Solar Panels and their Effect on European Views of China

Louise Merrington graduated with a PhD in China-India relations from the Department of Political and Social Change, ANU College of Asia and the Pacific in 2012. She was one of four alumni representing the College at the 2013 Global Emerging Voices program in Turin, Italy, which brings together young scholars from Europe and the Asia Pacific to examine global issues. Her Global Emerging Voices Fellowship was supported by the Australian Centre for China in the World. Louise also contributed an essay to the Australia-China Agenda 2013 project titled ‘Australia’s Engagement with China and India‘.—The Editors



The flags of China and the EU. Photo by friendsofeurope on flickr.

The flags of China and the EU. Photo by friendsofeurope on flickr.

In mid-2012, a long-running dispute between the European Union (EU) and China over alleged dumping of Chinese solar panels into the European market threatened to darken relations and escalate into a multi-sector trade war.

In retaliation for the EU’s proposal to place punitive tariffs on Chinese solar panels, China announced similar tariffs on French, Italian and Spanish wine. The dispute was eventually resolved, to the satisfaction of both parties – though it was met with some consternation by the European solar industry. What it highlighted, however, was the difficulty Europe continues to face in coming to grips with a rising Asia. With its gaze turned inwards towards its own regionalism project for the last six decades, the EU has yet to develop a substantive plan for engaging postcolonial Asia.

Historically, Europe’s relationship to the Asia Pacific was that of colonial powers to colonies; the French, Dutch, Portuguese, British, Spanish, Germans and Belgians all had a substantial presence across the region. The end of the Second World War, however, brought not only a wave of decolonisation movements throughout the old empires but also a push for greater integration within Europe itself. Fast-forward nearly 70 years, and the EU, beset by its own crises, is struggling to define its relationship to an Asia that is growing increasingly more powerful.

The rise of Asia, particularly economically, has not gone unnoticed in Europe. As well as the impossible-to-ignore growth of China as a global economic powerhouse, the four Asian Tigers of Singapore, Hong Kong, South Korea, and Taiwan have developed into advanced, high-income economies on par with their European counterparts. Indonesia, the Philippines, Malaysia and Thailand are often referred to as the Tiger Cubs, or economies to watch in the coming decades, while India shows considerable promise, even if it has yet to capitalise on it.

For Europe, the economic opportunities are clear, and its geography means these do not generally need to be tempered by the strategic or security considerations that keep policymakers in countries closer to Asia, such as Australia and the United States, up at night. And yet, Europe’s engagement with Asia, both collectively and bilaterally, remains low.

Part of the reason for this is the flipside of economic opportunity, which is competition. As seen in the solar panel stoush, Asia provides not only a wealth of opportunity but also a competitive edge, especially in manufacturing, that can undercut European producers via much lower production costs. This is particularly the case with China, even though it is one of only 10 countries to have a strategic partnership with the EU.

The EU-China strategic partnership has advantages for both polities: greater market access and improved global governance for the EU, while for China the EU remains its largest trading partner, a valuable source of technology transfer, and also helps to offset American global political and economic dominance.

However, issues in the partnership, such as the EU’s refusal to give China market economy status, and trade issues like the solar panels dispute, are symptoms of Europe’s ongoing difficulties with engaging Asia in general, and China in particular.

These difficulties stem, in part, from debates over European regionalism itself. The European Union as a whole lacks a cohesive policy on how to engage China or wider Asia, because when it comes to foreign relations Europe cannot decide whether it is a single, fully integrated union or simply a bloc of countries.

With this lack of a cohesive EU approach to Asia, some countries, such as Germany, have chosen to engage bilaterally, particularly with China, with notable success. Many European countries, however, have little interest in Asia in either an academic or policy sense. The lack of a strategic threat from Asia gives Europe the opportunity for unbridled economic engagement with the region, but it also means there is no overarching imperative to promote the study of Asia. Consequently, in much of Europe, Asia is seen as very far away; the South China Sea dispute is far outweighed by the Arab Spring.

This lack of a strategic focus on Asia from Europe gives rise to a number of questions. First and foremost is where Europe would stand in the event of a military conflict in Asia, particularly between the United States and China. There is also the question of NATO, and its role in a post-Cold War world, especially with its 10-year mission in Afghanistan drawing to a close. There is little emphasis on Asia in NATO, except for its traditional target of Russia and its ongoing presence in Afghanistan. Although there is the possibility that, should the US’ much-hyped rebalance to the Asia Pacific live up to its claims, it may play a role in reorienting NATO towards the region, this remains uncertain.

Russia has already expressed the intention to become more strategically engaged in Asia, and has been a traditional exporter of arms to various Asian countries for many years. Likewise, the EU continues to sell arms to Asia, though it maintains its post-1989 arms embargo on China, which is another source of friction in the relationship. It is also possible the EU may try to capitalise on its role as an outsider in Asian politics and offer itself as a mediator in regional disputes such as those in the South and East China seas – though such an offer would probably be emphatically rejected.

The 2008 Global Financial Crisis (GFC) and the resulting Euro crisis have turned Europe inwards, yet also illustrated just how much it needs Asia. How Europe decides to manage Asia’s economic opportunities – and cope with its challenges – will be integral to how it defines itself as a union. Many Asian countries, particularly China, prefer to deal bilaterally, and this could undermine the EU’s collective economic and strategic goals if it becomes the norm. However, in the absence of a cohesive EU-Asian engagement policy, countries like Germany, which can see the opportunities offered by the rise of Asia, will move to capitalise on them bilaterally.

Asia is not as far away as many Europeans think, and deciding how to deal with it will be crucial to the European Union’s resolution of its own ongoing identity crisis.


Note: This article was also published on the website of the College of Asia and the Pacific, ANU.