Geoeconomic Relations Between the EU and China

The merging of geopolitical and economic goals, known as geoeconomics, is becoming more and more frequently an important factor of state policies in the age of globalisation and the changing international order. The article offers an analysis of the EU-China relations seen within the increasingly valid geoeconomics perspective. It is focused on two case studies: armament embargo after 1989 Tiananmen Square protests and the Galileo system (a European system of satellite communication). The aforementioned cooperation has laid bare the weakness of European geopolitical thought. It has also demonstrated the supremacy of short-term economic goals of the European actors over strategic goals (both within the economic and the political spheres). In contrast with China, the EU does not possess a coherent geoeconomics strategy. Notes 1. For more details see: J. C. Hsiung, 'The Age of Geoeconomics, China's Global Role, and Prospects of Cross-Strait Integration', in S. Guo, B. Guo (eds.), Greater China in an Era of Globalization (Lanham and New York: Lexington Books 2010) pp. 27–49. 2. See E. Luttwak, 'From Geopolitics to Geoeconomics', The National Interest, Summer 1990, pp. 17–23. 3. Cf. K. M. Lord, 'The Meaning and Challenges of Economic Security', in J. V. Ciprut (ed.), Of Fears and Foes. Security and Insecurity in an Evolving Global Political Economy (Westport and London: Praeger 2000) pp. 59–78; V. Cable, 'What Is International Economic Security?', International Affairs 71/2 (1995) pp. 305–324; J. C. Scharfen, The Dismal Battlefield: Mobilizing for Economic Conflict (Annapolis: Naval Institute Press 1995); N. M. Ripsman, 'False Dichotomies: Why Economics Is High Politics', in P. Dombrowski (ed.), Guns and Butter. The Political Economy of International Security (Boulder and London: Lynne Rienner Publishers 2005) pp. 15–31. 4. Cf. S. Dalby, 'Introduction to Part Four', in G. Ó Tuathail, S. Dalby, and P. Routledge (eds.), The Geopolitics Reader, 2nd ed. (London and New York: Routledge 2006) pp. 177–187; P. Le Billon, 'The Geopolitical Economy of 'Resource Wars'', Geopolitics 9/1 (2004) pp. 1–28. 5. Cf. C. F. Doran, System in Crisis, New Imperatives of High Politics at Century's End (Cambridge: Cambridge University Press 1991) pp. 13, 33, 52; T. Moran, American Economic Policy and National Security (New York: Council on Foreign Relations Press 1993); K. E. Knorr, Power and Wealth: The Political Economy of International Power (New York: Basic Books 1973) p. 75; H. Morgenthau, Politics Among Nations: The Struggle for Power and Peace, 6th ed. (New York: Alfred Knopf 1985) pp. 130–139; J. Mearsheimer, The Tragedy of Great Power Politics (New York: Norton 2001) pp. 46, 57–82; K. N. Waltz, Theory of International Politics (Reading: Addison-Wesley 1979) p. 94. 6. Cf. A. Smith, The Wealth of Nations: Books 1-3: Complete And Unabridged (New York: Classic House Books 2009); D. S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (New York: W.W. Norton 1998). 7. According to some scholars, a nation-state in Europe is historically intended to perform two basic functions: it exerts coercion and enables accumulation of capital; cf. C. Tilly, Coercion, Capital and European States, A.D. 990-1990 (Cambridge: Basil Blackwell 1990) pp. 22–29. 8. This issue is presented in more detail in: A. Subramanian, Eclipse: Living in the Shadow of China's Economic Dominance (Washington: Peterson Institute for International Economics 2011). 9. Cf. A. Walter and G. Sen, Analyzing the Global Political Economy (Princeton and Oxford: Princeton University Press 2009) p. 101. 10. 'US Fumbling Puts China at Risk', Spiegel International, 22.10.2013, , accessed 27 Oct. 2013. 11. Cf. G. Arrighi, Adam Smith in Beijing: Lineages of the Twenty-First Century (London: Verso 2007). 12. Cf. A. Subramanian, 'The Inevitable Superpower. Why China's Dominance Is a Sure Thing', Foreign Affairs 90/5 (2011) pp. 66–78. 13. I define "economic system" as a system of mutual economic relations on the international arena, stretching over a longer period of time and based on particular formal and informal institutions, including legal regulations, international agreements, and informal rules or principles involving economic exchange. Within the given system, it is possible to recognise characteristic processes and phenomena of both economic and political character. 14. I define "systemic factors' as such factors that influence the functioning of the whole system, and that can also cause its change. They can be related to basic political institutions, processes, rules of action, and also to cost and benefit distribution within a given system (among the principal actors who participate in the system). 15. E.g., I. Wallerstein, The Capitalist World-Economy (Cambridge: Cambridge University Press 1979); I. Wallerstein, World-System Analysis: An Introduction (Durham: Duke University Press 2004). 16. Cf. T. G. Grosse, 'Monetary Power in Transatlantic Relations. Study of the Relationship Between Economic Policy and Geopolitics in the European Union', Natolin Papers 35 (Warsaw: Natolin European Centre 2009). 17. P. J. Taylor, Political Geography. World-Economy, Nation-State and Locality (London: Longman 1996) pp. 24, 31–32. 18. C. K. Chase-Dunn, 'Socialist States in the Capitalist World-Economy', in C. K. Chase-Dunn (ed.), Socialist States in the World-System (Beverly Hills: Sage 1982) p. 25. 19. E. Luttwak, Turbo-Capitalism. Winner and Losers In the Global Economy (New York: HarperCollins Publishers 1999) p. 131. 20. Ibid., p. 134. 21. Luttwak, 'From Geopolitics to Geoeconomics' (note 2) p. 128; E. N. Luttwak, The Rise of China vs. the Logic of Strategy (Cambridge, MA, and London: The Belknap Press of Harvard University Press 2012) pp. 40–43. 22. Cf. R. Keohane, J. Nye, Power and Interdependence (Boston: Little Brown 1977). 23. E.g., J. F. Mearsheimer, 'The Future of American Pacifier', Foreign Affairs (Sep.–Oct. 2001) pp. 46–61; K. N. Waltz, 'Structural Realism after the Cold War', International Security 23/1 (2000) pp. 5–41. 24. Cf. A. Y. So, 'Rethinking the Chinese Developmental Miracle', in H.-F. Hung (ed.), China and the Transformation of Global Capitalism (Baltimore: The Johns Hopkins University Press 2009) p. 59. 25. More about 'flying geese formation': T. Ozawa, 'Asia's Labour‐Driven Growth, Flying Geese Style: Types of Trade, FDI, and Institutions Matter for the Poor', in M. Nissanke, E. Thorbecke (ed.), The Poor under Globalization in Asia, Latin America, and Africa (Oxford: Oxford University Press 2010) pp. 87–115; J. G. Palma, 'Flying Geese and Waddling Ducks: The Different Capabilities of East Asia and Latin America to 'Demand‐Adapt' and 'Supply‐Upgrade' their Export Productive Capacity', in M. Cimoli, G. Dosi, and J. E. Stiglitz (eds.), Industrial Policy and Development: The Political Economy of Capabilities Accumulation (Oxford: Oxford University Press 2009) pp. 203–238. 26. G. Arrighi, 'China's Market Economy in the Long Run', in H.-F. Hung (ed.), China and the Transformation of Global Capitalism (Baltimore: The Johns Hopkins University Press 2009) pp. 22–49; Ho-Fung Hung, 'Introduction', in H.-F. Hung (ed.), China and the Transformation of Global Capitalism (Baltimore: The Johns Hopkins University Press 2009) pp. 12–13. 27. ASEAN (Association of South-East Asian Nations): An illustration of this cooperation is the development of ASEAN+3 formula, developed in 1997 as an answer to the economic crisis in Asia, which involves cooperation between ASEAN countries and China, Japan and South Korea. In 2010 China-ASEAN Free Trade Area was launched. D. Shambaugh, China Goes Global. The Partial Power (Oxford - New York: Oxford University Press 2013) p. 159. 28. N. Cesarini, Remaking Global Order. The Evolution of Europe-China Relations and its Implications for East Asia and the United States (Oxford and New York: Oxford University Press 2009) p. 59. 29. O. Nowak, 'EU and Member States' Balance of Payments During the Economic Turmoil', Eurostat, Statistics in Focus 32/2012. 30. T. Hanemann and D. H. Rosen, China Invests in Europe, Rhodinum Group, June 2012, pp. 32–39; J. Clegg and H. Voss, Chinese Overseas Direct Investment in the European Union, Europe China Research and Advice Network, London 2012, pp. 21–29. 31. For more detail see: R. Hsueh, China's Regulatory State. A New Strategy for Globalization (Ithaca and London: Cornell University Press 2011). 32. J.-M. Rousseau, 'How China is Re-Reading its Past and Re-Building its Future ... From a Theoretical Territorial Approach to a Realistic Meso-Analysis of China', in P. Artymowska, A. Kukliński and P. Żuber (eds.), The Future of Regions and The Megaspaces of the XXI Century (Warsaw: Ministry of Regional Development 2011) pp. 191–236. 33. T. Ming Cheung, Fortifying China: The Struggle to Build a Modern Defense Economy (Ithaca and London: Cornell University Press 2008) pp. 101–234. 34. Cf. Ho-Fung Hung, 'A Caveat. Is the Rise of China Sustainable?', in H.-F. Hung (ed.), China and the Transformation of Global Capitalism (Baltimore: The Johns Hopkins University Press 2009) pp. 192–193. 35. These examples are among the reasons for the fact that WTO granted China the status of a non-market economy. 36. Cf. Cesarini (note 28) pp. 95–99. 37. A broader overview of this issue can be found in A. Saxenian, The New Argonauts (Cambridge, MA: Harvard University Press 2007). 38. See So (note 24) p. 56. 39. E.g., 'Timothy Geithner: China 'Very, Very Aggressive In Stealing U.S. Technology', Hoff Post Business, The Internet Newspaper, 13 Jan. 2012, available at . 40. D. Breznitz and M. Murphree, Run of the Red Queen: Government, Innovation, Globalization, and Economic Growth in China (New Haven and London: Yale University Press 2011) pp. 10–85. 41. Quoted from Cesarini (note 28) p. 64. 42. For more details see: R. P. Appelbaum, 'Big Suppliers in Greater China', in H.-F. Hung (ed.), China and the Transformation of Global Capitalism (Baltimore: The Johns Hopkins University Press 2009) pp. 65–85. 43. See So (note 24) p. 61. 44. For more details see: A. Nölke and A. Vliegenthart, 'Enlarging the Varieties of Capitalism. The Emergence of Dependent Market Economies in East Central Europe', World Politics 61/4, (2009) pp. 670–702. 45. See So (note 24) pp. 50, 55. 46. Described more extensively in: J. Unger, The Transformation of Rural China (Armonk: M.E. Sharpe 2002). 47. See So (note 24) pp. 55, 58, 60; Subramanian, Eclipse (note 8) p. 70. 48. Whereas many Western researchers believe that the possibilities for extant models of transformation in authoritarian states are now approaching exhaustion. Cf., e.g., M. Pei, China's Trapped Transition. The Limits of Developmental Autocracy (Cambridge and London: Harvard University Press 2006). 49. Cf. R. Gilpin, The Challenge of Global Capitalism. The World Economy in the 21st Century (Princeton: Princeton University Press 2000) pp. 230–231; Arrighi, Adam Smith (note 11) pp. 257–258. 50. M. D. Jensen and P. Nedergaard, 'From 'Frankenstein' to 'Toothless Vampire'? Explaining the Watering Down of the Services Directive', Journal of European Public Policy 19/6 (2012) pp. 844–862. 51. For more details SEE: P. Ziltener, 'The Economic Effects of the European Single Market Project: Projections, Simulations – and the Reality', Review of International Political Economy 11/5 (2004) pp. 953–979. 52. R. D. Atkinson and S. J. Ezell, Innovation Economics. The Race for Global Advantage (New Haven and London: Yale University Press 2012) pp. 190–225. 53. Presidency Conclusions Lisbon European Council 23 And 24 March 2000, available at , accessed 30 Nov. 2012; Communication from the Commission, Europe 2020: A Strategy for Smart, Sustainable and Inclusive Growth, Brussels, 3 March 2010, COM(2010) 2020. 54. P. C. Padoan, 'Europe's Growth: A Sceptical View', in L. Tsoukalis and J. A. Emmanouilidis (eds.), The Delphic Oracle on Europe. Is There a Future for the European Union? (Oxford and New York: Oxford University Press 2011) pp. 61–75. 55. V. Duchêne, E. Lykogianni, and A. Verbeek, 'The EU R&D Under-Investment: Patterns in R&D Expenditure and Financing', in H. Delanghe, U. Muldur, and L. Soete (eds.), European Science and Technology Policy (Cheltenham and Northampton: Edward Elgar) pp. 193–213. 56. C. Svanfeldt, 'A European Research Area built by the Member States?', in H. Delanghe, U. Muldur, and L. Soete (eds.), European Science and Technology Policy (Cheltenham and Northampton: Edward Elgar) pp. 44–63. 57. H. Prange and Kaiser R., 'Missing the Lisbon Target? Multi-Level Innovation and EU Policy Coordination', Journal of Public Policy 25/2 (2005) pp. 241–263; J. Edler, 'Research and Innovation and the Lisbon Strategy', in P. Copeland and D. Papadimitriou (eds.), The EU's Lisbon Strategy. Evaluating Success, Understanding Failure (Basingstoke: Palgrave Macmillan 2012) pp. 168–188; M. Granieri and A. Renda, Innovation Law and Policy in the European Union. Towards Horizon 2020 (Milano: Springer) pp. 51–119; T. G. Grosse, 'Challenges for European Union Cohesion and Innovation Policies Conclusions for Poland', EMERGO Journal of Transforming Economies and Societies 11/3 (41) (2004) pp. 29–50. 58. B. Eichengreen, The European Economy Since 1945. Coordinated Capitalism and Beyond (Princeton and Oxford: Princeton University Press 2007) pp. 252–277. 59. N. Casarini and A. C. Musu (eds.), European Foreign Policy in an Evolving International System: The Road Towards Convergence (Basingstoke: Palgrave Macmillan 2007); D. Allen, M. Smith, 'Relations with the Rest of the World', Journal of Common Market Studies 45 Annual Review (2007) pp. 163–181; J. Howorth, 'The EU as a Global Actor: Grand Strategy for a Global Grand Bargain?', Journal of Common Market Studies 48/3 (2010) pp. 455–474; S. Duke, 'The Future of EU-NATO Relations: A Case of Mutual Irrelevance Through Competition?', Journal of European Integration 30/1 (2008) pp. 27–43; A. Toje, 'The EU Security Strategy Revised: Europe Hedging Its Bets', European Foreign Affairs Review 15 (2010) pp. 171–190; H. Mayer, 'The Long Legacy of Dorian Gray: Why the European Union Needs to Redefine its Role In Global Affairs', Journal of European Integration 30/1 (2008) pp. 7–25; A. Deighton and V. Mauer, Securing Europe? Implementing the European Security Strategy (Zürich: ETH 2006). 60. Por. European Security Strategy, Brussels 2003, 2009; Internal Security Strategy for the European Union "Towards A European Security Model", Brussels 2010, available at , accessed 30 Nov. 2012. 61. D. Allen, M. Smith, 'Relations with the Rest of the World'; A. Toje, 'The European Union as a Small Power, or Conceptualizing Europe's Strategic Actorness', Journal of European Integration 30/2 (2008) pp. 199–215. 62. R. A. Wessel, 'The Legal Framework for the Participation of the European Union in International Institutions', Journal of European Integration 33/6 (2011) pp. 621–635; D. Mügge, 'The European Presence in Global Financial Governance: A Principal–Agent Perspective', Journal of European Public Policy 18/3 (2011) pp. 383–402. 63. A. Dür and M. Elsig, 'Principals, Agents, and the European Union's Foreign Economic Policies', Journal of European Public Policy 18/3 (2011) pp. 323–338. 64. W. Mattli and N. Woods (eds.), The Politics of Global Regulation (Princeton: Princeton University Press 2009). 65. This is a case of the financial sector in Europe: G. Morgan, 'Supporting the City: Economic Patriotism In Financial Markets', Journal of European Public Policy 19/3 (2012) pp. 373–387; D. Mügge, 'From Pragmatism to Dogmatism: European Union Governance, Policy Paradigms and Financial Meltdown', New Political Economy, 16/2 (2011) pp. 185–206. 66. Endogenous development is targeted at creating long-term growth processes based on internal growth factors. External investment sources (public or private) should only be tapped with a view of strengthening endogenous growth processes, and external aid should be treated eventually only as an additional component helping internal growth mechanisms. Cf. T. G. Grosse, 'Wybrane koncepcje teoretyczne i doświadczenia praktyczne dotyczące rozwoju regionów peryferyjnych' [Selected theoretical concepts and experiences of peripheral regions], Studia Regionalne i Lokalne 1/27 (2007) pp. 27–49. 67. This is treated more fully in Cesarini (note 28) p. 68. 68. Ibid., p. 125. 69. For more detail see: 'Britain and EU Clash on Arms Sales to China', The Times, 12 Jan. 2011. 70. The official launch of the Galileo programme was a European Committee document published in 1998 and entitled 'Towards a Trans-European Positioning and Navigation Network together with a European Strategy for a Global Navigation Satellite System (GNSS)', Communication from the Commission to the Council and the European Parliament, COM(1998)29 final, 21 Jan. 1998. 71. Cf. H. W. Maull, 'Europe and the New Balance of Global Order', International Affairs 81/4 (2005) pp. 775–799. 72. More details in Cesarini (note 28) p. 112. 73. For more details see: Ch. Layne, 'It's Over, Over There: The Coming Crack-up in Transatlantic Relations', International Politics 45 (2008) pp. 325–347; S. Duke, 'The Future of EU-NATO Relations: A Case of Mutual Irrelevance Through Competition?', Journal of European Integration 30/1 (2008) pp. 27–43; H. Mayer, 'The Long Legacy of Dorian Gray: Why the European Union Needs to Redefine its Role In Global Affairs', Journal of European Integration 30/1 (2008) pp. 7–25. 74. Cf. Cesarini (note 28) p. 92. 75. More details in: 'Action Plan on Global Navigation Satellite System (GNSS)', a document prepared by the European Commission for the Council of Europe, European Parliament, European Economic and Social Committee and Committee of the Regions, European Committee, COM(2010)308, Brussels, 14 June 2010. 76. More detailed treatment in Cesarini (note 28) pp. 101–122. 77. Cf. T. G. Grosse, 'Systemowe uwarunkowania słabości polityki zagranicznej Unii Europejskiej' [Systemic conditions of the weakness of EU foreign policy], Studia Europejskie 1/53 (2010) pp. 33–66. 78. 'How China Stole the European Sky', Telematics, 12 April 2010, available at , accessed 30 Dec. 2011. 79. 'Beidou satellite navigation system to cover whole world in 2020', 20.05.2010, , accessed 27 Oct. 2013.' 80. Cf. 'Opinion of the European Economic and Social Committee Regarding the Action Plan on Global Navigation Satellite System (GNSS), a document prepared by the European Commission for the Council of Europe, European Parliament, European Economic and Social Committee and Committee of the Regions, European Committee', EU Official Journal, C 107 (06.04.2011) pp. 44, 47. 81. EGNOS is an acronym for European Geostationary Navigation Overlay Service. 82. E.g., Action Plan on GNSS (note 75) p. 2. 83. The Management of the Galileo Programme's Development and Validation Phase, Special Report No. 7 (Luxembourg: European Court of Auditors 2009) p. 47. 84. 'Opinion of the European Economic and Social Committee' (note 80) p. 44. 85. Management of Galileo (note 83) p. 7. 86. Cf. U. Mörth, European Public-Private Collaboration. A Choice between Efficiency and Democratic Accountability? (Cheltenham and Northampton: Edward Elgar 2008) p. 63. 87. Management of Galileo (note 83) p. 28–30. 88. E.g., A. Cooley, Logics of Hierarchy. The Organization of Empires, States, and Military Occupations (Ithaca and London: Cornell University Press 2005). 89. Cf. J. Chen and B. J. Dickson, Allies of the State. China's Private Entrepreneurs and Democratic Change (Cambridge and London: Harvard University Press 2010). 90. E.g., G. Duménil and D. Lévy, The Crisis of Neoliberalism (Cambridge and London: Harvard University Press 2011); L. Sklair, The Transnational Capitalist Class (Oxford: Blackwell 2001); W. I. Robinson, A Theory of Global Capitalism: Transnational Production, Transnational Capitalists, and the Transnational State (Baltimore: Johns Hopkins University Press 2004). 91. For more detail see: Mügge, 'From Pragmatism' (note 65). 92. For a more detailed treatment of this subject please see: Y. Xuetong, Ancient Chinese Thought, Modern Chinese Power (Princeton and Oxford: Princeton University Press 2011)

China · Economic globalization · Economic history · Economic interdependence · Economics · Economy · Geopolitics · Globalization · International relations · Political economy · Political science · Politics · Sociology · Globalization, Economics, and Policies · Law

• China and Limits to the European Union's Geoeconomic Turn

  Open Access•Alasdair R Young, Scott A W Brown•JCMS Journal of Common Market…•2026

  Add to list

• The European Union and China's geoeconomic tools in a multipolar world

  Open Access•Unai Gómez‐Hernández•Global Policy•2024

  Add to list

• The Belt-and-Road Initiative as a paradigm change for European Union-China security cooperation? The case of Central Asia

  Open Access•Benjamin Barton•Asia Europe Journal•2021

  Add to list

• Leveraging interregionalism

  Open Access•Katharina L Meissner•International Politics•2017

  Add to list

• Back to the Future? Charting Features of the Not-So-New Convergence in Aidland

  Simon Pahle•Forum for Development Studies•2020

  Add to list

• CPEC and Geo-Security Behind Geo-Economics

  Open Access•Mehmood Hussain•East Asia•2021

  Add to list

• China, geoeconomics and the 'new' state capitalism

  Open Access•Ruben Gonzalez-Vicente, Han Cheng•Environment and Planning A…•2025

  Add to list