The Rise of China: Implications for the Transatlantic Relationship

China’s Importance for the Transatlantic Relationship

How does the rise of China affect the transatlantic relationship? The United States and European Union are increasingly shifting their attention toward China as its economic growth and greater significance in international affairs make the country’s resurgence to the world stage a central feature of the twenty-first century’s international order. Whether we are going to face a new multipolar or more of a nonpolar world[1] is not yet clear. But China’s increasing prominence[2] coincides with a growing perception that “Europe no longer matters,”[3] leading to predictions of “a dim if not dismal future for the transatlantic alliance.”[4] Still, the proclamation of a G-2 comprised of the U.S. and China to replace the transatlantic partnership as the most prominent international connection seems pre-mature as the People’s Republic “sees itself as an at least partially dissatisfied power and takes a critical attitude towards the United States.”[5] Furthermore, China remains passive as a potential “responsible stakeholder.” Whether in the economic or security realm, today’s complex and interdependent challenges require an even more stable, open, and rule-based international order that allows for effective multilateral cooperation. Faced with unfavorable conditions at home and abroad on the one hand and given China’s reluctance to act as a responsible stakeholder in the international system on the other, the transatlantic relationship matters more than ever before.

Common Transatlantic Challenges

The United States and Europe both face tremendous interrelated global challenges. International security issues, though they have changed since the Cold War, remain salient to both the United States and Europe. “New” transnational security challenges from proliferation of weapons of mass destruction (WMDs), to terrorism, to state failure, to climate change still significantly threaten the well-being of nations and societies all over the world. The same holds true for increasingly significant global economic problems, such as returning financial crises, trade and currency imbalances, and recessions. No nation—regardless of its hard, soft, or smart-power capabilities—can address these complex issues autonomously as they are, by and large, caused by cross-border globalization processes that undermine state governance capacities. The same processes tend to concentrate globalization’s upsides overwhelmingly on developing nations while seemingly putting western governments and their societies behind the economic eight ball, thereby making it increasingly complicated for the U.S. and EU to provide global governance.[6]

The Global Governance Dilemma

The world and the transatlantic community find themselves in a “governance dilemma.” Both the United States and the EU are beset by notions of “declinism.” The EU is increasingly self-absorbed with its ongoing institutional deficit and with preventing its sovereign debt crisis from derailing the European spirit of integration. On the other side of the Atlantic, the U.S.—its political system in partisan gridlock—is equally hampered by serious economic problems. Furthermore, Washington has to narrow down its military commitments in Europe and the Middle East to enable its pivot to Asia, where it sees its main peer strategic competitor of the twenty-first century—China.

Given these challenges, it becomes increasingly difficult for the United States or EU to collectively provide the public goods necessary for an efficiently-functioning liberal global system. To further complicate the situation, a rising China legitimately demands greater influence in global institutions (IMF, Worldbank, etc.). To reject such demands would be hypocritical and dangerous as it would leave rising powers like China disgruntled with the global order. True, the U.S. provided and still provides (aided by its allies) large parts of the public goods that make up the international system. But at the same time the international system and its rules put the U.S. at a comfortable advantage vis-à-vis other countries, especially “latecomers” like China.[7] This is a potentially dangerous constellation. Historically, the majority of global power transitions entailed a great power war as the dominant but descending power tried to block an ascending challenger’s move to the top. When in a strong enough position, the rising state, which was not “present at the creation” of the status quo and is displeased with its rules, challenges the dominant nation for global leadership.[8] More often than not, such “systemic wars” led to phases of global disorder.[9]

Such global instability, resulting from a relatively declining West overburdened with the task of addressing global challenges and a rising but globally passive and disgruntled China, must be prevented. There are too many pressing security and economic problems today that can only be addressed within an even more stable, open, and rule-based international system that allows for effective multilateral cooperation. An overburdened transatlantic community will therefore have to rely on willing and able partners for a concerted effort to do so, an ever more powerful China being the obvious choice.[10] But here is the dilemma.

As of today, China rejects most liberal visions of world order, even though the country’s rise was only made possible by and within that same open, integrated, and rule-based system of Western origins.[11] It may have joined the WTO and G20 and has long been a P5 member, but that does not mean that China is “following the West’s path of development and obediently accepting [its] place in the liberal international order.”[12] With authoritarian political rule and state-led capitalism on the inside and rejection of global responsibilities despite utilization of the global system on the outside, China provides an alternative developmental model beyond “Westernization” for developing countries around the world.[13]

According to David Shambaugh, China is not prepared to support any “Western” global governance initiatives that are not based on a strict adherence to national sovereignty. This stance reflects Beijing’s historical fear of foreign interference in its own domestic affairs. Therefore, China only supports “Western” efforts including “tough” UN Security Council sanctions or military interventions when not given any other option or if a Chinese veto would cause serious negative consequences for Beijing. More often than not in such cases, China abstains, thereby displaying a pragmatic and passive diplomatic approach. Furthermore, and counter to the U.S. or European nations, China itself is not a “shaper” of international affairs. Contrary to its regional policy, Beijing does not really have an agenda for global governance, especially when it comes to transnational, non-traditional security issues.[14]

The dilemma is that China remains passive on global governance tasks and does not share liberal world order visions that could help stabilize the international system while it is reaping the benefits made possible through that very same system’s order. To employ an oft-used saying: The business of China is business. China’s core interest is to hold on to or improve the international conditions for doing business, as it needs a steady annual economic growth rate for stable domestic development and the prevention of potential social unrest that could place the Chinese Communist Party’s (CCP) rule at risk. System survival is also the reason why Beijing so fiercely clings to the principle of strict national sovereignty.

A Call for Transatlantic Cooperation, Coordination, and Integration

Given the international system’s economic interdependence, containment of China is not a realistic option. There will have to be some form of engagement of Beijing, although greater Chinese willingness to step up as a responsible stakeholder seems a long shot. This engagement of China is but one of the various global challenges that “require highly flexible, dynamic adjustments in global governance.”[15]

Security Issues

In the field of security the United States and European nations should envisage a global division of labor. Given present financial and personnel strains, the EU should support the United States in its task as a regional balancer and security provider in Asia. Although “[n]ational security is simply not a feature of the relationship between Europe and China,”[16] European lawmakers will have to understand that an absence of regional security interests by no means implies an absence of greater global security interests. Because of its economic importance, regional stability in Asia is crucial, especially for export-oriented countries such as Germany. Instability in that already volatile region could disrupt the flow of global trade and severely harm global markets. These global implications make regional stability in Asia a core interest for the economic superpower Europe. Brussels would not have to actively engage itself militarily in Asia. Rather, the EU should more seriously embrace its self-envisaged role as a regional security provider for Europe, the Mediterranean region, and parts of the Middle East. To this end, the EU should specifically move forward with implementing the Permanent Structured Cooperation in Defence (PSCD) as envisaged in the Lisbon Treaty. Until now, this more flexible structure, which would give a minimum of nine EU members the opportunity for advanced integration or cooperation in defense related matters within EU structures (where other EU members are not willing or able to participate), exists only in theory due to intra-European differences in strategic culture, capabilities, and political objectives.[17] Provided the political will for further military integration existed, it would of course require Europe’s political elites and national representatives to explain the potential benefits of greater pooling and sharing of defense capabilities to their respective constituencies. Only by convincing their citizens will European governments be able to secure the public mandate necessary for transferring these national prerogatives to the supra-national EU-level.

Parallel to improving their capabilities and institutions, European nations should warm up to NATO Secretary General Anders Rasmussen’s idea of new global partnerships for the alliance with countries of the Asia-Pacific region (Australia, Japan, New Zealand, and South Korea) as this would allow for even greater division of labor between the U.S., Europe, and their Asian partners. Such an effort would have to be complemented by “a deepening of [EU-]U.S.-China military-to-military talks, [that] can help ensure the transparency necessary to pursue NATO’s efforts to respond to global threats without creating Cold War style antagonisms.”[18]

These security initiatives need to be front and center of every U.S.-EU security dialogue and a prominent topic on every U.S.-EU summit to come. The most recent transatlantic consultations on an Asia-specific agenda at the next ASEAN Regional Forum are steps in the right direction, but have to be pursued seriously by American and European officials if they are to pay dividends.[19]

Economic Issues

Within the crisis-shaken transatlantic economies there is equal need for increased transatlantic economic cooperation, coordination, and integration. Picking up on efforts to build a transatlantic free trade area certainly would make sense as it could provide the United States and EU with a much needed framework for generating economic growth and reducing their financial and trade imbalances.[20] Although this is increasingly necessary, not only because China and other emerging market economies “are likely to modify their approach to economic policy further, trading the flexibility and efficiency associated with the free market model for domestic policies meant to ensure greater resilience in face of competitive pressures and global economic trauma” and “become less focused on the free flow of capital, more concerned with minimizing social disruption through social safety net programs, and more active in supporting domestic industries,”[21] this is realistically not going happen in the near future. The obvious political and economic obstacles to such an endeavor are just too big. Still, the United States and EU should “[c]oordinate strategies to reduce remaining tariff barriers, overcome regulatory obstacles, remove investment restrictions, and align future standards in ways that create jobs and promote mutual and sustainable prosperity while protecting health and safety.”[22]

The transatlantic partners must also coordinate on China’s upcoming WTO-related status designation as a market economy in 2016, which is going to diminish transatlantic leverage over Beijing in trade disputes as the United States and EU would no longer be legally allowed to impose higher tariffs on Chinese goods sold below their own production costs.[23] The sheer size of the U.S. and EU economies and China’s dependence on them as export markets provide the transatlantic community with great bargaining leverage vis-à-vis China. Washington and Brussels must look beyond narrow short-term interests and understand that by working together, they would be in a formidable position to pressure Beijing on many problems of mutual interest like the protection of intellectual property rights, better market access, or state subsidies.[24]

U.S. and EU business and commerce would greatly benefit from strengthened transatlantic economic ties. This in turn could provide the economic growth necessary for what is paramount—“getting their respective houses in order.” Addressing domestic structural problems will (have to) be the first step. Not doing so could ultimately threaten not only the capability and cohesion of the transatlantic partnership, but the West’s global influence in general.

Conclusion

For the time being, China seems neither willing nor able to pro-actively support much needed efforts of global governance or to engage in transnational security challenges or global economic problems on its own. China’s considerable growth and greater international importance alters the balance of power of the international system and, with it, its underlying order. No longer the primary beneficiaries of the globalized international system, the United States and EU face increasing diffuclty in managing today’s complex global issues alone. The transatlantic community will have to look for partners to do this. Still endowed with extensive capabilities, the United States and EU remain responsible for maintaining order in a rapidly changing international system until China agrees to become a responsible stakeholder. Renewal at home and closer transatlantic cooperation, coordination, and possibly integration could provide the United States and EU with the necessary resources to do just that.