With China’s sights set firmly on taking over from the United States as the world’s largest economy in the next decade, Europe’s engagement with China is critical during this transition phase for a number of reasons, write Javier Solana and Kevin Rudd.
Javier Solana is a member of the World Economic Forum’s Global Agenda Council on Europe and Kevin Rudd is a member of the World Economic Forum’s Global Agenda Council on Fragile States.
"Beginning with the onset of the global financial crisis over five years ago and further highlighted by the euro crisis, Europe’s waning economic fortunes stand in dramatically stark contrast to the rising power of China and the broader Asian hemisphere. This marked shift in global power dynamics is significant as Europe becomes increasingly close to being seen by Asia as irrelevant in geopolitical terms. With China’s sights set firmly on taking over from the United States as the world’s largest economy in the next decade, Europe’s engagement with China is critical during this transition phase for a number of reasons.
Firstly, despite its challenging economic circumstances, the European Union’s (EU) economic engagement with Asia remains high and stands to grow with increasing trade and investment flows. The Association of Southeast Asian Nations (ASEAN) as a whole is the EU's third-largest trading partner outside Europe (after the US and China), with more than € 206 billion of trade in goods and services in 2011. The EU is ASEAN’s second-largest trading partner after China, accounting for about 11% of total ASEAN trade. Between China and the EU, more than € 1 billion is being traded every day as China has become the fastest growing market for European exports.
Bilateral negotiations are under way between Europe and many Asian countries to facilitate these flows further. Already, the EU has launched free trade and investment treaties with leading Asian nations. These include South Korea (free trade negotiations completed in 2010, with the free trade agreement coming into force in 2011), Singapore (free trade negotiations completed in 2012), Vietnam, India and Japan.
Secondly, Europe is well-positioned to serve as a prime example to Asia of how overcoming conflict and animosity can lead to strong economic growth. While the continent is tackling tough internal challenges, it is through intense cooperation and unique structures that Europe was able to transition from an area of fraught relations and territorial conflicts to one of prosperity. Though Asia is growing steadily, improved relations within the continent could boost its situation even further. Indeed, stagnant disputes have recently risen to the surface in this continent without an overarching security structure. The EU is in a strong position to offer its expertise on multilateral cooperative engagement.
In fact, the EU’s cutting-edge institutional design has provided strong inspiration for ASEAN. In its beginnings, and still today, ASEAN has tried to learn from the EU’s avant-garde steps, adopting and adapting its successful elements to the Asian context. ASEAN provides an important forum for intergovernmental contacts, a dense network of cooperation. Furthermore, the ASEAN Regional Forum, including Australia, China, the United States and the EU, holds potential as a forum to build confidence and promote peace and security through dialogue in the highly volatile region.
Thirdly, just as Hillary Clinton acknowledged recently as US Secretary of State, the US “pivot” to Asia does not necessarily entail a pivot away from Europe at the same time. In fact, Clinton encouraged the enhancement of the Asia-Europe dialogue with the pursuit of a common strategic engagement, rather than seeing the Asian region only as a market.
There are extremely fertile grounds for cooperation between Europe and Asia. While the economic is the most obvious, Europe must – just as Australia is doing – engage fully with Asia to increase dialogue and build strategic trust. Only through this form of dynamic cooperation can the two continents grow together while overcoming the global problems that affect them.
Finally, as Australia has acknowledged, it is increasingly important to enhance mutual understanding between the European and Asian regions. Understanding fosters tolerance, minimization of conflict and deepened trust. This is the ideal foundation for building a global order that will ultimately benefit us all."