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US-China Conflict, the Analysis on Europe’s Perceptions and Relations with the US and China: Historical Study and Prospects Political Economy, International politics

Author Seung-Keun Lee, Sung-Won Yoon, YooJoung Kim, Hyunjung Kim, Yoo-Duk Kang, and Sae Won Chung Series 21-22 Language Korean Date 2021.12.30

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   With the advent of the era of G2, where the U.S.-China hegemony competition intensifies, many countries are struggling to build relations with the US and China. The European Union (EU) has maintained a close political, security and economic ties with the US. The EU shares identical security vision with the US. In contrast, the EU defined its relations with China as a cooperation partner, competitor and rival. It refers to the EU’s multifaceted relations with China. In climate change, multilateral trades and normative areas, the EU seeks to cooperate with China. However, the EU prompts profit balance through negotiations in the economic sector. Against this backdrop, the EU introduced a concept called ‘strategic autonomy’ by synthesizing the path dependence, Europe’s confronting issues and the EU’s strength and values regarding its relations with the US and China. The EU’s responses to the US-China conflicts are worth further attention.
   EU-US relations are based on Atlanticism, emphasizing the importance of bilateral cooperation based on identical civilization. Atlanticism emerged mainly in Britain in the 19th century as a concept encompassing democracy and the development of Western civilization. After World War II, it was embodied in the “Atlantic Alliance” formation, and NATO was launched in 1949. The establishment of the post-war European order began by the US’ Marshall Plan. In Europe, France pushed for independent economic reconstruction in 1951 by establishing European Coal and Steel Community (ECSC). In this process, confrontations between European countries were expressed by conflicts between British-centered “Atlanticism,” which values building relations with the United States, and French-centered “Europeanism,” which calls for Europeans to lead the establishment of European order. Since the end of the Cold War, on the one hand, Atlanticism has weakened relatively in the context of trans-Atlantic relations.
   Europeanism has recently re-emerged due to the expansion of the autonomous cooperation of European States. The clash between Atlanticism and Europeanism intensified, centered on the conflicts between UK/US and France, as Europe-US relations has been established as a ‘competitive and symbiotic relationship’. In January 2017, the emergence of the Trump administration, which promotes US priority and neo-isolationism, served as a decisive opportunity for cracks in the Atlantic Alliance.
   In terms of economic relations, the United States and the EU are the world’s first and second-largest economies, accounting for 42.7% of the world’s GDP and 29.1% of trade, respectively. They are mutually important trading and investment partners. In this situation, the two sides negotiated the FTA during the 2013-16 period, but it was suspended after the inauguration of the Trump administration, and bilateral trade relations rapidly deteriorated with the emergence of protection trade measures. Simultaneously, China led the establishment of the Asian Infrastructure Investment Bank (AIIB), and as many European countries participated, EU-China relations were also promoted. Amid intensifying trade conflicts between the US and China, the EU and the US agreed in July 2018 to minimize trade friction. Since then, they have cooperated in controlling China in the trade sector. The rise of the Trump administration deteriorated its relations with European states, which led a sharp decrease in supporting President Trump, and European perceptions of the US have changed negatively. The Atlantic alliance was eventually exacerbated. The Biden Administration received the task of recovering the broken Atlantic relations caused by the Trump administration. European perceptions of the US have significantly improved in this respect. During the terms of Trump administration, the negative perceptions about the US were predominant—weakening the US hegemony by viewing China as a leader rather than the US. However, after the Biden’s inauguration, the perception survey results showed that the positive perceptions about the US had increased again, and the US was viewed as a significant partner. The survey respondents recognized the limitation of the US political system and democracy model, so Europe’s perspectives on the US seemed to be changed from the past.
   The 1975 establishment of EU-China diplomatic relations laid the foundation of trade and economic cooperation, environmental dialogue, bilateral summits and human rights talks. Despite each European state showing different attitudes toward China, the two sides maintained relatively sound relations until the end of the 2000s. However, after experiencing the European sovereign debt crisis around 2010, Europeans started to perceive the importance of revising their approaches or policy instruments toward China. In particular, the COVID-19 crisis and US-China conflicts were the leading causes of changing European perceptions of China. The EU declared China not only as a strategic partner but also as a systemic rival. While requiring economic and investment cooperation with China, the EU are cautious about China’s extreme expansionism, human rights violation and challenges to the liberal democracy. It also emphasizes the importance of strategic responses in a multifaceted relationship.
   Europe-China relations have undergone the biggest changes in the economic sector. Since the rapid growth of Chinese economy, the EU-China trade volume has significantly increased. As a result, the two parties became their number one trading partners. In this process, the EU’s trade deficit with China increased over 180 billion Euros in 2020. Until the mid-2000s, European businesses mainly invested in China.
   In contrast, Chinese businesses began to increase their investment toward Europe after the 2008 global financial crisis. In 2017, China’s investment in the EU exceeded the volume of the EU’s investment in China. Recently, China’s investment in the EU is usually implemented as formats of mergers and acquisitions (M&A) in the key industry. It has been a direct cause of the EU’s introduction of a screening system for foreign investment and urging China to sign a bilateral investment agreement.
   European public perceptions of China have negatively changed. European respondents showed their negative perceptions toward China except for the EU-China trade. However, the younger generation relatively showed more positive attitudes toward China than the older generation, which implies further changes. Currently, EU-China relations have changed into a high-tension status. It is still questionable whether the EU maintain their antipathy toward China in the case of the EU’s future enlargement.
   Traditionally, the EU’s diplomacy is characterized by multilateralism, promoting active cooperation among multiple actors. It contrasts significantly from the US’ unilateral diplomatic approach. Hence, the EU has shown its leadership in the fields where multilateralism is universally applicable, such as environment, human rights and climate change. However, in recent years, the EU has been strengthening its own capabilities by ‘strengthening strategic autonomy’. Also, the EU has recently been trying to benefit from diplomacy, national defense, industry, and technology.
   Furthermore, the EU attempts to weigh up its Atlantic partnership with the US against its economic partnership with China. US-China conflict would not be easily resolved under the Biden Administration. On the one hand, the US tried to restore its broken trans-Atlantic alliance. On the other hand, the US established an AUKUS—an alternative alliance with Australia and the UK—which could be regarded as a warning sign. Accordingly, the EU shows its selective cooperation with the US rather than the Union’s complete reliance against the US. Against China, the EU attempted to take a multifaceted approach to each issue. It means the EU’s active support in the areas of trade and investment and the EU’s apparent confrontation against China in the areas of illegal subsidies and unfair practices.
   International conflicts continue to emerge due to a recent combination between security and the economy. The EU’s ‘open strategic autonomy’ is a byproduct of high coordination and troubles in this process. Europe’s strategy for dealing with the US and China provides implications for Korea’s diplomatic and trade policies. South Korea’s diplomacy is at the crossroads due to the US-China conflict triggered by the Trump administration period. It is because South Korea cannot abandon only its value-based alliance with the US but also its significant geopolitical and economic interests with China. First of all, in diplomacy, South Korea-US relations need to be rooted in their alliance because they have shared common values such as liberal democracy and a market economy system. Simultaneously, it is necessary to find an equilibrium between value and pragmatism through establishing multifaceted relations. South Korea does not share its political values and systems with China, but it is obviously an important partner in terms of its economy, climate change, and geopolitical weight. South Korea needs to advocate norm-based international relations by the active participation of the multilateral international order, taking the leading role by finding out the relevant issues and strengthening its solidarity with like-minded partners.
   In the field of trade, it is essential to note the competition paradigm has been shifting into a form combining technical advances, trade policy, labor and environmental regulations. In particular, international actors are inclined to combine trade policies with social issues like climate change, labor and human rights for restraining China. Therefore, South Korea needs to implement preemptive improvement of the systems up to the level of advanced countries in these fields. It also needs to implement diverse approaches such as traditional trade policies based on the FTAs, public diplomacy based on democracy and human rights, and CSR activities which are under company units. Additionally, it is necessary to actively respond to the changes in the global supply chain by participating in the chain reorganization supported by the US and the EU or the restoration plan by using bilateral economic cooperation and local corporations of Korean companies.

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