The Economist

The EconomistJuly 21 st 2018 31

1

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A

REMARKABLE summit between the

European Union and China in Beijing

on July 16 th marked a turning-point in Chi-

nese views of the EU. Rules and laws bind

the EU’s 500 m citizens together albeit

scratchily at times. Chinese leaders are

sniffy about polities that espouse rule of

law as a founding principle. The Commu-

nist Party prefers to talk of “rule by law”.

Rules are toolsbywhich the strongexercise

power over the weak. American talk of a

rules-based order notably strikes China as

the purest hypocrisy—a figleaf covering a

superpower’s lust for dominance. Unable

to bullyits waypast America China has of-

ten tried to pressEuropean governments to

bend or break rules that it found inconve-

nient seeing the Old Continent as cash-

strapped malleable and easyto divide.

Yet face to face with European bureau-

crats this week President Xi Jinping and

his team agreed in effect thatthe one thing

worse than an American-led world was

one with no rules at all. The cause of this

shift as with so much else is President

Donald Trump. Western governments

have spent 20 years tellingChinese leaders

that a rules-based global order is not a plot

to contain China but a source of stability

that has enabled their country’s rise. Rath-

er than chafe at American-led security alli-

ances in Asia China has been urged to see

how it gains when its exports steam along

sea lanes open to all. When Chinese en-

voys grouse abouta world trade and finan-

order. He said thatorderhad brought peace

to Europe prosperity to China and ended

the cold war between East and West. Mr

Tusk repeated those fears at the summit

press conference. Nodding to the meeting

between Mr Trump and Vladimir Putin he

declared that“the architecture ofthe world

is changingbefore ourveryeyes”. He urged

Europe China Russia and America “not to

destroythis orderbut to improve it”.

Earlier this year China dreamed of forg-

ing an anti-Trump coalition with Europe

which is China’s second-largest trade

partner exchanging goods worth $ 667 bn

in 2017. Chinese officials discreetly urged

EU counterparts to distance themselves

from American complaints about China’s

trade tactics and join them in complaining

about a welter ofAmerican tariffs slapped

on Chinese goods and European steel

alike. That was an error. European officials

explained that though they disagreed with

Team Trump’s tactics they agreed with the

substance of America’s grumbles about

China’s forced transfers of technology un-

even protection of intellectual property

and state subsidies for its firms.

Anew approach

Stung China changed tack. At the summit

in Beijing the prime minister Li Keqiang

said that talks with the EU on reforming

trade rules were not aimed at America

Russia or any other country. Instead Mr Li

talked up moves to open China’s economy

to Europe includingallowing BMW a Ger-

man carmaker to take a controllingstake in

a local partner. He announced a doubling

of fines for anyone abusively extracting

trade secrets from business partners.

Alas those warm words fall on scepti-

cal ears. In June almost halfofrespondents

to a business-confidence survey by the

European Chamber of Commerce in Chi-

na said they expected regulatory obstacles

cial architecture designed in Western capi-

tals after the second world war they have

been reminded how globalisation has

powered China’s growth.

On paper the big achievement of the

China- EU summit was a Chinese agree-

ment that the World Trade Organisation

(WTO ) must be reformed if it is to survive

these Trumpian times. The meeting also

unblocked talks about the further opening

of Chinese and EU markets to bilateral in-

vestment and trade (see Briefing). But the

real drama involved China’s reasons for

makingthose concessions.

In closed-door remarks conveyed to

Beijing-based ambassadors from the EU’s

28 member countries Mr Xi said that Chi-

na feared a trade war with America but

would not flinch from one. He accused Mr

Trump’s administration ofbehaving as ifit

were taking part in a freestyle no-rules

boxing match. Going beyond his public

rhetoric about China as a champion of an

open global economy Mr Xi told his guests

that China and the EUcould not watch the

old order being destroyed and a vacuum

beingcreated.

For his part Donald Tusk who as presi-

dent of the European Council represents

EU national governments privately told

his hosts that even as they met in Beijing

they needed to reflect on a meeting hap-

pening at the same time in Helsinki be-

tween the American and Russian presi-

dents and on threatsto the post-war global

Relations with the European Union

The youth and the rich old man

BEIJING

Amid tensions with America China is reassessing its ties with Europe

China

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