José Manuel and Herman go to China

After a trade war was narrowly avoided earlier this year, European Commission President José Manuel Durao Barroso and President of the European Council Herman Van Rompuy will land on Friday in Beijing. One of their stated goals is to help narrow the EU’s huge trade deficit in trade in goods with China, amounting €146 billion in 2012 (albeit reduced to just €62 billion in the first six months of 2013), by seeking greater access to the Chinese market for European companies and giving the formal green light to already ongoing negotiations of a bilateral investment agreement.

This is bound to be a difficult, if not unrealistic, mission. However, the timing could not be better: a major summit coming on the heels of the major decisions taken at the CPC’s Third Plenum, some of them aimed at a further gradual opening-up of the Chinese economy to market forces. Chinese leaders, pledging to give market competition a “decisive role” in the economy and strengthen judicial independence could indirectly have reinforced Europe’s bargaining position, which is quite clearly stated in its Trade website:

The EU is committed to open trading relations with China. However, the EU wants to ensure that China trades fairly, respects intellectual property rights and meets its WTO obligations.

Will Herman and José Manuel succeed? A good dose of skepticism is in order. As was clearly shown in the trade row over solar panel tariffs, which was quickly defused by Germany, Europe is still not acting with a single voice when it comes to China. Germany, which Germany accounts for 45% of EU28 exports to China, has a robust trade surplus with China and, despite recent warnings by the European Commission, Chancellor Merkel has no interest in reversing the tendency anytime soon.

Moreover, we should not expect too many decisions on economic matters to be taken at a high-level diplomatic encounter, even if this China-EU summit can indeed set the tone for future bilateral engagements. As the EC Trade website also reminds us, all topics in the bilateral trade and investment relationship are discussed in the annual Joint Committee and the EU-China High Level Economic and Trade Dialogue. The latest edition? Held on 24 October 2013 in Brussels.

As asserted by Jonathan Holslag, a researcher at the Brussels Institute of Contemporary China Studies, although the upcoming summit is of importance, nothing new seems to be on the horizon. José Manuel and Herman should rather embrace this rare opportunity to study and observe the new Chinese leadership right after the Third Plenum and before they leave their posts next year. In any case, it would be wise not to expect a revolutionary transformation of this suspect Strategic Partnership from one based on process to one of steadfast progress.

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