China, Europe and the United States: Implications for the World

By Shelly Han,
Policy Advisor

On December 5 and 6, 2008, Commission staff participated in the Stockholm China Forum in Stockholm, Sweden. This biannual meeting aims to establish a systematic transatlantic dialogue about China and the impact of its rise on the transatlantic alliance. Attendees include government officials, policymakers, academics, journalists, and businesspeople from Europe, China and the United States. The Forum is organized by the German Marshall Fund, the Swedish Ministry for Foreign Affairs and the Swedish Foundation for International Cooperation in Research and Higher Education.

Through a series of panel discussions the participants focused on the following issues:

What a new U.S. Administration will mean for U.S.-China relations;
The current state of EU-China relations;
China’s role in the global financial crisis; and
China’s relationship with Russia.

The backdrop for the Forum was the severe financial crisis impacting all of the major economies. While significant focus is on actions taken by the United States to correct the market slide, it is clear that China is a lynchpin in any solution as well. China is facing significant job losses (some estimate 12-16 million potential unemployed workers over the next 12 months) as their export-led economy slows significantly. And even as China announces a $600 billion stimulus package, it is an open question whether other badly needed reforms will be made in the Chinese economy that will allow the economy to pull through.

The Chinese Government’s worry extends beyond the economy. Labor protests appear to be at an all-time high and are expected to increase as more workers are laid-off. Added to that are the difficult social and political pressures that arise from the 226 million migrant laborers concentrated in the city and industrial centers of China.

The Forum kicked-off with discussion of the big question on everyone’s mind: How might the incoming Obama Administration change current U.S. policy toward China? There was significant consensus that despite the policy failings of the Bush Administration in Europe and other regions, the one foreign policy bright spot has been the U.S.-China relationship. Given that, it was suggested that there would no sharp breaks in U.S. policy toward China under President Obama. However, three general areas were identified where the Obama Administration was expected to change U.S. behavior that would, in turn, continue to strengthen the overall U.S.-China relationship: (1) the United States will be more consultative and less unilateral; (2) the U.S. will be more engaged in regional concerns; and (3) Obama will terminate practices that have harmed U.S. soft power (Guantanamo detentions, renditions, obstruction of climate change negotiations, etc.).

Participants discussed the reasons behind the poor EU-China relationship, which stands out in sharp contrast to the U.S.-China relationship. The EU-China relationship hit a new low just a few days before the Forum when China cancelled participation in the EU-China Summit in France because French President Nicolas Sarkozy planned to meet with the Dalai Lama, Tibet’s exiled spiritual leader. It was noted that bilateral relationships with the major EU Member States (excluding France) are generally better than interaction with the EU. This led one analyst to state that in its interactions with China, the EU was in danger of becoming “less than the sum of its parts” in almost every aspect of concern to the EU Member States.

The question of whether Russia and China might band together to create a new axis of power was deemed unlikely. Despite China and Russia’s creation of the Shanghai Cooperation Organization, analysts see too many points of competition and too few opportunities for cooperation in the relationship to create a true partnership. In fact, some analysts suggested that Russia may be reaching out to the European Union as an ally against what the Russian Government sees as a future world stage dominated by the U.S. and China.

It is clear that despite its status as a major player in the world economy and the world’s largest carbon emitter, China is not ready to play a leadership role in climate change negotiations. This is partly because China feels it cannot afford to green their economy in the middle of a financial crisis, and also due to the lack of maturity in China’s political system. One analyst noted that China actually has an edge on the U.S. and other Western countries in some environmental technologies and therefore the West should not focus so much attention on tech transfer ideas when discussing climate change remediation, but instead help China find the economic means to implement these technologies.

Despite China’s lack of leadership, many of the analysts concluded that China has matured on the world stage and become more sophisticated in its dealings with the West. While it still loudly espouses its key foreign policy tenet of non-interference in internal affairs of other countries, it has stopped using inflammatory terms such as “hegemony” to describe U.S. foreign policy and has sought to work closely with the United States to solve the financial crisis. This is only one step in the right direction, however, and it was noted that many extremely sensitive issues such as treatment of the Tibetans, the status of Taiwan and China’s own political and economic situation could overturn whatever progress has been made.