October 28, 2011
Tapping a developing country for cash is a lot to ask so we need not be surprised that China wants something in return
So it looks like Europe is asking China to contribute more than €100, 000,000,000 to boost its bailout fund and help save Europe’s single currency. The French President has been delegated the task (nice move, Merkel) of sweet-talking Beijing, Regling, who heads up Europe’s bailout fund, is in China today working on the detail.
Let there be no surprise that China will extract significant concessions in return for any help it might give. What would Europe do? What about the US? We all act in our own interest so spare us the faux outrage when Beijing leans on Brussels in a couple of key areas:
– China will want Europe to recognise it as a market economy
– It will expect less hand-wringing in Brussels over the value of China’s currency
– It may seek progress on the arms embargo which prevents European companies selling weapons to China
Fair enough. On the first one, China will have market economy status by 2016 anyway under WTO rules. Is it a market economy? Pfff…perhaps not. The government intervenes way too much in its economy, local companies get preferential treatment which makes it hard for foreign firms to compete, the biggest companies in China are quasi-semi-state corporations with strong ties to, and the backing of, government.
Nonetheless, this bargaining chip will expire in 2016 so Europe may as well throw it in the pot now. Every cent of diplomatic currency is needed today – there’s no point saving for a rainy day when it’s bucketing down outside.
Breaking with the US
The second is tricky as it requires breaking ranks with the US by taking a softer approach to the value of the renminbi. This is a serious shift in global power, but China is effectively doing what the US (and European powers) has done for decades – using the fact that it bankrolls or protects large swathes of the globe to buy compliance or silence on a controversial issue. It’s delicate but Europe is not in a position of strength and will have to make these kinds of concessions.
The arms embargo is also awkward. Personally, I despise the arms industry and everything they do. I hate the idea of more weapons being in circulation. But the reality is that China doesn’t even need weapons from foreigners – it can make its own. They just feel offended that a ‘friend’ doesn’t trust them enough to flog them a few fighter jets.
Obviously this all has more to do with US-led support for Taiwan against ‘Communist China’. But that’s from the Red Scare era of global diplomacy and is out of date. Lifting the embaro is something Europe should swallow. China has missiles pointed at Taipei today, it won’t matter a whit if they are allowed buy more from France.
Other potential areas where China will seek ongoing leverage over Europe are its place in international organisations like the IMF, WTO, G20 and UN, and Europe’s tendency to highlight human rights failings in China. The first is a natural progression for a rapidly rising power. Their place in international organisations must change to reflect their status – and it will come at the expense of the status quo. China’s gains will be Europe’s and America’s loss. That’s just the way it goes.
On human rights, it would be shameful for China to use their influence to silence criticism of human rights failings – even if such postering is just an empty gesture by EU leaders for the cameras of European broadcasters. Cede power, take the money, but let’s not abandon European values.
Begging from the poor
In the end we have to realise what we are asking. We want a country with hundreds of millions of very poor people to part with their cash so the pain of Europe’s decline can be minimised and we can maintain something close to our current standards of living.
We lecture China on the morality of their regime’s behaviour in its western provinces but where is the ethical justification for living off the backs of the world’s poor?
How can we have two cars per family, annual holidays, short working weeks, generous welfare safety nets, access to healthcare and medicines, free primary and secondary education and all the rest, when the people lending us the money are trying to hold together a massive two- or three-tier country where the top tier lives like us and the rest are either subsistence farmers or 80-hour-week factory slaves?
Of course, they want something in return. We would.
Read some less preachy, more amusing insights on China here: Beijing for BeginnersAuthor : Gary Finnegan