Political-economic relations with China: Comparative survey of Japan and western Europe's economic relations with China(1949-2002)

Abstract

China's economic relations with European Community (or EC but known as the European Union or EU after 1993) and Japan are characterized by the same sort of pragmatism seen in its political relations with all big powers. To the Chinese, the EC (later EU) and Japan are balancers in a multilateral world of big powers and valuable sources of political mileage and economic investments they can tap on during periods of downturn in their political and economic relationship with the US or the former Soviet Union. However, Chinese perceptions of Japan and the EU's potential balancers varied with different periods. This essay will examine the idiosyncratic features of each period in Sino-EC (or EU) and Sino-Japanese economic relations. In the beginning phase of the relationship, especially between 1949 to 1972, relationship between China and Western Europe was primarily based on political mutualism and big power balancing. Neither was prepared nor equipped to begin strong economic links. From 1972 to 1985, China-Western Europe economic relations began to take off but very slowly. In the same period, Japanese relation with China was governed by a pragmatic policy of economic precedence over sensitive political issues. The watershed event in 1972 was the US recognition of the People's Republic of China (PRC) over Taiwan which facilitated Western allies like Japan and Western Europe in establishing relations with the PRC. No longer did EC states or Japan have to toe the line between courting China and pleasing Washington at the same time. Other factors like the unpopular Vietnam war and the Nixon shock of no prior consultation with the Japanese on restoring ties with China also prompted the Japanese to embark on a timid independent stance from Washington. Promises of economic benefits as well as nascent problems of EU's relations with China also emerged during this period. China's rush towards modernization after the disastrous Great Proletariat Cultural Revolution saw her on a technology buying spree in a bid to catch up with the rest of the world. However, problems like the lack of legal infrastructure to absorb European investments had to be worked out. Meanwhile, Japan's investments in China took off and she gradually became the predominant source of overseas investments, loans and aids for China. From 1985 to 2002, China-EU relations also became balanced between economic and political goals. China's economic growth took off during this period with annual high growth rates, emerging at the end of this period as a top investment destination for European Union investments and indeed for regions of the world.