoC is wellknown for being an advocate of a more liberal exchange rate regime (Jakobson and Knox 2010, 11). The People’s Bank of China supports the government’s “Going Global” strategy in various ways and for various reasons. First, it is concerned with inflationary pressures. Capital outflows by Overseas Direct Investments can ease “export-induced inflationary pressures” (Jomec 2009). It also benefits the government’s strategy of economic restructuring (PBC 2011). Second, as assistant governor Li Dongren pointed out in a speech in January 2011, it wants to “promote foreign trade structural improvement and upgrade and accelerate implementation of Going Global strategy” (Li 2011). Third, the Going

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Global strategy, insofar as it diversifies big state-run export-oriented companies’ portfolios, weakens their resistance to a Renminbi (RMB) appreciation. Hence, it could weaken the MofCom’s resistance to a floating exchange rate regime, the ultimate goal of the PBoC. China Investment Corporation (CIC) and the State Administration for Foreign Exchange (SAFE) would be the main responsible bodies for buying European government debt. A vice-minister of finance, Zhu Guangyao, said that Eurobonds are an investment and ought to be treated as such. This means that the Chinese government will consider safety and profitability and compare this investment to other kinds of investment. He acknowledges the political role, “but eventually, this is a business decision, though when it is done, it has political meaning” (Fu Jing 2011). The CIC confirmed this opinion. A preference for safe investments, and in particular investments in the IMF that are guaranteed, can be seen here (see e.g. Hu 2011). The CIC proclaimed a more indirect role for its commitment and continues to support Chinese companies going to Europe (Vasan 2011). This is firmly in line with the “Going Global” strategy. However, it claimed not to have bought any (more) government debt in 2011. Its leader brought up some of the ideas cited in the previous section, by saying that “China would be willing to invest in, for instance, infrastructure in European countries” (Polaris 2011). In addition, the CIC has shown its priority for financial returns by being cautious with regards to projects in Spain, and investing in infrastructure projects that have a higher financial return due to positive tax structure (SWFI 2012). The CIC in 2012 reiterated that financial returns are the priority when the CIC invests abroad. In addition, most infrastructure deals are made in secret, and announced only after decisions are made. These announcements are usually accompanied by a wealth of concessions to host governments, leading us to suggest that influence is sought in making these deals. In May 2012, the CIC announced to cut back on financial investments in Europe’s public markets due to growing concerns about a possible breakup of the Euro zone (CNBC 2012). In contrast, SAFE was firmly committed to buying Eurobonds in 2010: As a responsible long-term investor in foreign exchange reserves, China has always upheld the principle of diversification in making investments. The European market has been and will continue to be one of the most important markets for China’s foreign exchange reserve investments (SAFE 2010).

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However, in 2012, a new element was added by Zhou Xiaochuan, governor of the People’s Bank of China: “We also hope that the Euro zone and EU can innovate their mechanisms to oˆˆer new products that are more helpful for Sino-Europe cooperation” (Wang and Edwards 2012). The China Finance 404 also focuses on the economic safety of investment. In a policy suggestion by Nong Jianguang, the reasons for Chinese participation in rescuing the Euro are described to be both economic and political. He focuses on China buying safe bonds, diversifying against the dollar, and ODI (Nong 2012). In the financial sector, the total direct exposure to Europe by the Chinese banking sector is comparatively small, and for the most part concentrated in Great Britain, Germany and France. So, even if the deterioration in the quality of euro zone bank assets spread to the core countries, the potential loss would be limited and could be sustained. However, the indirect exposure through involvement in the real economy (trade financing, crossborder loans and others) would make a great diˆˆerence due to wide distribution. Chinese banking would be vulnerable to shocks when European banks were to accelerate their deleveraging, in addition to more problems with foreign reserve securities (CF40 2012).5

China’s growth, the need for China to make itself less vulnerable to external shocks by readjusting its economy reaƥrm some of the ideas mentioned in the previous sections, such as a greater international standing for China. Private banks’ interests tend to be more directly aligned with the interests present in the real economy. Chinese banks have shown an interest in expanding to Europe, especially following greater ODI by Chinese companies in Europe. A European crisis leading to some banks getting in trouble could speed up this process, says Ma Jun from the State Council (Hexun 2012). He advocates Mergers and Acquisitions (M&A) in the financial sector that would be too costly during non-crisis times (Ma 2011). Overall, financial sector interests are firmly in line with the government’s policy of favouring direct investments. In addition, public funds’ risk adverseness can provide us with one more reason for the 4

A research institution bringing together leaders of financial institutions, bureaucrats and researchers 5 Chinese original: ⛐慹圵⯪朊炻ㆹ⚥撞埴᷂⮡㫏㳚䘬䚜㍍㔆⎋⿣慷弫⮷ᶼᷣ 天普ᷕ⛐劙ˣ⽟ˣ㱽ᶱ⚥炻⌛ἧⶴ僲徨↢⮤农㫏⃫⋢撞埴峬ṏ峐慷〞⊾咻⺞ ⇘㟠⽫⚥炻㼄⛐㌇⣙ḇ㚱旸ᶼ⎗ẍ㈧⍿ˤỮ㗗㴱⍲⭆ỻ乷㳶䘬峠㖻圵峬ˣ嶐 ⠫峟㫦䫱⮡㫏㳚䘬斜㍍㔆⎋炻䓙Ḷ↮ⶫ朊⸧ˣⶖ⺪⿏⣏炻⛐㫏㳚撞埴᷂≈忇 ⍣㜈㛮⊾徃䦳ᷕ⭡㖻⍿⇘⅚↣炻㬌⢾㚜㚱⢾㯯⁐⢯䘬峬ṏ⬱ℐ斖桀.

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favouring of investment through the IMF. Following the fragmented authoritarian model introduced above, the financial and political sector are highly intertwined. Therefore, bargaining between the different bureaucracies is likely to occur. Lieberthal and Lampton argue that all these bureaucracies have veto power (1992, 13). In the case of financial vs. political sector, however, we can see a hierarchy, where financial sector representatives have the right to advocate for their interests. Nevertheless, they are ultimately responsible for carrying out the policy decided by the political leadership, regardless of their own interests. Therefore, the interests mentioned above are likely to play a role in preference-formation, but are unlikely to carry with them the decisive power a veto would have.

Export-Oriented Businesses Chinese exports, especially in manufacturing, have been quite severely hit by the EDC. One example is the toy industry in Chenghai. Here, rising costs coupled with sluggish demand have led to several factories closing down despite subsidies (China Industry and Commerce News 2012). There are two main groups of companies exporting to Europe: first, big stateowned companies; and second, smaller, often private companies (SMEs). The state-owned companies naturally have preferential access to government leaders, while many of the SMEs are part of one (or more) semi-oƥcial associations under the MofCom. One would thus expect a certain measure of influence on actual policies. This might lead one to expect China to play a bigger role in addressing the European debt crisis and ensuring international demand. Export-oriented interests were also often cited in government speeches. Many Chinese and Western media outlets saw the promotion of international consumption as one major reason for Chinese financial commitment to Europe, especially at the beginning of the crisis (China Daily Europe 2010). Chinese exporters’ interests were cited frequently after that as well, though. However, as Chinese financial contributions became less frequent and grand, many commentators only mentioned Chinese exporters’ interests in passing without actually specifying them or explaining their influence on decisionmaking. In addition to continuing to export their products, Chinese exporters also have other interests. The Chinese economy’s dependence on exports was getting into trouble even before the EDC. Chinese exportoriented companies thus have a strong interest in acquiring new technology and also in gaining market access (Ministry of Commerce 2012).

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Related interests are the desire to invest abroad with FDI for technology transfer, and the desire for less import barriers put up by other countries. In this context, the recognition of the Market Economy Status is very important. Granting China Market Economy Status would make many anti-dumping law-suits much more diƥcult, and thus ease market access for Chinese companies (Europressresearch 2011). On the political level, it would acknowledge the progress the PRC has made in terms of “reform and opening up”, the core principle of its legitimacy at home and abroad. Regarding the Chinese response to the EDC, two broad phases can be identified. First, from 2010 to November 2011, financial investment and ODI often went hand-in-hand. While in this phase, direct investment was clearly favoured since it was more in line with interests and ideas. Financial investment was comparatively frequent and large-scale. Starting in November 2011, financial investment decreased, owing in large part to the increased risk perception and the idea that the Euro zone crisis might become a long-term issue that cannot be solved by purely economic measures. Although the Chinese government committed funds to the EFSF in February 2012, this can be seen more as an irregularity following bilateral talks with Angela Merkel, the German Chancellor. Since the end of 2011, government organs as well as academics have become much more vocal in expressing doubts over the stability of the Euro zone, and the soundness of financial investments in the region. There is a documented reluctance by many exporters to become more domestically-oriented which is seen as costly. However, some business leaders now acknowledge the importance of restructuring (China Light Industry 2011a). In addition, many exporting companies want better technology because Chinese labour-intensive, export-oriented companies are becoming less and less profitable. This process is sped up by the financial crises (China Light Industry 2011c). To obtain this technique and improve market access, especially to European countries, many exportoriented, particularly big firms, are interested in ODI to Europe (Le Galès 2010). This is especially appealing at a time when many companies in Europe are struggling and can thus be bought at a lower price. Chinese exporters also have an interest in not letting the Euro depreciate, as their export prices to Europe rise when the Euro is strong (China Light Industry 2011a).

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Government Response After this discussion of Chinese exporters’ interests, it is important to examine the response by the government. Until October 2011, China regularly bought government bonds. These were meant to stabilise the Euro zone and the Euro, as emphasised by Huo Jianguo: At present, the United States have already begun to worry about the Euro trend, and Chinese exports could also be hit hard, so we can say the Euro’s stability is a top priority at the moment (China National Garment Association 2010).6

Many other statements and analyses in Western newspapers focused on China’s domestic self-interest in investing in European bonds: A clear priority for Beijing has been to prevent a slump in the value of the euro against China’s currency, the renminbi. Such a slump, by increasing the renminbi’s relative value, would make Chinese goods less competitive in Europe, China’s largest export market (Bradsher and Alderman 2012).

In addition, oƥcial government statements focused more on China’s bid for full Market Economy Status, which is also in line with exportoriented interests: China’s full Market Economy Status as soon as possible, eases restrictions on high-tech exports to China and rejects trade protectionism so as to foster an environment conducive to the healthy growth of our trade (as cited in Fang 2010a)

This speech delivered by former Premier Wen actually includes mention of more than one export-oriented business interest: Market Economy Status, and the rejection of trade protectionism. In this time period, roughly lasting until October 2011, Chinese leaders, businesses and elites often emphasised the belief that EU nations would “achieve full economic recovery” (Xinhua 2011). This idea was expressed by the China Light Industry association: “Fortunately, the worst days are already in the past” (China Light Industry 2010).7 Furthermore, it was projected that European “sluggish growth” would continue for one or two more years.

6

Chinese original: 䚖⇵炻伶⚥⶚乷⺨⥳㉭⽫㫏⃫䘬崘≧炻ᷕ⚥䘬↢⎋ḇỂ⍿ ⇘弫⣏⅚↣炻⎗ẍ宜䧛⭂㫏⃫㗗⻻⇵⣜䫱⣏ḳ. 7 Chinese original:ġ⎗⸠㗗㚨ⶖ㖍⫸⶚彯⍣.

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In contrast, starting in November 2011, a gloomier view towards the European Debt crisis prospects was adopted (see e.g. Hu 2011). The perception emerged that the crisis might not have a satisfactory solution, and might in fact signal the waning of Europe’s economic strength at large. This perception was elevated in 2012, with European leaders addressing a possible Greek EU exit for the first time. In addition, more and more Chinese analysts took the crisis as a political instead of an economic issue, suggesting that nothing China could do would actually have a lasting eˆˆect on crisis countries. Chinese leaders and academics still acknowledge the importance of Europe’s market for China’s growth. However, since November 2011, other considerations as well as a heightened feeling of risk have made China wary of buying more European government bonds: Helping Europe is in China’s long-term interests because it is our biggest trading partner. The concern for the government is that it does not want to squander its wealth and be seen as a source of silly money (Li 2011).

China’s favouring of Overseas Direct Investment is visible all throughout the crisis. Between 2010 and November 2011, key investments by Chinese firms were often followed by further Chinese investments in government debt. This suggests some sort of behind-the-scenes bargaining process, where European leaders let Chinese firms invest in their key industries in exchange for financial support from China. The most prominent example is Cosco’s takeover of the Greek port Piraeus’ container terminals in 2010, just months after the first bailout measures. It was followed by China buying government debt (Alexander 2010). Investment in Greece was generally boosted in 2010, mainly in the shipping industry, but also in tourism (Mu 2010). In addition, Chinese government and elite commentary emphasised ODI as “mutually beneficial” and helping the real economy: What European countries really need is the capacity to form blood, rather than blood itself. So it is high time to ask whether European countries can be more open to investment from Chinese firms (An 2011).

Chinese ODI has been growing fast since the start of the world financial crisis in 2008. A trend towards investment in technologyintensive sectors in Europe has been visible since 2009 (Schüler-Zhou et al. 2010, 1). Meanwhile the growing role of M&A can be observed as well (Nicolas and Thomsen 2008, 19). The economic interests behind such ODI in Europe are first, to lessen the technology gap between Chinese and Western companies, and second, to gain new markets. In addition,

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increased competition and the failure of pure price advantages of Chinese firms motivate them to go abroad (Schüler-Zhou et al. 2010, 3). Although most ODI are still by state-owned companies, a growing diversification is visible (Jomec 2011). The emphasis on investment stayed virtually the same during the two years of the Euro-crisis. Over the course of the crisis, the Chinese government urged Europe to build a more favourable investment climate and safeguard Chinese investments to Europe (Yang 2011). However, investments mainly benefit big companies. More often than not, such companies are state-owned rather than export-oriented SMEs. The government has thus enacted favourable financing policies for SMEs, to assure their access to capital during restructuring (China Light Industry 2011b). These measures include a call for banks to oˆˆer better and more financing to small businesses and an easing of small companies’ tax burden. They were introduced in October 2011, following businessmen in Wenzhou fleeing because they could not pay back their private loans (Tian 2011).

Conclusion This chapter shows how at the time of the European Debt Crisis government policies and rhetoric were often congruent with voiced interests and ideas and used by Chinese politicians to gain domestic support. Favouring ODI over other forms of (monetary) investment has been the most consistent measure in Chinese responses to the Euro zone debt crisis. It serves both domestic interests and ideas. The state and the private financial sectors were both in favour of ODI, for RMB internationalisation, and for the diversification of assets. As many Chinese companies wanted to acquire new technology and increase market access, they were also in favour of increasing ODI. In addition, ODI are not opposed to any of the ideas that were found to be important in this study. They can increase China’s standing in the world, increase Chinese influence, and further internationalise the RMB. The purchase of government bonds, especially in the early stages of the crisis (in 2010 and 2011) clearly reflects exporters’ interests. With the perceived low risk and high return, financial institutions had an interest in this, also in light of currency diversification. In addition, this chapter has argued that many opposing views and ideas that surfaced later did not play a role at this stage of the crisis, especially those related to “squandering” Chinese peoples’ money. Here, risk perception is the key factor.

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The preference for investment through the IMF, present at all times, was grounded in both ideas and interests. With regards to ideas, many Chinese people believe that China should have a “bigger seat at the table” and regain great power status. In terms of economic interests, IMF loans are safe. The IMF as a global economic institution guarantees this. The SME loan programme reflected interests and did not oppose ideas, while programmes to increase household consumption reflected ideas and did not oppose interests. The relatively little attention these programmes have received can, in part, be explained by this fact. After July 2012, China seems to have continued the policy it pursued in January 2012. It continued to invest in European firms, promoted the involvement of the IMF, and preferred bilateral talks. In addition, it also focused on the Chinese domestic economy. A continuation of the SME loan programme started in 2012 as well. Moreover, Casarini argues that China continued its diversification away from the US Dollar with Euros, but mostly through investment in “core” countries that are perceived to be relatively safe, most of all Germany (Casarini 2012). With the Euro zone crisis seemingly spreading to more and more countries, and each affected country increasing the perceived risk of investment in crisis countries, such a policy makes sense in light of interests, ideas, and the important role of risk perception uncovered in this chapter. Overall, China’s commitment seems most consistent when domestic interests and ideas complement and strengthen each other, both favouring the same policy, as in the ODI case. Pledging money through the IMF is another such case. Where interests and ideas diverged (bond purchases), the Chinese government’s policies were less consistent. Moreover, they were dependent on external effects such as risk perception. The intensity of ideas versus interests seemed to have played an important role in determining Chinese responses. With opposing ideas getting stronger, the Chinese government also dialled back its involvement. However, it is unclear whether the Chinese government’s backtracking and ideas’ intensification might not have just occurred simultaneously, owing to the same factors, namely the loss of trust in the Euro zone. Chinese commitment has lagged far behind European expectations. This is understandable in light of domestic ideas and interests. While Europe has hoped for more (monetary) contributions from China, China felt that it was not being treated as an equal partner, especially due to the EU’s refusal to grant it Market Economy Status. In addition, Europe’s trust in China as a stable partner seems low, as evidenced by the myriad of commentaries that indicated concern about Chinese influence in Europe. The deteriorating situation in many European countries, perceived

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infighting, and the public discussion about Chinese influence also produced mistrust on the Chinese side. From the Chinese side, the Euro zone crisis was sometimes seen as an opportunity for a more equal partnership, establishing a multi-polar system with the EU and China to counterbalance the US. However, with the EU’s increasingly perceived political weaknesses, Chinese enthusiasm about this idea waned. While the two economies (EU and China) are still highly complementary, China’s bid for more high-tech production, intensified by the decrease in exports due to the recent crises, has the potential to make both economies more competitive towards each other. At the same time, there is potential for partnership and co-evolution in a mutually beneficial way, so far largely not realised due to a lack of trust on both sides.

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model_safe_en/news_en/new_detail_en.jsp?ID=30100000000000000, 236. Schmidt, Dirk, and Sebastian Heilmann. 2011. Außenpolitik und Außenwirtschaft der Volksrepublik China. Springer VS. Schirm, Stefan A. 2009. “Ideas and Interests in Global Financial Governance: Comparing German and US Preference Formation.” Cambridge Review of International Affairs 22 (3): 501–521. —. 2011. “Varieties of Strategies: Societal Influences on British and German Responses to the Global Economic Crisis.” Journal of Contemporary European Studies 19 (1): 47–62. Schüler-Zhou, Yun, Margot Schüler, and Magnus Brod. 2010. “Chinas Going Global–Internationale Finanzmarktkrise bietet neue Chancen für chinesische Investoren im Ausland.” 8. GIGA Focus Asien. German Institute of Global and Area Studies. SWFI. 2012. “Abertis Closes the Sale of 7% of Eutelsat to China Investment Corporation.” Sovereign Wealth Fund Institute. June 22. http://www.swfinstitute.org/swf-news/abertis-closes-the-sale-of-7-ofeutelsat-to-china-investment-corporation/. Tian, W. 2011. “Support for Small Business Buffers Effects of Global Downturn.” China Daily, March 11. http://www.chinadaily.com.cn/ bizchina/2011-11/03/content_14028084.htm. Vasan, Paula. 2011. “aiCIO – With Europe in a Financial Slump, China Investment Corp Voices Support.” aiCIO. November 26. http://www. ai-cio.com/channel/NEWSMAKERS/With_Europe_in_a_Financial_ Slump,_China_Investment_Corp_Voices_Support.html. Wang, Aileen, and Nick Edwards. 2012. “China to Keep Investing in Euro Zone Debt: China Central Bank.” Reuters. February 15. http://www. reuters.com/article/2012/02/15/us-china-europe-idUSTRE81E07J2012 0215. Wang, Chengqi, Junjie Hong, Mario Kafouros, and Agyenim Boateng. 2012. “What Drives Outward FDI of Chinese Firms? Testing the Explanatory Power of Three Theoretical Frameworks.” International Business Review 21 (3) (June): 425–436. Wu, Jiao. 2011. “BRICS to Play Summit Role.” China Daily, November 4. http://europe.chinadaily.com.cn/europe/2011-11/04/content1403698 3.htm. Xie, Andy. 2011. “China Should Not Save Europe.” China.org.cn. December 3. http://www.china.org.cn/opinion/2011-12/03/content_240 60877.htm.

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THEME III ENERGY AND ENVIRONMENTAL ISSUES

CHAPTER FIVE ENVIRONMENTAL POLICY IN A CHANGING ENVIRONMENT: A EUROPEAN VIEW MAXIMILIAN RECH Introduction This chapter will analyse Sino-European relations in the domain of energy and environmental policy. The chapter will build on a theoretical framework of Ideal-Type Rational Choice theory, and Rational Choice theory with regard to global commons to explain Chinese and European action in response to energy and environmental policy challenges. In particular, the chapter will analyse the behaviour of rational and utilitymaximising actors competing in the domestic arena of Europe and China respectively. It will explain how actors capture the state and institutions to shape state preference. As a result, Europe and China find similar answers to the triple challenge of (1) transaction costs, (2) distribution conflicts, and (3) the free-rider problem. In the domestic arena, both Europe and China experience a triangular relationship between politics, business and civil society. Therefore, any solution to this triple challenge in energy and environmental policy should take into account the domestic arena. The way forward will be to include all actors involved and mediate between their respective interests. When domestic actors manage to upload their particular interests to the state, they thereby “capture” the state and monopolise state preference. This way, states risk sub-optimal outcomes. Therefore, both Europe and China need to carefully mediate between domestic interests to achieve optimal outcomes in the domestic arena. Especially with regard to common goods and situations of market failure, a more balanced state preference formation can facilitate cooperative negotiations in international relations.

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In the course of the analysis the chapter will consistently return to the conclusion that Sino-European cooperation is taking “the form of coevolution of two societies progressing on parallel, though not identical tracks” (Kissinger 2011, 543). Therefore it is up to all stakeholders involved in Sino-European cooperation to take bold action and take into account the phenomenon of co-evolution into partnership initiatives so as to prevent competition.

Rational Choice The chapter will introduce Ideal-Type Rational Choice as a theoretical framework to explain actors’ behaviour on the basis of interests, beliefs and opportunities. Subsequently it will analyse rational choice in view of global commons.

Ideal-Type Rational Choice Ideal-Type Rational Choice takes an individualist ontological assumption about actors and their behaviour as a starting point. Rational choice theory is thus first and foremost an action theory predicting that actors, when faced with a choice between different courses of action, will choose the course of action that is best with respect to the actor’s interests (Hedström and Swedberg 1996, 128).

Hence, the Ideal-Type Rational Choice theory seeks to predict actors and their individual actions. “[I]ndividual actions should thus be seen as the results of three proximate causes: interests, beliefs, and opportunities” (Hedström and Swedberg 1996, 128). From a subjective point of view, individual actors behave rationally if the ends are in congruence with subjective standards of value and if means and efforts necessary to achieve this outcome are efficiently utilised. Ulrich highlights that these pre-conditions correspond to the ideal-types of rational action as defined by Max Weber. On the one hand, “valuerationality” leads to the convergence of purpose and value; on the other hand, “purposive rationality” emphasises the adequacy of means in regard to purposes. In combination, they represent the ideal-type of utility-maximising rationality. This rationality is aimed first and foremost “toward the success of one’s actions, whereby ends are assumed to be given and ‘success’ is measured in terms of cost-benefit analysis” (Ulrich 1988, 142). We can thus speak of utility-maximising actors or individuals. If actors behave

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according to their pre-given ends or interests, beliefs and opportunities, while at the same time realising a convergence of purpose and values, as well as adequate means to achieve the purpose, then rational action can be observed. If actors behave reasonably—that is in line with interests, beliefs, opportunities, as well as according to values and means available—then reasonable action can be assumed and behaviour can be more easily predicted. Reasonable action in this context is explained as fulfilling an “instrumental purpose with respect to given ends rather than a theoretical interest in gaining knowledge” (Ulrich 1988, 142). Ulrich therefore relies on Max Horkheimer’s conceptualisation of “instrumental reason” to better explain what is meant with reasonable action by rational actors. These utility-maximising, rational actors are interested in ends. Hence, they do not seek knowledge but outcomes. At this point it might also be useful to restate the insights gained by Andrew Moravcsik and his understanding of New Liberal theory and actors’ behaviour with regard to political outcomes (Moravcsik 1997). First, actors (individuals or groups of individuals) are rational and risk-averse. Secondly, they pursue interests. In the ideal-type understanding they do so independently from politics as they are utility-maximising actors. Moravcsik’s first assumption could apply to an economic actor such as for example an energy utility company that is driven by purely economic interests. Such an actor will seek to upload its particular interest to the institutions of the state. Capturing the state by defining state preferences leads to the state becoming a purposive actor acting on behalf of the company in international relations. Ultimately, this is a means to achieve the company’s interest. As shall be further specified below, this is an example of “Commercial Liberalism”. This is one of Moravcsik’s variants of New Liberal theory that explains how the interest of a company or a sector is uploaded to the state and then determines state preference in international relations. Moravcsik argues that Commercial Liberalism can explain free trade negotiations for example (Moravcsik 1997, 529). In free trade negotiations, states are “relative-gains seeking” because domestic actors have managed to capture the state. In the case of a highly competitive company or sector the domestic actors urge the state negotiator to pursue free trade in international negotiations. In the case of a non-competitive company or sector the domestic actors urge the state negotiator to pursue protectionism. It is thus the vested interests of domestic actors that may explain state preferences. Actual state policy is only of secondary importance to the domestic actor. The domestic actor’s primary aim is

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relative gains and his secondary aim is policy as a means to maximise relative gains. As will be exemplified with the case studies on waste management and international climate negotiations, this pattern can also be observed in Sino-European relations. For now, the theoretical framework already points to the fact that actors never act independently from each other, but rather act and react to each other. Thus, a social element needs to be added, as Hedström and Swedberg remark. They base their work on Karl Popper, Mark Granovetter and others when arguing for actor network analysis by means of network models and interaction chains: action becomes social—that is, interdependent—when one actor’s choice or anticipated choice of action influences the beliefs, interests, and/or opportunities of other actors (Hedström and Swedberg 1996, 134).

“Making action social” has additional ramifications. Not only are actors acting and reacting in response to each other, but they also make assumptions about other actors’ interests, beliefs, opportunities as well as values and means available. Sun Tzu’s Art of War is an ingenious example of how assumptions can lead to strategic political action in historical as well as present-day China (Giles 2007). Yan Xuetong’s contribution on new values in International Relations comparing Western conceptions of hegemony and benevolent hegemony with Chinese conceptions of the “way of might” and the “kingly way” is another example of how regional differences can change assumptions (Yan 2013, 16–19). However, there is another aspect to assumptions that needs further explanation, namely information. Information is an important qualifying factor for rational choice theory, as wrong assumptions based on imperfect information can have dramatic effects on action and reaction. Sun Tzu identifies five constant factors that are of essential importance to any general. They are (1) moral law, (2) heaven, (3) earth, (4) the commander as well as (5) method and discipline. He puts it relatively simply, stating “[t]hese five heads should be familiar to every general: he who knows them will be victorious; he who knows them not will fail” (Giles 2007, 23). This is a rather drastic statement, but Sun Tzu reemphasises “arduous study” on various occasions, thereby highlighting the need for perfect information and proposing deception as a possible strategy. Hedström and Swedberg conclude in a similar vein: “once we allow for imperfect information, the requirements for an action to be considered strictly rational become rather stringent” (Hedström and Swedberg 1996, 128). Thus, with imperfect information and strategies of deception strict rational action becomes difficult. In addition to this, Michael Reed and David

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Harvey stress the limitations of Positivist, Rational Choice theory in saying: The strict controls which scientists use to elicit nature’s law-like properties produce only limited, idealized knowledge. Positivist canons can suffice only in the closed domain of the experimental setting. These law-like regularities with their clarity and order often disappear when taken from the laboratory and used to explain outcomes in the open world of everyday life (Reed and Harvey 1992, 356).

Hence, once the fuzzy world comes into play, Rational Choice theory is at best an ideal-type for understanding actors’ behaviour. Yet, it is an important ideal-type as it allows us to make sense of actors’ behaviour within the greater system of real-world International Relations (IR).

Rational Choice and the Global Commons When focusing on Sino-European relations in energy and environmental policy, rational choice has to be analysed in reference to global commons. Air quality and international efforts to reduce greenhouse gas (GHG) are an instance of rational choice on global commons at work. First, it needs to be established that air quality is a common good. Clean air is to the benefit and in the interest of all. Once economic activity has negative effects on air quality, such as air pollution, there is an instance of market failure. There is an economic externality because clean air and air pollution have no market price. Hence, the polluter does not have to pay for the pollution of the common good (Reinhardt 1999; Bromley 2007). The international community devised the United Nations Framework Convention on Climate Change (UNFCCC) and subsequently the Kyoto Protocol to address this market failure and the related challenge of global climate change due to air pollution. The Kyoto Protocol was conceived as a legally binding mechanism to commit the parties to GHG reductions. However, it is essentially a voluntary agreement that each state can sign and ratify or decide not to sign or ratify. Once signed and ratified, the agreement legally obliges developed countries to adapt GHG emissions by negative eight per cent to plus ten per cent compared to 1990 levels (UNFCCC 2013c).1 Developing countries fall under the scheme of 1

“The targets for the first commitment period of the Kyoto Protocol cover emissions of the six main greenhouse gases, namely:͒Carbon dioxide (CO2);͒Methane (CH4);

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“common but differentiated responsibility” (Art. 3.1 UNFCCC) and are not obliged to reduce GHG emissions on the path to further development (Stone 2004, 279–280). To achieve the GHG reduction targets, the international community proposes the clean development mechanism, joint implementation, and emissions trading. This chapter will focus on the latter solution of emissions trading in international relations. In the European Union (EU), a market-based instrument for the management of CO2 emissions certificates is currently in force. The EU emissions trading scheme (ETS), as any other ETS, is based on the polluter pays principle developed by Ronald Coase (Coase 1960). ETS assign property rights to a certain good to overcome the market failure that this specific good is freely available to anyone at no cost. The common good is then offered on the market and will be efficiently allocated to internalise previously external costs in the production process. There is one caveat related to transaction costs which need to be low for the market to function efficiently. These transaction costs are normally borne by states or the international community through auctioning or allocation of emissions certificates. Polluters then pay for the certificates needed (Coase 1960; Woerdman, Arcuri, and Clò 2008). Given utility maximising actors, this principle works relatively efficiently because it is in the interest of each polluter to pay as little as possible for the certificates. Innovation towards efficiency—that is less polluting ways of production—will eventually prevail. Also, ETS work cyclically and in direct relation to supply and demand. This means that certificates will be more expensive in times of economic boom and less expensive in times of bust when economic performance is lower (Stiglitz 2008). Another aspect about global commons is related to the fact that it should be in everyone’s interest to preserve them. Taking clean air as an example, it should be in every citizen’s interest to secure on-going provision of this good. By extension, sufficiently large coalitions should manifest themselves to ensure that states also work to provide for this good. However, Sabatier points out that researchers who work on advocacy coalition frameworks (ACF) have wrongly assumed that actors who hold similar policy core beliefs will act in concert—that is, that the first condition of coalition formation is sufficient for the second. Anyone familiar with the literature on collective action will realize the dubiousness of this assumption (Sabatier 1998, 115). Nitrous oxide (N2O);͒Hydrofluorocarbons (HFCs);͒Perfluorocarbons (PFCs); and Sulphur hexafluoride (SF6)” (UNFCCC 2013c).

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Shared goals and beliefs as well as recognition that pooling resources increases the probability of success is assumed to be sufficient to overcome the triple challenge of (1) transaction costs, (2) distribution conflicts, and (3) the free-rider problem (Sabatier 1998). However, the debate about rational choice, especially with regard to global commons, highlights the difficulties of these assumptions. Each of these challenges and how they affect the specific domain of environmental policy will be addressed in turn in the following sections. How Europe and China address the market failure situation will be a decisive test that will determine whether relations develop as a partnership, as competition, or as co-evolution. This challenge, which is yet to be resolved, will be part and parcel of Sino-European relations in the twenty-first century.

New Liberal Theory in the 21st Century The Ideal-Type Rational Choice approach has provided a framework to understand actors’ choices and behaviour as well as social interaction. The discussion of global commons pointed out the difficulties related to market imperfection and market failures in environmental policy. The next step is to introduce a theoretical framework to explain Sino-European relations with regard to environmental policy. To do so, this chapter relies on Moravcsik’s work on reformulating Liberalism into a “New Liberal theory”, which proposes a logically coherent and theoretically convincing IR theory that helps explain state interaction (Moravcsik 1997). New Liberal theory points out three crucial caveats that make the theory useful to the endeavour of analysing Sino-European relations in environmental policy. This chapter will consider each caveat at a time.

Three Assumptions Moravcsik introduces three assumptions that provide a general framework for scientific inquiry along the lines of New Liberal theory. 1) The primacy of societal actors Instead of accepting states as primary actors in international relations, Moravcsik argues that individuals and private groups are the fundamental actors. These actors are generally rational and risk averse and they interact to promote their respective interest “under constraints imposed by material scarcity, conflicting values, and variations in societal influence”

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(Moravcsik 1997, 516). There are three instances in which actors use coercion to realise their interest: (1) divergent fundamental beliefs, (2) conflict over scarce resources, and (3) inequalities of political power. 2) Representation and state preferences States and political institutions represent domestic society. If there is a subset of domestic society that manages to dominate the domestic arena it may be able to upload its interest and define it as a state preference. In this case, state institutions will act on their behalf and behave as purposive actors in international relations. Even if state institutions are formally fair and open to all domestic actors, the variance of the different actors’ endowment with “property, risk, information and organisational capability” may allow advantaged domestic actors to dominate state policy in social or economic matters (Moravcsik 1997, 518). This is particularly interesting with regard to environmental policy as will be exemplified in the following sections. 3) Interdependence and the international system Moravcsik defines this interdependence as a “configuration of interdependent state preference [that] determines state behaviour” (Moravcsik 1997, 520). He argues that state preferences may have externalities for other states in an interdependent international system. Therefore, there are three possible patterns of policy interdependence: (1) harmony or compatible preferences; (2) conflict or zero-sum preferences; and (3) policy coordination in reply to collective action problems. In light of Henry Kissinger’s contribution, and this volume’s overall theme, these three patterns of interdependence could also be labelled (1) partnership, (2) competition, or (3) co-evolution.

Three Variants Moravcsik also introduces three variants of New Liberal theory that help explain real-world events. He offers a coherent structure to address different political phenomena with each of the variants being of added value on a specific problem, namely: -

Ideational Liberalism–focusing on societal identities that determine state preference;

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-

Commercial Liberalism–addressing economic interests that determine state preference; and Republican Liberalism–highlighting institutionally privileged state preference formation.

The added value is underlined by the fact that each of the variants can also be combined to explain real-world events (Moravcsik 1997, 526 ff.).

Four Criteria Finally, by emphasising the need to make New Liberal theory a more useful tool for empirical research and theoretical inquiry, Moravcsik formulated four criteria that help underline the relevance and validity of liberal thought for IR theory (Moravcsik 1997, 533 ff.). -

Parsimony and coherence–allowing to connect previously unrelated hypotheses and make sense of interaction in international relations; Conceptual limitation–highlighting the limited applicability to functional, institutional and regime theory arguing instead to make sense of state preferences that determine interaction in institutions; Methodological implications–pointing out that strict systems theories neglect domestic pressure that is often decisive in shaping outcomes in international negotiations; Priority of preference–allowing for a combination of preferences and constraints by introducing the Two-Level Game accounting for negotiations in the domestic as well as the international arena.

New Liberal theory can best analyse the process of state capture in Europe and China when combined with Robert Putnam’s model of a TwoLevel Game, which will be introduced next.

Essentially a Two-Level Game Interests are pre-given and assumed by Rational Choice and New Liberal theory, whereas preferences are an outcome of negotiations and social interaction. In this circumstance individuals and groups involved in political processes may make a difference to state preferences. Therefore, it makes sense to look at individuals and groups of individuals for the origins of pre-given interests and subsequently analyse state preferences as outcomes of negotiations. Each state’s pursuit of preferences in an interdependent international system may impose costs on other states, depending on the application of

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the concept of policy interdependence and distributional conflict. This relates back to Moravcsik’s third assumption and Kissinger’s patterns of interdependence—stating that it is either (1) partnership (compatible preferences), (2) competition (zero-sum, revisionist preferences), or (3) co-evolution (in response to collective action problems) (Moravcsik 1997, 521; Kissinger 2011, 543). Moravcsik opens the black box, identifies the sub-systemic structure (that is the state) as an arena and argues for the “bottom-up” approach: “Demands of individuals and societal groups are treated as analytically prior to politics” (Moravcsik 1997, 517). With regards to demands, actors are characterised by a “willingness to employ coercion in pursuit of them” and even fair and open government institutions are monopolised (Moravcsik 1997, 517). Thus, Moravcsik is able to explain state preference formation even in circumstances characterised by complex, pluralistic and competing interests on the sub-systemic structure, with many individuals and groups of individuals competing in the real-world. New Liberal theory is thus an important contribution to the conduct of empirical research in IR theory. Moravcsik’s work is largely based on the studies of Robert Putnam. Putnam stresses that “the unitary-actor assumption is often radically misleading” (Putnam 1988, 433). He therefore argues for a “Two Level Game”: in terms of global environmental policy conduct, each nation state negotiator and their respective position is an example of a Janus-face model. On level I, there is the domestic context and on level II there are international negotiations determined by preferences and constraints. Putnam argues that there is a constant interaction between these two levels. He places the state and its negotiator at the centre of attention and explains how negotiation strategy is influenced by domestic pressure and international constraints. Important dynamics such as defection in a prisoner’s dilemma, synergistic issue linkage and package deals or overlapping win-sets can fundamentally change the equation of international negotiations. Putnam also rebuffs the unitary state actor argument in light of strategic use of uncertainty of information. Negotiators may misrepresent domestic interest, understate their domestic institutional power and extort concession arguing with unfavourable public opinion or lack of societal consent. Perfect or imperfect information about domestic circumstances may be a very powerful bargaining chip in international negotiations. As we will see below, applying Putnam’s TwoLevel Game offers very interesting insights into European, Chinese and international politics.

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The combination of Ideal-Type Rational Choice, with this interpretation of Moravcsik’s New Liberal theory and Putnam’s TwoLevel Game represents an appropriate framework to analyse SinoEuropean relations on environmental policy as we will see next.

Domestic Tension: Brussels versus Member States and Beijing versus Provinces Comparing the European Union and the People’s Republic of China (PRC) with regard to environmental policy highlights interesting parallels between the two political entities. Europe and China are different in many respects, yet they share important dynamics with regard to state preference formation. These similarities in state preference formation and their implications for international relations have received too little attention in scientific literature. EU policy-making is very different from all other sorts of nation-state policy-making and many scholars have invoked an argument about the EU being a sui generis project (Øhrgaard 2004; Knelangen 2005; K. E. Smith 2002; Wallace and Wallace 1996). An important reason for this argument is of course the hybrid political structure of the EU whereby certain policy domains such as trade and competition are the sole responsibility of the European institutions. Meanwhile, other policy fields such as security and health remain by and large an affair of the respective member states. There is a constant exchange between different political entities on the (1) supranational, (2) national, (3) regional, and (4) local level. The EU has therefore been dubbed a system of “multi-level governance” (M. Smith 2004). Nonetheless, the EU essentially relies on bargaining between different actors on various levels. No matter what level is analysed, there is always some sort of negotiation among the stakeholders involved. The stakeholders ultimately settle on a certain common denominator. This may be the highest common denominator or the lowest common denominator, or simply a reflection of stakeholder endowments. Moravcsik explains that domestic stakeholders, such as corporate or civil society actors, have different endowments of property, risk, information and organisation capability. The domestic political arena is characterised by competition between domestic actors with different endowments. State preference formation is the outcome of domestic competition and depends on each stakeholder’s capacity to capture or even monopolise government institutions. Competition between domestic actors with different endowments of property, risk, information and organisation capabilities

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leads to preference formation (Moravcsik 1997). Hence, the EU can also be understood as a Two-Level Game in Putnam’s definition. It is an ongoing negotiation process between stakeholders on the local, regional or national level. Subsequently, their respective representatives engage in negotiations on the higher level. Ultimately either the member states conduct international relations or the EU’s supranational institution does so on their behalf (Putnam 1988). It is more difficult to apply the theory to the Chinese setting. Liberal democratic systems are arguably more transparent about state preference formation. Therefore, the element of uncertainty about domestic situations is somewhat diminished with relatively well-known win-sets for all negotiation partners. State preference formation in the PRC, by contrast, is less transparent. Yet, domestic actors engage in essentially the same process and Putnam’s Two-Level Game dynamics are at play (Chung 2013; Chung 2013; Heggelund 2007; Wübbeke 2013b; Wübbeke 2013a). It might not be easily distinguished from an outside perspective, as different actors in preference formation are less visible. However, primary or secondary sources can act as indicators to measure state preference formation in the PRC. Competition for capturing the state as a purposive actor is taking place as the following examples suggest. Chien-Peng Chung has produced a study applying Putnam’s TwoLevel Game to territorial disputes over islands in the South China Sea, thereby highlighting internal rifts between the Ministry of Foreign Affairs and the People’s Liberation Army as well as the Navy. Chung also argues for an increased attention to economic actors such as national and multinational companies in shaping the discourse and policies related to these disputes. He concludes that no analysis of these disputes can neglect the increasingly important domestic arena (Chung 2013). With regard to natural resource extraction, Wübbeke analysed economic policy implementation and argues that “national policies can be effective only if they are implemented locally. Provincial and sub-provincial governments have a strong hold in the industry” (Wübbeke 2013b, 6). Heggelund comes to the same conclusion with regard to civil society involvement in international climate change negotiations. He argues that “the trend is to involve more think tanks, thereby increasing the number of actors in the policy-making process” (Heggelund 2007, 189). Wübbeke suggests a similar analysis when focusing on the role of Chinese climate change experts and their influence on strategy formulation and policymaking. He highlights the hybrid role of scientific experts who simultaneously hold governmental office or assume semi-official status in activities related to climate change negotiations (Wübbeke 2013a, 727).

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Again, the exact impact of these domestic actors is difficult to measure empirically. Yet, the role of state preference formation at the domestic level can no longer be neglected in an increasingly diverse Chinese environment, as Morrison summarises succinctly: The foreign policy mechanism in place today is increasingly diverse, and appears to be changing to resemble that of Western powers that draw upon a wide range of actors to inform and influence decision makers (Morrison 2012, 78).

With regard to the implementation of climate change mitigation strategies, the structure of China might be different, but the actors implementing mitigation efforts are comparable to those in Europe. The Chinese political system features (1) a central government, (2) provinces, autonomous regions and special administrative regions, (3) municipalities, and (4) the local/village level. Hence, the same logic applies. There is negotiation between the stakeholders involved and depending on the various actors’ endowments with property, risk, information and organisation capabilities they will or will not be able to capture the state (Wübbeke 2013b; Chung 2013; Heggelund 2007; Morrison 2012).

Environmental Policy in a Changing Environment In the following section, this chapter suggests several insights from domestic state preference formation and international negotiations in the domain of environmental policy. The analysis helps explain how China and Europe interact with each other in this domain and offers suggestions on how to improve the relationship.

Waste Management Waste management is highly representative of Sino-European interaction in the twenty-first century. Many strategic patterns and priorities in this sector can also be observed in other environment related sectors such as solar, wind, or high-tech resources. Municipal solid waste (MSW) management in China relies up to 80 per cent on sanitary landfill as a means of disposal (Liu et al. 2009; Cheng and Hu 2010b). The twelfth Five-Year Plan of the central government identifies waste management as an important contribution to renewable energy production and the development of a circular economy (China’s 12th FYP 2011). Given various alternative means of waste management such as reduction and recycling as well as alternative means of disposal such as incineration,

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biological fermentation, China’s predominant strategy for waste disposal relies on second-best technology. Therefore, many municipalities and businesses are demanding collective action to introduce waste incineration plants as well as biological waste fermentation plants to recover energy from waste. Next to economic returns, these technologies allow for a more environmentally friendly management of waste. However, the technologies available domestically are not necessarily the latest on the market and hence face some problems. These include lower capacity, reduced efficiency, and emission of flue gases, dioxins and other GHG. It can be concluded that waste incineration plants in the PRC operate sub-optimally (Cheng and Hu 2010a, 2810; Cheng and Hu 2010b, 3818). It is difficult to judge with certainty which strategies different stakeholders pursue to capture government institutions and shape the reform of sub-optimal waste management in their interest. However, secondary sources allow insights into the political decision-making process in China. Long-term political strategies such as the twelfth FiveYear Plan and statistics about increasing numbers of waste incineration plants suggest that businesses offering domestic technology for waste incineration plants were able to capture the state (Zhang, Keat, and Gersberg 2010; Chen, Geng, and Fujita 2010; Troschinetz and Mihelcic 2009; Zhang, Tan, and Gersberg 2010). Transaction costs as well as distribution conflicts can explain this phenomenon. The waste management industry in China is very well endowed with property, information and organisation capacity as they run the waste management in the municipalities, dispose of technical expertise and represent a small number of relatively well organised actors (Nie 2008, 2– 4). They are also prone to risk as it is either their technology or European technology that is used in waste incineration plants. After an initial period of imports of waste incineration technology, China shifted its preference to domestic technology. This is reflected in the use of different technologies over time. In the early stages of waste incineration stoke grate technology was imported from Europe. The latest figures show a rapidly increasing number of fluidised bed and rotary kiln incineration plants as opposed to stoke grate plants (Cheng and Hu 2010b, 3819; Yu 2012; Balkan 2012; Nie 2008, 2–3). These domestically available technologies have the advantage of being cheaper in terms of initial investment. What is more, they use coal instead of oil or natural gas to co-fire the incineration process. Due to household waste composition in China, the moisture content is high and the caloric value is low. Therefore, a lot of co-firing with cheaply available coal is

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needed (Solenthaler and Bunge 2003; Nie 2008; Cheng and Hu 2010b). This in turn increases air pollution. Unfortunately, the central government regulation on pollution filters used in domestic technology incineration plants does not live up to the highest standards. Flue gases, dioxin pollution as well as other GHG emissions are endangering the livelihood and well-being of the population in close proximity (Balkan 2012; Solenthaler and Bunge 2003, 5; Cheng and Hu 2010a, 2810). The actors’ endowment with risks is high. As a result, there is increasing opposition among the local population. The number of citizen protests has increased and waste incineration is not very welcome in the respective communities. The protests have mainly taken place in first-tier cities due to a combination of facilitating factors. According Zhang Yi, Head of the Shanghai Environmental Sanitation Engineering Design Institute, these factors include poor management of incineration facilities, increased land prices, environmental awareness of the local population paired with dioxin and flue gas emissions as well as a lack of transparent tender processes in the planning phase of waste management facilities (Balkan 2012; Xiao 2012, 44; Yu 2012, 3; Wang 2013). State of the art waste management techniques such as source separation in households and subsequent waste incineration combined with biological waste fermentation not only recover energy from waste but also decrease GHG emissions, increase ecological performance and benefit the well-being of the population if implemented correctly (Rech 2013, forthcoming). For the time being, the central government encourages the use of local technology; technological cooperation with Europe is done via joint ventures. The state is thus captured by the industry as domestic actors have managed to upload their interest to state institutions. Moravcsik would label this Commercial and Republican liberalism. State preference formation is influenced by economic as well as institutionally privileged domestic actors. This is reflected in the numbers of domestic technology waste management facilities operating or under construction, as well as the joint venture requirements for technology investments in China and increasing numbers of joint ventures in the waste management industry (Cheng and Hu 2010b, 3819; China’s 12th FYP 2011; Dorn, Flamme, and Nelles 2012, 434–435; Ederer 2012; Nie 2008, 2; Umbach 2008). Interestingly though, the protesting citizens have at times become a part of the political process, too. They seek to capture the state just as businesses have sought (and succeeded in doing so) in the past. Xiao Bin argues that innovative forms of protest in Guangzhou’s Panyu district have resulted in access to government. Moreover,

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the constructive mode of action and tactics deployed by Panyu residents led them to be seen as “fellows on the other side of the debate”–that is, an indispensable force that cannot be underestimated by government (Xiao 2012, 44).

In other words, the triangular relationship of politics, business and civil society that is typical for Europe is emerging in China as well. Hence, Moravcsik’s “New Liberal theory” applies. However, outside the administration only a handful of researchers have direct access to information. Therefore, they need to rely on available information to measure the process of state preference formation. Building on publicly available publications of Chinese scholars that are situated on the higher echelon of China’s decision-making authorities is one such option (Cui 2012; Xiao 2012; Yan 2013). The example of waste management illustrates how environmental policies such as waste management are the result of constant bargaining of competing interests in China. The future development of China’s waste management will lead to a more sustainable management of waste. However, this section has shown how Sino-European cooperation in the form of technology exchange in source separation, filter technology and waste incineration and fermentation technology could facilitate this development. Therefore, it can be argued that domestic actors in the waste management industry that succeed in capturing the state essentially prevent greater technological cooperation. Their superior endowment with property, information and organisation capacity paired with vested economic interests slows down progress in this field of environmental policy. Therefore, more careful mediation between domestic interests could achieve more efficient outcomes in sustainable waste management. The way forward will be a more equitable representation of all actors involved. More balanced state preference formation can facilitate cooperative negotiations in international relations.

International Climate Negotiations International climate negotiations on air pollution are another case in point. Initiated by the establishment of the UNFCCC in 1992 and substantially promoted by the signature of the Kyoto Protocol in 1997, international climate negotiations are an important example of global environmental policy where both Europe and China’s cooperation can play a constructive role. However, the negotiations have stalled for several years. The first implementation period of the Kyoto Protocol is finalised and negotiations on the second implementation period are still on-going.

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The Conference of the Parties (COPs) meets on an annual basis, but progress on climate change mitigation policy is slow and fewer parties signed the second commitment period of the Kyoto Protocol as compared to the first (UNFCCC 2013b). How can Rational Choice and New Liberal theory help explain the current deadlock and what can be done to move from competition to partnership, or co-evolution? In order to analyse the situation, it is necessary to open up the black box of the state and look into the internal dynamics of both the EU and the PRC. This section will analyse the triple challenge of (1) transaction costs, (2) distribution conflicts, and (3) the free-rider problem. Transaction costs have been addressed in detail with arguments in favour of and against the allocation of emissions certificates on the one hand and the auctioning of emissions certificates on the other hand. Allocation of emissions certificates ensures efficiency of certificate trading through the subsequent market mechanism. Auctioning emissions certificates ensures efficiency through the subsequent market mechanism as well as equity with the immediate market mechanism in the process of bidding for certificates. Sabatier further specifies that distributional conflicts and free-riding are more serious problems for material groups—whose members are self-consciously seeking to maximize their own material self-interest—than for purposive groups, whose members are more committed to an ideology stressing the collective welfare (Sabatier 1998, 116).

This becomes more pronounced when analysing the EU in international climate change negotiations. The European domestic arena is characterised by the aforementioned triangular relationship between politics, business and civil society. Just as Moravcsik suggests, various societal actors compete to capture the state and to “upload” or to promote their interests to state preferences (Szarka 2004; Levy and Egan 2003; Moravcsik 1997). Traditionally, the European domestic arena has been characterised by relatively clear coalitions. On the one hand, there was the industry seeking lax rules on emissions and climate change mitigation policies. On the other hand, there was civil society seeking more stringent environmental regulation in the domain of emissions. Each group of actors was made up of a multitude of actors with converging interests, using a wide range of strategies to promote their own interest and capture government institutions (Szarka 2004, 323 ff.). Though coalitions were flexible, there was a relatively clear divide with industry and business representing one side of the debate and civil society and environmental non-governmental

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organisations (NGOs) representing the other side of the debate (Schreurs and Tiberghien 2007). An increasingly diverse landscape with greater variation in sectorspecific interests has led to a more complicated reality. Representatives of renewable energy industries, for example, identify allies in their respective sectors but also NGOs as very important partners in trying to capture the state with regard to international climate change negotiations (Friends of Europe, 2012). Civil society and NGO representatives also highlight that the situation has changed considerably since the industry ceased to be homogeneous. With a more heterogeneous industrial base interested in a more sustainable approach to industrial production and renewable energy generation, the domestic arena has become more diverse. As a result, coalition building has fundamentally changed. Greenpeace might cooperate with the automobile industry to demand greater leeway with the use of conventional chemical substances (Brake 2013). Zero Waste Europe might cooperate with energy intensive industries, such as the glass industry, to ask for stricter standards with regard to the EU Packaging Directive (94/62/EC) on the re-use of glass and polyethylene terephthalate (PET) bottles (Zero Waste Europe 2010). A more diverse landscape of domestic actors does not however prevent state capture, and distribution conflicts remain. An example of state capture was highlighted by Levy and Egan with regard to the automobile industry in Germany and Europe. Germany, with a well organized green political party, had unilaterally committed to significant GHG reductions during the negotiations in Berlin in 1994 and had pushed the German auto industry association into a “voluntary” agreement to reduce CO2 emissions from new cars by 25 per cent. Concerned about the competitiveness of its national automobile companies, Germany then pushed the European Union (EU) to adopt similar measures (Levy and Egan 2003, 820).

Hence, the Two-Level Game led to a capture of the German federal government which in turn sought to capture the EU by negotiating in the Council of the EU. After years of negotiations and internal divisions within the automobile and oil coalition this led to a voluntary emissions reduction by the European Automobile Industry Association (ACEA) in 1998 of 140g/km by 2008 (Levy and Egan 2003). That being said, the situation vis-à-vis free-riding in the international climate change negotiations is still relatively traditional in Europe. There is a clear call from the energy intensive industries and heavily emitting actors to demand a global-level playing field (Europia 2013; BusinessEurope 2013).

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Meanwhile, civil society points out the imperative to start climate change mitigation now before the two degrees centigrade target cannot be achieved anymore (CAN Europe 2013; Greenpeace 2013). It emerges that with regard to ETS, the international community is dealing with utility-maximising rational actors in the domestic arena that have managed to capture the state and promote their interests to state preference. Due to rent-seeking by utility-maximising polluters, allocation is likely to increase distribution conflict and free-riding. These actors seek relative gains not absolute gains. As the ETS is introduced in Europe, highly polluting industries now seek a global level playing field to realise relative gains vis-à-vis non-European states. This is not an instance of the altruistic pursuit of absolute gains, but a rational cost-benefit analysis of relative gains. Thus, the market failure is still apparent. Attempts from many societal actors to capture the state and by extension the EU continue. The constant bargaining process plays out differently across different sectors and different EU member states. In the energy sector for example, ambiguity persists over whether in the future energy reform is to be achieved “bottom up” by local consensus (which to a certain degree occurred in Denmark) or “top down” by state-centred measures, as was traditionally the case in the centralized, “bulk power” energy sectors of Britain and France (Szarka 2004, 328).

Hence, addressing the triple challenge of (1) transaction costs, (2) distribution conflicts, and (3) the free-rider problem remains a question of actor endowment with property, risk, information and organisational capacity. The same is of course true for China’s domestic situation. The more heterogeneous the domestic arena is, the more difficult coalition building to capture the state becomes. The example of waste management has already been very indicative of the different domestic actors that are competing for influence and facing the dilemmas of transaction costs, distribution conflicts and the free-rider problem. However, the triangular relationship between politics, business and civil society seems to be emerging in China as well. Examples include more active civil society involvement related to citizenship initiatives (Xiao 2012), but also Sino-European cooperation on international climate science such as the bi-national NGO ChinaDialogue.net. Another example of coalition building involves the global environmental NGO World Wide Fund for Nature (WWF) teaming up with the China Renewable Energy Industry Association (CREIA) to establish a club of renewable energy enterprises (Weiguang, Zheng, and Pan 2013, 110); or Huawei teaming up

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with the World Intellectual Property Organisation (WIPO) to advance innovation and intellectual property rights (Huawei 2013). Distribution conflicts also pose difficulties for collective action. The National Development and Reform Commission (NDRC) remains the leading ministry with regard to climate change. In order to capture the NDRC, civil society organisations need to streamline their efforts. However, environmental groups may agree on a general policy agenda, but each must also maintain (and even enhance) its budget and membership. Because, to some extent, such groups compete against each other for members and grant funds, they must also compete for credit concerning policy successes (Sabatier 1998, 116).

This holds true for Chinese experts as well. Wübbeke points out that access to government has varied greatly over time, with some actors gaining access and others losing out (Wübbeke 2013a, 727). This of course has implications for common interest and overall strategy as competition can hamper common initiative. To address distribution conflicts but also the free-rider problem, the central government works on better integration of existing mitigation initiatives. In a 2007 report entitled “China’s National Climate Change Programme” the State Council is quoted as establishing the National Leading Group to Address Climate Change. Its secretariat is integrated into the NDRC and relevant ministries as well as local governments are foreseen to cooperate with the National Leading Group (NDRC 2007). Regional administration systems are also mentioned as one of the priorities adapting climate change mitigation measures to local circumstances. However, further improvement is needed with the aim of strengthening the coordination between national and local governments to ensure the smooth implementation of relevant policy and measures in response to climate change (NDRC 2007, 56).

China has moved from a laggard position on climate change mitigation efforts to considering potential positive spill-over effects. The central government has realised that climate change mitigation efforts ultimately benefit not only the environment but also address a growing source of social and political unrest throughout the country. What is more, such efforts will eventually benefit China’s economic and industrial development. Mitigation strategies will improve energy efficiency and modernise China’s industrial infrastructure, making China’s manufacturers more competitive in the global marketplace (Esty 2010, 283).

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In the same vein, the 2007 NDRC report was further developed with two “National Assessment Reports on Climate Change” in 2007 and 2011. The second assessment report reflects a rather bleak outlook with climate adaptation costs threatening to have negative effects on China’s economic performance (China Briefing 2012).

Conclusion: Partnership, Competition, or Co-Evolution? Europe and China continue to work towards the same outcome. The analysis has shown how both partners struggle with the same triple challenge of addressing (1) transaction costs, (2) distribution conflicts, and (3) the free-rider problem. Ideal-Type Rational Choice theory, its discussion with regard to global commons as well as New Liberal theory and the Two-Level Game help explain actors’ behaviour in the European and Chinese domestic arena as well as their interaction when engaging in international relations. The chapter has highlighted how rational and utility-maximising domestic actors play a role in shaping state preferences. In the domestic arena, both Europe and China experience a triangular relationship between politics, business and civil society. Therefore, any solution to this triple challenge in energy and environmental policy should take into account the domestic arena. When domestic actors manage to upload their particular interests to the state, thereby capturing the state and monopolising state preference, it risks sub-optimal outcomes. Therefore, both Europe and China need to carefully mediate between domestic interests to achieve more efficient outcomes in the domestic arena. The way forward will be a more equitable representation of all actors involved. Especially with regard to common goods and situations of market failure a more balanced state preference formation can facilitate cooperative negotiations in international relations. Energy and the environment will remain an important policy domain in the years to come. Therefore, it will be a decisive test for Sino-European cooperation in the twenty-first century. The fifth Assessment Report of the Intergovernmental Panel on Climate Change will be released between September 2013 and October 2014. The cross-cutting themes range from water over carbon to sea-level rise, mitigation, adaptation and sustainable development (IPCC 2013). In the absence of a real breakthrough, SinoEuropean cooperation on climate change mitigation efforts could facilitate progress in international climate change negotiations.

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The analysis has shown that domestic actors can be a catalyst for change. They may facilitate or inhibit progress towards a more sustainable energy and environmental policy. Europe and China should search for overlapping win-sets of their respective domestic arenas to move forward on waste management and other technical policy fields as well as on the greater process of international climate negotiations. Sino-European partnership can speed up progress on environmental policy; competition will slow down progress on environmental policy. For the time being Sino-European cooperation takes “the form of co-evolution of two societies progressing on parallel, though not identical tracks” (Kissinger 2011, 543).

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CHAPTER SIX RENEWABLE ENERGY POLICY EVOLUTION IN CHINA AND ITS IMPLICATIONS FOR EU-CHINA CLIMATE CHANGE AND ENERGY COOPERATION: A CHINESE VIEW LI XINLEI Introduction The energy supply mix in China relies heavily on fossil fuels (over 90 per cent in 2010). Coal, oil and natural gas account for 68 per cent, 19 per cent and 4.4 per cent respectively (Zhang, Chang, and Eric 2012). The coal-dominated energy structure has changed little over the past decade, presenting a heavy path dependency on “black energy”. The rapid growth of energy consumption in China has led to soaring greenhouse gas (GHG) emissions. China surpassed the US as the largest emitter of GHGs in 2007. As a result, it was confronted with greater international pressure to take on legally binding GHG emission reduction commitments within the climate change regime. Although China refused such a binding commitment to reduce GHG emissions, China’s leaders embarked on voluntary carbonintensity reductions and renewable energy (RE) development commitments in the climate negotiations in order to boost the national image and to avoid loss of a national reputation. China was a late-comer to RE development compared to pioneering countries, such as Germany, the UK, Denmark, or the Netherlands. Until China signed the Kyoto Protocol in 1998 the large scale exploitation of RE, that is wind, solar and biomass power, did not get much political or financial support. More recently, an RE policy system has gradually been established. One of the key milestones was the issuing of the Renewable Energy Law in 2005 which stimulated RE investment and development.

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From 2006 to 2010 in the eleventh Five-Year Plan (FYP) period, RE grew at an incredibly rapid pace. China’s wind capacity installation doubled every year for five years in a row and small hydroelectric capacity increased by four to six gigawatts (GW) annually between 2004 to 2008 (F. Wang, Yin, and Li 2010). According to REN 21, China is the global leader in wind power capacity, solar water heating, and solar panel/cell production. It has ranked at the top in RE investment since 2010 (see Table 6.1). In the Decision on Accelerating the Cultivation and Development of Strategic Emerging Industries issued in 2010, RE was listed as one of the key development strategic emerging industries in China. In 2012, wind power generation increased more than the generation of electricity from coal and passed nuclear power output for the first time (REN21 2013, 4). If the ambitious renewable targets of the twelfth FYP are realised, China could become the largest country in solar photovoltaic (PV) power generation by 2015. Table 6.1 Top Five Countries: Total RE Capacity (2011)

1 2 3 4 5

Nonhydro RE Capacity

Wind power capacity

China US Ger Spain Italy

China US Ger Spain India

Solar hot water/ heat capacity China Turkey Ger Japan Brazil

Solar PV capacity

Biomass power capacity

Hydro -power capacity

New capacity Investment (2010)

Ger Italy Japan Spain US

US Brazil Ger China Sweden

China Brazil US Canada Russia

China Ger US Italy Brazil

Sources: REN21 2012, 19

Along with rapid RE development at the domestic level, EU-China clean energy cooperation has been highlighted as one of the pillars of their partnership (Freeman and Holslag 2009, 5–7). Over the past two decades, the EU and China have established several mechanisms to promote bilateral energy and environmental cooperation. This has created a substantial foundation for their green cooperation, such as the energy conference which has taken place since 1996; the Minister-level EU-China dialogue on environmental issues which started in 2003; the EU-China Partnership on Climate Change, kicked off at the eighth EU-China Summit; the energy and environmental programmes since 2001; the EUChina Institute for Clean and Renewable Energy (ICARE) set up in 2009; and the Europe-China Clean Energy Centre, established in 2010. The role of the Clean Development Mechanism (CDM), one of the main flexible

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mechanisms in the Kyoto Protocol, is also noteworthy.1 Since the Bush administration retreated from the Kyoto Protocol in 2001, the EU has played the leading role and acted as the main financial supporter in promoting CDM projects in developing countries. In May 2012, RE cooperation, greening urbanisation and energy conservation cooperation became the three priorities in EU-China energy cooperation (DG Energy 2012). However, due to the long-lasting Euro-crisis and the weak demand for carbon credit, the downturn of the global carbon market has exerted a negative influence on the CDM project operation since 2011. Meanwhile, the anti-dumping tariff imposed by the EU on Chinese solar panels in June 2013 has also soured the EU-China RE energy cooperation. Against this backdrop, this chapter investigates whether China’s green transformation at the domestic level could bring more dynamism to EU-China climate change and energy cooperation. With this analysis of the three stages of RE policy change in China as well as the diachronic evolution of RE issues in EU-China cooperation on climate change and energy, I aim to explore the implications of China’s RE policy change for this joint endeavour.

China’s RE Policy Change and Green Transformation The gradual RE policy change in the past decade has provided for rapid RE growth in China. There has been a continuous process of RE policy change, from the introduction of a tendering system in 2003 and the development of a feed-in tariff (FIT) system in 2005, to the introduction of a RE quota system in 2009. The RE policy change is a “learning by doing” process. So far, the evolution of RE policy in China has undergone three stages:

First Stage: The 2003 Tendering Policy China ratified the Kyoto Protocol in 2001. It changed its suspicious attitude to flexible mechanisms stipulated in the Kyoto Protocol. It showed special interest in CDM projects around 2002. The CDM has played a 1

The Clean Development Mechanism (CDM) allows industrialised countries to earn emissions credits by investing in emissions-reducing projects in developing countries. These credits are used to meet industrialised countries’ emissions targets under the Kyoto protocol (Mabey 2009, 1).

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significant role in stimulating the large-scale RE development, especially wind power projects. It also accelerated the modernisation process of the RE industry at an early stage. At the domestic level, the new Hu JintaoWen Jiabao administration showed its political commitment to optimising the national development approach starting in 2003. Former President Hu Jintao introduced the concept of “Scientific Outlook on Development”, which highlights balanced and sustainable society building, as well as energy saving and resource conservation (Freeman and Holslag 2009, 13). In this context, a large number of environmental and clean energy laws and policies have been ratified, such as the Environmental Impact Assessment Law issued in 2002, or the Cleaner Production Promoting Law issued in 2003. In this period, China began to design its own nation-wide RE policy. The National Development and Reform Commission (NDRC), which is the most powerful ministerial agency in economic planning, energy regulation and climate change negotiations, introduced the tendering policy in 2002. The tendering policy is based on the mechanism of “using a competitive bidding process to select projects that offer the best price” (Wiser et al. 2012, 7). The main goal of the tendering policy is to promote large-scale RE development through the concession of bidding projects and to make clear the real generation cost of RE power. In 2003, the NDRC issued the Wind Power Concession Programme (NDRC 2003). The goal was to create further incentives for international and domestic investors to develop large-scale wind farms through bidding procedures. Another aim was to encourage a reduction in the price of wind power through government-overseen competitive processes (Xia and Song 2009). Domestic and international companies were all invited to bid for relatively large-scale potential projects (100 to 200 megawatts). Successful bidders were selected according to the price per kWh of wind electricity proposed and the share of domestic components utilised in the wind farm (Edenhofer et al. 2011). From 2003 to 2008, the NDRC continuously organised five rounds of wind concession projects. It prioritized the localisation of wind power turbine manufacturing (Xia and Song 2009). Concession bidding projects aim to explore a reasonable feed-in price for RE generators in the previous rounds. However, the shortcoming of this policy is the emerging vicious price competition. Since the tendering policy cannot guarantee a reasonable price for RE development, it was gradually substituted by a feed-in-tariff policy (FIT) after the Renewable Energy Law was issued in 2005. Since 2009, the tendering policy has only been applied to off-shore wind park construction and large-scale solar PV projects, whose generation costs are comparatively high. The

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implementation of the tendering policy and concession projects has played an important role in promoting large-scale RE development, especially when it comes to wind power projects. The success of the tendering policy paved a way for the feed-in tariff policy.

Second Stage: The 2005 Feed-In Tariff Policy At the international level, the Kyoto Protocol became effective in 2005. At the domestic level, the former Premier Wen introduced two concepts of society in the same year: the energy and resources-saving society, and the environment-friendly society. In order to put these concepts into practice, the NDRC has initiated ten major nation-wide energy-conservation projects since May 2005 (Cheng 2008, 302). In this context, the RE Law was approved by the National People’s Congress Standing Committee in February 2005. The issuing of the RE Law symbolised the formation of the quiet complete RE policy system in China: from scattered supportive policy measures to an integrative RE policy system. This provides a basic legislative framework for promoting RE development by stipulating the national RE development targets, and designing central and local RE utilisation planning (NPC 2005; Schuman and Lin 2012). At this stage, the main focus of the RE policy system was to develop the feed-in tariff policy following the German model. The feed-in tariff (FIT) refers to a price-based policy which offers RE developers a guaranteed power sales price, coupled with a purchase obligation (a guaranteed market) by electric utilities in a relatively long time (such as 20 years) (Mendonça and Jacobs 2009; Wiser et al. 2012).

This law required that power grid operators purchase the full amount of wind power generated by registered producers. However, the RE law was basically a general legislative framework. This was not sufficient to provide detailed rules and procedures to foster effective implementation. Therefore, China issued several administrative regulations to enrich the RE Law (REN21 2009).2 The State Council released the Mid- and Long2

Such as the Interim Management Measure for Renewable Power Tariff and Cost Allocation issued by the NDRC in 2006; the Regulatory Measure on Off-Take Purchase of Electricity from RE Sources by Grid Companies issued by the State Electricity Regulation Commission (SERC) in 2007; the Interim Measure on

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Term Development Plan for RE in September 2007. It set the mid-and long-term targets: 10 per cent of China’s primary energy consumption should be from RE sources by 2010, and 15 per cent by 2020, including hydropower, wind, solar and biomass energy (Schuman and Lin 2012, 92; State Council 2007). The RE Law of 2005 stipulated that the grid enterprises should purchase all the RE electricity within their grid coverage. However, a gridconnection problem emerged. It seriously constrained RE electricity generation. Until 2009, the installed capacity of wind power accounted for 1.85 per cent of the total installed capacity of electric power, while the ongrid wind power only accounted for 0.75 per cent of total electricity consumption. The grid-connection problem has led to the imbalanced development of RE in China. Take wind power as an example, the “upstream” industry such as wind turbine manufacturing and wind farm construction develops rapidly due to favourable fiscal subsidies. By comparison, the ‘downstream’ support for RE power transmission is still insufficient. More specifically, the state-owned grid enterprises are unwilling to purchase unstable and low-quality RE power.

Third Stage: Further Consideration for a Quota System Beginning in 2009 In order to solve the grid-connection problem there has been increasing support for introducing the quota system to set mandatory RE quotas for power enterprises, grid companies, and local actors. Therefore, the RE Law Amendment was issued in 2009 and marked a milestone for the trial of combining a quota system with the FIT in the RE legislative framework (NPC 2009) . The quota system is defined as a market-based mechanism that “generally places an obligation on electricity supply companies to produce a specified fraction of their electricity from RE sources” (Jaccard 2004; Wiser et al. 2012). The main aim of introducing a quota system to combine with the FIT is to set mandatory RE quotas for the state-owned grid enterprises, state-owned power enterprises, and to coordinate RE planning between the central government and the provincial governments. However, the RE Law Amendment is also a comparatively abstract legislative framework, which needs the elaboration of supportive administrative regulations. In the twelfth Five-Year Plan for RE Allocation of Income form Surcharges on Renewable Power Prices issued by the NDRC in 2007.

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Development (2011-2015), the mandatory RE quotas have been included and emphasised so as to solve the grid-connection bottleneck. In May 2012 the draft version of the Regulation for Management of Renewable Power Quotas was issued by the National Energy Administration (NEA). It symbolised the operationalisation of the quota allocation on the national level. Based on this, China’s power enterprises as well as the grid companies will be forced to obey RE quota allocation. According to the draft regulation, power grid enterprises shall undertake a maximum of 15 per cent of RE power quotas by 2015. The RE quota for State Grid, China’s largest grid operator, will be five per cent by 2015, while the smaller China Southern Power Grid will have a quota of 3.2 per cent. Since the north-western area is the most significant place in China for wind power generation, the Inner Mongolia Power Company’s quota will be 14.9 per cent and Shaanxi Electric Power Company will have a quota of 9.9 per cent (NDRC 2012; Schuman and Lin 2012, 93). The draft regulation requires the power companies which generate more than five GW to generate RE sources accounting for eleven per cent of their installed capacity (Schuman and Lin 2012, 92).

RE Policy Change and China’s Green Transformation The three-stage RE policy evolution has three characteristics: first, RE policy in China has become more mature: from single policy instrument emulation it has developed into a comprehensive policy system. China has begun to explore its own RE policy system in line with its national conditions. Second, there has been a change from only emphasising RE installation capacity (quantity) to paying more attention to RE power transmission and utilisation (quality). China also makes efforts to solve the grid-connection problem. The mandatory RE quota system has brought “more bite” to the RE Law Amendment, which will challenge more vested interest groups in the energy sectors. Third, it unfolds that the RE policy has changed from a governmental concession project-led pattern to something approaching a green market mechanism. This is in particular due to the development of a quota system which is similar to a domestic carbon trading market. In May 2012, the NDRC issued the Notice on Carbon Trading Trials Scheme, in which five cities and two provinces were fixed as carbon trading pilots: the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen and the provinces of Hubei and Guangdong. Developing RE has gained priority in the local carbon trading strategy (T. Wang 2012). If a national carbon trading market were to be established, the RE quotas could be directly transferred to tradable carbon

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credits. They can then promote an economic-structural transformation in a cost effective way. Therefore, introducing a quota system will stimulate further reforms in the energy sector, such as an electricity market reform. The RE policy change has great implications for China’s green transformation. In 2010, after the RE Law Amendment came into effect, the State Council issued the Decision on Accelerating the Cultivation and Development of Strategic Emerging Industries, which clearly declared that RE was classified as a significant strategic industry and placed emphasis on guaranteeing the grid transmission of RE power through a quota system. In 2012, the issuing of the twelfth Five-Year Plan for RE Development symbolised a significant transition for green transformation in the RE policy system. Soon after, a series of twelfth FYPs for wind, solar, biomass power, and new energy automobiles were issued.

China’s Green Transformation and EU-China Environmental and Energy Cooperation EU-China cooperation on energy and environmental issues could be traced back to the early 1990s after the United Nations Conference on Environment and Development (UNCED) in 1992. Since developing clean energy is the core solution to mitigate climate change, clean energy cooperation has been highlighted as one of the key pillars of the EU-China climate partnership. The definition of “clean energy” is broader than just “RE”. Clean energy refers to an environmentally friendly low-carbon way to exploit the traditional fossil fuels as well as “new energy”, which includes but is not limited to RE. It also includes clean coal and de-carbon technology application (such as Carbon Capture Storage: CCS),3 energy efficiency improvement, and nuclear power. Since China has a heavy reliance on coal, clean coal technology transfer was high up on the agenda at first. With the rapid RE development as well as optimisation of the RE policy context in China, the EU and China have found more opportunities for cooperation in RE development. The evolution of the RE issue in the EU-China environmental and energy cooperation can be divided into three stages:

3

This technology allows for the capture of CO2 emissions from coal-fired power plants and its subsequent storage underground, for example in exploited oil or gas fields or in sealed geological strata, thereby avoiding CO2 emissions into the atmosphere (Scott 2009, 215).

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1994-2002: Initial Stage of EU-China Energy and Environmental Cooperation As early as 1994, the European Commission and China’s Ministry of Science and Technology (MOST) planned to initiate a new policy dialogue to explore clean energy as a new collaborative area, which could integrate the growing interest from both corporate players and from development agencies (Freeman and Holslag 2009, 25). In 1996, the EU and China organised the first Energy Conference to identify certain technologies with which the EU could launch cooperation with China in the future (ibid.). This provided a platform for European and Chinese enterprises to meet and communicate. In the same year, EU-China cooperation on environmental issues was also launched. These bilateral energy and environmental communication mechanisms had great relevance for clean energy technology. They provided an institutionalised forum for further cooperation. In this stage, the EU-China Summit, as the highest-level dialogue forum, was also initiated in 1998 and has since taken place every year (Carrapatoso 2011, 185). In 2002, during the fifth Summit, both the EU and China officially approved the Kyoto Protocol and they declared a common commitment to comply with the international climate change institutional framework. In order to endorse the objectives of the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, the EU and China particularly aim to strengthen the dialogue on climate change policies and to explore practical cooperation in clean energy fields. Some European countries had already cooperated with China in the RE field even before the Kyoto Protocol came into effect in 2005, notably through CDM projects. For instance, since 2001, the Longyuan Wind Energy Development Co., Ltd. in Inner Mongolia Autonomous Region has developed the Huitengxile wind farm project. It was the first CDM project in China, and it was the result of collaboration with the Dutch government. In the second half of 2002, the Dutch and Chinese governments signed a contract on China’s first CDM project. Chinese enterprises would receive about 2.77 million Euros revenue within one decade, accounting for 13 per cent of its total investment. This shows that CDM has not only played a significant role in stimulating rapid RE development in China but also promoted RE cooperation between the EU and China. In sum, this initial stage served as a prelude to institutionalising ChinaEU cooperation on environmental and clean energy issues. The annual EU-China Summit in particular has guaranteed regular communication at a

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high official level. Furthermore, the international climate change regime has provided a platform for the EU-China cooperative dialogue, as the CDM projects show.

2003-2008: EU-China Comprehensive Cooperation on the Climate Change Partnership In 2003, the EU and China decided to develop their “comprehensive Strategic Partnership”, which marked a milestone for the development of EU-China relations. In this context, the EU-China dialogue on environmental issues was upgraded to Vice-Minister-level in 2003 (Scott 2009, 212). This symbolises that the EU and China have agreed to work together to tackle environmental problems, to promote sustainable development, and to enhance bilateral green cooperation in different kinds of international meetings. Five years later, this dialogue was further upgraded to ministerial status (ibid.). There are four specific programmes under this framework: the EU-China Energy and Environment Programme (2003-2009); the EU-China Natural Forest Management Project (20032010); the EU-China Biodiversity Programme (2005-2010); and the EUChina River Basin Management Programme (2006-2012; see Scott 2009, 214). The first EU-China Energy and Environment Programme was allotted a budget of 45 million Euros, co-financed by the EU and China. The programme highlights energy saving, exchange of new technologies, and RE development. Between 2004 and 2008, 26 workshops and conferences were organised in the framework of the EU-China environmental cooperation. Some new areas were also investigated, such as biomass resources, rural power supply, and offshore wind power (Freeman and Holslag 2009, 25). During this time period, the most remarkable achievement of the EUChina cooperation was the establishment of the EU-China Partnership on Climate Change, which was declared by the EU-China Joint Declaration on Climate Change at the eighth EU-China Summit meeting in September 2005. Since then, the EU and China have entered a stage of comprehensive cooperation on climate change. The definition of partnership has provided a high-level political framework to further enhance clean energy cooperation. There are two concrete cooperative targets to be achieved by 2020: the first one is to develop and demonstrate advanced “zeroemissions” coal technology based on carbon capture and storage (CCS) in China and the EU; the second one is to significantly reduce the cost of key energy technologies so as to promote RE development and energy efficiency (European Commission 2005).

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As for the first clean coal technology target, there are two main coordinated feasibility studies for CCS under way: the COACH Project and the UK NZEC Initiative. The Cooperation Action with the CCS China–EU (COACH) Project began in 2006. 1.5 million Euros of its total 2.62 million Euro budget are financed by the EU F6 programme. This project involves universities, institutes and companies in China and across the EU to prepare the ground for CCS implementation of large-scale coalbased electric power generation (Scott 2009, 219). The UK has started its near-zero emission coal initiative (UK NZEC) with an investment of 1.1 million Euros, and set up a UK-China consortium to build a clean coal power station (Freeman and Holslag 2009, 25). CCS technology development has gained much attention in the EU-China clean energy cooperation: in February 2006, the Memorandum of Understanding on Cooperation on Near-Zero Emissions Power Generation Technology through Carbon Dioxide Capture and Storage was signed between the EU and China. At the tenth Summit meeting in November 2007, the EU and China signed a joint statement, reaffirming their commitment to jointly face the challenge of climate change. The European Investment Bank then agreed to offer a 500 million Euro loan to China in 2007. The loan will support China’s National Climate Change Programme, with the focus on the CCS, energy efficiency enhancement, and RE development (Freeman and Holslag 2009, 26). For the second target, the main cooperating channel is through the multilaterally developed Clean Development Mechanism (CDM). In order to promote domestic CDM project development, the State Council of China approved the establishment of the CDM Fund and its management centre in August 2006. In November 2007, the Ministry of Finance (MOF) and the NDRC jointly launched the CDM Fund and enhanced the interministerial coordination on CDM projects (CDMFUND 2012). China quickly became the most important host country for CDM projects. By 2007, 73 per cent of all CDM projects were carried out in China. In 2007, Beijing and Brussels established the 2.8 million Euro EU-China CDM Facilitation Project (2007-2010), which “aims to strengthen CDM as a central pillar within China’s path to sustainable development” (Scott 2009, 217). As Nick Mabey, the chief executive of Third Generation Environmentalism (E3G), proposed in November 2009: It is also crucial that the EU has a close bilateral relationship with China, which helps to accelerate the country’s transition to a low-carbon economy by leveraging Europe’s technology, expertise, investment and trade relationships. […] European companies already inject over EUR 1.5 billion a year into Chinese projects to lower emissions of greenhouse gases

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On the whole, this stage witnessed the comprehensive development of the EU-China Partnership on Climate Change. Although EU-China relations underwent a nose-dive during the period of 2006-2008 due to the prevalent China threat theory and European leaders’ meetings with the Dalai Lama, the established institutional mechanisms guaranteed the regular and formal communication of climate change cooperative projects as well as CDM-related activities. By 2009, EU-China relations began to warm up again and the construction of a comprehensive Strategic Partnership was back on track. This in turn paved the way for further bilateral climate change and clean energy cooperation.

2009-Until Today: Institutionalisation of EU-China RE Cooperation in the Climate Change and Energy Cooperative Framework Although both sides have attached priority to the development of CCS technology through the COACH project and UK NZEC initiative, feasibility studies and CCS demonstration tests need much more time to work as an effective technological solution for climate change mitigation (Scott 2009, 219). Compared with the rather slow motion of CCS, EUChina RE and energy efficiency cooperation has achieved great progress (Natural Resources Defense Council 2010). In order to enhance the regulating and coordinating function of China’s energy sector, the National Energy Bureau (NEB) was upgraded to the NEA in 2008. Later China set up its high-level National Energy Commission (NEC), headed by former Premier Wen Jiabao to coordinate inter-ministerial action on major energy issues. This institutional change upgraded the national strategic arrangement for energy, opening a “window of opportunity” for the high-level EU-China RE cooperation. Thus, the EU-China Energy Dialogue resulted in a whole range of concrete cooperation projects such as the EU-China Institute for Clean and Renewable Energy (ICARE), the Europe-China Clean Energy Centre (EC2), and workshops on RE, clean coal and Smart Grids (European Commission 2005). The ICARE is a five-year project set up in 2009 in order to foster scientific cooperation between leading European and Chinese researchers. It has created a research platform on RE with the support of 10 million Euros from the EU Commission’s budget (ICARE 2009). This institute aims at providing education and training to those working in the RE

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sector. It thereby produces qualified graduates to fill the gap between the growing industry demand for RE experts and the skills currently available on the Chinese job market (Freeman and Holslag 2009, 26; ICARE 2009). Nine key universities in five European countries and China will together support the operation of ICARE (ICARE 2010): Huazhong University of Science and Technology, Paris Tech, National Technical University of Athens, University of Zaragoza, Northumbria University, University of Rome, University of Perpignan, Southeast University, and Wuhan University of Technology along with the International Office for Water. In October 2012, the ICARE project was inaugurated on the campus of Huazhong University of Science and Technology in Wuhan. It marks a milestone in EU-China cooperation on RE (EUREC Agency 2012). The EC2 is a five-year cooperation project launched in April 2010 by the European Commission, the NEA, and the Ministry of Commerce (MOC) (EC2 2009). It aims to promote the exchange of knowledge on cleaner energy technologies, support the improvement of energy conservation and efficiency and provide a platform for capacity building of China’s energy planning and energy reform. It hence assists China in its transition towards a low-carbon economy. The main focus areas of EC2 include RE and sustainable bio fuels, clean coal and energy efficiency. In the EC2 annual high-level conference in December 2012, the EU-China cooperation in energy security became a priority on the conference agenda (European Delegation to China 2012). Gu Jun, the Deputy DirectorGeneral for the Department of International Cooperation in the NEA, emphasised that the communication mechanisms between China and the EU will be enhanced through working groups and platforms such as the EC2, in order to achieve consensus on the roadmap on energy through legislation, technology and market-based mechanisms and to encourage businesses to cooperate (European Delegation to China 2012).

The workshop on RE and grid integration in Brussels for Chinese industry representatives and officials was organised in May 2010. The Chinese delegation participated in the workshop with particular interest. This highlights China’s willingness to invest in their grids so as to make the best use of their RE sources. Besides, the eighth EU-China energy conference took place alongside the EC Energy Week at the World Expo 2010 in Shanghai. The conference focused on three items: RE development, smart grids and electric vehicles. During this period, it is undeniable that the role of CDM for promoting RE projects has gradually decreased. Wind power projects in particular

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have undergone a much more critical going-over by the CDM Executive Board (EB) and CDM projects applications from China have been confronted with more rejection by the EB since 2009 (Li 2009). Furthermore, coupled with the Euro-crisis, the downturn of the EU carbon market has further weakened the impetus for Certified Emission Reductions (CERs). In a way, the introduction of the RE quota system and carbon trading pilot trials at the domestic level reflects China’s attempts to respond to international pressures actively. Besides, the 2012 Doha Conference provided a positive prospect for RE development in developing countries, such as the efforts for establishing the Climate Technology Center (CTC) and the Green Climate Fund (UNEP 2012). It is noteworthy that the EU-China energy dialogue has been upgraded to the EU-China high-level meeting on energy. When former Vice-Premier Li Keqiang visited Brussels in May 2012, two new EU-China institutional mechanisms were established: the first EU-China high-level meeting on energy and the first high level conference on urbanisation (European Commission 2012b). In this framework, energy security is considered the “sustainable, secure and safe […] route towards greater security for all nations” (Oettinger 2012). The EU-China Joint Declaration on Energy Security clearly points out that .

both sides agree to further enhance dialogue on climate change related domestic policies and share experiences on specific climate change legislation […] and encourage more sustainable and cleaner energy resources, in particular the development of rentable energy sources (China and European Commission 2012).

In sum, the main characteristics of this stage are the increasing tendency of bilateral institutionalisation in EU-China climate change and energy cooperative fields. Also, the EU-China energy dialogue has been upgraded to the high-level meeting. The upgrading of EU-China energy cooperation will bring more substantive content to the climate change cooperative framework, since GHGs emission mitigation obviously relates closely to the energy consumption pattern in China.

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Implications of China’s RE Policy Change for EU-China Climate Change and Energy Cooperation Agenda-Setting Balance of EU-China Climate Change and Energy Cooperation Having elaborated on the different phases of EU-China collaboration in energy and environmental issues, in this section, I aim to identify the implications of RE policy change at the domestic level for EU-China green cooperative relations. Agenda-setting theory describes the “ability to influence the salience of certain issues on the public agenda” (Scheufele 1999). In his multiple-stream approach John Kingdon theorises how specific problems are introduced into the mainstream political agenda (Kingdon 1995). Different countries have different domestic policy agenda-setting arrangements. RE development has since the early 1990s gradually gained a priority position on the political agendas of many European countries. In China, by contrast, green issues did not get due attention during the same period. In fact, they were trapped in a marginalised position until China ratified the Kyoto Protocol in 2002. Due to the dynamics from the RE policy change in China in the past decade, the RE issue has finally become a strategic priority in the energy system. Relating this back to theory, an “agenda-setting balance” means that two countries have similar domestic policy agendas on the same issue. It may also mean that they have an agenda-setting arrangement on certain domestic issues that matches. This could enlarge the bilateral cooperative space on a particular issue. Applied to Sino-European relations, if there is an increasing tendency for agenda-setting balance on RE between the EU and China, bilateral cooperative opportunities on clean energy and lowcarbon will be multiplied. Since the EU and China have had similarly ambitious targets on RE development in recent years, the cooperation on RE has been greatly triggered. The successful performance of such collaborative projects could be a driver for further cooperation in climate change and energy cooperation. As a global leader in climate change mitigation, the EU set ambitious binding targets in 2007 to reduce GHG emission by 20 per cent and to increase the share of RE to 20 per cent by 2020. The 2007 European Strategy Energy Technology Plan (SET-Plan) advocates that the EU should become carbon neutral by 2050 (Lema et al. 2011). In Directive 2009/28/EC, the EU reaffirmed these targets and added a ten per cent

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share of RE for the transport sector (European Commission 2009). In January 2011, the European Commission stated in a Communication the 2020 RE policy goals are likely to be met and exceeded if member states fully implement their national RE action plans and if financing instruments are improved (European Commission 2009).

Since China was a late-comer to RE, Chinese RE development has been a “learning by doing” process. As previously shown, the RE policy change has provided a favourable policy context for the rapid growth of RE. The introduction of a mandatory RE quota system combined with FIT has in particular shown the government’s willingness not only to solve the grid-connection problem but also to assess local officials’ political performance through a “green index”. Shortly before the COP15 Copenhagen Conference in 2009, China announced its climate change and RE targets for the first time: to lower its carbon dioxide emissions per unit of GDP by 40 to 45 per cent by 2020 compared to the 2005 level and increase the share of non-fossil fuels in primary energy consumption to around 15 per cent by 2020. These ambitious RE development targets were also embodied in the twelfth Five-Year Plan and were further elaborated in the twelfth FYP for RE Development issued in 2012: wind power generation should reach 100 GW, solar PV power should reach 21 GW and biomass power 13 GW by 2015 (NEA and CNREC 2012). To sum up, due to the favourable policy context provided by RE policy change, the increasing agenda-setting balance of RE development between the EU and China is reflected in their similarly ambitious RE targets and strategic interest preference for low-carbon energy transition. This agendasetting balance has laid an important foundation for maintaining and deepening the EU-China climate change partnership.

New RE Bureaucratic Arrangements Further Institutionalise EU-China Cooperation A significant standard to evaluate bilateral as well as multilateral cooperation is the degree of institutionalisation. This includes two main indicators, formalisation and institutional density. The former indicator means the concrete cooperative level attained (leaders’ summit level, ministry level, vice-ministry level, delegation level, unofficial level) and established cooperative agencies (such as specialised institutions); the latter indicator refers to the number of institutional mechanisms in place on a certain issue and the number of involved actors during the institutionalisation process of cooperation (Tian 2006, 16). It should be

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noted that domestic policy changes are likely to accelerate national resource reallocation and the institutionalisation processes of bureaucratic arrangements. Any cooperation at the international level needs to be implemented in the national context as well. The favourable policy context supported by continuous policy change and new domestic institutional capacity building is likely to enhance an international cooperative framework (Dai 2007). Table 6.2 Institutional Mechanisms of the EU-China Environmental and Energy Cooperation Institutions

Time

Level

Key Contributions

EU-China Summit

Since 1998

Heads of State and Government level

EU-China Biannual Energy Conference

Since 1994

Ministry level (the EC and the MOST)

EC-China Energy Dialogue

Since 2005

Ministry level (the EC and the NEA)

EU-China Environme nt Dialogue

Since 2003

EU-China High-level Meeting on Energy

Since 2012

Viceministrylevel and upgraded to ministry level in 2008 Summit level

EU-China Partnership on Climate Change at the 8th meeting in 2005; Setting two cooperation targets: CCS / Energy Efficiency and RE; EU-China CDM Facilitation project (2007-2010) Discussing aspects of energy-related research, providing a platform for European and Chinese enterprises to meet and exchange and enhancing research cooperation in areas such as sustainability criteria for biofuels, CCS, and Joint Technology Initiatives in the field of Hydrogen Fuel Cells Signing a Memorandum of Understanding (MoU), Europe-China Clean Energy Centre (EC2), EU-China Institute for Clean and Renewable Energy (ICARE), clean energy workshops EU-China Energy and Environment Programme (2003-2009), EU-China Environmental Governance Programme (2008-2010) EU-China Joint Declaration on Energy Security Joint Statement for Enhanced Cooperation on Electricity Markets between the European Commission and the State Electricity Regulatory Commission of China

Source: Compiled by the author

The RE policy change in China is closely related to the new bureaucratic capacity building in the RE policy-making system. The Center of Renewable Energy Development (CRED), for instance, has played a pivotal role in promoting research on the feasibility of different RE policy instruments in China. It has also drafted policy proposals for the NDRC, such as the RE Law and RE Law Amendment for the NPC’s

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legislative ratification. The Department of New Energy and Renewable Energy (DNERE) set up in the NEA has played a significant role in RE policy coordination and implementation at the national and local levels. It has also taken responsibility for RE fund management with cooperative support from the MOF. In the process of EU-China climate cooperation, the EU-China Summit is the overarching framework. In this framework, RE is one of the most developed fields of bilateral cooperation. RE development has also become the backbone of bilateral Sino-European cooperation, especially regarding the sustainable use dimension as well as environmental acceptability. Up to now, there have been four main ministry-level cooperation mechanisms under the EU-China Summit framework: the EUChina Energy Conferences; the EC-China Energy Dialogue; the EU-China Environment Dialogue; and the EU-China High-Level Meeting on Energy. Furthermore, the aforementioned establishment of bilateral cooperative agencies, such as the EC2, the ICARE, and other institutional arrangements has provided various institutional platforms for substantive cooperation. During the development of these institutional mechanisms, newly established domestic bureaucratic agencies, such as the CRED, the DNERE and the CDM Project Management Center have fostered policy implementation and promoted cooperative institutionalisation (Liu 2013; CRED 2009). Table 6.2 gives an overview of the institutions, their levels and their key contributions. Besides summit and ministerial level meetings, increasing EU-China academic cooperation and local climate change initiatives, which involve a broader range of social actors, have also enhanced the institutional density of bilateral cooperation. Thus, the Interdependencies on Energy and Climate Security for China and Europe Project brings together Chinese and European research institutions to jointly facilitate further understanding of China-EU interdependence and the potential for collaboration on energy and climate security issues (Chatham House 2007). In November 2009, the project released its significant report “Changing Climates: Interdependencies on Energy and Climate Security for China and the Europe”, in which “it identifies the mutual interests, challenges and opportunities for China and the EU in energy security and climate security over the next 25 years” (ibid.). It also maps out a number of possible policy pathways of cooperation which are not only extremely effective in making a difference in the fight against climate change, but also serve the economic interests of both China and the EU (Holzer and Zhang 2008, 220). Another joint initiative is to establish China’s first “low carbon technology and investment development zone” (LCTIDZ), which

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was originally proposed during the EU-China Summit in 2009 (Mabey 2009, 7). A feasibility study exploring the potential for LCTIDZs in three Chinese provinces (Gansu, Shandong and Jiangsu) has been completed by Third Generation Environmentalism (E3G) in cooperation with the Investment Promotion Agency of the Ministry of Commerce (ibid.). The superior performance of RE development in China has enhanced the government’s confidence in the bilateral low-carbon technology and investment zone project, which in turn further promotes the economic restructuring process.

RE Policy Change Provides a Favourable Market Context for EU-China Climate Change and Energy Cooperation As mentioned above, the introduction of a quota system to work in tandem with FIT has led to a green economy transition: turning from a mainly governmental project-led scheme to the promotion of a green market. The main aim in establishing carbon trading pilot cities is to stimulate the domestic market mechanism of green credit for RE development. The RE quotas can be directly transferred to the carbon credits for the domestic carbon trading system. The introduction of the quota system, which is coupled with domestic carbon trading trials, has spurred reform in the electricity market. There have been more and more voices that support amending the current Electricity Law by including RE grid-connection and RE priority distribution in the legislative framework (GuangmingNet 2013). In the twelfth Five-Year Plan for Energy Development which was issued in January 2013, the low-carbon transition in the energy sector, especially the electricity market reform, is regarded as a breakthrough for national economic structural transformation (NDRC 2013). During the first EU-China High-level Meeting on Energy, the Joint Statement for Enhanced Cooperation on Electricity Markets was signed by the European Commission and the State Electricity Regulatory Commission of China (China and DG Energy 2012). Electricity markets are key components for both the EU’s and China’s energy policies: for the EU, the energy policy, such as electricity market integration, has been treated as “the next great European integration project” (Oettinger 2012). For China, promoting the low-carbon transition through the electricity market is of great importance, too. The European Commission’s Directorate General for Energy and the State Electricity Regulatory Commission of China (SERC) intend to cooperate in areas of common interest in order to enhance the efficiency of electricity markets and to

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support China in its reform process towards a low carbon economy (China and DG Energy 2012). Moreover, the electricity market reform will make the domestic market in China more mature, providing a more favourable market context for EU-China climate change and energy cooperation. “Technology transfer” is one of the keywords in EU-China bilateral cooperation. As a developing country, China hopes to promote technology transfer though a bilateral EU-China cooperative framework. However, the actual technology transfer process has been hindered by many structural obstacles: the first obstacle is the national competition considerations of technology transfer. The EU usually emphasises the balance between environmental and economic interests, especially equivalent economic compensation for its technology (Scott 2009, 218). The EU has been cautious in transferring its key technologies to China, also due to the uncertainty of supporting a potential future competitor in the market for low-carbon technology (Holzer and Zhang 2008, 224–225). Although the EU regards China as its biggest partner in the green market, China is also treated as a main potential competitor in this field in the long run. Due to the lack of trust, some business associations seek to exert pressure on the EU as they fear fierce Chinese competition will result in a competitive disadvantage for them. Hence, increasing bilateral trust and reducing uncertainties is significantly important in facilitating further cooperation (ibid.). The second obstacle is linked to the private-sector in EU member states. European businesses are generally concerned about the immature market economy and insufficient intellectual property rights protection in China (Freeman and Holslag 2009, 28). That is why EU companies have remained reluctant to transfer technology. Although EU-China governmental cooperation could provide a framework of cooperation, the major driver of innovation and the diffusion of technologies around the world is the private sector (European Delegation to China 2012). They are the real technology entrepreneurs for clean energy. As a result, constructing a favourable market context to stimulate private business cooperation is a crucial condition for successful technology transfer.

RE Policy Change Provides More Flexibility and Resilience for EU-China Climate Change and Energy Cooperation We know by now that China has made remarkable progress in RE development over the past decade. We have also seen that cooperative relations and competitive relations co-exist in EU-China collaboration to

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mitigate climate change. Confronted with the rapid development of RE in China, the EU has recently become more cautious about clean energy competition in the world market with China. Furthermore, the Euro-crisis has had a negative impact on European RE investment and governmental financial support. This has worsened the overcapacity situation of RE equipment production, such as solar panel and wind turbines. It has also triggered a tendency for trade protectionism in the RE industries. The most frequently cited case is the anti-dumping duty and anti-subsidy tariff that the EU has imposed on China’s solar panels (European Delegation to China 2012). China, as the world’s largest producer of solar panels, accounts for about two-thirds of global solar panel production. Increasing import demand for PV equipment in the EU and the US has spurred the rapid development of solar panel production in China in the past five years (Zhang, Chang, and Eric 2012, 4). In October 2012, the US set final antidumping duties ranging from 18.32 per cent to 249.96 per cent and antisubsidy tariffs ranging from 14.78 per cent to 15.97 per cent on solarenergy cells imported from China (Wingfield 2012). Following in the footsteps of the US, the EU also launched an anti-dumping investigation (European Commission 2012). In June 2013, the European Commission decided to impose 11.8 per cent provisional anti-dumping tariffs on Chinese solar panels and it might raise this to an average 47.6 per cent if no settlement is reached (European Commission 2013). Compared to the US, the EU’s anti-dumping investigation will have a more negative impact on China’s solar panel industry, since the EU is the largest PV export market for China, accounting for 80 per cent (Solarbuzz 2012). The cost of the solar cells supplied by Chinese manufactures is often 20 to 30 per cent lower than that of European manufacturers, making China’s solar cell manufacturers very competitive in the world solar PV market (Zhang, Chang, and Eric 2012, 4). In reaction to the consequences of the anti-dumping measures, Chu Junhao, a Deputy of the National People’s Congress (NPC) and scholar at the Chinese Academy of Sciences, proposed that in order to improve the passive situation which overly relying on the overseas market, China should encourage the development of domestic RE market, to generate and transmit more RE power for energy demand (NPCnet 2012).

RE development in China has entered its “adjustment period”: structural adjustment in the RE policy system is conducive to enhancing national capacity building so as to withstand external interference and related risks. The RE policy change has strengthened national capacity

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building in RE governance and accelerated the green transformation at the domestic level, which will further increase the flexibility and resilience needed to maintain EU-China climate change and energy cooperation. Meanwhile, China tries to enhance bilateral cooperative mechanisms in order to reduce the negative effects of trade friction. Thus, Chinese leaders have emphasised that the solar panel trade frictions in the current economic depression situation should not exert too much negative impact on overall economic and trade relations (CRI 2012). The interests that China and the EU share exceed those that are opposed. Therefore, the two sides should learn to achieve a win-win situation through more flexible bilateral cooperation (CRI 2012; XinhuaNews 2013).

Conclusion Through an analysis of three evolution stages of RE policy in China and the diachronic development of the EU-China environmental and energy cooperation, I have aimed to explore the implications of RE policy change for EU-China bilateral green cooperation. This chapter has shown that there are three evolving stages of RE policy change in China: firstly, in 2003, China introduced the tendering policy to the RE field in order to launch large-scale RE projects, such as concession bidding projects in wind power; secondly, in 2005, China formally introduced the feed-in tariff as part of the RE Law, in order to avoid vicious bidding competition and to guarantee profit space for RE in the long run; thirdly, in 2009, the issuing of the RE Law Amendment marked a milestone for the trial of combining the quota system with FIT in the RE legislative framework. As RE has become an integral part of the domestic political agenda of the PRC, RE has also gradually gained priority in EU-China environmental and energy cooperation. Accordingly, the evolution of RE in the EU-China environmental and energy cooperation process can be divided into three stages, too: firstly, the period of 1994-2002 is the initial stage, which served as a prelude to introduce institutional cooperation on environmental and clean energy issues into the EU-China relationship; secondly, the period of 2003-2008 was marked by the establishment of the EU-China Partnership on Climate Change, which has since provided a high-level political framework to further enhance clean energy cooperation; thirdly, from 2009 until today, the Sino-European cooperative framework on RE has been greatly institutionalised. In fact, it has become one of the key pillars in the first EU-China high-level meeting on energy in 2012. From this analysis, it becomes clear that RE policy change and

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the national strategic conversion to a low-carbon society in China have laid a solid foundation for EU-China cooperation on climate change and energy. The implications of domestic RE policy change on EU-China cooperation on climate change and energy can be summarised into four main points: first, China’s ambitious RE development targets as well as its strategic RE policy change have set a synchronous agenda-setting with the EU, which has facilitated their cooperation. Due to the increasing tendency for an agenda-setting match on RE issues between the EU and China, the bilateral cooperative opportunities on clean energy and low-carbon are likely to be further multiplied in the future. Second, the new RE bureaucratic arrangements that emerged in the process of the RE policy change have increased the institutionalisation degree of EU-China cooperation in the field. RE policy change in China has promoted new bureaucratic capacity building in the RE policy system, such as the CRED, the DNERE, and the CDM Project Management Center. These institutional arrangements at the domestic level have become the backbone for fostering the implementation of various EUChina RE cooperative projects. Third, the implementation of a quota system in RE development, coupled with the domestic carbon trading trials, has promoted reforms in the electricity market. Such reform is a common interest of the EU and China. Moreover, the reform of the electricity market will make the domestic market in China more mature. This in turn is likely to provide a more favourable market context for EU-China climate change and energy cooperation, such as promoting EU-China technology transfer and green investment in the private sectors. Fourth, the RE policy change in China has increased national capacity building, which provides more flexibility and resilience for EU-China climate change and energy cooperation. Despite the many opportunities, partnership and competition co-exist in EU-China RE relations, as the most recent case of European anti-dumping measures against Chinese solar panels shows. Against this backdrop, China has enhanced its RE policy change through further exploration of the domestic PV power market. China has also tried to enhance bilateral cooperative mechanisms, such as at the level of business-to-business consultation, so as to reduce the negative effects of the most recent trade frictions.

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THEME IV SOFT POWER AND PUBLIC DIPLOMACY

CHAPTER SEVEN MUTUAL PERCEPTION AND SOFT POWER IN EU CHINA RELATIONS: A EUROPEAN VIEW JULIA SOEFFNER Introduction The twenty-first century has introduced a variety of novel challenges for political decision-makers all over the world. In times of power shifts in the international system and the increasing importance of state reputation, it seems to be a widely recognised fact that traditional “power politics” based on military (and economic) strength are no longer enough to influence political outcomes. The concept of “soft power”, developed by Joseph Nye in 1990, has now found its way into real-world politics. Soft power is the ability to affect others to obtain the outcomes one wants through attraction rather than coercion or payment. A country’s soft power rests on its resources of culture, values, and policies (Nye 2008, 94).

A large body of literature assessing the possibilities of soft power and public diplomacy has emerged (Gilboa 2008). EU-China relations are hence no special case for soft power. They are however an interesting example as to how public diplomacy initiatives have been included in the formal institutional framework. Since the start of their diplomatic ties in 1975, EU-China relations have become deeper and closer every year, with both positive developments as well as challenges. While the number of sectoral dialogues is rising steadily, thus leading to ever closer formal ties between the two actors, there is recurring disagreement, reaching from solar panels to (potential) interventions in Syria and Libya. Nonetheless, a close and balanced relationship between the EU and China is of crucial importance for both actors, for their respective economic development, their global

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power position, and (potentially) the structure of the international system. There is however still a long way to go. One main reason is the deficit of understanding each other’s decisions and ways of thinking (see for example Men 2008, 6-8). China is currently considered a country striving to become one of the “big players” in international politics. This is backed by its economic power, and driven by its growing need for energy resources, the desire to protect the one-party system, and to advance its “national core interests”. At the same time, the EU’s convoluted decision-making mechanisms and its complex structure render its capacity to respond to crises insufficient. This and other factors lead to the perception of the EU as a weak actor. However, this picture may be too one-dimensional. It is important to focus on other aspects of Europe and China to better understand their political decisions and the ways that these decisions are made. A better understanding of Chinese and European political culture, their philosophical and religious heritage can lead to an alternative way of dealing with each other. Such a way might decrease misunderstandings and result in a more fruitful cooperation between these two actors. Looking at the formal agreements between the EU and China, it seems that this need has been recognised. During the fourteenth EU-China Summit, held in Beijing in February 2012, European and Chinese leaders agreed on establishing the EU-China High-Level People-to-People Dialogue (HPPD) as the third pillar of EU-China relations. It complements the first two pillars, the High-Level Economic and Trade Dialogue, and the High-Level Strategic Dialogue. The people-to-people dialogue will enjoy the same status as the other agreements and will have flexible structure with very low financial implications (European Commission 2011).

People-to-people dialogues between the European Union and China existed before the establishment of the third pillar. Since 1975, EU-China relations have become more and more diverse, leaving behind the times of solely economic cooperation. Over 50 sectoral dialogues have been established over the years, ranging from discussions on various issues of economic cooperation under the Economy and Trade Pillar, and, under the Strategy Pillar, regular meetings between party groups, or talks on human rights. Sectoral dialogues under the new third pillar are the policy dialogue on education and vocational training affairs, which includes the topic of multilingualism, the policy dialogue on cultural affairs, and the policy dialogue on youth affairs (“EU-China Sectoral Dialogues” 2013; “EUChina Relations: Chronology” 2013).

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In addition to bilateral initiatives, the last years have shown various attempts by China to boost its soft power, including its increasing engagement in international organisations and the global promotion of the Chinese language and culture through the Confucius Institutes (see Wang and He in this volume; also see Hartig 2011). Furthermore, the Chinese government issued a new guideline in October 2011, highlighting the importance of intensifying its soft power, both internally and externally (Wang 2011). This guideline was followed by a national outline for cultural reform and development for the period from 2011 to 2015, issued by the general offices of the State Council and the CPC Central Committee on 15 February 2012 (Wang 2012). It therefore can be argued that soft power is gaining new momentum in the relations between the European Union and the People’s Republic of China. However, it remains to be seen how successful the approaches mentioned above will be and whether the increasing efforts will achieve the desired outcomes. Based on a Constructivist approach, this chapter will elaborate on the role of self-perception and world-views and their impact on the perception of other global players. China and the EU serve as the cases. It will give a brief overview of potential factors that shape the perception of Chinese and European decision-makers. Firstly, I will look at how respective political decision-makers perceive the world and the EU’s and China’s role in it. Secondly, I will elaborate on how these world views shape the perception European and Chinese decision-makers have of each other. In a third step, I will take on the Constructivist assumption that ideas and views shaping the political elites’ policies can change (Schwellnus 2006, 323324). By looking at three fields of European-Chinese interaction, namely the EU and China in international organisations, the human rights dialogue, and public diplomacy and cultural exchanges, I will check the empirical evidence for this claim. If empirical evidence for Chinese decision-making becoming closer to EU values can be found, it would suggest that EU public diplomacy has been comparatively successful in boosting EU soft power in China.

Self-Perception The assumption that people are shaped by their respective culture is a fundamental assumption put forward by social constructivists. Constructivism argues that cultural factors such as norms and ideas play a central role in politics. They affect the framework for political action

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(Checkel 2007, 58-59; Esser 1999, 36). Therefore it can be argued that states and political actors construct role concepts that influence their political decisions. The presence of role concepts in the minds of policy-makers may both affect and constrain their definition of interests, and thus shape their policy choices (Orbie 2008, 2).

As described by Holsti (1970, 239), these role concepts consist of two elements: first, the self-perception or “ego part” one has, which arises from world views, norms and ideas; second, the expectation other actors have, the so-called “alter part”. National role concepts influence the actions of political decision-makers and shape the framework for formulating policy goals and creating instruments to achieve these goals. The national role concept arises from the specific geographic, (power-) political, historic, economic, and cultural character of a state (Kirste and Maull 1996, 283; Holsti 1970, 240).

The European Union The emphasis on “soft power”, or “normative power”, has always been a main element in the European Union’s foreign policy. The EU is often described (and, more importantly, sees itself) as a normative or civilian power. Its core values, laid down in the Lisbon Treaty, should therefore be displayed in its foreign policy actions (Manners 2006, 70). The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, nondiscrimination, tolerance, justice, solidarity and equality between women and men prevail (European Union 2007, Art. 2).1

European history and philosophy shaped the values displayed in the European treaties: the philosophers in the ancient Greek city-states formulated the concept of “man” as a political being. The participation in public life and the free articulation of thoughts in public debates defined “man” as a citizen. The concept of the universalism of law goes back to the Roman Empire. A citizen of the Roman Empire was seen as a legal 1

The common principles of individual freedom, political liberty, rule of law and democracy are already included in the first statement of the Council of Europe (5. May 1949; see Morgenthau and Thompson 1950, 435).

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person and thus had the right to sue the Empire. In other words, an individual was theoretically able to protect itself from the state.2 In addition, the role of the individual was strengthened by Christianity. In the words of Yu Hai (2011, 70), Christianity in a sense created the concept of “the individual.” In terms of the significance of salvation, the individual was created—we were all equal before God. This is what Paul termed sola fide, by faith alone. He emphasized what was to become the most important spiritual doctrine of Christianity—individuality. Regardless of one’s birth, race or fortune, salvation is considered an individual matter.

Secularisation increased the importance of the individual, and was the basis for the European (or Western) notion of state and law. As Thomas Hobbes outlined in his Elementa philosophica de cive, the rightful state should be based on individual rationality, not belief. John Locke, JeanJacques Rousseau, and other thinkers of the European Enlightenment expanded these thoughts in their writings, and introduced the idea of equality and equal rights for all as a “natural law”. The Declaration of the Rights of Man and of the Citizens of 1789 included these ideas. With its adoption, the National Constituent Assembly of France introduced individual rights as natural rights for all men. The French Revolution thus put the thoughts of these thinkers into action (Böckenförde 1991, 106). Any discussion of the EU and modern European values has to take into account the developments after the two devastating World Wars in the early twentieth century. Despite not being able to prevent World War II, Woodrow Wilson’s idealistic political philosophy based on internationalism, the pursuit of human rights, democracy and humanity not only led to the formation of the League of Nations in 1919, but had a major impact on the statutes of the United Nations (see for example Adar 1998, 33-34). Furthermore, these thoughts are deeply embedded in postWorld War II European thinking and the creation of the European Union. The founding principles of the European Union create the framework of its actions, both internally and externally. What started out as a small club of six countries has developed into a continent-wide Union of 25, with powers and responsibilities in many new areas, including foreign and defence policy. A continent that for decades was divided by ideology and plagued by conflict is now united at peace and free (Solana 2005a). 2

One should keep in mind though that these rights were only granted to full citizens of the Empire, which for example excluded slaves and women.

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Therefore, European decision-makers see a responsibility for the EU to “work for the ‘global common good’”.3 This statement by Javier Solana, the former EU High Representative for Foreign and Security Policy, describes the way the EU wants to be perceived, and the framework that constructs the Union’s foreign policy. The European Union is seen as a “model” that brought peace, stability and welfare to an area that was at war for centuries. This model, and the values that led to the foundation of it, is worth being exported. The underlying values are not perceived as values unique to the EU—instead, the wish for peace and freedom are considered to be universal and the EU also sees itself as a model for how that goal can be achieved globally.

The P.R. China The preamble of the Chinese Constitution lays out the way Chinese decision-makers perceive their role and China’s role in the world: China is one of the countries with the longest histories in the world. […] the Chinese people of all nationalities led by the Communist Party of China with Chairman Mao Zedong as its leader ultimately, in 1949, overthrew the rule of imperialism, feudalism and bureaucrat capitalism. […] Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people […] will continue to adhere to the people’s democratic dictatorship and follow the socialist road […] to turn China into a socialist country with a high level of culture and democracy. […] Taiwan is a part of the sacred territory of the People’s Republic of China. […] The future of China is closely linked with that of the whole world. China adheres to an independent foreign policy as well as to the five principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence in developing diplomatic relations and economic and cultural exchanges with other countries; China consistently opposes imperialism, hegemonism and colonialism (Constitution of the People’s Republic of China 1982).

The values displayed in the Chinese Constitution have several roots. On the one hand, they are certainly based on Communist ideology. In 3 See also: The EU in the World. The Foreign Policy of the EU. 2007. “Having brought stability and prosperity to its own citizens today, the EU seeks to work with others in an interdependent world to spread the advantages of open markets, economic growth and a political system based on social responsibility and democracy.”

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contrast to the liberal thoughts underlying the EU Constitution, Communist ideology puts the well-being of the society at first place. The individual thus holds a subordinate position. Additionally, some authors argue that some concepts of Chinese political thinking can be traced back to ancient Chinese philosophy and the concepts of order, hierarchy, stability and family. Confucius defined family as the most important unit in society. The head of the family is responsible for its stability and the well-being of as many as its members possible. This concept can be transferred to the state as a “super-family”– the head of the state thus being responsible for the prosperity and stability of society. He can punish individual members of society if their actions appear to be disadvantageous for society as a whole (Hernig and Fang 2011, 44; Salát 2011, 65). One should be careful not to put too much emphasis on the role of Confucianism and ancient Chinese philosophy in present-time China, and its impact on the Chinese Constitution in particular. Nonetheless, it is still important to mention that the Communist Party has re-introduced some notions of Confucian thought, especially those seen as useful for legitimizing the Chinese system: the importance of order, balance, harmony (Hu Jintao’s “harmonious society” springs to mind), and respect for authority (see Economist 2007). Comparing the role concepts of the EU and China, there are several important points. Both the EU and China are partially constituted around values and thoughts that were shaped centuries ago. Whereas Chinese political theory is based on the concepts of Communist ideology, thus emphasising the well-being of society at large over the rights of the individual, European political theory is focussed on universal and equal rights for everybody. If we apply the Constructivist assumption it can be argued that one concentrates on the community, the other on the individual. This is reflected in the norms and values that influence Chinese and European decision-makers. China defines itself through its long history and rich culture, and the continuity of its civilisation (see for example Zhang and Shen 2011, 78). It even can be argued that the present international power allocations are highly unusual. Historically, the situation in which China does not hold a leadership position is the exception, not the norm (Yan 2001, 33). For a long time, Chinese foreign policy was led by Deng Xiaoping’s understanding of foreign policy, laid out in a talk with leading members of the Central Committee in 1989: In short, my views about the international situation can be summed up in three sentences. First, we should observe the situation coolly. Second, we

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should hold our ground. Third, we should act calmly. Don't be impatient; it is no good to be impatient. We should be calm, calm and again calm, and quietly immerse ourselves in practical work to accomplish something— something for China (Deng 1994).

This statement was later summed up as “keeping a low profile” (Yan and Qi 2012, 122; Leonard 2008, 87). It seems that the times of “never taking the lead” could be over soon: Xi Jinping’s recent “Chinese Dream” dictum is often interpreted as the dream of re-gaining leadership (see for example BBC 2013). Therefore, it can be assumed that Chinese elites see China as a state that has both the right and the responsibility to act globally on its behalf. Additionally, China has a unique system and therefore follows its own way of development and its own values that are at least indirectly exported through its foreign policy. Contrasting the so-called “Washington Consensus” of democratic liberalism and an economic and political model that emphasises individual rights and civil liberties, the alternative way of the so-called “Beijing Consensus” concentrates on a socio-economic model of top-down control of development and poverty reduction for greater parts of the (Chinese) society while side-lining political reform in favour of economic reform (Kurlantzick 2007, 56-57).

Another important element of values guiding Chinese decision-makers is the Five Principles of Peaceful Coexistence: Mutual respect for each other’s territorial integrity and sovereignty; mutual non-aggression; mutual non-interference in each other’s internal affairs; equality and mutual benefit; and peaceful coexistence. These five principles were introduced in 1954 as a formal agreement between India and China. However, they have become a general guideline for Chinese foreign policy, often leading to frustration among Western diplomats during negotiations about military interventions. One reason for the dominant role of the five principles in Chinese foreign policy is likely the memory of the Opium Wars, which resulted in forced submission to Western (European) powers (Barr 2011, 5), followed by civil wars until the final foundation of the People’s Republic.4 The memory of this humiliation is kept alive and now forms a part of the Chinese collective memory (Leonard 2008, 10). Despite the different values and roots of the constitutional documents discussed above, some similarities between European and Chinese leaders 4

Barr assumes that the perception of Europe and European states is still influenced by the “Century of Humiliation” in the aftermath of the Opium Wars.

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can be found. Similar to European leaders, Chinese diplomats promote the creation of a peaceful world as the centre-piece of their foreign policy. Furthermore, China stresses that it seeks a “peaceful rise” in the world, opposing military actions and aggression and instead embracing diplomatic dialogues and cultural exchanges.

Mutual Perception Looking at the respective role concepts of the EU and China, similarities and differences are visible. Arguably the most obvious similarity is the importance of the promotion of global peace, which is enhanced by the strong support of multilateral organisations (such as the United Nations) and the preference of dialogue and exchanges over sanctions and military pressure. Keukeleire and MacNaughtan point out that voting patterns in UN organisations show more similarities between the EU and China than between the EU and its closest ally, the United States (2008, 313). But there are also some crucial differences. The European Union believes in the universality of its values, such as individual liberty, rule of law, human rights and the freedom of speech. It therefore often attaches the promotion of these values as conditions to its treaties with other foreign actors. However it is interesting to note that some European core values such as human rights, democracy, the rule of law and political conditionality have not been included in EU cooperation agreements with China and other Asian countries (Petiteville 2003, 132). What are the reasons for this? Some politicians and scholars argue that it is better to have an established and formalised agreement, even without specific paragraphs on human rights. This can be used as a basis for stronger ties which ultimately would lead to more frequent dialogues during which critical issues could be addressed (see for example Balme 2008). Others will conclude that European elites care more about their economic interests and would not risk provoking Chinese leaders by repeatedly addressing human rights issues (such as for example Kinzelbach 2011). China on the other hand does not officially oppose these “European” values. Human rights, freedom of speech, and the rule of law are formally guaranteed through the Chinese constitution. However, they are perceived as domestic issues. Any form of conditionality or external influence is seen as an interference and infringement on China’s sovereignty. Furthermore, there is a discrepancy between the formal guarantee of such rights and political and legal practice. Socio-economic rights, collective

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mentality, and well-being of the masses matter more than the well-being of each individual. Additionally, the maintenance of Party leadership is the central aim of Chinese decision-makers, pushing human rights like freedom of speech further towards the back of the room. Kolonko (2013) argues that the Central Committee of the Communist Party of China planned to publish an internal directive advising officials to avoid and prevent public discussions about the following issues: Freedom of opinion, universal values, civil society, civil rights, rule of law and mistakes the CPC has made. Apparently, the directive appeared on the Internet, where it was immediately found and deleted by censorship authorities. The published summary of the directive did not include these issues, however, journalists and university scholars confirmed that they were discussed at the meeting. It seems that the CPC deems it necessary to increase ideological education which implies more control over the masses (Kolonko 2013). These differing views obviously have an impact on mutual perception: Officially, the EU and China are engaged in a Strategic Partnership that covers bilateral cooperation in trade, political dialogue, sustainable development and international and regional cooperation (European Commission 2006). But despite many similarities, joint positions, and regular institutionalised dialogues, China is still perceived as a threat. Whereas both can work together closely for economic benefits, the differences in values and political systems have led to problems in bilateral relations. The EU, on the one hand, is disappointed by the (in its eyes) slow progress in the area of political and civil rights (Algieri 2009, 164).5 Additionally, there is the fear that the Chinese model of cooperation which excludes political conditions is undermining the EU’s efforts to democratise developing countries. These negative perceptions are also mirrored in European media. Often, negative images of China are complementary to the more positive ones. The same magazines which published articles with a very excited tone about the rise of China and the chances provided by this rise a couple of years ago are now more cautious about the implications of China’s rise. Follath (2010) argues that China is using its increasing soft power in Africa and Latin America to undermine Western efforts to decrease human rights abuses,

5

Whereas the European Commission sees improvements in the fields of rule of law and civil society, it is still disappointed at the deficits in the improvement of human rights.

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The imprisonment of Ai Weiwei was widely covered in German media, as were riots in Tibet and Xinjiang, workers’ riots, problems with intellectual property rights or media and Internet censorship (Landwehr 2012; Bistrow 2011). The financial aids to European states provided by China to alleviate the financial crisis are seen with a mix of scepticism and relief. On the one hand, Chinese money is welcomed because it might decrease the financial burden of European tax payers. On the other hand, many fear that China is “buying its way into Europe”. For some, the veto on the Resolution against Syria in the United Nations Security Council (UNSC) seems to underline the fact that China is only acting out of its own interest: To protect the principle of non-interference, to avoid another Western-led intervention in the Middle East which might have resulted in too much Western influence in that region (Wong 2012), to undermine long established (Western) modes of action within the UN while playing by UN rules (Follath 2010). After the European decision to impose an oil embargo in Iran in January 2012, media and political decision-makers feared that China would buy the European share of oil, thus limiting the possible success of the embargo (Roßmann 2011). China on the other hand feels unfairly treated by the Western criticism on its Iran policy, which is based on negotiations, “respect for justice, adherence to peace, and opposition to war”. Negative opinions from outside of China were due to the fact that China is not cooperating with the West (Zhong 2012). The Chinese UN representative Li Baodong explained that the Chinese veto in the UNSC concerning the EU-backed draft resolution that supported a regime change in Syria would “violate the purposes and principles of the UN Charta and the basic norms governing the international relations” (Wang 2012). While introducing China’s new cultural initiative, President Hu Jintao emphasized the importance of this initiative by saying that we clearly must see that international hostile forces are intensifying the strategic plot of Westernizing and dividing China, and ideological and cultural fields are the focal areas of their long-term infiltration (quoted for example in Wong 2012).

Another important aspect of the reception of Europe in Chinese media is the fact that there is a very limited amount of articles on the EU as a

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whole, especially in comparison to articles about European member states (the Euro-crisis being an exception). In contrast to the Chinese perception described in the last paragraph, a research project financed by the European Commission on Chinese views of the EU comes to more positive conclusions. According to the surveys undertaken by the research group, the EU seems to be seen mainly positively by the Chinese public, by elites and by government officials. Nevertheless some areas of “conflict” can be identified, such as Tibet, intellectual property rights and human rights (China Policy Institute 2011).

Soft Power and Public Diplomacy: How to Get What We Want The main goal of soft power as defined by Joseph S. Nye is “to get desired outcomes because others want what you want” (1998, 86). This can be contrasted with “hard power”, that is the ability to achieve goals through threats and/or rewards. As mentioned before, both the EU and European member states have increased their public diplomacy towards China significantly since the beginning of diplomatic relations in 1975. Current EU-initiatives include student exchange programmes, for example through Erasmus Mundus, dialogues on various topics reaching from trade to environmental problems, human rights, seminars, trainings, jointly organised events such as the 2012 EU-China Year of Intercultural Dialogue, the 2011 EU-China Year of Youth or the EU China Youth Policy Dialogue. To get a clearer picture on whether or not these initiatives have had an impact I have chosen three examples as case studies: 1) the EU and China in multilateral and international organisations, 2) the EU-China Human Rights Dialogue, and 3) Cultural and Public Diplomacy.

The EU and China in Multilateral and International Organisations Looking at the outcomes of negotiations in multilateral and international organisations such as the United Nations or the World Trade Organisation (WTO) is one possibility to assess the impact of soft power and public diplomacy. According to Nye’s definition of soft power (2008, 94), it is also one of the settings in which political actors hope to see positive results of their public policy. Political actors that are attracted to another state’s values and image are more likely to take the same position within multilateral negotiations.

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As mentioned before, Keukeleire and MacNaughtan elaborated that voting patterns in international organisations show more similarities between European countries and China than between European countries and their closest ally, the USA (2008, 313). China has also signed more international treaties than the USA and has become increasingly active in multilateral initiatives, such as UN-peacekeeping missions (see He’s chapter in this volume). However, and despite these similarities, opposing positions are frequent, especially in areas that generate considerable publicity, such as the UN resolutions on Sudan and Syria. It took several attempts to pass a resolution on Darfur in the Security Council, because China repeatedly used its veto. European observers and academics saw the growing Chinese demand for natural resources and raw materials (in this case Sudanese oil) and the possibility of gaining African support for Chinese positions in international organisations as the main reasons behind the vetoes. Indeed, a resolution against China in the UN Human Rights Commission was blocked by African countries (Müller 2006, 92; Schüller and Asche 2007, 67). A more recent example of achieving a common position is the failed attempt by the Arab League, European countries and the United States to pass a resolution on Syria in the UNSC. It was blocked by Russia and China. The Chinese (and Russian) veto in the UNSC was a great disappointment for European decision-makers and the European public. In the case of Sudan, a resolution was passed after a couple of attempts. But did European soft power have anything to do with this? Most articles on the topic rather see the Chinese fear of loss of image on the international stage as the main reason (for example Stähle 2008). This in turn would have reduced Chinese soft power. The cases of Sudan and Syria clearly show one aspect where Chinese and European values greatly differ: the universality of human rights. From a European perspective, human rights exceed borders. Therefore, human rights violations can justify interference such as through economic sanctions or, in special cases, military action (Balme 2008, 152). Additionally, the protection of human rights is one of the core values underlying the foundation of the EU. The importance of human rights has been accepted after centuries of wars, fighting, two world wars and genocide. From a Chinese perspective, human rights are a domestic issue and as such any human rights violation will be dealt with at the domestic

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level. Furthermore, interventions in national affairs of another state run counter to the aforementioned Five Principles of Peaceful Coexistence.

The EU-China Human Rights Dialogue As should be clear by now, the promotion of human rights and democracy are core values of the European Union and thus constitute a centrepiece of its foreign policy. Indeed, political conditions are often an elementary part of EU cooperation agreements with other states. The Human Rights Dialogue between the EU and China was set up in 1995. Meetings between Chinese and European officials have since been held twice a year (one under each rotating EU Presidency). Although the dialogue is frequently criticised for being a standardised routine without actual results, the EU maintains its position that “constructive dialogue remains the Union’s preferred channel for working to improve the human rights situation in China” (“EU-China Human Rights Dialogue” 2013). The EU hence seeks to remind China of its having signed (and ratified) the UN Covenant on Civil and Political Rights, the UN Covenant on Social, Economic and Cultural Rights, release of prisoners etc.. At the same time, disappointment about little improvement of the human rights situation “on the ground” is expressed (Kinzelbach 2011). In her dissertation, Katrin Kinzelbach analyses the Human Rights Dialogue and its actual outcome. She concludes that the dialogue is a complete failure. The talks follow a strict routine, in which the European side tries to not insult the Chinese leadership while at the same time showing the European public that something is being done about the human rights situation in China. However, the rhetoric is not followed by actual results. Turning the Chinese signatures on the above mentioned UN agreements into action is not influenced by the EU-China Human Rights Dialogue, but instead results from domestic pressure within China and political agreements with the USA (Kinzelbach 2011, 6). The Chinese interest in the dialogue was based on the hope that the EU would vote against a UN resolution on China in the UNHCR (United Nations High Commission for Refugees). With the decreasing likeliness of such a resolution the Chinese interest in the dialogue has decreased rapidly. Apart from this disillusioning situation, Kinzelbach also argues that the European interest in changing the human rights situation in China (and Asia) is side-lined by other (economic) interests (see also Kernic 2007, 179). Richard Balme on the other hand argues that visible results have appeared in some areas. Moreover, these have been touched upon during

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the HR Dialogue and they relate to EU initiatives, especially concerning the reform of the legal system. The Dialogue is therefore “closer to a moderate success than an absolute failure” (2008, 148). Balme also elaborates a major difference in the conception of human rights (as described in previous paragraphs). From a Chinese point of view, national sovereignty and stability are major conditions for the guarantee of human rights and within the scope of human rights social and economic rights are seen as the most important ones. Civil and political rights are subordinate to social and economic rights, which serve economic development and thus the common good. By contrast, Europeans see civil and political rights (individual rights) as the central part of human rights.

Cultural Diplomacy and Public Diplomacy With the growing recognition of the importance of soft power comes increasing interest in public diplomacy. There are various definitions of soft power and public diplomacy. In this chapter, I will stick to the one given by Joseph Nye. According to Nye: [P]ublic diplomacy is an instrument that governments use to mobilize these resources [culture, political values, foreign policies, additions by the author] to communicate with and attract the publics of other countries, rather than merely their governments. Public diplomacy tries to attract by drawing attention to these potential resources through broadcasting, subsidizing cultural exports, arranging exchanges and so forth (Nye 2008, 95).

Obviously, public diplomacy as defined as a governmental instrument has many aspects. As cultural exchange programmes and educational programmes are usually aimed at academic and (future) political elites, they (should) play an essential part in the EU’s public (and cultural) diplomacy. A survey on the Chinese view of Europe, conducted by the University of Nottingham, leads to the broad conclusion that the Chinese public and its elites have a generally positive image of the EU and Europeans. However, another conclusion is that the overall knowledge of the EU in China is still relatively small (China Policy Institute 2011). This could also lead to misunderstandings and negative perceptions. One conclusion drawn from many such surveys is that the EU should invest more in cultural diplomacy and people-to-people exchanges and thus raise a broader understanding about the EU and Europe and increase the EU’s profile within China. This objective has been stated in European

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Commission Communications on China since 1995 (European Commission 1995). It seems that the EU has recognised that “the success of soft power depends on the actor’s reputation within the given community, as well as the flow of information between actors” (Barr 2011, 16). The introduction of the EU-China High-Level People-to-People Dialogue (HPPD) might be the result of this recognition. Educational and cultural exchanges have already taken place, such as joint universities (the China-EU International Business School, CEIBS, and the China-EU School of Law, CESL), European Centres at Chinese universities, the 2011 EU China Year of Youth, the EU China Youth Policy Dialogue, and the “China window” within the Erasmus Mundus Program.6 These EU efforts are complemented by programmes initiated by European Member States, for example through the Goethe Institute, British Council, Alliance Française, the German Academic Exchange Service (DAAD), and bilateral cultural years on different levels (Germany celebrated 2012 as the “Year of Chinese Culture”). It is still too early to assess the overall success and positive impact that these initiatives might have. Furthermore, measuring impact and changes in values is highly difficult; proving the correlation between public diplomacy initiatives and political action even more so. However, sometimes personal experiences can give us a hint. During interviews, the author of this chapter asked experts working in the field of cultural exchange about their personal views on the frequent misunderstandings and misperceptions between Europeans and Chinese. Concerning the question on frequent misunderstandings in their mutual perception, differences in ways of communication (direct-indirect), differing views on hierarchy and the role of individuals (individualism-collectivism) and differing expectations in working behaviour were mentioned most frequently. Another problematic issue mentioned was that Europeans often find it difficult to separate political issues from private issues, which influences their positive perception of China. Europe and the EU are rarely seen as one entity with joint values, a common history and culture. Instead, the European nations are regarded as 6

The Erasmus Mundus External Cooperation Window has been initiated to promote deeper academic exchange and cooperation of European students, scholars and universities with their counterparts in third countries. Students from China (and other third countries) have the opportunity to choose out of 138 Erasmus Mundus Joint Masters and 42 Erasmus Mundus Joint Doctorates, while European universities can apply for partnerships with institutions in third countries.

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single actors. The interviewees made it clear that the differences within Europe such as different languages make it harder for Chinese and for non-Europeans in general to gain a clear understanding of the European idea. Such perceptions can however be mitigated if Chinese people spend time in Europe. Vice-versa, the perceptions of Europeans about China tend to be more balanced and more positive after spending some time in the country. Of course, these perception changes happen on an individual level. Thus it is impossible to claim that all participants of (student) exchange programmes indeed change their perceptions in a more positive direction.7 However, several scholars came to the conclusion that in most cases exchange programmes have a positive impact on the participants (Scott-Smith 2009, 52-53; Snow 2009, 232).

Conclusion Constructivism assumes that values and norms are important factors that shape the framework for all political actions. Therefore, these norms are also (co-)responsible for the perception of other actors. The ability to influence and shape values, and thus create a more positive perception of oneself, can thus be seen as the core of successful soft power and public diplomacy. The chapter illustrates that European soft power in China still remains relatively weak, especially when it comes to the ultimate goal of successful soft power: “Getting what you want”, because the other actor shares the values and “wants it” too. Knowledge about the EU as a whole is still limited in China. Attention is focused on the European member states. As member states, they also undoubtedly transmit European values. However, at the same time they are acting based on their national selfinterest. Member states’ national interests sometimes compete with each other and may also be incongruent with general EU interests. This may sometimes even undermine EU initiatives. Additionally, when dealing with China the EU side-lines some of its core values, such as democracy and human rights, in favour of economic benefits. On the other hand it is obvious that the Chinese public perception of European states and the EU is generally positive. Experiences of actors in the cultural field reveal that Chinese students who have been in Europe or 7

An often quoted negative example is the case of Seyyed Qutb, an Egyptian civil servant who went to the United States in 1948 and was so shocked by the American lifestyle that he became a strong supporter of radical Islam (Scott-Smith 2009, 52)

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have closer contact with Europeans have a better understanding of the European idea and the European Union. Clearly, improvements are necessary. So far, the EU has failed to reach its goal of raising its profile in China. This underlines the growing need for strengthened inter-cultural ties and further investment in public diplomacy. Looking at this rather disillusioning outcome of European public diplomacy towards China one might question the importance of public (and cultural) diplomacy as such. However, it has to be stressed that public diplomacy includes various tools with short-term, medium term and longterm impact (Gilboa 2008, 73). The promotion of cultural exchanges and people-to-people dialogues is a strategy that works best in the long run (Snow 2009, 242; Leonard 2002, 51; Gilboa 2008, 73). It is hard to assess its actual success. It is difficult if not impossible to foresee whether increased cultural ties will ultimately lead to closer positions in multilateral organisations. However, experience shows that changes, adaptation and understanding, on an individual level, are happening. What do these findings imply for the development of the relations between the EU and China? Are we moving towards increasing competition or a closer partnership, or maybe neither? Certainly, the EU and China are competing in many fields, and soft power is no exception. But the increasing number of interpersonal relations of Europeans and Chinese holds the possibility of creating a group of people interested in establishing a closer partnership—not one in which everything is agreed on, but one that accepts differences and uses them as a base to reach outcomes which are beneficial for both sides.

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CHAPTER EIGHT PUBLIC DIPLOMACY AND THE CO-EVOLUTION OF CHINA AND EUROPE: A CHINESE VIEW WANG HAIPING AND HE ZHIGAO Introduction In times of globalisation and international order reconstruction, especially given China’s peaceful rise and the West’s stagnation, it is of great importance to secure and improve China’s world image. Even though Europe-China relations have experienced ups and downs, this chapter seeks to investigate whether Europe and China could construct a benign relationship of co-evolution. The term co-evolution is applied to cases where two or more international actors reciprocally affect each other’s evolution and development. In order to explain how and why China and Europe will co-evolve in the twenty-first century, the chapter focuses on the role of culture and soft power in constructing Europe-China relations from a Chinese perspective. More specifically, the chapter emphasises the role of public diplomacy in relation to the co-evolution of China and Europe. The chapter seeks to provide answers to the following two research questions: firstly, how does China implement its public diplomacy in relation to Europe? Secondly, to what extent does Chinese public diplomacy have an influence on a benign co-evolution of Europe and China? In order to elaborate on the implementation of Chinese public diplomacy, two cases will be analysed: the Confucius Institute Project and study exchange sponsored by the Chinese Scholarship Council (CSC).

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Public Diplomacy: A Means to Promote a Benign Co-Evolution of China-Europe Relations? In terms of a relationship among international actors, “cooperation or conflict”, or put differently “partnership and competition”, traditionally constitute the main antagonism (Majeski and Fricks 1995). More specifically, partnership implies a “shared sense of purpose, mutual respect and willingness to negotiate” (Pugh 1987, 5). Meanwhile, competition emphasises rivalry between two or more groups for a commonly desired object, resulting in a winner and a loser. This is generally called a “zero-sum game”. The term co-evolution, recently used by former US Secretary of State Henry Kissinger in his book On China, is different from these two categories (Kissinger 2011, 344). In biology, co-evolution refers to an evolutionary change in a trait of the individuals in one population in response to a trait of the individuals of a second population, followed by an evolutionary response by the second population to the change in the first (Janzen 1980).

In a similar vein, social actors, including international ones, co-evolve. According to Kissinger, co-evolution in international relations depicts the process that two actors adapt with each other’s alternation in the international society. They thereby mutually evolve and develop. Each of them adapts to changes in the other. In other words, international actors could not fulfil their goals without interacting with others. Meanwhile, such interaction is not always benign. For Kissinger, it is a rather rational endeavour: depending on their “domestic imperatives”, the two actors “cooperate where possible, and adjust their relations to minimize conflict” (Kissinger 2011, 365). The key tool that drives international relations is diplomacy. Traditionally, it is the synonym for statecraft and a tool to conduct and implement foreign policy (Baker and DeFrank 1995; Kissinger 1994). Paul Sharp defines it as the management of international relations by negotiation; the method by which these relations are adjusted and managed by ambassadors and envoys; the business or art of the diplomatist (Sharp 1999).

The alternations in international relations have transformed the goals and means of diplomacy. Instead of security issues and traditional conceptions of (hard) power, states around the world strive to project a

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favourable and benign image of themselves. In other words, they seek to increase their “soft power” rather than focusing exclusively on military and economic aspects. As Joseph Nye defined it, soft power “is the ability to affect others to obtain the outcomes one wants through attraction rather than coercion or payment” (Nye 2008a, 94). Recently, the concept of soft power has attracted considerable attention in China. According to the former Chinese Prime Minister Wen Jiabao, culture is viewed as a bridge that “brings together hearts and minds” and that creates a bond between states (Global Times 2007). The new Chinese President Xi Jinping further argues that the relationship between two countries is based on the affection between two civilisations (“guo zhi jiao zai yu min xiang qin”, quoted from Han Fei Zi, Shuo lin shang). Such a benign relationship is not only in the interest of governments but also that of the general population. As a result, international cultural exchange and public diplomacy characterise one of the key features of China’s contemporary foreign policy, especially when it comes to Europe-China relations as we will see later in this chapter. Moreover, conceptually, there is a close connection to the term co-evolution: the current prevalence of soft power is not so much because the world has developed towards a Kantian relationship between states. After all, we are far from “perpetual peace” and a world government (Hurrell 1990). China’s and other states’ focus on soft power is rather a rational choice for themselves, based on domestic pressures. Whether China’s soft power project succeeds is ultimately dependent upon the sources that fuel such power; these include a country’s culture, the attractiveness of its political values, and its foreign policies (Nye 2004, 11–15). Resources of a country’s soft power can vary from language to culture to values and policies. Public diplomacy has emerged as one instrument to mobilise these resources and hence to implement soft power. It is a diplomatic tool which not only contributes to fulfilling national interests represented by governments, but, more importantly, also strengthens the mutual understanding of citizens. According to Gregory, public diplomacy is an instrument used by states, associations of states, and some sub-state and non-state actors to understand cultures, attitudes, and behaviour; build and manage relationships; and influence thoughts and mobilize actions to advance their interests and values (Gregory 2011, 353).

Hence, public diplomacy differs from its traditional counterparts in that it involves interaction not only with governments but primarily with nongovernmental individuals and organisations. It is important to stress that

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governments are not the only actors that pursue public diplomacy. The inner logic embedded in public diplomacy is that the image and reputation of a country are a public good which can create either an enabling or a disabling circumstance for individual transactions, for both governments and citizens. In other words, public diplomacy could provide a platform for the interaction between actors. If public diplomacy exerts a positive influence, then governments and citizens could benefit from that. An example for a successful public diplomacy strategy is the worldwide exportation of the so-called “American Dream”. A former French Foreign Minister once commented that Americans are powerful because they can “inspire the dreams and desires of others, thanks to the mastery of global images through film and television. For these reasons, large numbers of students from other countries come to the United States to finish their studies” (Védrine and Moïsi 2001, 3). The “American Dream” hence serves as an effective tool for Americans to continuously glorify foreigners’ perception of the US. In a similar vein, the “Chinese Dream” is currently one of the most frequently used terms in media reports and textbooks in China in 2012 (Xinhua 2013). The new President Xi Jinping recently pointed out: By the Chinese dream, we seek to have economic prosperity, national renewal and people’s well-beings. The Chinese dream is about peace, development, cooperation and win-win results, and it is connected to the American dream and beautiful dreams of people in other countries (Xinhua 2013).

Seeking commonality of the Chinese dream and dreams of other nations is of crucial importance to promote China’s national image as a responsible big country committed to peaceful development. This will help generate a positive perception of China among foreigners. As one of the effective tools to enhance China’s soft power, the Chinese Dream has already garnered attention from foreigners (Kapp 2013; Larson 2011; H. Wang 2010). Unlike the Chinese civilisation, which is much older than its American counterpart, the Chinese Dream is still in its infancy compared to the American Dream. Since there are however some similarities, the Chinese Dream may have the potential to influence China’s relations with other regions and countries in the world, notably its biggest trading partner, the European Union. Nonetheless, the current evidence that the Chinese Dream has already had a benign effect on China’s relations with Europe is thin to nonexistent. In comparison with other emerging yet democratic countries, such as India, China is more likely to be regarded by Western countries as

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a threat. While there are variations across European states, and even though it is internationally acknowledged that China has succeeded in terms of developing its economy, Westerners, notably European citizens, still have a quite a negative image of China. Chinese opinions about Europeans, by contrast, tend to be much more positive. It hence seems that there are differences in the success of soft power strategies, such as through public diplomacy. Table 8.1 European Public Opinion on China Year Favourable view on China

2011 Average: 47% Selected states: Romania: 69%; France: 53%; Germany: 35%; Sweden: 36% Average: 41% agree vs. 46% disagree

China is an economic threat China is a Average: 30% agree vs. 62% disagree military threat Source: (German Marshall Fund 2013)

Table 8.2 Chinese Public and Elite Opinion on the European Union Year Impressions about the EU Impressions about EU Citizens

2011 74.1% favourable vs. 12.3% unfavourable 77.6% favourable vs. 7.1% unfavourable 85.6% agree 85.1% agree 87.6% agree 46% agree

The EU is a global actor in the economic area The EU is a global actor in the political area EU-China relations are important Positive view about the future of the China-EU relationship Sources: (Dong 2011; Everts 2011; Dekker and van der Noll 2011; Sun 2011)

In an attempt to tackle this discrepancy, both Europe and China must invest more in people-to-people relations. Only then can both sides fully benefit from the EU-China Strategic Partnership. In the eyes of Chinese leaders, public diplomacy is a possible and even necessary approach to promote mutual understanding between Europe and China which may have a positive effect on their co-evolution. A more favourable image of China in other countries would also strengthen China’s discourse power in international society, thereby

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helping China to seize strategic opportunities. Since China’s economic power has already translated into political influence, successful public diplomacy could add cultural attractiveness to it, and thereby strengthen and improve China’s international image and position. Given the fact that European views of China are rather unfavourable, China-Europe relations would particularly benefit from this. Education has become a powerful tool in public diplomacy. In the next section, we will see how China employs educational measures to implement its public diplomacy and increase its soft power.

Understanding China through education: Cultural Exchange as a Public Diplomacy Instrument When it comes to developing effective public diplomacy tools, education has drawn considerable attention on the part of China. In this section, the authors shall emphasise the Chinese government’s recent initiatives to strengthen educational exchange with Europe through the Confucius Institute Project and through study exchange programmes. The aim is to investigate in how far public diplomacy plays a role in contributing to a benign co-evolution between Europe and China. The general principles of Constitution and By-Laws of the Confucius Institutes state that: Confucius Institutes devote themselves to satisfying the demands of people from different countries and regions in the world who learn the Chinese language, to enhancing understanding of the Chinese language and culture by these peoples, to strengthening educational and cultural exchange and cooperation between China and other countries, to deepening friendly relationships with other nations, to promoting the development of multiculturalism, and to construct a harmonious world (Ministry of Education 2006).

Accordingly, China’s initiative of building Confucius Institutes worldwide is to teach the Chinese language, meaning standard Mandarin, and to disseminate Chinese culture with the ultimate goal of boosting China’s global image. The Chinese government’s enthusiasm for establishing Confucius Institutes is a result of its desire to strengthen China’s soft power. The reference in the above quotation to a “harmonious world” is in line with Chinese foreign policy, notably under Hu Jintao (Hu 2007). The target of China’s public diplomacy hence lies in promoting China’s global image as a peace-loving, responsible, self-confident, and cooperative big country that seeks peaceful development and harmonious

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relations with other countries—and Confucius Institutes are one means in the endeavour to achieve this goal (Yiwei Wang 2008, 679). Confucius Institutes, whose main purpose is to expand and to develop cultural exchanges, are a vehicle to present Chinese culture and hence to let more people know how and why the Chinese national character is made the way it is. The idea behind it is that if a full picture is unfolded before them, foreigners will understand the Chinese people and their way of thinking better. As mentioned in the previous section, how to boost a favourable image of China that also helps to present the benign intentions of China’s fast economic development to the rest of world now poses as a considerable challenge for political leaders in China. China has a civilisation counting over 5,000 years and no other civilisation in the world can look back at a continuous written history of such an extent. The most important evidence for this long history is the continuity of the Chinese language, notably the continuous stable evolution of Chinese characters that help connect different historical periods despite the diversified pronunciation systems of various dialects within the vast Chinese territory (P. Zhang 2007, 41). The Chinese language hence best serves as a messenger conveying Chinese culture to be spread all over the world. Confucius, China’s most influential philosopher, who created the concept of harmony in human affairs and humanity in human hearts, is arguably the best image to represent peace-loving China. As a result, Confucius Institutes combine a favourable image and an effective language instruction tool, working toward the overarching foreign policy aim of constructing a harmonious world. The Confucius Institute Project has been described as “an impression management, an effort by China to craft a positive image of itself in a world fraught with danger” (Paradise 2009, 662). Based on this conceptualisation, Confucius Institutes are supposed to help create a favourable impression of China, a kind and gentle China. In practice, Chinese teachers and foreign students at Confucius Institutes endeavour to communicate together, to create a sustainable dialogue, and to help remove or at least mitigate stereotypes of each other so as to enhance mutual understanding and reciprocal support. Effective language teaching itself must be set in the context of the target culture. In the Confucius Institutes, teaching Chinese is always associated with a cultural experience. Confucius Institutes provide a comprehensive Chinese teaching syllabus which has integrated teaching of Chinese language together with cultural experience classes such as Chinese calligraphy practice, Chinese music appreciation, Chinese paper-cutting, etc. Teachers at overseas Confucius Institutes have adopted a variety of teaching

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methodologies to immerse students in Chinese culture, such as singing popular Chinese songs, presenting Chinese films, teaching Chinese national dance, painting, and even Chinese Kung Fu. Despite the quite sophisticated design of the Confucius Institutes, difficulties are unavoidable during the process of communication. Sometimes, Confucius Institutes’ work is even misunderstood (Qu, Zhao, and Cheng 2012). The China expert Steven W. Mosher directly called Confucius Institutes “Trojan Horses with Chinese characteristics” in his writings that attempted to highlight the political connotation of Confucius Institutes (Mosher 2012). Thereafter, the US government signed a controversial visa policy directive without consulting China which forced any teachers in US Confucius Institutes holding a J-1 visa to leave the US within six weeks. This directive was criticised by a host of university presidents who wrote letters to the US Department of State. Eight days later, the US government changed the policy and promised it would not force the teachers to leave (Qu, Zhao, and Cheng 2012). Linking such issues back to the overall theme of this chapter as well as this book, coevolution between China and foreigners is not always benign. However, the first step to understanding each other is to get to know each other and the Confucius Institutes can be a good way for foreigners, notably Europeans, to get to know China. In order to make a first evaluation of the effectiveness of the Confucius Institutes, we will turn to some empirical evidence. From the first establishment of a Confucius Institute in Seoul in the year 2004 as a milestone to publicise Chinese language and culture, the Confucius Institute Project has witnessed a steadily growing development in recent years (Xinhua 2011). According to official statistics issued on the Hanban website, 322 Confucius Institutes and 369 Confucius Classrooms had been established in 96 countries by the end of 2010 (Hanban 2010).1 As far as Europe is concerned, there were as many as 105 Confucius Institutes distributed over 31 European countries. In 2011, the Confucius Institutes around the world continued to expand. By the end of August 2011, 353

1

Hanban is the Confucius Institute Headquarters as a public institution affiliated with the Chinese Ministry of Education. Its functions include making policies and development plans for promoting the Chinese language internationally; supporting Chinese language programmes at educational institutions of various types and levels in other countries and drafting international Chinese teaching standards and developing and promoting Chinese language teaching materials. It works with the partner institutions in China and abroad to run Confucius Institutes on a collaborative basis (Hanban 2010).

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Confucius Institutes and 473 Confucius Classrooms had been established in 104 countries and regions worldwide (Hanban 2011).2 Based on statistics issued by the Confucius Institute Headquarters, in the year 2009, Confucius Institutes and Classrooms around the world offered 9,000 Chinese courses of a multitude of styles. The total enrolment rate was 260,000; a 130,000 strong enrolment increase compared to the previous year. More than 7,500 cultural exchange activities took place involving over 3,000,000 participants. This figure almost doubled the participation figures of the previous year (Hanban 2011). By the end of 2012, China had established 358 Confucius Institutes and 500 Confucius Classrooms in 105 countries and regions. In Europe alone, 129 Institutes and 104 Classrooms were established throughout 34 countries and regions (Xinhua 2012). Comparing European countries with each other, and taking into consideration the population size of each country, the enthusiasm about the Confucius Institutes is particularly great in France. Here, Confucius Institutes were established and have expanded at a particularly fast pace. Over the past few years, the number of French people learning Chinese has increased by nearly 30 per cent annually (Zhou 2007, 82). The number of Confucius Institutes is also booming in the UK, and at the UK Confucius Institutes National Conference held in London entitled “Sustainable Development of Confucius Institutes in Britain”, Wang Yongli, Deputy Director-General of Hanban, said that lack of talent had become the biggest challenge for the development of Confucius Institutes (C. Zhang 2011). In Germany, the first Confucius Institute was established in 2006 at Freie Universität Berlin and currently all eleven Confucius Institutes are organised as joint ventures (Hartig 2010). Table 8.3 provides a comparison of a number of European countries. As Nye states, “[s]oft power rests on the ability to shape the preferences of others” (Nye 2008b, 95). Shaping preferences is a very long-term process. Confucius Institutes cannot be merely employed as an instrument of imposing Chinese language and culture on other countries. Rather, they serve as a platform for cultural exchange, through which China’s amiable image on the world stage can gradually be accepted. It remains yet to be seen whether the visitors of Confucius Institutes and

2

The main difference between Confucius Institutes and Confucius Classrooms lies in the entity of their cooperative local partner. A very common cooperative model for Confucius Institutes is a partnership between a Chinese university and a foreign university while for Confucius Classrooms their local partners are usually primary and middle schools (Hartig 2010).

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Classrooms change their attitudes towards China after taking a Chinese course or participating in the cultural activities on offer. Table 8.3 Numbers of Confucius Institutes and Classrooms in European Countries (2010) Country

Nr. of CIs

Nr. of CCs

Total

Country (Region)

Nr. of CIs

Austria Belarus Belgium Bulgaria Czech Rep. Denmark

2 1 3 1 1

1

1

3 1 3 1 2

Malta Moldova Netherlands Norway Poland

1 1 1 1 4

1 1 1 1 4

2

2

4

Portugal

2

2

Estonia 1 1 Romania Finland 1 1 Russia France 14 2 16 Serbia Germany 11 2 13 Slovakia Greece 1 1 Slovenia Hungary 1 1 2 Spain Iceland 1 1 Sweden Ireland 2 4 6 UK Italy 9 9 18 Ukraine Lithuania 1 1 CIs = Confucius Institutes CCs = Confucius Classrooms Source: (China Scholarship Council 2010)

2 17 1 1 1 4 1 13 3

Nr. of CCs

3

57

Total

2 20 1 1 1 4 1 70 3

Regarding the instrumental incentives to learn Chinese, students often associate Chinese language learning with great value for their career development. They believe learning Chinese might help them sharpen their competitive edge on the job market (He 2008, 23–31). This clearly shows that China’s economic power is also a means for China to develop its soft power. Even if the initial rationale to study Chinese is strategic or materialistic, once learners of Chinese have started studying, they can develop a more intrinsic interest in learning about Chinese culture, Chinese arts and Chinese society (ibid.). At the 2013 Joint Conference of Confucius Institutes in Europe, Italy’s Education Minister commented that those studying the Chinese language are more open to “exchange and collaborat[ion]” in all fields, including industrial, scientific and technologic fields (De Giuli 2013).

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Meanwhile, the establishment of Confucius Institutes close to foreign universities worldwide has enabled China’s universities to expand their contacts and exchanges with foreign academic institutions (Paradise 2009, 665). As China endeavours to maintain its economic momentum, increased communication and exchanges with foreign scholars and institutes facilitated by the Confucius Institutes could be a significant driving force that helps internationalise China’s education beyond just language learning. On the whole, the Confucius Institutes function as one of the cultural public diplomacy instruments to boost China’s soft power worldwide. Yet, how effective the model of Confucius Institutes is leaves large room for further investigation. First, people’s perception of a country is a complicated psychological process that is subject to a multitude of influencing factors. It is therefore difficult to isolate the exact impact of the Confucius Institutes alone. Second, the Confucius Institute Project is still a fairly new initiative. Accordingly, the research on this project is still scarce. Last but not least the Confucius Institute Project is just one tool for China’s emerging public diplomacy. Therefore, its effect would be entangled with that of other cultural promotion projects. With China’s economic development and increasing influence on the world stage, foreigners’ interest in Chinese food, music, art, etc. has increased tremendously. According to Wu Ying’s survey of 16 Confucius Institutes in five different countries,3 statistics show that foreign students in those Confucius Institutes highly identify with Chinese culture such as Chinese cuisine, Chinese tea, etc. (Wu 2012, 144–151). Certainly, China’s general foreign policy will also largely determine its soft power in the future. According to Hartig, who has conducted research based on the case of Germany, Confucius Institutes are part of “a cultural diplomacy with Chinese characteristics” (Hartig 2010). Because of the connection with the Chinese government, Confucius Institutes are not practicing pure cultural diplomacy; nor are they carrying out active propaganda, as they hush up sensitive topics (ibid.). Finally, according to Paradise, “only time can tell whether the Confucius Institutes can help spark a more sympathetic understanding of China and usher in a more benign view of it” (Paradise 2009, 664). This is why China’s other educational initiatives, as well as the general strategy beyond the Confucius Institutes, should be investigated, notably in relation to their value as effective public diplomacy instruments to strengthen China’s soft power. Since Confucius Institutes are Chinese 3

The five countries are USA, Japan, Russia, Thailand and Lebanon.

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institutions located in foreign countries, foreigners can experience China only to a rather limited extent. As with any other countries, the “real China”, however, can only be experienced by travelling there and by spending some time in the country. Study exchange programmes conducted by China and the rest of the world facilitate such an experience. They are hence key instruments to promote mutual understanding and contribute to a benign co-evolution of China and other regions such as Europe. The Chinese government has realised this value and decided that its long-term goal is to be the largest host country in Asia for international students by 2020, according to the “Plan for Study in China” issued by the China Scholarship Council (China Scholarship Council 2012). By 2020, the number of overseas students at primary, secondary and tertiary level is estimated to be as high as 500,000, of which 150,000 students will be enrolled at higher education institutes in China. The latest statistics issued by the Chinese Ministry of Education for the year 2011 show that the number of international students at all levels studying in China has reached 265,090. For the first time, it has exceeded the benchmark of 260,000. The overseas students came from 194 countries and regions. In the previous years, students from other Asian countries still ranked No. 1, followed by Europeans, Americans, Africans, and Oceanians. They studied at 620 colleges and universities, research institutions and other education institutions in 31 provinces, autonomous regions and municipalities in China (not including Taiwan, Hong Kong and Macao). China has hosted the fifth highest number of overseas students in the world. Only the US, the UK, France and Germany have hosted more students (Ying Wang 2008). In Asia, China has already exceeded Japan in terms of the number of international students it hosts. According to statistics issued by the Japan Student Services Organization (JASSO), by 1 May 2012, the number of overseas students in Japan was 137,756, down 0.2 per cent compared with the previous year. Japan experienced negative growth for two consecutive years (JASSO 2013). Judging from these figures, one can draw a first conclusion that China is quite successful in establishing a Chinese education brand in the world and notably in the Asian region. With more and more foreign students coming to China, the strategic goal of nurturing an educational elite spread all over the world that holds friendly views of China can be gradually realised. Study exchange is by definition not a one-way street. While foreigners can experience China more directly, Chinese students studying abroad can also function as cultural ambassadors of China. The large number of students studying abroad can help disseminate Chinese culture and explain

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current Chinese policies. This could exert a favourable influence on foreigners’ perception of China and further help develop the “China brand”. As a matter of fact and in addition to the growing number of overseas students now studying in China, more and more Chinese students and scholars have found a way to study abroad as well (China Scholarship Council 2010). In terms of effectiveness of public diplomacy, however, Europeans coming to China is arguably more important than Chinese students going out to Europe. An ancient Chinese proverb says that it is better to travel ten thousand miles than to read ten thousand books. The current Chinese government takes this wisdom very seriously today and helps foreign students overcome financial barriers on their way to China. Thus, in order to promote study exchange programmes, the China Scholarship Council (CSC) was established in 1996 (ibid.). The CSC provides financial resources to Chinese students and scholars who want to study abroad and to international students and scholars who would like to study in China. Similar to the Confucius Institute Project, the CSC also aims at promoting study exchange with other countries to strengthen the friendship and understanding between the Chinese people and people around the world, to promote the socialist modernization drive in China and the world peace (China Scholarship Council 2010, 4).

With the help from the CSC, a large number of Chinese students have fulfilled their dream of studying abroad and many international students have also managed to study in China. In 2010, a total of 22,390 foreign students were granted a Chinese government scholarship. Compared to the year 2009, 22.72 per cent more students received such governmental financial support. During the academic year 2010-2011, a total of 8,494 new students from 163 countries were recruited and awarded a CSC scholarship. Out of this total number, 4,411 came from Asian countries, accounting for 51.93 per cent of the total; 1,606 came from Europe, that is 18.9 per cent of the total; 1,582 were from Africa, 18.62 per cent of the total; 740 were from America, meaning 8.71 per cent of the total and 155 were from Oceania, 1.82 per cent of the total (China Scholarship Council 2010). Hence, Europe as a whole has already become China’s second largest educational partner. Vice versa, the CSC sponsored various types of Chinese students and scholars to study and to do research overseas, with postgraduates and visiting scholars as top priorities. In 2010, the CSC recruited a total of 13,038 candidates for all types of so-called State Sponsored Study Abroad Programs (SSSAP), among which 5,960 studied for a Ph.D. degree and

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joint Ph.D. programmes, accounting for 45.71 per cent of the total sponsorship. 5,677 were visiting scholars and senior research scholars, accounting for 43.54 per cent. 1,401 account for other categories (Masters, short-term scholars and undergraduates; see China Scholarship Council 2010, 7). The main rationale behind this emphasis on senior students and scholars for China is the requirement for important skills in innovation, technology, to further China’s economic development (China Scholarship Council 2010). Beyond that, these CSC scholars are however supposed to make a key contribution to China’s public diplomacy as well: they will make an important impression on their foreign supervisors and colleagues, which might reshape the foreign senior researchers’ perception of China and Chinese people through their face-to-face communication and collaboration. Whether it be Chinese that are studying abroad or international students that are studying in China, they all help develop cultural exchange between China and the rest of the world on a micro- and on a macro-level and will surely make a far-reaching impact on world citizens’ impression of China. As an effective public diplomacy tool, educational exchange programmes are going to play a more and more significant role in the future (China Scholarship Council 2010, 8).

Conclusion In line with the international society which is characterised by cultural diversification and complex interdependence, China and Europe do have distinctive identities and preferences, even cognitive dissonance. However, they have increasingly common interests, too (Shambaugh, Sandschneider, and Zhou 2007). Therefore, it is important to find a way to bring about a benign co-evolution between China and Europe that contributes not only to the development and transition of China, but also to the further integration of Europe. Soft power, such as through a favourable image and perception, plays an increasingly important role therein. Public diplomacy has recently emerged as a foreign policy tool to complement traditional foreign policy instruments in implementing this soft power. This chapter has investigated the role of public diplomacy to strengthen Chinese soft power, especially vis-à-vis Europeans who generally hold sceptical attitudes towards China’s development and rise. Two public diplomacy tools were examined in particular: Confucius Institutes and study exchange programmes. Based on the empirical data and analysis, the chapter has shown that both tools have the potential to

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strengthen mutual understanding and alleviate misperception between China and Europe, thereby paving the way to a more constructive and beneficial Europe-China relationship. The Chinese government is convinced of its usefulness to promote China’s “ancient but vibrant” culture and to promote a harmonious society to both internal and external audiences and hence to solve “image deficits” (d’ Hooghe 2007). Chinese leaders therefore “will take solid steps to promote public diplomacy as well as people-to-people and cultural exchanges, [and] conduct friendly exchanges” between all sorts of stakeholders (Xinhua 2012). In the years to come, more empirical research is needed to confirm the high hopes for Chinese public diplomacy towards Europe, for the Confucius Institutes, for study exchange programmes, and beyond.

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CONCLUSION CONTEMPORARY CHINA-EUROPE RELATIONS: SIMULTANEOUS PARTNERSHIP AND COMPETITION EQUALS CO-EVOLUTION ANASTAS VANGELI AND FRAUKE AUSTERMANN The year 2013 marks the tenth anniversary of the establishment of the Strategic Partnership between China and the European Union (EU-Asia Centre 2013). As this volume has shown, the relationship between the two sides in this past decade is one of complex dynamics. While reaching important milestones primarily in terms of economic exchange, the SinoEuropean relationship has also faced its own bottlenecks and dead ends, especially on the political end. Moreover, China and Europe have undergone, or rather endured, a financial crisis of historical dimension. As a result, both political and economic projects—on the European as well as the Chinese side—are faced with the challenge to reform and to adjust to their new reality. China’s formidable double-digit growth rates seem to have ground to a halt. The Communist Party now seeks to yet again find the most suitable formula for governing the most populous and still rapidly changing polity in the world (Yao et al. 2010). Europe has been caught in the turmoil of the global financial crisis and is yet to find a political compromise and a sustainable solution. Meanwhile, growing nationalism and Euro-scepticism haunt the continent. This reveals fundamental doubts among an increasing number of European citizens about the actual value and sense of the European integration project (Gingrich and Banks 2006; Leconte 2010). Back in 2003, these events could hardly have been foreseen. Although quite optimistic about their respective positions on the global stage ten years ago, both China and Europe had to review their foreign policies. This has consequently reflected on the development of their mutual relationship: with the simultaneous presence of partnership and sometimes

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unavoidable competition, depending on the domestic imperatives, SinoEuropean relations seem to “co-evolve”. We will unpack this conclusion in the following sections.

The Basis for a Sino-European Partnership In the past decade, the EU and China have demonstrated that they are resolute when it comes to developing their relations into a genuine and comprehensive Strategic Partnership. Relations with China are high on the European foreign policy agenda. China has been equally active in terms of its own action towards Europe. The partnership with China is one of the few that has been codified as formally strategic and has undergone a process of institutionalisation on all fronts. In this sense, maintaining the regular EU-China Summits and high-level meetings in all sorts of policy domains (with the exception of two occasions of temporal suspension), and strengthening the diplomatic presence of Brussels in Beijing are clear signals of the European commitment to the cause of a Sino-European comprehensive Strategic Partnership. While maintaining institutionalised cooperation with Brussels, China has also strengthened its relationship with European member states. Additionally, it has established a platform for cooperation with the sixteen countries of Central, East and Southeast Europe, and it has strengthened its cooperation with European countries that are not members of the European Union. In the words of Zhou Hong, Director of the Institute for European Studies at the Chinese Academy of Social Sciences (CASS), this approach reflects China’s will to improve its relationship with Europe not only in a pro-active but also in a comprehensive way, that is with the EU, its member states, its affiliated states such as Switzerland, its future members, such as Iceland, and its neighbouring states, that may or may not be part of the EU but which are integral parts of the European continent (Zhou 2013). The chapters of this volume have looked at four aspects of the SinoEuropean relationship: High Politics and Security Relations; The European Sovereign Debt Crisis; Energy and Environmental Issues; and Soft Power and Public Diplomacy. Having analysed these four different areas, the authors’ findings confirm that there is in fact substantial common ground for developing a full-fledged partnership in the future. First, the EU and China are both proponents of the ideas of lasting peace and achieving peace through multilateralism, and actively work towards that end. China and Europe have had a significantly prolific military and defence cooperation, seen in frequent exchanges at the high

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military level. China has also undertaken meaningful cooperation with individual EU member states, and with NATO. Of special importance is the cooperation between China and Europe in United Nations peacekeeping operations. Being devout multilateralists, Brussels and Beijing have a common interest in supporting and advancing UN peacekeeping. Hence, both work for “a strong and effective” UN peacekeeping regime, as could be read in He Yin’s chapter of this volume. They are significant among the top contributors in terms of funding and troops, with the EU being represented through its member states. Moreover, China and the EU have similar approaches to peacekeeping as they are both competent peacekeeping powers. For areas where their competences diverge, they can complement each other in the field. China has had especially fruitful cooperation and exchange of experience with France and the United Kingdom, the two EU member states that hold permanent seats on the UN Security Council. Overall, military and peacekeeping cooperation is a positive development in Europe-China relations and will be of considerable importance for the future of their comprehensive Strategic Partnership. Second, the “green” sphere, that is energy and environmental issues, are among the most promising areas to develop a Sino-European partnership. As the chapters by Maximilian Rech and Li Xinlei have shown, energy and environment are fields where China and Europe actively cooperate and institutionalise this cooperation, so as to minimise conflict. Of special importance to this process is the rapid domestic policy shift in China, which now prioritises green development. China has become a pro-active player in terms of “green” diplomacy. This is congruent with the EU’s approach. After all, the EU has developed an image of a “green force” in the world for some years now, being at the forefront of pushing for higher CO2-reduction targets and promoting renewable energy. The “greening” of China and the EU has more than just a normative dimension. The imperative of mitigating environmental devastation and formulating a more sustainable and efficient energy policy is rooted in a transnational, global risk that both China and Europe have to face. Air quality, as Rech analyses, is a global common good, and as such, it is in everyone’s interest to preserve it. As a consequence, both Li and Rech show that China and Europe have so far cooperated greatly on issues such as renewable energy or waste management. These areas of cooperation are instances that show the crucial role of research and development; of Europe and China learning from each other.

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In this respect, energy and environment also offer a blueprint for cooperation in other areas outside of high politics, where normative positions and interests can be aligned more easily. In fact, the domestic policy agendas of the two sides formulated during the twelfth Chinese Five-Year Plan and the Europe 2020 agenda have their fair share of crosscutting themes and priorities, primarily in various fields of environmental protection, food security, and especially urbanisation (Noguera 2013). Noteworthy in this respect is the cooperation at levels other than only Heads of State and Government, such as business-to-business consultation, as Li pointed out, or the EU-China Mayors’ Forum, which is arguably the right level to tackle the crucial issue of urbanisation (Committee of the Regions 2012). Third, the chapters in this volume have also shown on several occasions that the EU-China Strategic Partnership is not a normative ideal as part of globalisation but simply an imperative for the EU and China in order for them to realise their respective domestic interests. This has been one of the main findings in Antonia Hmaidi’s and also Wang Liang’s and Shi Wentao’s chapters. Solving the European sovereign debt crisis is in the interest of both China and Europe. After all, their economies are highly intertwined. Moreover, despite its severity, and truthful to the Chinese translation of the word “crisis” as both a threat and a chance at the same time, the crisis can be regarded as an opportunity.1 It is an opportunity not only to restructure the European economy and its in many ways outdated welfare system, but also to strengthen and deepen Sino-European cooperation and partnership. Granted, the exact methods and ways to achieve this are controversial, such as the question whether and how China should “save” Europe from risking a long-term recession as a consequence of the Euro-crisis. The findings of Hmaidi as well as Wang and Shi are congruent in this regard. Nonetheless, the fundamental agreement to put an end to the crisis can be a basis for the realisation of a genuine long-term oriented, that is strategic, partnership. Fourth, this comprehensive Strategic Partnership, however, is not all about politics and business. An important precondition for having a functional Sino-European relationship is to get closer and to become more familiar with each other’s society and culture. As a result, China and Europe will more readily accept each other, without which partnership is hardly possible. Policy-makers realised this not so long ago, and in 2012 the third pillar of the partnership was established: the so called “High Level People To People” dialogue and exchange. This is the linchpin of 1

In Chinese: ༴ᮘ(WéijƯ).

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Julia Soeffner’s as well as Wang Haiping’s and He Zhigao’s chapters. However, most of the efforts in this third pillar remain driven from the top, and the authors in this volume frame them in the broader soft power debate, using concepts such as public diplomacy. China poses a great unknown for many Europeans. Having realised the limitation of exclusive top-level exchanges, China has undertaken a set of actions to improve its own image and to bring Europeans closer to China. Two cases that have a promising potential impact on people-to-people exchanges, analysed by Wang Haiping and He Zhigao, are the Confucius Institute Project, and the student exchanges supported by the China Scholarship Council. China used to profile itself as a great “exporter” of exchange and foreign students to Europe and elsewhere. Through these two sets of actions China now attracts in turn an ever-increasing number of foreign students, many of them European. These young Europeans are on the path of becoming the first generation with first-hand China-experience as well as knowledge of the Chinese language and culture. While it is still too early for a profound impact analysis, the authors of both chapters on Soft Power and Public Diplomacy agree that this process is likely to positively influence future Sino-European relations.

The Competitive Dimension of China-Europe Relations Above we summarised the key common ground and potential for advancing a comprehensive strategic Sino-European partnership in the future. As this book has shown, the present, and by extension the future of China-Europe relations is not all that rosy. Important obstacles stand in their way. The chapters in this volume have revealed the competitive and at times even conflictual dimension that is equally part of the reality of the Sino-European ties. The occasional incidents that have affected the quality of the SinoEuropean relationship, such as the temporal suspension of the political dialogue in 2009 and 2011, are no unexplainable phenomena but symptoms of underlying deep structural deficiencies. For one, the EU and China often seem to talk past each other, even when they address their own bilateral matters or issues of common concern. One of the themes that permeate across most of this volume is the lack of mutual understanding between Chinese and European leaders on political core concepts and approaches in contemporary global politics. Moreover, China and Europe often struggle with projecting their desired images to one another. This has been shown in the contributions by Anastas Vangeli, Julia Soeffner, Wang Haiping and He Zhigao, and He Yin. Such problems stem from their

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fundamentally different normative foundations, different worldviews and different historical pathways. While the first and most important pillar of the comprehensive Strategic Partnership is the political dialogue between the two sides, normative dead ends, and what Pan Zhongqi has coined as “conceptual gaps”, remain a challenge that needs to be overcome in order for the political dialogue to solidify and to yield more tangible results (Pan 2012). Normative divergence is an obstacle even when common positions have been adopted and initially successful cooperation has been launched. As the chapter by He Yin has shown, although the EU and China are enthusiastic peacekeeping partners, when it comes to the new global security framework, their relationship is imperfect. They have substantially diverging interpretations of the concept of sovereignty, and the mandate, scope and the limits of the international community’s involvement in conflict regions. The European Union runs on a postmodern matrix of pooling sovereignty, supranational governance, and is a strong proponent of the responsibility to protect (R2P) concept. This also includes provisions on external humanitarian intervention. China, on the other hand, is a typical modern polity that prioritises sovereignty and national border integrity. In this sense, it sticks to the non-interventionism principle and sees R2P primarily as a domestic affair. Additionally, China and Europe also diverge on the eventual post-conflict peace-building process, stemming from their different systemic objectives (liberal vs. developmental). This, as He Yin argues, resembles a challenge for the future of the security cooperation between the two sides, and it will take meticulous efforts to replace points of divergence with complementarities. The diverging, if not conflicting interpretation of basic norms regarding statehood, sovereignty and borders, is not only reflected in security relations, but also in the dialogue on global issues. Led by the principle of impartiality towards other actors’ domestic affairs, China often stands for regimes that are condemned by the European Union or that are considered to be a threat by the latter. As a consequence, the EU often puts international pressure on countries that are China’s partners, driven by a concern for the state of democracy and human rights. Such positioning at opposing ends greatly compromises what is supposed to be a relationship of strategic partners. As Vangeli’s chapter shows, this has only recently divided the EU and China on the situation of Iran’s nuclear programme, as well as regarding the Syrian civil war. The normative divergence on sovereignty matters influences the bilateral political dialogue regarding human rights. The respective understandings of human rights in Brussels and Beijing are not only

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competing but contradicting (Pan 2012). Disagreements over what the EU frames as human rights issues, and what China sees as domestic or security matters, have ultimately led to cancellation of the annual political summits and have brought about some of the most difficult times for the Sino-European relationship. This has inevitably slowed down the pace of cooperation, not to mention the development of a Strategic Partnership. In this sense, the political aspect of the comprehensive Strategic Partnership is poised for conflict by design. Core political concepts, such as sovereignty or statehood, have rather different meanings for both sides; moreover, these meanings are juxtaposed against each other. Although less normatively charged, certain divergences are present in the field of energy and environmental cooperation as well. While “green” diplomacy is overall a reason to be optimistic, energy and environment are also areas with a significant business component, and this is a source of hindrance, especially given the broader context of trade issues and cooperation in research and development. The looming trade war, sparked by the imposition of anti-dumping measures by the EU on Chinese solar panels and respective retaliation measures by China has been subject of discussion in the chapters by Rech and Li. Trade and economic cooperation, the second pillar of the comprehensive Strategic Partnership, has been analysed in this volume in light of the European debt crisis. Sino-European trade cooperation is generally considered to be a success story, simply by taking into account the respective figures (European Commission 2013). Indeed, it used to be the fundament of the so-called “honeymoon period”. While China and the EU agree that the Euro-crisis should be ended sooner rather than later, a competitive dimension has been uncovered by Hmaidi as well as Wang and Shi in their respective contributions, such as the desire to bypass Brussels via the IMF or the EU member states capitals; the Chinese public outcry against “China saving the EU”; or the European angst about increased Chinese influence globally and in particular on the European continent, such as through FDI and other means like public diplomacy (see also Wang and He in this volume). It is another instance that relates to the fault line of “developed versus developing country”. It also reveals the double standards on both sides: the EU being led by the idea of advancing the free market, with some members promoting protectionist measures nonetheless; and China showing commitment to trade liberalisation while protecting or heavily subsidising strategic industries aimed for export, including the financial sector or the renewable energies industry (Fox and Godement 2009; Haley and Haley 2013).

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Simultaneous Partnership and Competition Equals Co-Evolution The previous sections have shown that all chapters in this volume detect a fundamental willingness of both Europe and China to develop a partnership but also that there is sometimes unavoidable fierce competition. Most authors are also of the opinion that despite transnational trends connected to globalisation, the core reason for this ambiguous finding is essentially that China and Europe—that is, the EU and its member states—pursue their domestic imperatives. Whenever these overlap, such as in the case of trading complementary goods with each other, learning from each other how to mitigate land-, water-, or airpollution, or making contributions to maintain peace in conflict regions in the world, cooperation and partnership are possible. However, given their fundamentally different political and economic systems, levels of development, and cultural backgrounds, the prominence of a myriad of actors, such as politicians, businesses, NGOs, and regular citizens, whose interests are different depending on the level (local, provincial/ memberstate level/ federal), such win sets are by no means the rule. Occasional or even regular competition, conflicts, or clashes on various issues are the logical and unavoidable outcome. In that sense, the way that Henry Kissinger recently framed SinoAmerican relations also applies to the Sino-European relationship: China and Europe “pursue their domestic imperatives, cooperating where possible, and adjust their relations to minimize conflict” (Kissinger 2011). The secret to changing the balance towards more partnership rather than competition lies in the latter aspect: “adjusting relations”. But how can the EU and China adjust their relations so as to not only “minimise conflict” but also to create ties that deserve to be labelled a “partnership”?

Adjusting Sino-European Relations for a Genuine Partnership One of the key promises of the comprehensive Strategic Partnership back in 2003 was the idea of equal treatment between the EU and China. Both are (established or rising) global powers and recognise each other as such. On a symbolic level, this is seen for instance in the alternate hosting of the annual summits, and it is reiterated on every suitable occasion, notably as part of official speeches. Yet again, the concept of “relationship of equals” (European Commission 2003) or “equal-footed” cooperation (Wen 2004) has still not fully translated from lip service into practice.

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The lack of equality in practice can be traced back to the actual lack of mutual perception as equals. In this respect, China’s identity as a developing country as opposed to the “Union of developed countries” identity of the EU is crucial. As the chapters by Hmaidi as well as Wang and Shi have illustrated, this discrepancy has delayed a consistent and coherent Chinese response to the sovereign debt crisis in Europe, despite the honest concern of Chinese leaders. In this sense, the lack of mutually perceived equality is rooted in the two-level game each side faces. The “developed-developing divide” and their ultimately unequal conceptions partially reflect in non-traditional security areas as well, such as mitigating the adverse effects of climate change. Considering itself a developing country, and reminding Europeans that they polluted the atmosphere in the first place through their own development, China objects to norms proposed by Europe, such as certain emission reduction obligations or the so called carbon tax. Adjusting relations to overcome the “developed-developing divide” and to hence put China and Europe on a more equal footing may be a matter of time. As China develops and further strengthens its position in global politics, this may lead to more converging interests. As recent experience shows, China has already moved beyond the one-dimensional path of economic growth and embarked on a more sustainable development. This has already contributed to increased cooperation between Beijing and Brussels. The green aspects of it, as well as the emphasis on urbanisation, are now shared policy priorities. The diverging identities of China as a modern nation-state and Europe having entered a post-modern phase is another obstacle on the way of treating each other as genuine equals. Again, the linchpin is the divergent attitude towards sovereignty, which China holds high while Europe compromises it—at home and abroad. This has led to the above-mentioned obstacles to crisis-management and peace-keeping that He Yin pointed out, and to aid, development and cooperation in Africa, as Vangeli has argued. Furthermore, it has a bearing on the institutional fundamentals of cooperation: while Brussels and EU member state capitals can rather unambiguously address Beijing in their relations with China, Beijing for its part has to juggle and balance between both the EU-level and the EU member-state level. This ambiguity leaves the Chinese government valuable manoeuvring space in terms of its European policy (Godement, Parello-Plesner, and Richard 2011). It however tends to be detrimental for the development of a clear-cut EU-China partnership. Adjusting SinoEuropean relations to overcome the “modern—post-modern divide” does not seem to be a matter of time. The different historical experiences and

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resulting political cultures of China and Europe are too deep-seated and may determine their diverging interests and hence their relationship for the long-term future. As a consequence, the most adequate and promising way to overcome potential conflict in this regard may be through direct interaction, from the top-level down to people-to-people exchanges. Evidence from scholarly studies2 to personal experience shows that people develop a lot more understanding and respect for each other if they interact directly, if they grasp the background, the living conditions, and the contexts of others—in short, if they really know each other. We hope that this book has made a humble contribution to this end.

Bibliography Committee of the Regions. 2012. “EU-China Mayors’ Forum.” European Union. September 19. http://cor.europa.eu/en/news/events/Pages/EUChina-Mayors.aspx. EU-Asia Centre. 2013. “10 Years of EU-China Strategic Partnership – An Assessment.” June 13. http://www.eu-asiacentre.eu/events_details. php?event_id=83. European Commission. 2003. “A Maturing Partnership – Shared Interests and Challenges in EU-China Relations.” Policy Paper COM(2003)533. European Commission. http://eur-lex.europa.eu/LexUriServ/LexUriSer v.do?uri=COM:2003:0533:FIN:EN:PDF. —. 2013. “China – Trade – European Commission.” European Commision. http://ec.europa.eu/trade/policy/countries-and-regions/cou ntries/china/. Fox, John, and François Godement. 2009. “A Power Audit of EU-China Relations.” London: European Council on Foreign Relations. Gingrich, André, and Marcus Banks. 2006. Neo-Nationalism in Europe and Beyond: Perspectives from Social Anthropology. Brussels: Berghahn Books. Godement, François, Jonas Parello-Plesner, and Alice Richard. 2011. “The Scramble for Europe.” Policy Brief. London: European Council on Foreign Relations. http://www.ecfr.eu/page/-/ECFR37_Scramble_For_ Europe_AW_v4.pdf. Haley, Usha C. V, and George T Haley. 2013. Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy. Oxford; New York: Oxford University Press. 2

See Soeffner as well as Wang and He in this volume.

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Kissinger, Henry. 2011. On China. New York: Penguin Press. Leconte, Cécile. 2010. Understanding Euroscepticism. Palgrave Macmillan. Noguera, Mireia Paulo. 2013. “The 10th Anniversary of the SinoEuropean Strategic Partnership.” 10 Years of EU-China Strategic Partnership. Europe China Research and Advice Netweork. http:// www.euecran.eu/pdf/ECRAN%20essay%20winners%20-%2010%20 Years%20of%20EU-China%20Strategic%20Partnership.pdf. Pan, Zhongqi, ed. 2012. Conceptual Gaps in China-EU Relations: Global Governance, Human Rights and Strategic Partnerships. Houndmills, New York: Palgrave Macmillan. Wen, Jiabao. 2004. “Vigorously Promoting Comprehensive Strategic Partnership Between China and the European Union. Speech.” Mission of the People’s Republic of China to the European Union. http:// www.chinamission.be/eng/zt/t101949.htm. Yao, Shujie, Wu Bin, Stephen Morgan, and Dylan Sutherland. 2010. Sustainable Reform and Development in Post-Olympic China. Oxon, New York: Taylor & Francis. Zhou, Hong. 2013. “Back to Polygamy: Multilateralism in EU-China Relations.” Talk presented at the ThinkIN China Event no. 26, May 22, Beijing. http://www.thinkinchina.asia/26-event-report/.

LIST OF ACRONYMS AND ABBREVIATIONS ACEA ACF ASEAN BRICS CASS CCS CDB CDM CEE/CESEE CEIBS CERs CESL CIC COPs CPC/CCP CPPTC CRED CREIA CSC CTC DAAD DNERE E3G EB EC ECB ECFR EDC EEAS EFSF ESS ETS EU Exim Bank FDI

European Automobile Industry Association Advocacy Coalition Frameworks Association of Southeast Asian Nations Brazil, Russia, India, China and South Africa Chinese Academy of Social Sciences Carbon Capture and Storage China Development Bank Clean Development Mechanism Central, East and Southeast Europe China Europe International Business School Certified Emission Reductions China-EU School of Law China Investment Corporation Conference of the Parties Communist Party of China China Peacekeeping Police Training Center Center of Renewable Energy Development China Renewable Energy Industry Association China Scholarship Council Climate Technology Center German Academic Exchange Service Department of New Energy and Renewable Energy Third Generation Environmentalism Executive Board European Community and European Commission European Central Bank European Council on Foreign Relations European Debt Crisis European External Action Service European Financial Stability Framework European Security Strategy Emission Trading Scheme European Union Export and Import Bank of China Foreign Direct Investment

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Fed FIT FYP GDP GHG GW HPPD ICARE IMF IPTF IR JASSO LCTIDZ M&A MES MOC MOF MofCom MOST MSW NATO NDRC NEA NEB NEC NGO NPC ODI OECD PBoC PLA PRC/China PV R2P RE RMB SAFE SERC SET-Plan

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Federal Reserve System Feed-In Tariff Five-Year Plan Gross Domestic Product Greenhouse Gas Gigawatt High Level People to People Dialogue Institute for Clean and Renewable Energy International Monetary Fund International Police Task Force International Relations Japan Student Services Organization Low Carbon Technology and Investment Development Zone Mergers and Acquisitions Market Economy Status Ministry of Commerce Ministry of Finance Ministry of Commerce Ministry of Science and Technology Municipal Solid Waste North Atlantic Treaty Organization National Development and Reform Commission National Energy Administration National Energy Bureau National Energy Commission Non-Governmental Organisation National People’s Congress Overseas Direct Investment Organisation for Economic Cooperation and Development People’s Bank of China People’s Liberation Army People’s Republic of China Photovoltaic Responsibility to Protect Renewable Energy Renminbi State Administration of Foreign Exchange State Electricity Regulatory Commission of China Strategy Energy Technology Plan

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SEZ SGP SME SOE SSSAP TPCCs UK UN UNCED UNFCCC UNHCR UNHRC UNPKO UNSC UNTSO US WIPO WTO WWF

List of Acronyms and Abbreviations

Special Economic Zone Stability and Growth Pact Small and Medium Enterprise State-Owned Enterprise State Sponsored Study Abroad Programs Troop and Police Contributing Countries United Kingdom United Nations United Nations Conference on Environment and Development United Nations Framework Convention on Climate Change United Nations High Commission for Refugees United Nations Human Rights Commission United Nations Peacekeeping Operations United Nations Security Council United Nations Truce Supervision Organization United States World Intellectual Property Organisation World Trade Organization World Wide Fund for Nature

CONTRIBUTORS Editors Frauke Austermann is Assistant Professor in International Affairs at the Shanghai Campus of ESSCA, School of Management, LUNAM University. She holds a Ph.D. degree in Political Science from Freie Universität Berlin and Renmin University of China and a Master’s degree in International Employment Relations and Human Resource Management from the London School of Economics and Political Science. She was previously a Lecturer in European Studies at Maastricht University and has taught EU politics at Fudan University in Shanghai, Renmin University of China, and at Vietnam National University in Hanoi. Frauke is a board member of the UACES Collaborative Research Network on EUChina relations, see www.uaces.org/china. Her research interests include EU-China relations, European diplomacy, and contemporary Chinese society and politics. Anastas Vangeli is a graduate of the Master’s Programme in Contemporary China Studies of the School of International Studies, Renmin University of China (2013). He also holds a Master’s degree with Distinction in Nationalism Studies from Central European University in Budapest, Hungary (2009), and a Bachelor’s degree in Political Science from the University Ss Cyril and Methodius, Skopje, Macedonia (2008). Anastas has worked as a researcher at the Center for Research and Policy Making in Skopje and completed a Visiting Fellowship at the Brussels branch of the German Institute for International and Security Affairs. His current research interests include Chinese elite politics, China’s foreign policy, global politics, nationalism, and (post)communism. Wang Xiaoguang is a Ph.D. candidate at the German-Chinese Graduate School of Global Politics, based at the Center for Global Politics at Freie Universität Berlin. His research is on the EU’s normative politics promotion towards China. In 2011, Xiaoguang was a visiting scholar at S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore. He previously worked as a public relations manager at Beijing University’s Guanghua School of Management. He

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earned his undergraduate degree in Chinese Language and Literature from Jilin University in Changchun, China. Thereafter, he completed a Master’s programme at the London School of Economics in Comparative Politics.

Authors He Yin is an Associate Professor at the China Peacekeeping Police Training Center and a Ph.D. candidate in International Relations at China Foreign Affairs University. From 2001 to 2002, he served as a UN police officer in the United Nations peacekeeping mission in East Timor. From September 2006 to June 2007, he was a guest researcher sponsored by the Swedish Institute at the Silk Road Studies Program at Uppsala University of Sweden. His academic interests include the UN system and its peacekeeping regime, global governance, and China’s foreign policy. He Zhigao is a Ph.D. Candidate of the Graduate School of Global Politics, Freie Universität Berlin. His research area is European foreign policy, European politics and foreign policy analysis. Recent publications include “China’s Regional Strategy – Foundational Basis and Practical Operation”, International Review (Chinese CSSCI), No.5, 2011. Antonia Hmaidi is currently an M.A. student in International Relations/Political Science at the Graduate Institute, Geneva (IHEID), where she concentrates on International Political Economy, emerging markets and domestic influences on foreign policy. As part of her M.A., she spends one semester at Jawaharlal Nehru University (JNU) in New Delhi, India. Antonia earned her B.A. in East Asian Politics and Economies at Ruhr-University Bochum, Germany, and spent one year at Renmin University of China. She previously worked with the GIZ in Beijing on rural development. Her research interests include China’s foreign economic policy, the link between its domestic economy and the international sphere, and relations between established and rising powers. Li Xinlei is a recent PhD graduate of the German-Chinese Graduate School of Global Politics, based at the Center for Global Politics at Freie Universität Berlin. Xinlei has an additional affiliation to the Environmental Policy Research Center at Freie Universität Berlin. She received the Bachelor’s and Master’s degrees in International Politics and English from Shandong University in China. Her main research fields are the politics of climate change and renewable energy policy. From 2010 to 2011, she joined the Project of “Database Climate Mitigation Initiatives in Asian Cities”. She won the St. Gallen Wings of Excellence Award 2012.

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Recent publications include “The Diffusion Mode in the International Environmental Policy Coordination”, Journal of Social Sciences (Chinese CSSCI), 6 (2012): 15-25; “Transnational Municipal Climate Networks in the Global Climate Governance: with Case Study of C40”, Journal of Social Sciences, 6 (2011): 37-46. Maximilian Rech is a Ph.D. candidate at the German-Chinese Graduate School of Global Politics at Freie Universität Berlin and Renmin University of China. He specialises in EU-China cooperation on rare earths and resource management. Maximilian previously worked as Project Manager for the Brussels-based think tank Friends of Europe where he implemented the Understanding China programme from 2009 to 2012, and as Programme Fellow for the European antennae of the Carnegie Endowment for International Peace from 2008 to 2009. Maximilian holds an M.A. in European Studies from Maastricht University. Shi Wentao is a Master’s graduate student of Tsinghua University’s Institute of International Studies. His research focuses on European culture and the EU’s relations with China. He earned his Bachelor’s degree in English from Nankai University in Tianjin, China. Julia Soeffner is a Ph.D. candidate at the German-Chinese Graduate School of Global Politics, based at the Freie Universität Berlin. She graduated in 2009 from Cologne University, Germany, in Area Studies China with a focus on EU politics and Chinese politics. After graduation, Julia worked at the German Academic Exchange Service (DAAD) in Bonn and Shanghai, and completed a traineeship at the European Commission’s China Unit in Brussels in 2010. Her research interests include the role of public diplomacy in EU-China relations, soft power and reputation management of international actors, and global politics. Wang Haiping is currently a Ph.D. candidate at the College of English Language and Literature at Shanghai International Studies University. She participated in and organised university and municipal research projects in applied linguistics from 2011 to 2012. As an experienced lecturer, she has taught Chinese Ancient History and Culture since 2005 at the Shanghai Campus of ESSCA, School of Management and has held lectures on Chinese Ancient and Modern History and Culture for international students since 2007 at the College of International Cultural Exchanges at Shanghai International Studies University. Her research interests include

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applied linguistics, intercultural communication, and the dissemination of Chinese culture. Wang Liang is a Ph.D. candidate at Tsinghua University’s Institute of International Studies. His research focuses on European integration and the EU’s relations with China. Wang Liang obtained his Master’s degree in International Relations School at Liaoning University in Shenyang, China. He also earned a Bachelor’s degree in administrative management from Beijing University of Chemical Technology. Before joining Tsinghua University, Wang Liang worked in the water treatment and purification technology industry.