China-EU Trade Deal on the Ropes
Robert Cole
It took only a few days to potentially destroy a project that has taken seven years to build up. That is what lawmakers in Beijing and Brussels have been discovering in the past week, as a spat over Chinese human rights abuses in the Xinjiang Autonomous Region of western China threatens to destroy a bilateral trade agreement. Experts say over a million Uighur people are being held in concentration camps by the Chinese government in Xinjiang, a finding that the Chinese government vehemently denies. After the EU targeted four Chinese officials in the region with sanctions over the issue, its first sanctions against Chinese officials since the Tiananmen Square Massacre in 1989, China responded with what has widely been seen as a disproportionate response, sanctioning five members of the European Parliament, the entire EU subcommittee on human rights, as well as several leading European experts on the issue. In response, the EU has threatened to cancel the EU-China Comprehensive Agreement on Investment or CAI, a deal long pursued by both sides. How has it come to this? To understand why this dispute has escalated so quickly and in such an unprecedented manner, the motivations of both sides have to be taken into consideration.
China, for its part, is clearly attempting to assert itself on the international stage and make clear that it will not tolerate any nation meddling in what it considers to be its internal prerogative. Perhaps the move was intended purely to scare away European critics of Chinese Uighur policy, and to make an example out of those in Europe that endanger its plans for Xinjiang. However, this alone makes little sense. It is doubtful that China’s leadership could reasonably expect these sanctions to actually halt its opponents half a world away, especially when it has just challenged them so publicly. More likely, the decision was a combination of internal and external motivations, some of which are obscured by the West’s limited insight into Chinese domestic politics. On the external side, China has seventeen active border disputes, including a very serious and occasionally deadly one with India and a highly militarized situation in the South China Sea. It is also facing widespread condemnation for its crackdown in Hong Kong over the past few years, as well as scrutiny for its reticence to share information on the origins of the covid-19 pandemic that started in the southern Chinese city of Wuhan. The internal elements are more obscure, but a few things are clear. The Communist Party has always relied on the promise of greater prosperity and the imposition of order to remain popular, particularly under Chairman Xi Jinping. The pandemic has greatly weakened China’s economic growth, and appearing to accept criticism of its handling of Hong Kong or Xinjiang would undermine the other of its major appeals. Appearing to be strong externally could also offset any appearance of internal weakness the Hong Kong protests or pandemic may have generated. There is also a strong cultural memory of the “Century of Humiliation” when the country was brought low by colonial powers, and the internal optics of China standing up to Europeans criticizing its internal policy are likely very good.
On the European side, things are in some ways similar, in others quite different. As evidence of a Uighur genocide continues to pour out of Xinjiang, and public sentiment turns against China in the midst of the pandemic, leaders feel compelled to make a stronger stand against the worst of the PRC’s abuses. Both Macron and Merkel, leading proponents of the trade deal, are facing tough political challenges to their respective parties at home, which likely factored into their stances on Xinjiang and subsequent threats to derail CAI. Macron in particular is facing a strong challenge from right-wing and highly xenophobic candidate Marine Le Pen, and may be attempting to bolster his nationalist credentials by publicly refusing to acquiesce to China. The shock of such a strong response to the EU’s initial sanctions may prevent the EU from backing down, but it doesn’t hurt that the bloc needs this deal much less than China does. Part of the strategic purpose of the deal from the Chinese perspective was to sideline Europe in the ongoing US-China trade dispute, and prevent the bloc from aligning more closely with American grievances. Lacking a solid geostrategic reason to stick with the deal, the EU is much more likely to persist in its demands that China lift the sanctions imposed on European officials as a precondition to ratification of CAI.
The controversy over Xinjiang and resulting conflict over CAI reveals the great weakness of Chinese foreign policy. Often characterized as a military and economic juggernaut by Western commentators, China is often hampered in its strategic aims by internal approval, just like any other nation. As China reaches out across the world and attempts to assert itself, it will have to contend with the need to save face at home, limiting its ability to compromise. On the other hand, CAI reveals the power Europe currently holds as a fulcrum point between the established power of the United States and the rising strength of the People’s Republic of China. Each side desires to be the EU’s primary economic and political partner, giving the bloc the power to play off the two sides for maximum benefit. From an American perspective, the conflict shows how China’s dismal human rights record and sometimes capricious diplomacy represent a rhetorical line of attack in unifying opposition to its worst practices. The same works in reverse. China serves as a reflection of America’s own shortfalls internationally, and continued human rights soul-searching domestically as well as a more straightforward trade policy abroad would go a long way in maintaining American standing as a world leader.