{"id":131,"date":"2022-11-09T10:29:09","date_gmt":"2022-11-09T10:29:09","guid":{"rendered":"https:\/\/sites.dundee.ac.uk\/social-science-student-research-journal\/?page_id=131"},"modified":"2023-07-28T10:29:18","modified_gmt":"2023-07-28T09:29:18","slug":"vol-1-issue-1-keiko","status":"publish","type":"page","link":"https:\/\/sites.dundee.ac.uk\/social-science-student-research-journal\/archives\/volume-1-issue-1\/vol-1-issue-1-keiko\/","title":{"rendered":"Keiko, F.O."},"content":{"rendered":"\n

The trajectory of Sino-European relations: The political and economic impact of the Covid-19 Pandemic <\/strong><\/p>\n\n\n\n

CITATION: Keiko, F.O. ‘The trajectory of Sino-European relations: The political and economic impact of the Covid-19 Pandemic’, Journal of Social Science Student Research<\/em>, Volume 1, Issue 1, DOI: 10.20933\/30000101<\/p>\n\n\n\n

Abstract <\/strong> <\/p>\n\n\n\n

In the recent years, the power dynamics of Sino-European relations has shifted with the People\u2019s Republic of China (PRC) becoming more assertive and strategic. However, with disruption and uncertainty in Europe due to the former US Trump administration, Brexit, and the Ukrainian war, the EU needs PRC\u2019s international engagement to build a resilient international political community. PRC also needs the European market to expand outwardly, via the Belt and Road Initiative (BRI), to overcome its stagnation of domestic economy. Amidst this sensitive phase of the developing Sino-European relationship, the pandemic of Covid-19 hit the world.  <\/p>\n\n\n\n

According to complex interdependence theory, the social and economic interconnectedness of the world transcends intergovernmental relationship. The pandemic brought a negative impact and weakened political resilience and European countries began to re-examine negative effects of complex interdependence, especially with PRC. The objective of this paper is to examine if this unique phenomenon of the pandemic has altered the trajectory of the Sino-European relationship. This literature is significant as few scholars in the field of Social Science have analysed Sino-European relations, specifically in light of the Covid-19 pandemic.  <\/p>\n\n\n\n

Relevant organisations, or actors, include PRC, the EU and EU member state governments, ambassadors, State Owned Enterprises (SOEs), and private firms. There is no clear theory on how these actors react to pandemics in the complex interdependent modern era. Hence, this study takes an inductive approach by gathering relevant evidence for analysis. The main conclusion and implication of this study is that the actual data appears to show a decline of Chinese FDIs (Foreign Direct Investments) in Europe after the pandemic. However, the EU increasingly recognizes PRC as a systematic rival and involved parties are raising concern on PRC\u2019s influence over Europe.  <\/p>\n\n\n\n

Keywords:<\/strong> Sino-European relations, pandemic<\/p>\n\n\n\n

History of pandemics and its implication to politics and economy<\/strong> <\/p>\n\n\n\n

This paper explores Sino-European relations and the impact of Covid-19 pandemic. To do this, first attention must be paid to how historically pandemics affected political resilience. The 2016 EU Global Strategy on Foreign and Security Policy defined political resilience as \u2018the ability of states and societies to reform, thus withstanding and recovering from internal and external crisis\u2019 (European Union, 2016, p.23). <\/p>\n\n\n\n

Pandemics have historically impacted political resilience such as smallpox, cholera, measles, malaria, plague and polio. The plague of Cyprian was one of decisive elements for the fall of the Roman Empire (Drezner, 2020). Spain\u2019s invasion into Aztec and Inca civilisations was accelerated by a lethal combination of smallpox and measles. Due to the lack of immunity to yellow fever, Napoleon and his French army allowed Haiti\u2019s independence in 1812 (Snowden, 2019). <\/p>\n\n\n\n

In the modern era, there has been an increase in human population, expansion into wildlife area, and the density in metropoles. Some medical experts have emphasized a thread of zoonotic spillover is now two or three times higher than 40 years ago, with approximately 200 events occurring annually. Liberalists and neo-liberalists have supported complex interdependence theory, especially since increased globalisation through the 1980s (Newman and Farrell, 2020). It has suggested that international relations are not only driven by intergovernmental interactions with the focus on security, but also by trans- and non-governmental interactions through economy and societies. Additionally, states have incentives to reconcile issues through negotiation and settlement to avoid the damage of disrupted relationships such as war. <\/p>\n\n\n\n

However, amidst the outbreak of modern pandemics, this approach brought a negative impact. The exchange of people, goods, and manufacturing process weakened political resilience. Some events in the 21st century include SARS in 2003, H1N1 in 2009, MERS in 2012, Ebola in 2014, and Zika in 2016 (Ma et al., 2020; Jamison et al., 2017; Berger and Behn, 2020; Global Preparedness Monitoring Board, 2019). The Covid-19 pandemic was officially declared on March 11, 2020 (Bolder, 2020). COVID-19 brought over 557.9 million cases and took lives of over 6.3 million people globally [as of July 2022] (World Health Organization, 2022). This re-opened a discussion considering how to build a resilient political and economic entity in the face of pandemics. <\/p>\n\n\n\n

Sino-European relations before the pandemic<\/strong> <\/p>\n\n\n\n

To explore Sino-European relations and the impact of Covid-19 pandemic, we need to understand the pre-pandemic state of Sino-European relation. Their contemporary relation can be divided into 5 major time phases, namely: pre-2003; from 2003-2009, and the years 2010 onwards.  <\/p>\n\n\n\n

Sino-European relations before 2003<\/strong> <\/p>\n\n\n\n

The Tiananmen square incident in 1989 caused a rupture of the diplomatic relationship till the late 1990s when the EU took an initiative to assist PRC towards modernisation such as its participation in WTO in 2001 (Chen, 2016; European Commission, 1993). PRC continued its growth by applying five principles of peaceful co-existence and Deng\u2019s Market reform and open-door policy (Deng Xiaoping, 1974; Michalski and Pan, 2017). <\/p>\n\n\n\n

Sino-European relations between 2003-2009<\/strong> <\/p>\n\n\n\n

After the announcement of the EU of a comprehensive strategic partnership with China in 2003, PRC began to place its demand for the EU\u2019s abidance by the One-China principle and non-interference with domestic politics, regarding issues like Taiwan, Tibet, and the so-called Dalai Clique\u2019s separatist activities (Foreign Ministry of China, 2003; Michalski & Pan, 2017). PRC was disappointed by the EU\u2019s failure to lift the arms export ban in 2005, and market economy status not being accorded despite PRC being the EU\u2019s biggest trade partner (Brown, 2018). The decision in 2008-2009 of French, German and Danish Prime Minister meeting the Dalai Lama caused a temporary break-down of the relation (Jakim\u00f3w, 2019). In the same period the EU was struck by the financial crisis which weakened the EU\u2019s credibility as a cohesive political actor due to the sovereign debt crisis in the Eurozone. The EU began to be more accommodating towards PRC. PRC also has accelerated its Foreign Direct Investments into European territory (Wang, 2020). <\/p>\n\n\n\n

Sino-European relations 2010 onwards<\/strong> <\/p>\n\n\n\n

With the solar panel conflict (2012-2014), PRC tactically deployed a targeted probe on the imports of European wine (The Financial Times, 2013). It then threatened to place an official trade complaint over import of luxury cars from the EU (Pepermans, 2017). It led the German government to turn against the EU Commission (Maull, 2017), and Beijing to treat Berlin as a proxy for Brussels (Kundnani and Parello-Plesner, 2012). The 2016 Communication was influenced by the world\u2019s shift into the era of eroding confidence in international liberal and democratic order (Brown, 2018). The EU required more than ever China\u2019s engagement in the resilient multilateral order in the fear US abandonment (Maher, 2017).  <\/p>\n\n\n\n

Characteristics of Sino-European relations and Chinese FDIs before the pandemic<\/strong> <\/p>\n\n\n\n

Some characteristics of their recent relationship leading up to the Covid-19 pandemic are firstly PRC has increased assertiveness. Secondly, European policies towards PRC are driven by complex and often contradictory commercial considerations (Stumbaum, 2010). Thirdly, the EU was under the fear that its failure to act in a coordinated way reflects the broader trend towards re-nationalisation within the EU. Maull (2017) argues that the characteristics of the EU as a polity sui generis<\/em>, that consists of sovereign member states, demonstrate a different quality of incoherence from what appears in national foreign policies. It leads to a structural asymmetry in favour of China. China\u2019s economic power is perceived by the European public as a threat to employment (Stokes and Studdart, 2014). However, at the same time, certain business, national and local governments are keen to attract Chinese involvement (Maull, 2017). Chinese FDI hit a record high in 2016 with an increase of 37%, exceeding 200 billion USD between 2005 and 2016 (Christiansen and Maher, 2017). This included heavy investment on infrastructure projects such as ports, airports, the energy sector, telecommunications, and real estate as well as the high value-added area and high-tech companies such as robotics, chemical and semi-conductors (Holslag, 2017). As a result, the EU began to recognize a need to protect its strategic sectors like infrastructure and high-tech products. <\/p>\n\n\n\n

Sino-European relations after the Covid-19 pandemic<\/strong> <\/p>\n\n\n\n

The Covid-19 pandemic accelerated the trend of the already uncertain Sino-European relationship. Stock markets suffered their worst first quarter since the 2008 financial crisis, with a 21% fall (Georgiadis et al., 2020). China was an important producer of supplies of essential medical goods. Over half of the world\u2019s medical masks before Covid-19 were produced in China, who effectively bought up the country\u2019s entire supply at the time of incident. China also imported a considerable quantity of respirators and other medical supplies from abroad (Farrell and Newman, 2020). On 16th April 2020 EU trade ministers agreed on the importance of diversifying sources reducing heavy reliance on external countries for key supply (The Japan Times, 2020). <\/p>\n\n\n\n

The EU also shifted its policy from being amicable to China to less cooperative at the first peak of pandemic in 2020. When Wuhan was hit hardest, the EU provided nearly 60 tonnes of medical material to PRC discreetly at Beijing\u2019s request (Small, 2020). When Covid-19 began to reach Europe, PRC provided aid with propaganda causing inflammation of anti-EU sentiments, questioning the very reason for the EU (Seaman, 2020; Bolder et al., 2020; Rankin, 2020). EU border controls among member states also returned (Bolder, 2020). Member states also criticized the EU at the beginning of the pandemic for failing to deliver its promise of solidarity over their common fate as it did in the aftermath of the Second World War.  <\/p>\n\n\n\n

At the beginning of the pandemic, the EU was perceived by some member to have been less helpful than expected. For example, when Italy called for the EU to use its fiscal tools such as its bailout rescue fund, it was met with skepticism (Yacoub and El-Zomor, 2020). This demonstrated possible differences between values between northern and southern member states, which had already pre-existed before Covid-19. During the Eurozone crisis, Southern European countries had been the hardest hit economically. Using Eurobarometer data, this disparity in economy created a shift in which citizens in Southern European states now have substantially less trust in government, in political parties and in democracy than those who are in Northern European states (Alonso, 2013). This led to increasingly polarised views between north and south in their stance towards the EU.  <\/p>\n\n\n\n

Financial impact of the Covid-19 pandemic<\/strong> <\/p>\n\n\n\n

The economic impact of the pandemic has been more severe than the Brexit or the financial crisis of 2008 (Haba and Holland, 2021). For example, in May 2020, European Commission (2020) released the forecast stating that the Eurozone could contract 7.75% in 2020. The sharpest decline was foreseen for southern states such as Greece (9.7%), Italy (9.5%) and Spain (9.4%), which are worse than the 2008\/2009 financial crisis in which the EU economy contracted by 4.5% (European Commission, 2020). The main fear this presented the EU was the impact this would have on the unity of the EU, and hence the stability of the Euro. Public debt within the EU was expected to rise to 102.7% of GDP in 2020 from 86%. Italy was particularly severe with 158.9% in 2020 (Gentiloni, 2020). Alongside this, southern and eastern EU member states such as Czech Republic, Italy, Poland, Portugal and Spain had a tendency to give more praise for Chinese handling of the pandemic and to be grateful for Chinese cooperation with them (China Global Television Network, 2020). Additionally, the policies and strategy to address the pandemic sat with individual countries, and not the EU as an entity. <\/p>\n\n\n\n

PRC involvement in the EU during Covid-19<\/strong> <\/p>\n\n\n\n

Since mid-March in 2020, Chinese medical teams, masks and ventilators draped with Chinese flag arrived at European airports (Brattberg and Corre, 2020). Italian Foreign Minister, Luigi di Maio, posted a video on Facebook praising China for its \u2018solidarity spirit\u2019. On the same day, China hosted a video conference for the 17+1 (Current 16+1) group sharing lessons on combatting Covid-19 with Central and Eastern European states. Spain agreed to purchase over half a million masks, 5.5 million test kits, and 950 respirators. Other European countries such as Greece, Belgium the Czech Republic, France, Austria and Serbia received help from China as well. Spanish Prime Minister Pedro Sanchez also praised China at which point, the European Commission issued the statements that \u2018France and Germany have donated more masks than China did\u2019.  <\/p>\n\n\n\n

Chinese ambassadors across Europe became highly visible (Bolder et al., 2020). Many of the embassies in Europe recently are run increasingly by hardliners, such as Lu Shaye an ambassador to France and Monaco since August 2019 (Brattberg and Le Corre, 2020). Lu accused the nursing staffs of abandoning their posts at the elderly housings overnight leaving their elderly patients to die. The President of the EU Chamber of Commerce in China, Joerg Wuttke, stated that the atmosphere in Europe regarding China is toxic due to extremely aggressive stance and hard-line propaganda taken by the Ministry of Foreign Affairs in Beijing demonstrating the superiority of Communist party rule over democracy (Small, 2020). <\/p>\n\n\n\n

Impact of PRC Foreign Direct Investment in Europe<\/strong> <\/p>\n\n\n\n

A major concern of the EU is Chinese purchase of European strategic assets and investment in sectors via State Owned Enterprises (SOE). There is no agreed definition of SOE in international relations today. However, the closest one was provided in the Comprehensive Agreement on Investment (CAI) between the EU and PRC, which is not yet signed as of today. The CAI refers to SOEs as \u2018Covered Entities\u2019 with criteria to recognize them. It includes the power of the state to appoint directors, control the decision of the enterprise through \u2018any other ownership interest\u2019 or even \u2018without any ownership stakes\u2019. The definition applies at all levels of government, including local and regional government (Dadush and Sapir, 2021).  <\/p>\n\n\n\n

Ortega (2020) argues that while the EU wishes China to follow one Europe policy, EU member states differ in their interests towards China, making it difficult for the EU to excuse a unified policy. Some European countries signed Memorandums of Understanding (MOU) with China to participate in Belt and Road Initiatives (BRI). At times they used a tactic of debt-trap, where infrastructure projects are financed in exchange for use of those spaces. China will claim an ownership of those spaces in the case that the loans cannot be repaid. Those investments often neglect socioeconomic and financial stability and result in high indebtedness and a transfer of control over strategic assets and resources where China could potentially, ultimately, station its troops (Bolder, 2020; Silver et al., 2020; Li\u0161anin and Vukasovic, 2020). Chinese SOEs now control 10% of European port container capacity and are active in the aspiring EU member states of the Western Balkans.  <\/p>\n\n\n\n

EU member states differing interests with Chinese FDI<\/strong> <\/p>\n\n\n\n

French President Emmanuel Macron emphasized the necessity to tackle Sino-European relations as one united EU (Ortega, 2020). However, in the event of crisis, countries have more tendency to encourage FDI, especially less developed countries that have less means at their disposal to help their economies recover, post-pandemic and to compensate for economic losses. For example, the Hungarian government rushed through the Belgrade-Budapest railway deal, financed by the Export Bank of China under emergency legislation enacted in response to the pandemic. In 2020 the European Commission issued guidelines for implementation of a common EU investment screening framework, adding to the already established extensive FDI screening process (Tonchev et al., 2020). The EU commissioner and the NATO Secretary General warned governments to be extra vigilant in efforts to protect infrastructure and sensitive technologies to enhance resilience against Chinese FDI (Small, 2020). China is also pushing its programme \u2018Made in China 2025, whereby Beijing aspires to become the world leader in key technologies. The use and development of technologies, such as 5G and Artificial Intelligence, accelerated a pre-existing debate in Europe regarding the privacy protection for end-users and the protection of sensitive governmental information (Klonowska and Bindt, 2020). <\/p>\n\n\n\n

Brexit and the impact on EU and PRC relations<\/strong> <\/p>\n\n\n\n

With Brexit, when the UK removed itself from the EU it also withdrew from the single market. This caused the significant shift in the EU\u2019s identity with its value and geographic core being moved further to east and south with 11 out of 27 member states being Central East European countries. Maintaining the \u2018global Europe\u2019 after Brexit is not only about the EU and China\u2019s relationship but also whether the EU is able to ensure stable multilateral relationship among regions and countries nearby as a whole. The dynamics of China\u2019s trade ties with the EU, post-Brexit, changed. In response to the impact on international trade it was important for the UK to keep links with China to reduce the economic impact of Brexit (Haba and Holland, 2021).  <\/p>\n\n\n\n

Within a few days of the 2016 referendum, the Brexit secretary at the time, David Davis declared that trade deals with the UK and China alone would give the UK a trade zone of almost 2 times the size of the EU (Mitter, 2020). The speech made on 8th July 2016 in Shanghai, by then Minister of State for Trade and Industry, Lord Price, echoed this sentiment by addressing the UK\u2019s ability to create the second Elizabethan Golden Age of trade and investment (GOV.UK, 2016). In 2019, the trade volume between those two countries reached 86.2 billion USD, making the UK China\u2019s second largest trade partner in Europe. On completion of Brexit, the former UK Prime Minister Boris Johnson approached China and asked for additional investments in nuclear power generation in UK and a collaboration with Huawei for its 5G technology. The nuclear plant \u2018Hinkley Point C project\u2019 in Britain became the first nuclear power plant financed by China General Nuclear Power Corporation with 33.5% of capital provided by them. Moreover, the first Chinese-designed atomic reactor project passed three out of four assessment stages of the approval process set by Britain\u2019s Nuclear Regulation office in February 2020 right before the pandemic was declared in March 2020 (Haba and Holland, 2021).  <\/p>\n\n\n\n

From the EU point of view, Brexit was and still is a problematic as retaining too many favourable terms with the UK would likely to accelerate Euroscepticism while imposing stringent trade conditions with UK would inevitably harm the European economy. The EU also wanted to avoid another opportunity for China to divide and conquer Europe, by giving an impression of \u2018weak unitedness\u2019. Therefore, both parties, the EU and UK, must ensure the maximum gain that benefits both parties when it comes to their relationship with China in the time of pandemic. Since it is increasingly perceived that the EU\u2019s strong voice is regarded as coming from Berlin, both London and Berlin could have been fighting to seek an attention from Beijing to remove their economic uncertainty. From the Chinese point of view, the UK would continue to serve as an important steppingstone to test the market before introducing its FDI to the rest of the EU. <\/p>\n\n\n\n

Implications and Conclusion<\/strong> <\/p>\n\n\n\n

Under the circumstances discussed so far, we must now contemplate how the EU is able to establish a resilient Europe. The first action required is to reintegrate American presence in international order with Biden administration as well as incorporating like-minded countries who face some threat from the PRC such as Australia, New Zealand, India, Taiwan, Canada, South Korea, and Japan. It must become an initiator and opinion maker to organize opportunities to discuss PRC, and not only rely on the G7 or G20 summits and NATO. The UK is another key partner for the EU, as some it has been suggested it has more consistently seen PRC as an economic opportunity rather than a security threat (Reilly and Lee, 2013). However, it is the time for the UK to re-evaluate its positioning, especially considering the Russian invasion in Ukraine and China\u2019s stance not to criticize Vladimir Putin. Finally, the EU must continue to engage PRC on shared challenges such as climate change, counter-piracy, North Korea, and peacekeeping operation so as not to isolate it, fully deploying a \u2018pull and push\u2019 effect.  <\/p>\n\n\n\n

This paper has shown the actual trend of Chinese FDI in Europe does not equate with the amount of attention the EU and EU member states pay to PRC. The Covid-19 pandemic has accelerated the existing trends in two key areas. Firstly, a decrease in any form of Chinese FDI in Europe and secondly, the EU recognizing PRC as a systematic rival. The Chinese economy is high likely to be negatively impacted if the governments continued enforcing strict lockdown rules in major cities as this significantly affected the supply chains. Furthermore, strategies regarding the handling of the pandemic management diverged between the EU and PRC.  <\/p>\n\n\n\n

Further research is required if the lockdowns and other measures that limited trans-governmental and non-governmental interactions within societies and local and global economy are the direct cause of changes to the current Sino-European relationship. States are motivated to stabilize economic uncertainty caused by the recent events including the Covid-19 pandemic. For this reason, as the complex interdependency shows, both the EU and PRC are open for a negotiation with proof being offered by the 23rd EU-China summit that took place on 1 April 2022 (European Commission, 2022). If the solution is to build stronger political resilience, for both the EU and PRC government, then each needs to learn from the successes of its counterpart and maneuver the way out of the pandemic. All parties must recognize our common goals, moving beyond the virus, and finding a way to minimise risk and increase resilience in this complex interdependent world. <\/p>\n\n\n\n

Page Break <\/p>\n\n\n\n

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