Growing closeness in times of social distancing? European leaders and Xi Jinping during the videoconference that sealed the EU-China investment agreement. | Photo: © European Union, 2020 / EC - Audiovisual Service / Photographer: Lukasz Kobus | Free use.

The EU-China Investment Agreement: a sign of political naïveté or strategic autonomy?

The recently-concluded EU-China Investment Agreement has attracted severe criticism, with many commenters focusing specifically on the supposed naïveté of concluding a separate agreement with China instead of pursuing a joint approach together with the incoming Biden administration. However, this approach is in line with the EU’s stated desire to achieve a greater strategic autonomy, and in fact a sensible reaction to the uncertainty that has marked international politics since the Trump era.

On December 30, the EU and China announced the successful conclusion of negotiations on a bilateral investment agreement, drawing a line under a seven-year process with many setbacks. The agreement came just in time for a self-imposed year-end deadline that also marked the end of Germany’s EU presidency. This is not a coincidence, as media reports have noted that German chancellor Angela Merkel was the main driver behind the agreement on the European side.

Even before its official announcement, the agreement already drew significant criticism from several corners. European China critics have lambasted it as a sell-out of the EU’s supposedly values-based foreign policy, handing a major diplomatic victory to Beijing’s unabashedly authoritarian regime. Subject-matter experts have raised doubts if concrete provisions designed to improve European firms’ access to the Chinese market or to strengthen labor standards will actually be implemented as promised. But the most significant criticism has focused on the agreement’s strategic implications, specifically the fact that the EU struck a separate deal mere weeks away from the inauguration of a new US president who had already vowed to rebuild an international coalition to confront China over trade issues.

Disappointment over this move seems to be particularly strong among American liberals and internationalists, who have spent years arguing against the Trump administration’s disregard for traditional American alliances and backed his successor’s campaign pledge to rebuild strained transatlantic ties. There is a palpable sense of betrayal among people who were clearly hoping that this outreach would be met with equal enthusiasm on the other side of the Atlantic. One interpreted it as a „slap in the face“ for incoming president Biden, while others have accused the EU of geopolitical naïveté.

The view from Europe after four years of Trump

On the one hand, this reaction is understandable, and perhaps even positive if interpreted as an eagerness to turn the page on the Trump era. But in order to understand strategic choices in Brussels, it also helps to recall the European experience of this period: four years of dealing with a government that was anything but a partner, treated Europe with open hostility, and plainly did far greater damage to its unity than China has done in the past or conceivably could in the foreseeable future. The Trump administration enthusiastically applauded the first-ever withdrawal of a country from the EU, and encouraged a hard Brexit at every turn. It ostentatiously embraced Europe’s most illiberal governments, and backed them in their defiance of EU norms. Memorably, Trump’s first ambassador to Berlin even described it as part of his duties to empower right-wing, eurosceptic movements across the continent.

The bizarreness of this episode, and its status as the absolute lowest point in eight decades of post-war transatlantic relations, would make it easy to dismiss it as an aberration. But there is simply no guarantee that it will be proven as such in the long run, given the polarization of US politics and the fact that Trump’s Republican Party remains electorally competitive despite its ever-accelerating radicalization. A majority of its voters and congressional representatives are openly rejecting the results of the last election, turning their backs on the most basic democratic principles. This group also includes some plausible future candidates for president, which raises the specter that the next Republican administration in Washington will be at least as difficult to deal with as the current one.

Given this situation, and the mounting US-Chinese tensions that will likely remain a feature of the international system for some time to come, it seems unwise for Europe to quickly and irrevocably commit itself to one side. A transatlantic partnership ostensibly designed to confront China over trade issues would certainly be interpreted in Beijing as an anti-Chinese containment coalition, and not without reason. Many of the issues at stake in these negotiations concern fundamental aspects of the economic model that underlies China’s rise to superpower status, and US attempts to force reforms are invariably seen as intended to stall or reverse it.

The advantages of an autonomous EU approach to China

In comparison, the great advantage which Europe has in its own dealings with China is that similar pressure from Brussels does not immediately trigger the same reaction. EU-China ties have been strained in their own way, but are not yet marred by the near-total strategic distrust that has turned Sino-American relations into a zero-sum game. This is a major asset, not dissimilar to the one which Germany and other European states employed in their past engagement with the Soviet Union. Back then, this approach reinforced détente between the superpowers and yielded an institutional forum for East-West security dialogue and confidence-building, all without fatally undermining transatlantic ties. An autonomous EU China policy offers the same advantage of also being able to mediate between Washington and Beijing where necessary.

It also seems unfair to criticize the EU for naïveté in its dealings with China, or of a myopic perspective focused overly on business ties, when the last few years have already seen a major reassessment in Brussels. The EU’s 2019 China strategy explicitly noted many points of disagreement and even characterized the overall relationship as (partially) a strategic rivalry – but, crucially, also pointed out areas where cooperation remains possible and desirable. Its proposed itemization of EU-China ties to achieve common goals in some issue areas like climate change and regional security is, in fact, virtually identical to the approach which Joe Biden outlined in his campaign.

Meanwhile, European politicians ranging from the EU’s Foreign Affairs Representative to the new President of the European Commission have published highly critical statements on China, especially its ongoing human rights violations and crackdowns in Hong Kong and Xinjiang. There is also now a large, consolidated group of European Parliament members that have made it their mission to raise these issues and keep them on the EU’s agenda for China talks. Values remain a stark dividing line between Brussels and Beijing, and the conclusion of a treaty on investment issues does not imply a downgrading of their importance.

Accordingly, the agreement should not be seen as a fundamental rejection of transatlantic cooperation on China issues, or even a first step towards EU-China alignment. It is first and foremost a reaction to the profound uncertainty that exists in the world today – for which the chaos emanating from Trump’s White House has been a major reason. Under these circumstances, it simply makes sense to lock in some achievements where they can be obtained, and otherwise maintain flexibility. Far from being naive, this is a strategic principle employed to great effect by a previous German chancellor, widely considered to be the father of modern realpolitik. And from a values perspective, Europe has shown consistent commitment to liberal principles during a time when the US government seemed all too eager to discard them in the service of„transactional“ politics, or perhaps even an altogether different ideology. The incoming Biden administration will certainly correct this course and find willing partners in rebuilding transatlantic ties – but this will take some time, and should not require the sacrifice of hard-won agreements with other states as a precondition.

Pascal Abb

Pascal Abb

Dr. Pascal Abb is Senior Researcher at PRIF. His research is focused on Chinese conceptions of world orders, Chinese foreign policy, the Belt and Road Initiative, knowledge and governance, and Taiwan.

Pascal Abb

Dr. Pascal Abb is Senior Researcher at PRIF. His research is focused on Chinese conceptions of world orders, Chinese foreign policy, the Belt and Road Initiative, knowledge and governance, and Taiwan.

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