Social Europe Journal Vol. 3 No. 3

Social Europe

Volume 3 • Issue 3 Spring 2008 Suggested Donation 5€

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Contributions by Will Hutton Linda Yueh Mark Leonard Andrew Cottey Jörn-Carsten Gottwald Niall Duggan Olli Rehn Herbert Schmalstieg www.social-europe.eu

Europe and China – Emerging Rivals or Partners?

Social Europe Journal • Volume 3 • Issue 3 • Spring 2008

Editorial Board Detlev Albers Chief Editor Giuliano Amato Former Italian Prime Minister Karl Duffek Director Renner Institute Please make sure that there are more issues of ‘Social Europe Journal’ by paying the suggested 5€ donation for this issue or become a Sponsor Member. Visit our website www.social-europe.eu for more details and payment options.

Social Europe Journal is published by the Global Policy Institute at London Metropolitan University on behalf of Social Europe Forum.

Elisabeth Guigou Former French Europe and Justice Minister Zita Gurmai President PES Women Stephen Haseler Chief Editor Poul Nyrup Rasmussen President of the PES Angelica Schwall-Dueren Vice Chair SPD Bundestag Group Giuseppe Vacca President Gramsci Foundation Jan Marinus Wiersma Vice President Socialist Group European Parliament Henning Meyer Managing Editor

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Social Europe Journal • Volume 3 • Issue 3 • Spring 2008

Editorial T

HE RISE OF China in international politics and economics has been evident for 30 years now. And there is little doubt that since the 1990s, this process has accelerated. But there are very different views as to what China’s ascendancy means and what the likely consequences for global politics will be.

Henning Meyer Managing Editor

This latest issue of Social Europe Journal brings together some of these different points of view and tries to make a contribution to the continuing effort to conceptualise the emergence of a new major power on the world scene.

The Director of the Work Foundation and leading British columnist, Will Hutton, is the first contributor to our essay collection on EU-China affairs.

Hutton sets out why he believes that the Chinese political course needs to change fundamentally if the country really wants to play a leading global role.

Following this, Linda Yueh presents her economic argument on the state of EU-China relations from a Chinese perspective, before Mark Leonard, in a very stimulating article, gives some rare insights into Chinese political thinking.

Our primary subject matter is concluded by two contributions – dealing with the dynamics of EU-China rela-

tions and the Tibet riots of last March – authored by academics from the Irish Institute of Chinese Studies at University College Cork.

But the spring 2008 issue of Social Europe Journal has more on offer. We also conducted an exclusive interview with EU Enlargement Commissioner Olli Rehn about the future of the EU 27+. And finally the former Mayor of Hanover, Herbert Schmalstieg, forcefully argues for an appreciation of the role of municipalities in Europe’s system of multi-level governance.

As always, we hope we have put together an interesting journal that is informative and thought-provoking. Please do not hesitate to contact us at info@social-europe.eu if you would like to voice criticism, praise or suggestions.

Social Europe Journal • Volume 3 • Issue 3 • Spring 2008

Contents 131 135 140 149

Will China Dominate the 21st Century?

Will Hutton

154 159 161

Tibetan Riots, March 2008: Causes and Consequences Niall Duggan

Reflections on the EU-China Economic Relationship Linda Yueh China’s New Intelligentsia Mark Leonard The European Union and the People’s Republic of China: Who’s Changing Whom?

Andrew Cottey and Jörn-Carsten Gottwald

Interview with EU Enlargement Commissioner Olli Rehn Olli Rehn Cities and Municipalities are Europe’s Strength Herbert Schmalstieg

Click on the flags for links to foreign language versions

Will China Dominate the 21st Century?

C

Will Hutton Chief Executive of The Work Foundation and a Columnist for the Observer newspaper in Britain. Author of a number of bestselling and widely reviewed books on political economy, notably The State We’re In (1995), The World We’re In (2001) and The Writing on the Wall (2007).

HINA IS A CONTINENTAL wide country whose land area is eerily close in terms of square miles to that of the USA – and whose geography has the same eery pattern. The Himalayas, Manchuria, Beijing, Shanghai and the Yangtze have their almost exact counterparts in the Rockies, industrial New England, Washington, New York and the Mississippi. The difference is that China is a country of 1.3 billion people and a civilisation more than 3000 years old. If those numbers ever combined with China’s continental potential, as Napoleon once famously remarked, it would shake the world; the USA times four.

That is what now seems to be happening. Since 1978 China has burst back onto the world scene in a manner only paralleled in scale and speed in world history by the rise of the USA between the Civil War and First World War in 1914. The open question is whether the twenty-first century is going to be the Chinese Century in the

‘China is not coming to take us all away. Nor is it stealing millions of jobs in the West, squeezing our middle class – the great preoccupation in the US – or about to become our economic master’ 131 Social Europe Journal Spring 2008

way the twentieth century was American and the nineteenth century British. Is the baton of global leadership going to pass from Anglo-Saxon hands, who held so many values in common, to Chinese? If so the implications could not be more profound, as the world is beginning to recognise in Chinese repression in Tibet. A Chinese century would imply a wholly different civilisation and values; the character of global institutions, our culture and obviously the primacy of the English language would be challenged. If China remained communist there would be substantial implications for the organisation of Western economies and societies. The answer to this question is one of the most important of our age.

My argument is that China is not coming to take us all away. Nor is it stealing millions of jobs in the West, squeezing our middle class – the great preoccupation in the US – or about to become our economic master. In fact China, for all its breathtaking growth, has not managed to change the rules of globalisation which are still massively skewed to benefit the West. They are very difficult, even for China, to overturn. Instead of using China as an excuse either to close our markets or dismantle our welfare states, the truth is more complicated. Our political and business class should stop terrorising us about its rise; and instead try to understand it. This is an ancient civilisation with chronic problems that from the environment to inflation have become ever more obvious. If we over-

exaggerate its threat, we could scare ourselves into dismantling the world’s open economic system – and start a slide into mutual suspicion which could end in war. If ever there is a third world war, our antagonist is likely to be China.

This analysis may seem contrarian, even maverick. After all China has growth rates that are the envy of all, has succeeded in taking 400 million people out of poverty, is set to become the world’s leading exporter before 2010 and whose foreign exchange reserves have broached the $1.5 trillion level. Critics have been predicting the end of its boom for more than fifteen years, but still China’s communist rulers continue to keep one step ahead of any political instability and drive the economic reform programme forward. The consensus in the West believes that the system they have built will continue to flourish. My view is very different. I argue that the economic model that has taken it thus far can not take it much further, and now the numbers are so large that China’s capacity to fudge and hide reality is rapidly fading. As a consequence there are profound implications for authoritarian communism, the US and West’s policy in Asia and the way we portray globalisation.

China is everywhere broaching the limits of its capacity to continue as it has. It is reaching the limits of how much longer its banks can carry on directing billions of dollars of savings into investments that produce derisory returns and on which interest is irregularly paid. It is reaching the limits of how much longer its very poor peasants can carry on saving to fuel the investment. It is reaching the limits of the capacity to increase its exports of now one trillion dollars by 25 per cent a year, in any case largely made by foreign companies. It is reaching the limits of acquiring foreign exchange reserves which in 2007 grew at an astounding $650 billion without gener132 Social Europe Journal Spring 2008

ating colossal inflation. Even the Chinese cannot insulate their financial system from the impact of printing $650 of renminbi and so fuelling inflation – now at a twelve year high.

Nor are the limits solely economic.

200 million people out of a working population of nearly 800 million are migrants, chafing at their lowly status and rotten wages. Inequality is breathtaking. Corruption is epic – whether in its banks, its legal system or the leadership of its cities and provinces.

Environmental degradation is scarcely credible; 400,000 people a year die of respiratory diseases caused by polluted air. And to cap it all there is a first order internal ideological crisis over how a communist party that proclaims it remains the trustee of the 1949 Revolution can claim monopoly power when it has also declared class war over.

Behind all these problems lies China’s only half conversion to capitalism. It is more accurately a system of Leninist corporatism. Everything in China – from enterprises to the remotest village club – is subject to the pervasive direction and control of the party. Politics intrudes China’s every nook and cranny. The impact is pernicious.

Enter an overwhelming paradox.

Capitalism is much more than the profit motive and the freedom to set prices which China’s reforms have permitted.

It also hinges on multiple decision makers free to make judgement calls as they see them and the capacity, through the independence that property ownership and citizenship confers, freely to change individual strategies and policies. But more important still the effective use of resources depends upon a whole network of independent processes of scrutiny, justification, transparency and accountability of which democracy, in the sense of representative government, is but one, if crucial, element. Whistle blowing, for example, as much as judges who rule

‘Chinese consumers need to be less paranoid, save less and spend more; but consumers with no property rights or welfare system are correctly highly cautious’ on the evidence and newspapers who report what is happening, are crucial to the operation of Western capitalism.

They keep it honest.

It is this soft, what I call in the book ‘Enlightenment infrastructure’, that the Chinese communist party cannot allow because it would challenge their hegemony. And thus the explanation for China’s ills. It is the lack of independent scrutiny and accountability that lie behind the massive waste of investment and China’s destruction of its environment alike. The reason why so few people can name a great Chinese brand or company despite its export success is that there are none. China needs to build them; but doing that in a one party authoritarian state, where the party second guesses business strategy for ideological and political ends, is impossible. In any case more than three fifth of its exports and nearly all its high tech exports are made by non-Chinese, foreign firms – another expression of China’s weakness. The miracle has depended upon the mountain of debt lent by the banking system to state owned enterprises, cities and provincial governments. If ever interest rates rose or growth slowed, the consequent non-performing loans would overwhelm the banks – and bring down the economy. Yet China and Western business alike turn a blind eye to the risks. Buyers paid an astonishing $21 billion for a fifth of the shares of the Industrial and Commercial Bank of China in October 2006, making it one of the most highly valued banks in the 133 Social Europe Journal Spring 2008

world. If all goes well the price might be justified, but if there were ever a hiccup….

China needs to become a more normal economy, but again the party stands in the way. Chinese consumers need to be less paranoid, save less and spend more; but consumers with no property rights or welfare system are correctly highly cautious. To put that right in a serious way means taxing to fund a welfare system and conceding property rights. That will mean creating an empowered middle class who will ask how their tax renminbi are spent. The political implications are obvious.

The party’s challenge is to create a market economy that can continue to create the vital 20 million or so jobs each year the country needs for social stability. China has to build the institutions that are beginning to spread through the rest of Asia – an independent legal system, independent audit, a freer media, proper shareholder rights, independent trade unions, free scientific inquiry and accountable government. This is an economic as much as a political imperative. But it means in effect that the communist party has to surrender the means of authoritarian control.

The American strategy should thus not be too close to China, but stay open and to lead by example. This means ensuring that the panoply of the US’s own institutions are in good health; they are not. This not only matters in the US’s relations with China; America’s system of social support, however frayed, is vital as a shock absorbers for change – helping the disadvantaged get by and maintaining the political consensus in favour of openness. It means respecting the international rule of law on which international governance depends. It has not.

It means getting the threat to American jobs in perspective According to the US Department of Labor’s survey of extended mass lay-

offs, between 2004 and 2006, only around a total of 28,000 jobs (out of 1.7 million) have been lost due to out-ofcountry relocations. The British figure is even lower. It is the onward march of technology, the wave of Wall Street inspired takeovers, the weakness of trade unions and America’s own consumers who spend more on services and less on manufactures which together are driving change in the American economy – just as the same phenomena are working in Britain. The stagnating incomes of the American middle class is largely home grown. In short the Chinese should not be blamed for problems they have not caused.

But anti-China sentiment is rife in Washington and with the wider American public. There are currently 20 anti-China trade bills in Congress, threatening swingeing tariffs against Chinese imports unless the government stops rigging the renminbi.

Despite the dollar falling so that it takes as little 7 renminbi to buy a dollar, American political hostility remains intense. The US stands behind both Japan and Taiwan, and is indulging both the rise of its own nationalism and those of its Asian protectorates. Meanwhile the Chinese, intensely nationalistic themselves and still smarting from the humiliations of the nineteenth century when the country signed more than 20 treaties with the West all giving up sovereignty, are no less ready to play the nationalist card. There is a dangerous groundswell of resentment to the agitation over the Olympics. Their military build-up only makes sense in the context of a potential invasion of Taiwan, although the election of the nationalists has eased tensions for the time being. Raw materials and energy grow scarce; competition for security of supply more acute. Asia is a tinderbox waiting to catch fire. It should be handled with care.

But the Chinese have huge problems 134 Social Europe Journal Spring 2008

– not quite a paper, rather a very flawed dragon. It is not trade war or shock and awe military strategies that will convert them to democracy. It will be by practicing what the West preaches. Which is why Iraq was such a debacle. And why Western protests over Tibet must be backed by making sure that our own house is in order.

Whether climate change or the movement of goods, the world needs to find ways of acting for the wider public interest – especially as a global credit crunch looms. For China, for the US and for the world system the message is clear. The Writing is on the Wall.

Reflections on the EU-China Economic Relationship

A

Linda Yueh Fellow in Economics at St. Edmund Hall, University of Oxford, and Associate of the Globalisation Programme of the Centre for Economic Performance at the London School of Economics and Political Science

S IS APPROPRIATE given its size as the largest economy in the world exceeding even the United States, the European Union is also the largest trading partner of the fastest growing major economy in the world, namely China. The EU overtook both Japan and the United States in 2004, while China is the EU’s second largest trading partner after the US. Moreover, China is the largest importer into the EU. Since market-oriented reforms began in China in 1978, the EU has seen trade volumes with China increase by more than sixty-fold. In 2003, total trade had been growing at around 17 per cent per year to an impressive €135 billion with a trade deficit of around €55 billion. At present, trade volumes are nearly double that figure at around €254 billion and the trade deficit has more than doubled to approximately €128

‘Opening the economy to competition and bolstering the foundations of a market economy through fortifying the rule of law are notable aims of the EU-China agenda’ 135 Social Europe Journal Spring 2008

billion – the largest that the EU has with any other country.

The 2000 EU-China bilateral treaty was one of the cornerstones of China’s accession to the World Trade Organisation (WTO) in December 2001 after 15 years of negotiations. With WTO accession and the current signs of increased EU-China trade, the bilateral linkages will undoubtedly strengthen. The EU has highlighted three priorities in its relations with China: social and economic reforms; the environment; and the rule of law. But the EU also identified a range of concerns related to China’s compliance with its terms of accession. These are primarily in terms of market access in the manufacturing and services industries, such as construction, banking, automobiles, as well as improving intellectual property rights enforcement.

Opening the economy to competition and bolstering the foundations of a market economy through fortifying the rule of law are notable aims of the EUChina agenda. Although this is not different from the stated goals of the Chinese government, which is keen to decentralise its economy and improve its legal and institutional foundations, the tension witnessed over the past few years attests to the difficulty of achieving these

aims – both as a matter of domestic policymaking and as a reaction to what has been perceived to be Western pressure (mainly from the United States) in criticising the progress in this respect. Recent attention to the environment has arguably been prompted by the Beijing Olympics perhaps more than any other single factor.

There is less unhappiness with the Europeans than with the Americans on the part of the Chinese, though that looks likely to change with the recent shift in tone regarding alleged violations of anti-dumping rules

by Chinese firms into the EU. The diversified economies of the EU, where countries such as Germany and France sell high tech and capital goods to China, while Italy and Spain feel the pinch in terms of their manufacturing workers in textiles and clothing, have moderated the European position vis-à-vis China. The United States has been more adamant and vociferous, particularly on account of its high consumption and imports over the past few years that has left it with high levels of internal and external indebtedness. Attention has accordingly turned to the role played by the Chinese currency.

The Chinese Perspective

One often hears that it is the ‘Chinese way’ when discussing an aspect of China’s development that stands at odds with expectations derived from economics. In a sense, the fact that China is a marketising but not yet a marketised economy explains quite a lot of the Chinese perspective.

The issue is not so much a dichotomy between Western

economics versus ‘socialism with Chinese characteristics’, as it is that there is not a single economic model for economic transition to address the issues which arise in the development process. Although the long-run endpoints are clearer, the manner of progressing toward the ultimate aim differs a great deal among economies. For a country as large, complex and heterogeneous as China, this is undoubtedly true and underscores the challenges of reform faced by policymakers.

Few countries have faced the challenges that confront the Chinese economy. Economic transition has taken place for three decades with aspects of the state-owned sector still in existence and indeed national champions yearning to be global players acting like rather than being shuffled toward privatisation. At the same time, China still confronts the difficulty of rural development that plagues developing countries. For the rural areas are where the majority of its population dwell.

Opening and globalisation have hastened the reform of the institutional foundations of its markets, both because of international expectations built up after China’s WTO promises and also because the lack of such foundations will lead to macroeconomic instability and crises such as was seen in the Asian financial crisis of the late 1990s. Such foundations will require reform of not only the rule of law, but also improving the effectiveness of laws, as well as the policy implementation apparatus that is daunting for a country that is as decentralised and populous as China.

The Chinese saying, ‘the moun-

136 Social Europe Journal Spring 2008

tains are high, and the emperor is far away’, often seems apropos for characterising the autonomy of particularly the more marketised southern coastal provinces.

Chinese economic reforms are often described as ‘crossing the stream while feeling the stones’.

In a sense, China is muddling through. This is not as discouraging as it sounds since many reforms, economic and legal, can come about in response to the needs or crises experienced by an economy. Few regimes are all encompassing even in the West, which has had many more years of experience with regulating and supporting a market economy. However, the pace of reform of China is often criticised, as some measures lag despite government pronouncements.

The Chinese perspective is thus one that is steeped in the memories and history of its, in many ways, improbable development. In 1980, economic predictions squarely put the Soviet Union as the economic superpower to watch vis-à-vis the United States and not the poor, primarily agrarian China with less than half of the world’s average of arable land sustaining the world’s most populous nation. At the same time, the Chinese are keen to learn the best practices and lessons from other countries – whether it is the regulation of financial markets or how to improve energy efficiency. This eagerness does not, though, extend to accepting unsolicited advice that appears to be derived more from selfinterest than concern for the challenges that China faces.

This line is difficult to demarcate and in many ways is a facet of the complex and sometimes

paradoxical nature of China’s opening to the rest of the world – it is the most open economy (measured by the ratio of exports/ imports to GDP) for an economy of is size, while simultaneously placing numerous limitations on international trade and investment into and out of its domestic market that frequently frustrate Western governments such as the EU member states.

The Rise of China

To understand the EU-China relationship, the rise of China as a global economic power is central to the picture as is the development of the EU as an economic entity. The European experiment in the post-War period may have been politically motivated, but the single market has given the smaller but rich nations of Europe the potential for scale in its markets and the production of its firms. Indeed, intra-EU trade accounts for the bulk of European trade. This has enabled its firms to compete with the United States and increasingly China and India where their firms achieve scale on the basis of large domestic markets and then branch out into the global marketplace having achieved a sufficient degree of economies of scale. With a population that is larger than the United States, albeit not nearly as large as that of China or India, the EU as a bloc and its leading nations on their own are a competitive economic power in a rapidly changing world.

The economic transformation of China heralds a change in the global economy that started in the early 1990s. Although market-oriented reforms began in 1978, it was not until 1992

‘With its low level of per capita GDP and high growth rate, China has been as much a driver of global economic growth as the United States in the past two decades’ when China’s ‘open door’ policy took off. At the same time, India, after decades of inwardlooking policies such as import substitution-industrialisation undertaken since independence in 1947, experienced a major balance of payments crisis in 1991 which also caused its policies to shift to become more open to the world economy.

Finally, the early 1990s also marked the re-emergence of Eastern Europe and the other states of the former Soviet bloc as they re-joined the global economy after shedding their planned economy for a market one which would also propel many of them to become members of Europe once again.

These changes transformed the global labour force and by extension the returns to capital.

The global labour force of around three billion people doubled since the early 1990s as these new workers ‘joined’ the worldwide labour pool through international trade/investment and through migration in some instances. This effectively halved the global capital/labour ratio, driving down costs and increasing the productivity of capital. The growth of offshoring followed as multinational corporations looked to capitalise on the cheaper labour and other costs of producing and servicing their customers

137 Social Europe Journal Spring 2008

from bases in emerging markets; and international trade as well as investment flows increased rapidly during the 1990s.

This structural shift in the global economy coincided with the remarkable 9 per cent growth experienced by China where it quickly overtook most members of the G7 to be nearly the size of the German economy, making it the world’s fourth largest economy after only the United States, Japan and Germany. More importantly, perhaps, with its low level of per capita GDP and high growth rate, China has been as much a driver of global economic growth as the United States in the past two decades. The rise of China affects all countries, including those in the EU, not only as a trading partner but insofar as it is an engine of the world economy alongside the United States.

The Difference in World Views

This world view of the rise of China, however, differs somewhat within and outside China.

China is a paradoxical economy which is one of the largest and most important in aggregate size, but also one which still has an estimated 100 million people living in abject poverty and a per capita GDP that is but a fraction of the OECD average.

It is therefore a major economy

but also still a developing country. The former tends to dominate the view outside China, while the latter drives the policies within China.

As such, China’s view of itself is dominated by the need to achieve better and more sustainable development, including more infrastructure such as its current road and rail building project (which is the largest since the Western economies undertook the same during their period of industrialisation) as well as securing the energy and raw materials needed to fuel its growth. The conflict in world views arises in several places, but notably where China deals with regimes such as in Sudan and Iran. The Chinese view these investments as enhancing their energy security which is crucial for a developing country while the West sees the lack of adherence to the international community’s stance on sanctions against nations which violate international norms to be unacceptable for a powerful nation that is economically strong and holds a permanent seat on the UN Security Council. As a fervent adherent of the doctrine of non-interference, China does not take a stance on how other countries conduct their internal affairs.

Nowhere is the difference in world views more apparent than when it concerns Tibet or Taiwan. Not for economic but territorial sovereignty reasons, China views these as internal matters concerning which external pressure is not welcome.

This difference in world views colours the relationship between the EU and China, as it does with other Western powers, notably the United States.

Recently, the Chinese authorities (at least in Europe) have begun to appreciate the benefits of explaining their views and concerns. These centre on emphasising the developmental challenges of China and the obstacles to implementing policy in an under-developed state. The Europeans for their part have launched high level talks modelled after those held with the United States to discuss economic issues with China. This sharing of world views is promising and is superior to protectionism and retaliatory actions, even though the bi-annual USChina strategic economic dialogues have not been as fruitful as many in the United States (especially Congress) had hoped.

The Future for the EU and China

To assess the future of this bilateral relationship, the complexion of China’s economy is important to anticipate and assess. Its intentions are not apparent – probably because there is still a great deal of ‘muddling through’. The signs so far suggest that the state will continue to be an important player in the economy. Stateowned enterprises after years of decline from accounting for over 90 per cent of GDP in 1978 to less than half in the 2000s, have recently increased their presence primarily through fastgrowing, large state-owned enterprises such as banks (Industrial and Commercial Bank of China) and energy companies (China National Offshore Oil Corporation). This suggests that China is not going to end up with a US-type of model where the private sector predominates but may be more like

138 Social Europe Journal Spring 2008

Japan or Germany where state control and cross-holdings among conglomerates involve the state. The Chinese view is driven by both the power retained by the state as it seeks to hold onto strategic assets and by the realisation that most multinational corporations from developing countries tend not to be competitive against established ones from developed countries due to their late starts.

The key will be when to let go, as early success such as in Japan can be followed quickly by inertia if such firms are insulated from competition. For China, it is a more difficult situation as these firms are also state-owned or controlled enterprises generating revenue for the state. Thus, the call for greater emphasis on competitive markets outside of so-called strategic industries is well placed. At the same time, enticing foreign investment and know-how will continue to be a focus of policy, whereby marquee international firms will be given access to equity markets and enticingly to China’s domestic consumers in exchange for sharing of knowledge. How far the door is open and how to hang onto expertise in the face of quick Chinese learning will continue to be challenges, as many European and other multinational firms have already realised.

The rapid development of the legal system, including improved emphasis on protecting intellectual property rights, is the other major facet of the Chinese complexion. For quite a long time, imitation rather than respect for intellectual property characterised utilisation of foreign know-how in China. For

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www.palgrave.com/politics www w.palgrave.ccom//politiccs China, this process of learning allows them to cheaply ‘catch up’ with the technological frontier and the weak legal system was not in a position to do much enforcing in any event.

However, the recent push in China to protect intellectual property coincides with a major governmental agenda for domestic firms to secure their own intellectual property. As Chinese firms mature and innovate, the self-interest of China now coincides better with those of foreign firms, and enforcement of such rights should accordingly improve. The rapid adoption of a number of laws, such as a Mergers and Acquisitions law in 2004, and a bankruptcy law in 2007, as well as efforts to improve clinical legal education to enhance legal and regulatory enforcement,

have followed. However, legal developments take time to take hold and must develop in a way that organic acceptance by the populace takes place as well.

Transplanted laws do not work as was seen in other transition economies. But China’s progress has certainly been informed by their experiences.

The picture of China is rapidly shifting, but the complexion of its economy is one that is increasingly competitive and innovative while encased in a still fragile legal and institutional foundation. There are areas where pressure from the EU would be warranted, but others where a lack of understanding of the Chinese intent will lead to conflict. For the most part, the EU-China agenda reflects fairly closely the developmental aims of China. The key will be

139 Social Europe Journal Spring 2008

to mould the relationship to suit both the goals of China and the aspirations of the Europeans.

Given the stature and needs of these economies, this should be the most important bilateral relationship for the EU in the 21st century. The United States has made such a claim vis-à-vis the Chinese; the Europeans cannot afford to lag behind.

China’s New Intelligentsia I Mark Leonard Executive Director of the first panEuropean think-tank, the European Council on Foreign Relations (www.ecfr.eu). Previously, he was Director of the Foreign Policy Centre

This article was first published in Prospect, and is based on Leonard’s new book What Does China Think? published by Fourth Estate in 2008.

WILL NEVER FORGET my first visit, in 2003, to the Chinese Academy of Social Sciences (CASS) in Beijing. I was welcomed by Wang Luolin, the academy’s vice-president, whose grandfather had translated Marx’s Das Kapital into Chinese, and Huang Ping, a former Red Guard. Sitting in oversized armchairs, we sipped ceremonial tea and introduced ourselves. Wang Luolin nodded politely and smiled, then told me that his academy had 50 research centres covering 260 disciplines with 4,000 full-time researchers.

As he said this, I could feel myself shrink into the seams of my vast chair: Britain’s entire think tank community is numbered in the hundreds, Europe’s in the low thousands; even the think-tank heaven of the US cannot have more than 10,000.

But here in China, a single institution – and there are another dozen or so think tanks in Beijing alone – had 4,000 researchers. Admittedly, the

‘We are used to China’s growing influence on the world economy – but could it also reshape our ideas about politics and power?’

140 Social Europe Journal Spring 2008

people at CASS think that many of the researchers are not up to scratch, but the raw figures were enough.

At the beginning of that trip, I had hoped to get a quick introduction to China, learn the basics and go home. I had imagined that China’s intellectual life consisted of a few unbending ideologues in the back rooms of the Communist party or the country’s top universities.

Instead, I stumbled on a hidden world of intellectuals, thinktankers and activists, all engaged in intense debate about the future of their country. I soon realised that it would take more than a few visits to Beijing and Shanghai to grasp the scale and ambition of China’s internal debates. Even on that first trip my mind was made up – I wanted to devote the next few years of my life to understanding the living history that was unfolding before me. Over a three-year period, I have spoken with dozens of Chinese thinkers, watching their views develop in line with the breathtaking changes in their country. Some were party members; others were outside the party and suffering from a more awkward relationship with the authorities. Yet to some degree, they are all insiders. They have chosen to live and work in main-

land China, and thus to cope with the often capricious demands of the one-party state.

We are used to China’s growing influence on the world economy – but could it also reshape our ideas about politics and power? This story of China’s intellectual awakening is less well documented. We closely follow the twists and turns in America’s intellectual life, but how many of us can name a contemporary Chinese writer or thinker? Inside China – in party forums, but also in universities, in semi-independent think tanks, in journals and on the internet – debate rages about the direction of the country: ‘new left’ economists argue with the ‘new right’ about inequality; political theorists argue about the relative importance of elections and the rule of law; and in the foreign policy realm, China’s neocons argue with liberal internationalists about grand strategy. Chinese thinkers are trying to reconcile competing goals, exploring how they can enjoy the benefits of global markets while protecting China from the creative destruction they could unleash in its political and economic system.

Some others are trying to challenge the ‘flat world’ of US globalisation with a ‘walled world’ Chinese version.

Paradoxically, the power of the Chinese intellectual is amplified by China’s repressive political system, where there are no opposition parties, no independent trade unions, no public disagreements between politicians and a media that exists to underpin social control rather than promote political accountability. Intellectual debate in this world can become a surro-

gate for politics – if only because it is more personal, aggressive and emotive than anything that formal politics can muster. While it is true there is no free discussion about ending the Communist party’s rule, independence for Tibet or the events of Tiananmen Square, there is a relatively open debate in leading newspapers and academic journals about China’s economic model, how to clean up corruption or deal with foreign policy issues like Japan or North Korea.

Although the internet is heavily policed, debate is freer here than in the printed word (although one of the most freethinking bloggers, Hu Jia, was recently arrested). And behind closed doors, academics and thinkers will often talk freely about even the most sensitive topics, such as political reform.

The Chinese like to argue about whether it is the intellectuals that influence decision-makers, or whether groups of decisionmakers use pet intellectuals as informal mouthpieces to advance their own views. Either way, these debates have become part of the political process, and are used to put ideas in play and expand the options available to Chinese decision-makers. Intellectuals are, for example, regularly asked to brief the politburo in ‘study sessions’; they prepare reports that feed into the party’s five-year plans; and they advise on the government’s white papers.

So is the Chinese intelligentsia becoming increasingly open and Western? Many of the concepts it argues over – including, of course, communism itself – are Western imports.

And a more independent-mind-

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ed, Western style of discourse may be emerging as a result of the 1m students who have studied outside China – many in the West – since 1978; fewer than half have returned, but that number is rising. However, one should not forget that the formation of an ‘intellectual’ in China remains very different from in the West. Education is still focused on practical contributions to national life, and despite a big expansion of higher education (around 20 per cent of 18-30 year olds now enrol at university), teaching methods rely heavily on rote learning. Moreover, all of these people will be closely monitored for political dissent, with ‘political education’ classes still compulsory.

Zhang Weiying has a thing about Cuban cigars. When I went to see him in his office in Beijing University, I saw half a dozen boxes of Cohiba piled high on his desk. The cigar boxes – worth several times a Chinese peasant’s annual income – are fragments of Western freedom (albeit products of a communist nation), symbols of the dynamism he hopes will gradually eclipse and replace the last vestiges of Maoism. Like other economic liberals – or members of the ‘new right’ as their opponents call them – he thinks China will not be free until the public sector is dismantled and the state has shrivelled into a residual body designed mainly to protect property rights.

The new right was at the heart of China’s economic reforms in the 1980s and 1990s.

Zhang Weiying has a favourite allegory to explain these reforms. He tells a story about a

village that relied on horses to conduct its chores. Over time, the village elders realised that the neighbouring village, which relied on zebras, was doing better. So after years of hailing the virtues of the horse, they decided to embrace the zebra. The only obstacle was converting the villagers who had been brainwashed over decades into worshipping the horse. The elders developed an ingenious plan. Every night, while the villagers slept, they painted black stripes on the white horses.

When the villagers awoke the leaders reassured them that the animals were not really zebras, just the same old horses adorned with a few harmless stripes. After a long interval the village leaders began to replace the painted horses with real zebras. These prodigious animals transformed the village’s fortunes, increasing productivity and creating wealth all around. Only many years later – long after all the horses had been replaced with zebras and the village had benefited from many years of prosperity – did the elders summon the citizenry to proclaim that their community was a village of zebras, and that zebras were good and horses bad.

Zhang Weiying’s story is one way of understanding his theory of ‘dual-track pricing’, first put forward in 1984. He argued that ‘dual-track pricing’ would allow the government to move from an economy where prices were set by officials to one where they were set by the market, without having to publicly abandon its commitment to socialism or run into the opposition of all those with a vested interest in central planning.

‘After 30 years of having the best of the argument with ideas imported from the west, China has turned against the new right’ Under this approach, some goods and services continued to be sold at state-controlled prices while others were sold at market prices. Over time, the proportion of goods sold at market prices was steadily increased until by the early 1990s, almost all products were sold at market prices. The ‘dual-track’ approach embodies the combination of pragmatism and incrementalism that has allowed China’s reformers to work around obstacles rather than confront them.

The most famous village of zebras was Shenzhen. At the end of the 1970s, Shenzhen was an unremarkable fishing village, providing a meagre living for its few thousand inhabitants. But over the next three decades, it became an emblem of the Chinese capitalism that Zhang Weiying and his colleagues were building. Because of its proximity to Hong Kong, Deng Xiaoping chose Shenzhen in 1979 as the first ‘special economic zone’, offering its leaders tax breaks, freedom from regulation and a licence to pioneer new market ideas. The architects of reform in Shenzhen wanted to build high-tech plants that could mass-produce value-added goods for sale in the West. Such experimental zones were financed by drawing on the country’s huge savings and the revenues from exports.

The coastal regions sucked in a

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vast number of workers from the countryside, which held down urban wages. And the whole system was laissez-faire – allowing wealth to trickle down from the rich to the poor organically rather than consciously redistributing it. Deng Xiaoping pointedly declared that ‘some must get rich first’, arguing that the different regions should ‘eat in separate kitchens’ rather than putting their resources into a ‘common pot’. As a result, the reformers of the Eastern provinces were allowed to cut free from the impoverished inland areas and steam ahead.

But life today is getting tougher for the economists behind this system, like Zhang Weiying. After 30 years of having the best of the argument with ideas imported from the West, China has turned against the new right. Opinion polls show that they are the least popular group in China. Public disquiet is growing over the costs of reform, with protests by laid-off workers and concern over illegal demolitions and unpaid wages. And the ideas of the market are being challenged by a new left, which advocates a gentler form of capitalism. A battle of ideas pits the state against market; coasts against inland provinces; towns against countryside; rich against poor.

Wang Hui is one of the leaders of the new left, a loose grouping of intellectuals who

are increasingly capturing the public mood and setting the tone for political debate through their articles in journals such as Dushu. Wang Hui was a student of literature rather than politics, but he was politicised through his role in the student demonstrations of 1989 that congregated on Tiananmen Square. Like most young intellectuals at the time, he was a strong believer in the potential of the market. But after the Tiananmen massacre, Wang Hui took off to the mountains and spent two years in hiding, getting to know peasants and workers. His experiences there made him doubt the justice of unregulated free markets, and convinced him that the state must play a role in preventing inequality. Wang Hui’s ideas were developed further during his exile in the US in the 1990s, but like many other new left thinkers he has returned to mainland China – in his case to teach at the prestigious Qinghua University. I met him last year in ‘Thinker’s Café’ in Beijing, a bright and airy retreat with comfy sofas and fresh espressos.

He looks like an archetypal public intellectual: cropped hair, a brown jacket and black poloneck sweater. But Wang Hui does not live in an ivory tower.

He writes reports exposing local corruption and helps workers organise themselves against illegal privatisations. His grouping is ‘new’ because, unlike the ‘old left’, it supports market reforms.

It is left because, unlike the ‘new right’, it worries about inequality: ‘China is caught between the two extremes of misguided socialism and crony capitalism, and suffering from the worst elements of both… I am in favour of orienting the

country toward market reforms, but China’s development must be more balanced. We must not give total priority to GDP growth to the exclusion of workers’ rights and the environment.’

The new left’s philosophy is a product of China’s relative affluence. Now that the market is driving economic growth, they ask what should be done with the wealth. Should it continue accumulating in the hands of an elite, or can China foster a model of development that benefits all citizens? They want to develop a Chinese variant of social democracy. As Wang Hui says: ‘We cannot count on a state on the German or Nordic model. We have such a large country that the state would have to be vast to provide that kind of welfare. That is why we need institutional innovation.

Wang Shaoguang [a political economist] is talking about lowprice healthcare. Cui Zhiyuan [a political theorist] is talking about reforming property rights to give workers a say over the companies where they work. Hu Angang [an economist] is talking about green development’.

The balance of power in Beijing is subtly shifting towards the left. At the end of 2005, Hu Jintao and Wen Jiabao published the ‘11th five-year plan’. their blueprint for a ‘harmonious society’. For the first time since the reform era began in 1978, economic growth was not described as the overriding goal for the Chinese state. They talked instead about introducing a welfare state with promises of a 20 per cent year-on-year increase in the funds available for pensions, unemployment benefit, health insurance and maternity leave. For rural China,

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they promised an end to arbitrary taxes and improved health and education. They also pledged to reduce energy consumption by 20 per cent.

The 11th five-year plan is a template for a new Chinese model. From the new right, it keeps the idea of permanent experimentation – a gradualist reform process rather than shock therapy. And it accepts that the market will drive economic growth. From the new left, it draws a concern about inequality and the environment and a quest for new institutions that can marry co-operation with competition.

In February 2007, Hu Jintao proudly announced the creation of a new special economic zone complete with the usual combination of export subsidies, tax breaks and investments in roads, railways and shipping.

However, this special economic zone was in the heart of Africa – in the copper-mining belt of Zambia. China is transplanting its growth model into the African continent by building a series of industrial hubs linked by rail, road and shipping lanes to the rest of the world. Zambia will be home to China’s ‘metals hub’, providing the People’s Republic with copper, cobalt, diamonds, tin and uranium.

The second zone will be in Mauritius, providing China with a ‘trading hub’ that will give 40 Chinese businesses preferential access to the 20-member state common market of East and Southern Africa stretching from Libya to Zimbabwe, as well as access to the Indian ocean and South Asian markets. The third zone – a ‘shipping hub’ – will probably be in the Tanzanian capital, Dar es Salaam. Nigeria,

‘Scores of countries are copying Beijing’s state-driven development using public money and foreign investment to build capitalintensive industries’ Liberia and the Cape Verde islands are competing for two other slots. In the same way that Eastern Europe was changed by a competition to join the EU, we could see Africa transformed by the competition to attract Chinese investment.

As it creates these zones, Beijing is embarking on a building spree, criss-crossing the African continent with new roads and railways – investing far more than the old colonial powers ever did. Moreover, China’s presence is changing the rules of economic development. The IMF and the World Bank used to drive the fear of God into government officials and elected leaders, but today they struggle to be listened to even by the poorest countries of Africa. The IMF spent years negotiating a transparency agreement with the Angolan government only to be told hours before the deal was due to be signed, in March 2004, that the authorities in Luanda were no longer interested in the money: they had secured a $2bn soft loan from China. This tale has been repeated across the continent – from Chad to Nigeria, Sudan to Algeria, Ethiopia and Uganda to Zimbabwe.

But the spread of the Chinese model goes far beyond the regions that have been targeted

by Chinese investors. Research teams from middle-income and poor countries from Iran to Egypt, Angola to Zambia, Kazakhstan to Russia, India to Vietnam and Brazil to Venezuela have been crawling around the Chinese cities and countryside in search of lessons from Beijing’s experience.

Intellectuals such as Zhang Weiying and Hu Angang have been asked to provide training for them. Scores of countries are copying Beijing’s state-driven development using public money and foreign investment to build capital-intensive industries. A rash of copycat special economic zones have been set up all over the world – the World Bank estimates that over 3,000 projects are taking place in 120 countries. Globalisation was supposed to mean the worldwide triumph of the market economy, but China is showing that state capitalism is one of its biggest beneficiaries.

As free market ideas have spread across the world, liberal democracy has often travelled in its wake. But for the authorities in Beijing there is nothing inexorable about liberal democracy. One of the most surprising features of Chinese intellectual life is the way that ‘democracy’ intellectuals who demanded elections in the 1980s and 1990s have changed their posi-

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tions on political reform.

Yu Keping is like the Zhang Weiying of political reform. He is a rising star and an informal adviser to President Hu Jintao.

He runs an institute that is part university, part think tank, part management consultancy for government reform. When he talks about the country’s political future, he often draws a direct analogy with the economic realm. When I last met him in Beijing, he told me that overnight political reform would be as damaging to China as economic ‘shock therapy’.

Instead, he has promoted the idea of democracy gradually working its way up from successful grassroots experiments.

He hopes that by promoting democracy first within the Communist party, it will then spread to the rest of society. Just as the coastal regions were allowed to ‘get rich first’. Yu Keping thinks that party members should ‘get democracy first’ by having internal party elections.

Where the coastal regions benefited from natural economic advantages such as proximity to Hong Kong, the Cantonese language and transport links, Yu Keping sees advantages for party members – such as their high levels of education and articulacy – which make them into a natural democratic vanguard.

What is more, he can point to examples of this happening. At his suggestion, in 2006 I visited a county in Sichuan province called Pinchang that has allowed party members to vote for the bosses of township parties. In the long run, democracy could be extended to the upper echelons of the party, including competitive elections for the

most senior posts. The logical conclusion of his ideas on inner party democracy would be for the Communist party to split into different factions that competed on ideological slates for support. It is possible to imagine informal new left and new right groupings one day even becoming formal parties within the party. If the Communist party were a country, its 70m members would make it bigger than Britain. And yet it is hard to imagine the remote, impoverished county of Pinchang becoming a model for the gleaming metropolises of Shanghai, Beijing or Shenzhen.

So far, none of the other 2,860 counties of China has followed its lead.

Many intellectuals in China are starting to question the utility of elections. Pan Wei, a rising star at Beijing University, castigated me at our first meeting for paying too much attention to the experiments in grassroots democracy. ‘The Sichuan experiment will go nowhere’, he said.

‘The local leaders have their personal political goal: they want to make their names known. But the experiment has not succeeded. In fact, Sichuan is the place with the highest number of mass protests. Very few other places want to emulate it’.

Chinese thinkers argue that all developed democracies are facing a political crisis: turnout in elections is falling, faith in political leaders has declined, parties are losing members and populism is on the rise. They study the ways that Western leaders are going over the heads of political parties and pioneering new techniques to reach the people such as referendums,

opinion surveys or ‘citizens’ juries’. The West still has multiparty elections as a central part of the political process, but has supplemented them with new types of deliberation. China, according to the new political thinkers, will do things the other way around: using elections in the margins but making public consultations, expert meetings and surveys a central part of decision-making. This idea was described pithily by Fang Ning, a political scientist at the Chinese Academy of Social Sciences. He compared democracy in the West to a fixed-menu restaurant where customers can select the identity of their chef, but have no say in what dishes he chooses to cook for them. Chinese democracy, on the other hand, always involves the same chef – the Communist party – but the policy dishes which are served up can be chosen ‘à la carte’.

Chongqing is a municipality of 30m that few people in the West have heard of. It nestles in the hills at the confluence of the Yangtze and Jialin Jiang rivers and it is trying to become a living laboratory for the ideas of intellectuals like Pan Wei and Fang Ning. The city’s government has made all significant rulings subject to public hearings – in person, on television and on the internet. The authorities are proudest of the hearings on ticket prices for the light railway, which saw fares reduced from 15 to just 2 yuan (about 14p). This experiment is being emulated in other cities around China. But an even more interesting experiment was carried out in the small township of Zeguo in Wenling City – it used a novel technique

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of ‘deliberative polling’ to decide on major spending decisions. The brainchild of a Stanford political scientist called James Fishkin, it harks back to an Athenian ideal of democracy (see ‘The thinking voter’, Prospect May 2004). It involves randomly selecting a sample of the population and involving them in a consultation process with experts, before asking them to vote on issues.

Zeguo used this technique to decide how to spend its 40m yuan (£2.87m) public works budget. So far the experiment has been a one-off but Fishkin and the Chinese political scientist He Baogang believe that ‘deliberative democracy’ could be a template for political reform.

The authorities certainly seem willing to experiment with all kinds of political innovations. In Zeguo, they have even introduced a form of government by focus group. But the main criterion guiding political reform seems to be that it must not threaten the Communist party’s monopoly on power. Can a more responsive form of authoritarianism evolve into a legitimate and stable form of government?

In the long term, China’s oneparty state may well collapse.

However, in the medium term, the regime seems to be developing increasingly sophisticated techniques to prolong its survival and pre-empt discontent.

China has already changed the terms of the debate about globalisation by proving that authoritarian regimes can deliver economic growth. In the future, its model of deliberative dictatorship could prove that one-party states can deliver a degree of

popular legitimacy as well. And if China’s experiments with public consultation work, dictatorships around the world will take heart from a model that allows one-party states to survive in an era of globalisation and mass communications.

China scholars in the West argue over whether the country is actively promoting autocracy, or whether it is just singlemindedly pursuing its national interest. Either way, China has emerged as the biggest global champion of authoritarianism.

The pressure group Human Rights Watch complains that ‘China’s growing foreign aid programme creates new options for dictators who were previously dependent on those who insisted on human rights progress.’

China’s foray into international politics should not, however, be reduced to its support for African dictators. It is trying to redefine the meaning of power on the world stage. Indeed, measuring ‘CNP’ – comprehensive national power – has become a national hobby-horse.

Each of the major foreign policy think tanks has devised its own index to give a numerical value to every nation’s power – economic, political, military and cultural. And in this era of globalisation and universal norms, the most striking thing about Chinese strategists is their unashamed focus on ‘national’ power. The idea of recapturing sovereignty from global economic forces, companies and even individuals is central to the Chinese worldview.

Yang Yi is a military man, a rear admiral in the navy and the head of China’s leading military think tank. He is one of the

tough guys of the Chinese foreign policy establishment, but his ideas on power go far beyond assessments of the latest weapons systems. He argues that the US has created a ‘strategic siege’ around China by assuming the ‘moral height’ in international relations. Every time the People’s Republic tries to assert itself in diplomatic terms, to modernise its military or to open relationships with other countries, the US presents it as a threat. And the rest of the world, Yang Yi complains, all too often takes its lead from the hyperpower: ‘The US has the final say on the making and revising of the international rules of the game. They have dominated international discourse… the US says, “Only we can do this; you can’t do this.”‘ One of the buzzwords in Chinese foreign policy circles is ruan quanli – the Chinese term for ‘soft power’. This idea was invented by the American political scientist Joseph Nye in 1990, but it is being promoted with far more zeal in Beijing than in Washington DC. In April 2006, a conference was organised in Beijing to launch the ‘China dream’ – China’s answer to the American dream. It was an attempt to associate the People’s Republic with three powerful ideas: economic development, political sovereignty and international law. Whereas American diplomats talk about regime change, their Chinese

counterparts talk about respect for sovereignty and the diversity of civilisations. Whereas US foreign policy uses sanctions and isolation to back up its political objectives, the Chinese offer aid and trade with no strings.

Whereas America imposes its preferences on reluctant allies, China makes a virtue of at least appearing to listen to other countries.

But while all Chinese thinkers want to strengthen national power, they disagree on their country’s long-term goals.

On the one hand, liberal internationalists like Zheng Bijian like to talk about China’s ‘peaceful rise’ and how it has rejoined the world; adapting to global norms and learning to make a positive contribution to global order. In recent years, Beijing has been working through the six-party talks to solve the North Korean nuclear problem; working with the EU, Russia and the US on Iran; adopting a conciliatory position on climate change at an international conference in Montreal in 2005; and sending 4,000 peacekeepers to take part in UN missions.

Even on issues where China is at odds with the west – such as humanitarian intervention – the Chinese position is becoming more nuanced. When the West intervened over Kosovo, China opposed it on the grounds that it contravened the ‘principle of non-intervention’. On Iraq, it abstained. And on Darfur, in

‘One of the buzzwords in Chinese foreign policy circles is ruan quanli – the Chinese term for “soft power”.’

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2006 it finally voted for a UN mandate for peacekeepers – although Beijing is still under fire for its close ties to the Sudanese government.

On the other hand, China’s ‘neocons’ – or perhaps they should be called ‘neo-comms’ – like Yang Yi and his colleague Yan Xuetong openly argue that they are using modern thinking to help China realise ancient dreams. Their long-term goal is to see China return to greatpower status. Like many Chinese scholars, Yan Xuetong has been studying ancient thought.

‘Recently I read all these books by ancient Chinese scholars and discovered that these guys are smart – their ideas are much more relevant than most modern international relations theory’, he said. The thing that interested him the most was the distinction that ancient Chinese scholars made between two kinds of order: the ‘Wang’ (which literally means ‘king’) and the ‘Ba’ (‘overlord’). The ‘Wang’ system was centred on a dominant superpower, but its primacy was based on benign government rather than coercion or territorial expansion. The ‘Ba’ system, on the other hand, was a classic hegemonic system, where the most powerful nation imposed order on its periphery. Yan explains how in ancient times the Chinese operated both systems: ‘Within Chinese Asia we had a ‘Wang’ system. Outside, when dealing with ‘barbarians’, we had a hegemonic system.

That is just like the US today, which adopts a ‘Wang’ system inside the Western club, where it doesn’t use military force or employ double standards. On a global scale, however, the US is hegemonic, using military power

and employing double standards.’ According to Yan Xuetong, China will have two options as it becomes more powerful. ‘It could become part of the Western ‘Wang’ system. But this will mean changing its political system to become a democracy. The other option is for China to build its own system.’

The tension between the liberal internationalists and the neo-comms is a modern variant of the Mao-era split between bourgeois and revolutionary foreign policy. For the next few years, China will be decidedly bourgeois. It has decided – with some reservations – to join the global economy and its institutions. Its goal is to strengthen them in order to pin down the US and secure a peaceful environment for China’s development. But in the long term, some Chinese hope to build a global order in China’s image.

The idea is to avoid confrontation while changing the facts on the ground. Just as they are doing in domestic policy, they hope to build pockets of an alternative reality – as in Africa – where it is Chinese values and norms that increasingly determine the course of events rather than Western ones.

The Western creations of the EU and Nato – defined by the pooling rather than the protecting of sovereignty – may one day find their matches in the embryonic East Asian Community and the Shanghai Co-operation Organisation.

Through these organisations, China is reassuring its neighbours of its peaceful intent and creating a new community of interest that excludes the US. The former US official Susan Shirk draws a parallel between

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China’s multilateral diplomacy and her own country’s after the Second World War: ‘By binding itself to international rules and regimes, the US successfully established a hegemonic order.’

The UN is also becoming an amplifier of the Chinese worldview. Unlike Russia, which comports itself with a swagger – enjoying its ability to overtly frustrate US and EU plans – China tends to opt for a conciliatory posture. In the run-up to the Iraq war, although China opposed military action, it allowed France, Germany and Russia to lead the opposition to it. In 2005 when there was a debate about enlarging the UN Security Council, China encouraged African countries to demand their own seat, which effectively killed off Japan’s bid for a permanent seat. Equally, Beijing has been willing to allow the Organisation of Islamic States to take the lead in weakening the new UN Human Rights Council.

This diplomacy has been effective – contributing to a big fall in US influence: in 1995 the US won 50.6 per cent of the votes in the UN General Assembly; by 2006, the figure had fallen to just 23.6 per cent. On human rights, the results are even more dramatic: China’s win-rate has rocketed from 43 per cent to 82 per cent, while the US’s has tumbled from 57 per cent to 22 per cent. ‘It’s a truism that the Security Council can function only insofar as the US lets it’, says James Traub, UN correspondent of the the New York Times. ‘The adage may soon be applied to China as well.’

The debate between Chinese intellectuals will continue to swirl within think tanks, journals and universities and – on more sensitive topics – on the

F

or every insurgent killed in Iraq, 250,000 bullets have been fired ~ IRELAND is the second richest country in the oecd, behind JAPAN ~ 11 out of the 12 men to have walked on t h e m o o n w e r e i n the Boy Scouts ~ windscreen wipers, laser printers and bulletproof vests were all invented by women ~ there are five people under 18 in custody in FINLAND. in BRITAIN there are roughly 3,000 ~ spammers usually need to send a million emails to get 15 positive responses ~ Isaac Newton invented the cat flap

Prospec makes you think www.prospect-magazine.co.uk

internet. Chinese thinkers will continue to act as intellectual magpies, adapting Western ideas to suit their purposes and plundering selectively from China’s own history. As China’s global footprint grows, we may find that we become as familiar with the ideas of Zhang Weiying and Wang Hui, Yu Keping and Pan Wei, Yan Xuetong and Zheng Bijan as we were with those of American thinkers in previous decades; from Reaganite economists in the 1980s to the neoconservative strategists of the 9/11 era.

China is not an intellectually open society. But the emergence of freer political debate, the throng of returning students from the West and huge international events like the Olympics are making it more so. And it is so big, so pragmatic and so des-

perate to succeed that its leaders are constantly experimenting with new ways of doing things.

They used special economic zones to test out a market philosophy. Now they are testing a thousand other ideas – from deliberative democracy to regional alliances. From this laboratory of social experiments, a new world-view is emerging that may in time crystallise into a recognisable Chinese model – an alternative, non-Western path for the rest of the world to follow.

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The European Union and the People’s Republic of China: Who’s Changing Whom?

Introduction

Andrew Cottey Senior Lecturer and Jean Monnet Chair in European Political Integration in the Department of Government, University College Cork

Jörn-Carsten Gottwald China specialist and Lecturer at University College Cork

China’s rise is Europe’s challenge. The growing economic and political strength of the People’s Republic of China has caught the attention of policymakers in European capitals.

The European Union formally recognized the government of the PRC as the sole legitimate representative of China in 1975 and concluded a bilateral trade agreement in 1985. Over the years, the EU slowly emerged as the most important trading partner of the PRC. Over the last decade or so, a series of programmatic policy papers, particularly on the EU side, and bilateral agreements have established an increasingly institutionalised relationship, with a wide variety of diplomatic and other forums for dialogue. At present, more than 24 policy areas are currently subject to regular meetings between representatives of the PRC and the EU. Clearly, European-Chinese relations have reached a remarkable level and density

‘From the European perspective, China provides a major test of the European strategy of constructive engagement’ 149 Social Europe Journal Spring 2008

compared to what was a decade ago described as a significant, yet secondary relationship.

After the 10th EU-China summit, which took place in Beijing in November 2007, however, there is a stark contrast between official descriptions and public opinion. In official declarations, the relationship between the two has successively been called a ‘maturing’ (EC 2006), ‘comprehensive’, ‘strategic’ (Wen Jiabao 2006) and ‘global’ (EC 2007) partnership. But the carefully designed and expertly staged fall-out between the two most senior trade representatives, Ms Wu Yi and Peter Mandelson during a press conference the day before the official summit, stimulated a critical stock tacking of the state of bilateral ties, with some concluding that the EU and China were entering a new era of mutual ‘disillusionment’ (Jonathan Holslog). Exaggerated optimism and political rhetoric have suffered a reality check.

The growing tensions between the Asian superpower and the European non-state are hardly surprising. Beyond what one source within the Beijing foreign policy community describes as ‘EU arrogance’ in spreading European laws and standards, a closer examination of concepts and interests reveals

fundamentally contradictory approaches to the bilateral relationship itself and to global politics more broadly.

On the surface, a set of trade disputes overshadowed the 10th summit. European governments and businesses are increasingly concerned about key aspects of China’s trade and economic policies: a growing trade imbalance between the EU and China; China’s reluctance to open its market to European goods and companies; China’s lack of respect for intellectual property rights and for product safety standards; and Beijing’s maintenance of a low currency exchange rate, which artificially reduces the price of Chinese goods flowing into Europe and raises that of European produce exported to China. In the run up to the 10th EU-China summit European Trade Commissioner Peter Mandelson called for China to modify its policies in these areas and warned that the EU would increasingly have to treat China as a ‘normal’ economic partner, as opposed to a developing country entitled to privileged economic relations with Europe. In particular three areas dominated his agenda, the trade imbalance, the protection of intellectual property rights, and improving the conditions for trade in services and investment.1 Mandelson barely disguised his threat of growing support within Europe for protectionist measures against China if Beijing showed no signs of accommodation.2 On a more fundamental level, China was enraged by what the PRC government interpreted as deliberate interference in China’s internal affairs. The German Chancellor Angela

Merkel received the Tibetan spiritual and political leader, the Dalai Lama, for a private visit in her Chancellor’s office. Only a few weeks after a state visit to Beijing, Chinese leaders took this as a clear signal of a remarkable shift in German policy towards China. The PRC retaliated by cancelling highlevel diplomatic meetings with German representatives. The warm reception of the new French President Nicolas Sarkozy and the high volume of trade agreements signed with a French delegation only days ahead of the EU-China summit amounted to a form of retaliation against Germany. Ironically, even the sale of Airbus planes was declared a French-Chinese business deal ignoring the substantial German stake in the European aerospace corporation.

it with various forms of technical assistance. The EU has opened its market to China because of the benefits to European citizens and in order to obtain reciprocal market access, but also to promote economic and political liberalisation within China. The Europeans also consistently call for China to play a more active role in addressing global multilateral issues. Finally, the EU is supporting dual track meetings in the context of the Asia Europe Meeting (ASEM) process and within the bilateral relationship. The extent to which all this ‘constructive engagement’ is actually effective in achieving European objectives has, however, been subject to remarkably little serious analysis.

The Chinese Approach

The European Approach

From the European perspective, China provides a major test of the European strategy of constructive engagement. The European Union has been characterised as a civilian, normative or soft power – an actor that influences others not by coercion but rather by the attractiveness of its model, by offering them economic, political and cultural ties, and by promoting multilateral normative standards and agreements.3 This is exactly the type of strategy which the EU has sought to develop in relations with China over the last two decades: relations between the two are strongly institutionalised (from top-level meetings such as the recent summit to lower-level diplomatic ties); the EU has a wide range of sectoral dialogues with China, as well as providing

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Engagement is a two way process: China is also engaging the EU, but in addition to straight forward economic interests (such as market access), and in contrast to the EU’s implicit objective of shaping China’s domestic transformation, China is following a traditional realpolitik strategy of encouraging Europe to establish itself as a global power in order to help counter-balance US dominance. The EU is perceived not so much as a partner for addressing global problems, but rather as a potential temporary ally in the race for global supremacy. The Chinese leadership consistently calls for a multi-polar world – including Europe and China as core actors – in opposition to a unipolar one of US hegemony. Peaceful co-existence has been the main principle for Chinese foreign

Thus, the expanding relationship between China and Europe is creating growing tensions in two different but interrelated areas: a series of economic disputes might seem to require nothing more than better management but in reality point to a fundamental objective of EU strategy: the EU calls for the establishment of a rule of law, a pluralistic society and the safeguarding of human rights within the PRC, which would amount to a drastic change in the political system – an outcome that is clearly impossible under the ‘democratic dictatorship led by the working class and based on the alliance of workers and peasants’, i.e. the Communist Party of China.4

does not help the current situation, but the roots of this imbalance lie deeper. China has become a prime destination for manufacturers from all over the world, including Europe.

Companies from Japan, Taiwan and South Korea are increasingly producing their goods for the European and American markets in China. Europe’s growing trade deficit with China is thus partly the result of an intraregional relocation of production. The fundamental challenge, however, lies in a Chinese government that promotes domestic enterprises at the costs of international rivals.

Even after China’s entry into the WTO and the formal implementation of rules and regulation concerning free trade and investment, Western businesses have ample reason to complain about piecemeal implementation and weak enforcement – if at all – of WTO commitments and standards in most of China’s provinces. Add in China’s systematic disrespect for intellectual property rights and a series of high profile cases where the Chinese security services have been involved in gathering sensitive information from European governments and enterprises and the picture is one of an increasingly unfair playing field.

On the Surface: Issues in Economics and Trade

Below the Surface: Human Rights and Rule of Law

The trade gap between China and the EU is alarming: the European Commission estimated that over the six days of Mandelson’s November 2007 visit to China alone the deficit would rise by €2.1 billion, fearing it will reach €170 billion for the year 2007. The strong euro

The People’s Republic of China still has a dismal human rights record. While the Chinese authorities can rightfully point out to progress in the fight against poverty and in the area of social rights, individual human rights – above all political rights and equality before

‘The People’s Republic of China still has a dismal human rights record’

policies ever since the early years of the PRC. When it comes to preserving the interests of the Chinese leadership, however, Beijing does not hesitate to ignore it. When it comes to what the PRC defines as ‘issues of national integrity’ such as the situation of occupied Tibet or Taiwan, the authorities in Beijing successfully play hard ball with the EU. While they officially reject any linkage between improvements in human rights or the rule of law within the PRC or any official recognition of the mature market democracy that is Taiwan, China has made relations conditional on European positions which are acceptable to Beijing. With regard to Taiwan, all member states of the EU as well as the EU have accepted the ‘one China’ policy which means that Taiwan is considered to form an integral part of the one Chinese state represented by the communist government of the PRC. In the case of Tibet, the EU accepts the disputable Chinese claim of Tibet being an integral part of China, too. Despite serious and continuous violations of human rights in Tibet, the bigger member states, as well as the EU, have carefully avoided officially meeting the leading representative of the movement for an autonomous, not an independent, Tibet, the spiritual and political leader of Tibetan Buddhism, the Dalai Lama.

Once this pattern submissive

behavior is broken, governments face harsh reactions from Beijing and a Beijing friendly business community claiming preference for smooth relations with the Asian powerhouse over ethical values – as Chancellor Merkel recently discovered.

Increased Exchange, Growing Tensions

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the law – are ignored and systematically abused. The EU has rightfully been criticized for being too weak in its human rights policies towards China.

While most member states play a skillfull two-level game by misusing the EU as a domestic excuse for not being more active on human rights themselves, they block efforts to establish a stricter human rights policy at the European level. The EU approach is mainly confined to raising human rights issues behind closed doors and efforts to engage China in practical cooperation. A number of programmes are designed to improve the human rights situation on the ground in China, for example, through promoting consistent application of the rule of law as opposed to a legal and judicial system subordinated to the Communist Party.

Critics argue that the way in which the EU addresses human rights issues at high-level political meetings is little more than perfunctory, while the impact of technical assistance programmes is very limited.

Rivals or Partners in Global Security?

A second area where growing differences can be identified is security. These issues are usually central to relations between major powers: the tendency of major powers to define their interests broadly can easily generate geo-political competition between them; to the extent that they are able to project military power, the so-called security dilemma pushes major powers towards at least considering worst case scenarios in relations with peers. The EU-China relationship is thus unusual in hav-

ing, at least to date, a very limited security dimension. There are, of course, good reasons for this – above all geography.

Although China may be the economic superpower of the twenty-first century and its military power is growing significantly, its ability to project military force beyond its immediate neighbourhood remains rather limited. Although some European states, in particular Britain and France, retain residual military ties in Asia and the EU has been developing its Common Security and Defence Policy (CSDP) for nearly a decade, Europe’s ability to project military power beyond its neighbourhood is also limited.

Neither China nor the EU poses any direct military threat to the other. Nevertheless, the EU and China are beginning to bump up against one another on a number of political and security issues.

One sensitive issue is Taiwan, a successful democracy and market economy but still viewed as a renegade province by the Chinese government. China’s leadership is absolutely committed to the ‘one China’ principle (which rules out independence for Taiwan and seeks the province’s re-unification with the mainland) and has made EU acceptance of this principle a pre-condition for relations with the European Union. The Chinese government also threatens military action if Taiwan formally declares independence.

The US retains a commitment to the defence of Taiwan and is the central external actor in this context. The EU, which has so far remained largely silent on Taiwan – with the notable exception of the European Parliament -

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could arguably do more on the issue. While the EU has consistently called for China to pursue a peaceful approach to the issue, it could enhance support for Taiwan and make clear to Beijing that the use of force would incur very significant long-term costs in terms of political and economic relations with Europe. If the EU-China relationship is really a maturing strategic partnership it should be able to survive more substantial European support for Taiwan.

China’s ambitions in Africa, its support for the dismal regime in Sudan, the unwillingness to put pressure on Iran over its nuclear programme and the reluctance to join a successor to the Kyoto agreement on global warming all raise further question marks over the EUChina strategic partnership.

The Fundamental Challenge: Changing China, Changing Europe

The European Union recognises China as an increasingly important global player across virtually the full spectrum of international issues. In responding to China as an emerging superpower, the EU also seeks to shape China’s international behaviour and domestic evolution according to European norms and values. In other words: in addition to the official agenda of supporting the integration of the PRC into global politics, the EU is also pursuing a not-too-implicit agenda of changing Chinese perceptions and behaviour. The European objective of supporting China’s evolution towards a market economy implies re-shaping China’s domestic politics because a full market economy

requires a well-functioning independent judiciary to guarantee property rights, independent intermediary organisations to represent civil society, private enterprises, free access to information, and a range of individual freedoms to encourage entrepreneurial activity.

From the implicit European perspective, modernisation and marketisation will inevitably lead to a pluralisation of society.

Supporting China’s reform process thus turns into a subversive strategy to change China’s political and economic system.

While the ruling Communist Party of China has set out the aim of establishing a ‘socialist market economy’, economic reforms were introduced with the explicit aim of strengthening the Communist regime. While the effects of economic reforms in China are still subject to intense academic debate,5 so far the CCP has avoided a systemic transformation or deconstruction of the PRC while at the same time overseeing the country’s rise to international prominence.

In essence, the Communist regime has so far avoided making the kind of domestic changes which are implicit in the EU’s approach to China – whether this will continue to be the case, and what this means for the EU’s strategy, remains to be seen.

From the Chinese perspective, the EU is a very valuable source of high technology, capital and

know-how. All of these are vital if the Chinese leadership is to fulfil its self-defined historical mission of uniting and developing the Chinese nation and leading China to a position of global leadership. In the short-term at least, the Chinese government would clearly prefer to have a politically and strategically much more mature political Union. Even if a consensus within Europe emerges that the EU has should play a more leading role in international relations, it is highly unlikely that the policies pursued would meet the preferences of the Chinese leadership. An EU which openly challenges US supremacy seems a very long way off. But even on less fundamental issues like Taiwan and human rights, China is working hard to distance the EU from its own core values.

If both partners continue to pursue these agendas of changing the value base and institutions of each other, the emerging tensions in ChineseEuropean relations are likely to remain. Decision-makers in Brussels and Beijing should not misinterpret the issues as teething problems of an emerging Chinese market economy finding its place in the globalised economy. They are the product of fundamentally different concepts of politics, international relations and democracy.

Look out for the next round of mutual disagreement!

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Endnotes 1 Commission of the European Union (2007a), EU Trade Commissioner Mandelson in China November 23-28. Press Release.

2 Peter Mandelson (2007), Growing Trade, Shared Responsibilities. Speech at the EU-China Business Summit, Beijing, 27 November 2007.

3 Duchene, F. (1972) ‘Europe’s Role in World Peace’, in Mayne, R. (ed.) Europe Tommorrow: Sixteen Europeans Look Ahead, (London: Fontana), pp. 32-47; Nye, J. S., Jr. (2004) Soft Power: The Means to Success in World Politics, (New York: Public Affairs), pp75-83; Manners, I. (2002), ‘Normative Power Europe: A Contradiction in Terms?’, Journal of Common Market Studies, Vol. 40, No. 2, pp. 235-58; and Mark Leonard, Why Europe Will Run the 21st Century, (London: Fourth Estate, 2005).

4 The Preamble of the Constitution of the People’s Republic of China 5 Amply illustrated by debate in the special issue of the Journal of Democracy on China in 2003.

See Minxin Pei (2003), ‘Contradictory Trends and Confusing Signals’, in Journal of Democracy, Volume 14, No 1 (January 2003), pp 73-81.

Tibetan Riots, March 2008: Causes and Consequences

A Niall Duggan Doctoral researcher at the Irish Institute of Chinese Studies, University College Cork

S BEIJING CONTINUED its final preparations to play host to the 29th Summer Olympic Games, rioting and protests ignited across the Tibetan region(s) of China throughout the second half of March, the severity of which have not been seen since 1989.

At least 25 instances of protests by ethnic Tibetan groups have been reported across Tibet and neighbouring provinces in Western China. Estimates claim that up to 160 people have been killed, and another 200 people imprisoned as a result of their involvement in the protests.

There are many socio-economic, historical, cultural and ethnic reasons for the riots.

Tibet has had a tumultuous history: it has spent some periods functioning as an independent entity and others ruled by powerful Chinese and Mongolian dynasties. Tensions have been escalating since China, ruled by the Chinese Communist Party (CCP), retook control of Tibet in 1951. China deployed thousands of troops to enforce its claim on the region in 1950.

Some areas became the Tibetan Autonomous Region (TAR) and others were incorporated into neighbouring Chinese provinces. The Dalai Lama, the spiritual leader of Tibetan Buddhism and by tradition

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Tibet’s absolute political ruler, led a failed anti-Chinese uprising in 1959, after which he fled Tibet and set up a government in exile in India. The majority of Tibet’s monasteries were destroyed in the 1960s and 1970s during China’s Cultural Revolution. It is believed that Chinese forces killed thousands of Tibetans during various periods of repression and martial law. However some catalysts for the March riots, such as cultural and religious repression, as well as increased inequality due to the side effects of China’s modernisation process, belong to the modern era. The timing of these protests is particularly important, as the CCP had been hoping to use the Beijing Olympic Games to create a new image of the People’s Republic of China (PRC).

Re-Launching China

The 2008 Olympic Games in Beijing are considered by many to be China’s ‘re-launching party’: re-launching itself as a global leader and world power, a status that it enjoyed throughout history, a status lost around the mid-1800s. The Olympic Games provide the ideal showcase for the Chinese government, as well as the Chinese people, to present China as a modern vibrant state on the cut-

‘The Chinese government has responded to their critics by claiming that any democratic government would have reacted to the violent rioters in Tibet in the same fashion’

ting-edge of technology, science, art, culture and sport; a country that boasts global cities with exciting modern infrastructure, state of the art tourism and business; and a country that fosters companies, which lie at the forefront of the global economy.

By projecting such an image, China’s government hopes to remarket the brand ‘Made in China’, which is currently synonymous with low quality goods produced in mainland China under conditions that violate human rights. On the political front, the Chinese government is hoping to use the Olympic Games to alter Western perceptions of the CCP, i.e. from an image of the suppression of political freedoms, (symbolised by the solitaire student protester confronting a People’s Liberation Army tank during the crackdown on the 1989 demonstrations), to an image of happy citizens living in a harmonious society, enjoying huge increases in their standard of living due to the enormous economic growth owing to a change, executed by the CCP, to a socialist market economy.

Changing a country’s image on a global scale is akin to rebranding a major product. It is hoped that the Olympic Games will launch ‘Brand China’, which will modernise people’s

perceptions of China, while concurrently maintaining China’s image as an ancient cultural centre, with which we are already familiar. Branding at this level has successful precedents: the ‘I heart New York’ campaign being a prime example of such a marketing campaign. The successful launch of this national brand will be of great economic benefit, as it will lead to the influx of foreign direct investments (FDIs) and will increase tourism, as well as providing a positive image of China abroad.

Tibet: An Opportunity to Be Heard

However the 2008 Summer Olympic in Beijing is also the perfect opportunity for the disenfranchised of Chinese society to voice their grievances on a global stage. Signs that Tibet’s independence and civil rights movements would be particularly vocal in voicing their objections came last year (2007) near Beijing, when a group of Tibetans living in North America and Europe hung a sign from the Great Wall of China, which read, ‘One World, One Dream, Free Tibet 2008’.

This image was beamed by satellite around the world, as it happened to correspond with a Beijing 2008 publicity event

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held nearby. Although 10 March 2008 is the 49th anniversary of the failed Tibetan uprising against Beijing’s rule, few people expected the scale of protests, which began on 10 March and escalated on 14 March. The demonstrations and protests spread throughout Greater Tibet, which covers the TAR, the whole of Qinghai province, Western parts of Sichuan province, areas of Yunnan province and some areas of Gansu province. The resulting crackdown by Chinese security forces has left a number of people dead, although the exact number remains unknown: the exiled Tibetan government claims as many as 160 people were killed, while Beijing disputes this, alleging that only 19 people, predominantly Han-Chinese, were killed by rioters. A number of government and human rights groups have expressed strong disapproval regarding the Chinese government’s reaction to the protests in Tibet, with some groups calling for a boycott of this summer’s Olympic Games.

The Chinese Reaction

The Chinese government has responded to their critics by claiming that any democratic government would have reacted to the violent rioters in Tibet in the same fashion. If we look at the reaction of the British government to the civil rights movement in Northern Ireland in the 1960s and 1970s, and the US government’s reaction to the African-American civil rights movement in the same period, we can see there is some validity to the Chinese government’s claim. As the UK and the US are considered the backbones of

liberal democracy, i.e. rule by law, freedom of speech and freedom of assembly, both governments’ actions during these events could be interpreted as far more shameful and hypocritical than the actions of the Chinese government in Tibet, as freedoms of speech and assembly are not rights the Chinese people enjoy. To a certain extent, the Chinese government is correct in claiming that Western governments would have reacted in a similar fashion to China. However the Chinese government should closely examine the results of violent crackdowns on disenfranchised groups protesting for rights, autonomy or independence. Frequently these groups become more militant, turning to more violent forms of protest, often leading to the formation of terrorist groups, or strengthening the ranks of previously existing groups. The Dalai Lama himself has warned, for some time now, that members of the Tibetan community (particular the younger members) were beginning to stray from the path of peaceful protests that he has been advocating in public since his exile from Tibet in the 1950s. The protests this March were violent, even before the crackdown of the Chinese security forces. Many ethnic Han Chinese, who have moved to and settled in Tibet in their droves since the beginning of the reform era in the early 1980s, have been attacked by Tibetans who accuse the ethnic Han Chinese of cultural genocide. The protesters claim that ethnic Han Chinese inhabitants enjoy a commercial advantage over their Tibetan counterparts as all official business, such as

appealing for state contracts and licences, is conducted through Mandarin Chinese. Other key areas, such as education, are also conducted through Mandarin Chinese. This forces Tibetans to neglect their own language and culture in order to gain an education and compete in the market place alongside the ethnic Han Chinese that have relocated to Tibet. Tibetan groups have also reported that the Chinese government has forced nomadic Tibetan tribes to settle, and has given away their lands. Once again, this is a crime of which many Western democracies are guilty. Many governments have inflicted the same offence on their own nomadic peoples, claiming, as the Chinese government does, to be helping these tribes to develop. Cultural genocide is a very subjective issue. One may claim that economic development in an area is bound to damage traditions and cultures.

However many Tibetans and human rights groups, such as Amnesty International and Human Rights Watch, claim that Tibetans are under constant duress to conform to Han Chinese culture, and are unable to express their ethnic identities outside the realms of traditional song, dance and customs.

Tibetans face arbitrary arrests, detention and torture or simply ‘disappear’ when practicing their religion or otherwise arousing the suspicions of Chinese security. There are also claims of enforced sterilisations on ethnic Tibetan women in order to enforce China’s one child policy, which legally does not apply to ethnic Tibetans.

This claim is backed by the United Nations Special

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Rapporteur, Radhika Coomaraswamy, who stated: ‘Women in Tibet continue to undergo hardship and are also subjected to gender-specific crimes, including reproductive rights violations such as forced sterilisation, forced abortion, coercive birth control policies and the monitoring of menstrual cycles. There have been many reports of Tibetan women prisoners facing brutality and torture in custody.’

The Chinese government claims that such transgressions against human rights are either outdated or untrue. Whether these claims of human rights abuses are true or false is only a potential problem for the Chinese government if they are unable to convince the majority of the Tibetan population that such claims are untrue. If the Tibetans believe these human rights abuses to be a reality, it will galvanise their support for Tibetan independence and may lead to a more violent Tibetan independence movement.

Tibet’s economy is relatively poor and underdeveloped and depends largely on agriculture, although tourism is becoming an increasingly important revenue earner. The territory is, however, rich in minerals, and many Tibetans maintain that the exploitation of these minerals to fuel China’s economic development is the real reason behind China’s determination to hold on to Tibet. Although this argument is not without its merits, it does overlook the fact that the PRC have been in control of Tibet since the 1950s, when poor transport links limited the exploitation of these minerals.

The rise of nationalism in China is a far greater motivator for

China’s continued control over Tibet. This rise of nationalist sentiment is due in part to the relaxing of communist dogma and the introduction of a patriot education system in the 1980s, coupled with the strong belief among the Chinese population that Tibet is historically part of the Chinese motherland. This means that the Chinese government would face a strong backlash from the Chinese general public if they were to concede Tibet from Chinese rule.

How has Europe reacted?

The Chinese government claims that the Dalai Lama himself is behind the violence in Tibet, and that he is attempting to use media coverage of the Beijing Olympic Games for his own political agenda, which will tarnish the summer Games. The mumbling of the word ‘boycott’ is being heard in the halls and offices of Western governments, as public opinion swings towards this option. Public opinion has been influenced by images of Tibetan protesters being violently beaten by security forces, which have been continually broadcast across television screens across the world, although in a number of cases this is in fact Nepalese security forces, rather than Chinese ones. A number of European countries have suggested that if China does not restrain itself from further suppression of protesters, they will, at least, conduct a diplomatic boycott of the Games, i.e. heads of state and government officials will not attend the Games.

Heavier sanctions from Europe appear unlikely as many European states are major investors in China, and would

stand to lose heavily in terms of trade if relations with China were to sour. However the March riots in Tibet and the subsequent crackdown will no doubt make it much harder for the Chinese government to convince the EU to drop its arms embargo against China. The head of the European Parliament, Hans-Gert Pöttering, issued an invitation to the Dalai Lama to address MEPs, and paved the way for a vote on a possible partial boycott of the Olympics. However the Dalai Lama has called on the governments of the world not to boycott the Games: he believes the people of China have earned the right to host the Games, and they should be held, with all the countries of the world attending and participating.

There seems to be a general trend amongst EU states towards taking a harder stance towards China’s human rights violations, particularly in terms of Tibet. This can be seen in the meeting between German Chancellor Angela Merkel and the Dalai Lama in 2007.

However, due to the Dalai Lama’s stance on an Olympic boycott, it seems highly unlikely that any state will boycott the Games. Despite this, many individual athletes have chosen to boycott the Games, as well as the Olympic torch relay. Most

notable thus far has been India’s football captain, Baichung Bhutia, who had been asked to carry the torch through the Indian capital, Delhi, in April.

Baichung Bhutia stated: ‘I sympathise with the Tibetan cause.

This is my way of standing by the people of Tibet and their struggle’.

Whether the Games are, in fact, boycotted or not, it is clear that China has failed to fulfil many of the criteria and conditions under which China had been granted the right to host the Games, i.e. the improvement of human rights, freedom of movement throughout China for foreign journalists etc. This tarnishes China’s reputation on the international stage regarding the fulfilment of future promises and treaties.

What does the future hold?

The exiled Tibetan spiritual leader, the Dalai Lama, advocates a non-violent, negotiated solution to the Tibet problem and claims to accept the notion of real autonomy for Tibet under Chinese sovereignty.

China has questioned his claims that he does not seek independence and is suspicious that he may use increased autonomy as a stepping-stone to independence. It is very unlikely that a peaceful settlement that both sides can agree on will be

‘There seems to be a general trend amongst EU states towards taking a harder stance towards China’s human rights violations, particularly in terms of Tibet’

157 Social Europe Journal Spring 2008

Independent Thinking from Polity What’s Wrong with the European Union and How to Fix it Simon Hix, Professor of European and Comparative Politics, London School of Economics and Political Science The European Union seems incapable of undertaking economic reforms and defining its place in the world. Public apathy towards the EU is also increasing, as citizens feel isolated from the institutions in Brussels and see no way to influence European level decisions.

Taking a diagnosis and cure approach to the EU’s difficulties, Simon Hix tackles these problems with distinct clarity and open mindedness. What the EU needs, Hix contends, is more open political competition. This would promote policy innovation, foster coalitions across the institutions, provide incentives for the media to cover developments in Brussels, and enable citizens to identify who governs in the EU and to take sides in policy debates. The EU is ready for this new challenge. The institutional reforms since the 1980s have transformed the EU into a more competitive polity, and political battles and coalitions are developing inside and between the European Parliament, the Council, and the Commission.

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www.polity.co.uk reached in the near future, and it seems that the status quo will remain. The effects the March riots in Tibet have on China’s future are numerous: ‘Brand China’, which was meant to be re-launched by a successful and grand Olympic Games in 2008, will now be associated, particularly by Westerners, with an oppressive authoritarian regime.

What the Chinese government has in fact achieved by its reaction to the situation in Tibet this March has been to replace the image associated with the Communist rule in China from that of a student facing down a tank, with that of the People’s Liberation Army attacking Tibetan Monks. This may have long-term economic ramifications on China. It could damage the marketing of Chinese products abroad due to their associa-

tion with negative marketing conducted by disgruntled groups within Chinese society.

It may also have long-term consequences on China’s relationship with the EU, which is beginning to put more of an emphasis on human rights in its dealing with China. However there is light at the end of the tunnel for the Chinese government: if the government recalls the aftermath of the 1989 Tiananmen Square massacre and, in particular, the reaction of the Western powers, they will note that sanctions, introduced then and beyond, have become softer over time as China has grown in economic importance.

Money washes away all sins.

158 Social Europe Journal Spring 2008

Interview with EU Enlargement Commissioner Olli Rehn

Olli Rehn European Union Commissioner for Enlargement

SE: In the last years, the number of EU member states has almost doubled from 15 to 27 members. This major extension has obviously had economic, political and cultural consequences. How do you think this enlargement was absorbed by the Union? And were there any political consequences?

OR: The fifth enlargement of the EU is a great success. It has peacefully reunited Eastern and Western Europe. It is an extraordinary example of the EU’s soft power of democratic transformation. We have more and more compelling evidence of the economic benefits too. We are trading today five times as much between Western Europe and Eastern Europe than ten years ago. The new member states are the engine of economic dynamism for Europe today, so important for job creation in the whole EU. There is no institutional gridlock in the EU either. The adoption of the Reform Treaty in Lisbon is the best proof that the enlarged Union works.

The new Treaty that adapts the EU to this new reality reinforces our capacity to act: to deliver concrete results to our citizens and to make the EU a stronger global player.

SE: Slovenia was the first state of the former Yugoslavia to join the European Union in 2004. It has since developed very positively, including the achievement of becoming the first country to join the Euro after its introduction.

Also, Croatia seems to be on the verge

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of becoming the next European Union member state. But doubts remain about Serbia and the newly founded state of Kosovo in particular. How do you see the future development of Serbia-EU and Kosovo-EU relations after key states recognised Kosovo as an independent state?

OR: Indeed, the countries of the Western Balkans can be inspired by Slovenia’s example of successful accession to the European Union. Croatia’s good progress is also a positive benchmark for the region.

Serbia is central for regional stability and good neighbourly relations in the Balkans. Serbia has the potential to be the engine of the region and the EU is ready to accelerate its EU course – including candidate country status. But for this Serbia needs to reaffirm its European choice and meet the conditions. The EU can set the road sign, but it is up to the Serbia to decide the direction.

This is a crucial choice to be made: Serbia can either turn to the European future or risk self-imposed isolation.

The first option will take Serbia forward, towards stability, stronger freedoms and increasing prosperity – along with the other countries of the region.

The other option is a road to nowhere.

The EU remains committed to Kosovo’s European perspective and political and economic development.

Kosovo on its part needs to ensure its commitment to a democratic and multi-ethnic society.

SE: Another pivotal candidate state for EU membership is Turkey. It seems unrealistic for Turkey to become a full member of the European Union without a permanent solution to the question of divided Cyprus. The resolution of this particular problem obviously also requires political changes from existing EU member states. How far down the road to a permanent solution of this key political issue is the EU? And at what stage are the membership negotiations with Turkey in general?

OR: Concerning the Cyprus issue, I welcome the recent successful meeting between leaders of the Greek Cypriote and Turkish Cypriote communities, and their agreement to take full responsibility for the future conduct of the negotiations. I commend their decision to meet again in three months’ time to review the work of the working groups and technical committees and, using their results, start full-fledged negotiations under the auspices of the Secretary-General of the United Nations. The EU stands ready to support the negotiations and both parties.

As for Turkey’s EU accession course, the accession negotiations are on track.

Their pace depends on Turkey’s ability to carry out the necessary reforms in order to meet the tough conditions for EU accession.

After successfully overcoming a difficult political and institutional crisis in 2007, the Turkish government has committed itself to the EU related reforms. I encourage Turkey now to revitalise the momentum of reforms, by taking concrete decisions in key areas, such as freedom of expression and freedom of religion.

Turkey’s accession to the EU will be a long and sometimes difficult journey, during which Turkey will have to transform itself, to make fundamental freedoms prevail in all corners in the country and in all walks of life.

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SE: In the wake of the debate about Turkish EU membership, a fundamental question has surfaced: What are the borders of the European Union?

And how should these borders be defined? Is the European Union a geographic, cultural or value-based entity? What are your answers?

OR: The EU Treaty says that any European country which respects the values of democracy, human rights and the rule of law may apply for EU membership. However, this does not mean that all European countries must apply, or that the EU has to accept all applications. It is not an automatic process, but one where conditionality is the key.

The EU has consolidated its enlargement agenda. Our energy now focuses on South-East Europe, ie. the Western Balkans and Turkey. They have a clear accession perspective, provided they fulfil the necessary conditions. We have to be cautious of taking new commitments, at the same time I do not think we should set in stone the EU’s final borders. The term ‘European’ combines geographical, historical and cultural elements, which all contribute to the European identity. The shared experience of ideas, values, and historical interaction cannot be condensed into a simple timeless formula and is subject to review by each succeeding generation.

Cities and Municipalities are Europe’s Strength

T Herbert Schmalstieg Former Executive Mayor of Hanover and President of the Union of Socialist Local and Regional Representatives in Europe (German Version)

HE EUROPEAN integration process has been an unprecedented success story. It provided the basis for reconciliation among the peoples of Western Europe and with the accession of the Central and Eastern European states in 2004 and 2007, it overcame the 40 years lasting division of the European continent. The united Europe brought peace, security, prosperity and progress. Since the nation states cannot meet the challenges of our time on their own anymore, there is no alternative for Europeans to the European Union despite its many little deficiencies. We have to pursue the objective to create a social Europe together with Europe’s citizens and for Europe’s citizens.

In the process of growing closer together, cities and municipalities play an important role due to a number of reasons. After World War II, Europe’s cities and municipalities brought their people back together by establishing town

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twinnings and cooperation.

They so crucially contributed to the reconciliation process in Europe. Following the fall of the Berlin Wall, many local authorities in Western Europe together with state and social players shared their experiences with the Central and Eastern European countries, which had only established their democracies in order to support the creation of local democratic as well as local economic structures in these countries.

The role the more than 95,000 cities and municipalities are playing in the EU is also outstanding because they shape and organise the immediate social environment of 490 million people. The EU’s cities and municipalities make sure that the essential basic conditions of everyday life are maintained for its citizens. Given the proximity to their people, local authorities form the basis of European democracy and society. In doing so, they preserve local and regional identity and maintain Europe’s cultural diversity in the globalised world.

In the light of these reasons, the EU must more strongly consider the European cities and municipalities and pay more attention to their interests.

What counts for nation states, also counts for Europe: A state

cannot survive without its cities. The same is true for Europe. Local authorities on their parts have to deal more thoroughly with the EU in order to better use the chances the EU offers.

If one considers the relationship between the European and the local and regional levels, two questions come to the fore: ‘How does the European Union change local government and affect local policies?’ and ‘How can local authorities influence the shaping of European policies?’

Since at least the creation of its internal market in 1986, Europe has arrived in the town halls and has increasingly affected local government. We should not make the mistake and regard the European integration process as obstructing local development and democracy. It is in fact an inevitable consequence of the European integration process that the governmental manoeuvring room in the member states becomes smaller due to the establishment of common rules and the process of harmonisation. This is also true for the local level.

Yet, the right balance must be struck.

Given the number of duties local authorities and regions perform for their people, local self-government needs to be strengthened. Local authorities need to maintain their ability to act. Otherwise, they cannot fulfil their functions for their people. According to the subsidiarity principle, the execution of tasks has to happen as close as possible to the citizen. The European Union or the nation state shall only take action if the local or regional level can-

not effectively handle matters.

This concept also ensures that precisely tailored solutions, which address the needs of the people, can be found at local level. What goes well for a town in North Finland, does not have to work out for a municipality in Andalusia. Europe needs decentralised structures in order to be able to use its innovation potential and cultural diversity in the best possible way for the benefit of its people. Europe’s big advantage and strength lies in the variety of its cities and municipalities. Therefore, the following principle should be applied: Integration wherever it is necessary and decentralisation wherever it is possible.

In Germany, we assume that 70 per cent of all EU regulations have direct or indirect influence on local action; for example, by setting social and ecological standards, through consumer protection, through EU internal market rules (competition law and public procurement law), and also through EU funding for local and regional projects.

Human resource management, construction planning, water pollution control, public transport, Sparkasse (savings bank), waste management, economic actions of local authorities, business development or public procurement are some of the areas of local politics, which are affected by EU law.

Furthermore the European citizen’s right to vote in local elections has to be mentioned.

Every EU citizen (citizen of an EU member state) is entitled to vote and run for office in local elections, if he or she is a resident in the municipality where the local elections are held – no matter in which EU member

162 Social Europe Journal Spring 2008

state. This right significantly contributes to integration and a growing together of different nationalities at local level.

EU structural policy funding programmes also affect the development of municipalities and regions. It is an act of solidarity that the European family supports structurally weak regions and cities by providing them with money from the structural funds programmes so that their economic strength and competiveness can be improved. Projects, which receive EU money, are, for example, the improvement and development of infrastructure, support of structural change in old industrial regions, creation of new jobs and qualification of unemployed persons, restoration of city districts or projects in rural areas. Although the European Commission has paid more attention to urban areas and rural regions in the programming period between 2007 and 2013, due to the special importance of cities, they should be even more intensively funded. With regard to rural regions, more importance than before needs to be attached to the promotion of regional development of structurally weak rural areas compared to a ‘pure’ funding of agriculture. Overall, it would be desirable for cities and regions if application procedures for EU programmes would be further simplified.

Of course, we feel the dynamic of globalised markets in our cities. We recognise that the economic development of our cities and regions also depends on decisions of globally acting companies. Given the objective of a social market economy, as it is codified in the EU Lisbon

Reform Treaty, the social dimension of the European Union needs to be further enhanced.

Whether people accept the EU essentially depends on the improvement of working and, in particular, living conditions.

European legislative projects therefore need to be checked up on their social consequences for Europe’s citizens.

In many areas, the continent’s economy has regained new momentum due to the dynamic of the EU’s internal market. It has also provided new jobs. The internal market regulations however also bear problems. For local authorities, the tense and rather difficult relationship between the EU’s internal market and locally delivered public services is of particular importance. Services of general interest, as public services are called in the EU Commission’s language, are in general oriented towards common welfare. The scope of the services of general interest, which are mostly provided by local authorities, ranges from basic water and energy supply to public transport and areas like welfare, school, health care, housing, culture and care for persons in difficult living situations. As soon as theses services have economic character, they are subject to European competition law, public procurement law and state aid law. The problem is that the division between economic and non-economic services is often unclear.

Since the guarantee and the improvement of these services is a fundamental condition for the realisation of a social Europe, we need to strike a balance. Competition should never be an end in itself. It is the indi-

vidual that counts. For some time, the Local Government Associations in Germany and the Council of European Municipalities and Regions (CEMR) have therefore demanded more legal certainty for local authorities in the field of services of general interest. The member states should keep the right to decide who delivers what kind of public services and how public services can be provided.

In doing so, the historically grown structures of each EU member state need to be considered, according to the before mentioned subsidiarity principle.

The stronger European politics and the EU Commission affect local activities, the more important it becomes that local authorities on their part exert more influence on the shaping of policies in Brussels. The often praised Europe of the citizens is not feasible without the voice and involvement of local authorities in the shaping of European policies. If the European integration process succeeds, local authorities should not only be objects of such a process, which have to defend their rights. Instead, they should assume an active role in this process as a successful European integration needs local authorities and regions.

Thanks to their expertise and

knowledge about local conditions and problems, they are able to deliver an important contribution to the shaping of policies close to the citizens.

Local authorities are in a better position to assess to what extent legislative projects meet the needs of the people in their immediate social environment.

It has to be said that in most of the EU member states the possibility of involvement in the national legislative process is very limited for the local level. It is mostly restricted to informal or institutionalised consultation. At the European level, a similar pattern can be recognised.

Since the Maastricht Treaty, the regional and local authorities at least have had an institutionalised advisory body within the EU – the Committee of the Regions (CoR). This is an achievement, which in the light of the restricted participation possibilities of local authorities in most of the EU member states should not be disregarded. Although over the years the Committee of the Regions has been strengthened, it is still a fact that it has only advisory functions, which carry little weight in the legislative decision-making process. The involvement of the Committee occurs in a relatively late stage of the legislative process and is

‘Local authorities are in a better position to assess to what extent legislative projects meet the needs of the people in their immediate social environment’

163 Social Europe Journal Spring 2008

M O FR N EW

Sidekick Bulldog to Lapdog: British Global Strategy from Churchill to Blair

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by Stephen Haseler

Sidekick is also a history of how a whole post-war British political generation has turned Britain into what amounts to a province of the American global system. He suggests that the ‘special relationship’, based on dependence, is not just undignified but also unhealthy – spawning an undercurrent of anti-Americanism.

And he argues that in the new political era we still have a choice – between, on the one hand, continuing with the ‘special relationship’ and on the other making a real contribution to the building of Europe and, through Europe, towards a healthy and balanced transatlantic relationship.

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restricted to the right of nonbinding hearings. Besides the Committee of the Regions, the major European associations, such as the CEMR and Eurocities, as well as national local government organisations and to some extent offices of regions in Brussels represent the interests of local authorities and regions at the European level.

The EU Lisbon Reform Treaty contains significant improvements of the position of local authorities and regions, which had been carried over from the Constitutional Treaty. The explicit recognition of local selfgovernment as an integral part of the national identity of the EU member states is of utmost importance. The Treaty also envisages an explicit extension of the definition of the principle of subsidiarity to include the

local and regional levels as well as a strengthening of the Committee of the Regions by providing it with the right to go to the European Court of Justice if it believes the subsidiarity principle has been breached.

Furthermore, a reliable financial assessment process and the codification of the local organisations’ right to consultation within the EU are foreseen. After the collapse of the Constitutional Treaty, we must now hope that the Lisbon Treaty will come into force. Then, the European cities and regions need to consequently use the opportunities the Treaty provisions bring about.

The democratic structure of the European Union with its 27 member states and more than 490 million people need a solid basis. Such a basis is the local level that is our more than

164 Social Europe Journal Spring 2008

95,000 cities and municipalities.

European integration and local self-government do not contradict each other. Europe needs the support of local authorities and local authorities deserve the attention of European politics. And for local politicians it is necessary to remember: European politics is too important to leave it to European politicians and the national governments.

Social Europe Journal • Volume 3 • Issue 3 • Spring 2008

Endnotes

All the views expressed in the articles of this issue are those of the authors and do not necessarily represent the views of Social Europe Forum.

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