Lessons from Middle Powers for the EU's China Policy: Japan, Canada and Australia

The Diplomat

5 days ago

In anticipation of the late July EU-China summit in Beijing, held at China's insistence, there are so far no visible concessions from the Chinese side. Europe should thereafter consider the recent experience of some middle powers in dealing with the People's Republic of China.
At first glance, there is not much in common between Australia, Canada, Japan and the European Union. Australia and Canada are middle powers by virtue of their size, and both share the peculiarity of being large energy, raw materials and agricultural exporters to China: 74 percent of Australia's sales to China, including LNG; 66 percent in Canada's case. Japan is the largest of the so-called 'middle powers,' and still has China as a key industrial partner, especially in the automotive industry and consumer electronics.
As for the European Union, which by some counts deserves a seat at the table of the world's great powers, it mixes some agricultural exports to China — often exploited by the Chinese side in current trade tensions — with a much larger exposure to China's industrial overcapacity.
Proximity or distance from China also matters. Seen from Beijing, however, all four are considered to be potential swing partners between China and the United States. Nothing new there: This is what Mao Zedong and, later, Deng Xiaoping termed in 1974 as the 'Second World' between the two superpowers — the Soviet Union being one at the time — and a supposedly revolutionary Third World.
In the past two decades, a chain of events has reinforced the perception that a swing was indeed possible to achieve. Chief among them, of course, is the added economic leverage that China now wields over all four, through economic interdependence or outright dependance, as the rare earths issue now shows, and China's willingness to practice coercion and link trade with security postures. Ironically, Chinese op-eds do not hesitate to condemn such 'economic bullying' — solely when it comes from others.
But skepticism regarding the reliability of the United States has also built up in Australia, Canada, Japan and the European Union. There was the failure of the U.S. to ratify the Trans-Pacific Partnership (TPP) under President Barack Obama's watch, and the U.S. withdrawal under his successor, Donald Trump; a tighter Transatlantic Trade and Investment Partnership (TIPP) which never took off between the United States and Europe; and asymmetries between U.S. hard power or willingness to go into conflict and Europe's uncompleted common defense.
With Asia, the U.S. alliance as a 'hub-and-spoke' relationship endured. The term, often attributed to John Foster Dulles in the making of the 1951 San Francisco Treaty, is being given world-wide relevance by Donald Trump: America now prefers bilateral deals to multilateralist interaction. The net result, now compounded by a strong reengagement of Russia by the United States, leads every one of its partners to deeper doubts about the latter's reliability. Not even the so-called 'prioritizers' in the Trump administration can fully reassure some of them.
This, and the vigor and unpredictability of Trump's trade bargaining since the April 2 'Liberation Day' announcement, naturally leads to examining the case for re-engaging China — or for accepting to be re-engaged. It is, after all, the world's first trading nation and one that might perhaps concede better terms if it fears an 'encirclement' led by the United States.
A look at the diplomacy of Japan, Australia, and Canada shows that reengagement has indeed happened. These three countries all started from a high point in trade and mutual linkages with China, only to go through a protracted period of trade tensions and in some cases acute political and diplomatic crises. Today, without apologizing for downturns that were largely due to China's own behavior, they seek to normalize the relationship, and perhaps to upgrade it. This is the case of Australia's recently re-elected Labor government, even if it still endorses its predecessors' Indo-Pacific strategy; Canada's Liberal government, embroiled as it is in acrimonious debates with the United States; and Japan's Liberal Democrats, who are clinging to their traditional relationship with Washington but seeking a form of normalization with Beijing.
An exploration of Chinese views on this shift and the relative détente reveals that it is highly conditional on China's part: The main concession being a fall in aggressive rhetoric, except when the United States or supposed local 'hawks' are castigated as the culprits for previously souring relations. That military issues are paramount, whether China's offensive or defensive positions, is well demonstrated in Australia's case.
Rarely do Chinese commentators criticize their own country in matters of foreign policy. They now do so vis-à-vis Australia, blaming China's coercive tactics for a change of posture that has created, among other developments, the Quad and AUKUS. Australian pushback, such as practiced by ASPI, Australia's well-known security think tank, demonstrates that it may indeed hit a raw nerve in Beijing. This is a rare (and unofficial) walk back by China.
In other cases, what China rescinds is sanctions it had imposed in the first place, usually, but not always, in retaliation for measures it disliked. The hostage-taking of two Canadians in response to the proceedings against Huawei CFO Meng Wanzhou, the trade sanctions and duties on canola against Canada after it imposed a large tariff on Chinese-made electric vehicles, the tariffs and non-tariff barriers on Australian beef, barley, copper, coal, timber, wine (and lobsters) but not iron ore, which China needed, are as many examples of removable sanctions put in place.
Small countries such as Lithuania and middle powers, starting with South Korea, have been the first on the receiving end of these tactics. These tactics are also meant to have a chilling effect on others. A 'normalization of relations' expressed with much fanfare and rhetorical goodwill from Chinese officials does not include concessions on previous demands from their international partners. Thus, the ban on fish from Japan was lifted — but not for Fukushima and Tokyo, although there are no more sanitary reasons. The European Union received a lifting of sanctions on sitting EU Parliament members but not on other personalities or institutions. The diagnosis from relations with Australia, Canada and Japan matches the trend with Europe.
To whom does China hint at a real willingness to negotiate, implying not just words, but actual concessions on both sides? Well, to its nemesis, the United States. In an authoritative albeit anonymous commentary published on July 8, the People's Daily exhorts Washington to 'continue to meet China half-way,' which obviously implies China will also walk half of the path to a compromise. You would not find that kind of language with any other nation.
In a nutshell, this gives away Beijing's strategy toward all but the number one global power: Talk the walk rather than walk the talk.
There is now more frankness in acknowledging hyperrealism. Thus, Minister of Foreign Affairs Wang Yi admitted to Kaja Kallas, the EU high representative for foreign affairs and security policy, that China cannot accept Russia's defeat. This follows years of pretended 'neutrality' on an issue that Europeans placed on top of their agenda with Beijing. Lambasting Vietnam for accepting additional U.S. duties on reexports from China is also a broad recognition that China uses all available detours in its international trade.
This could be one of the factors that has pushed the new Trump administration to tactics that often mirror China's own actions. While China is usually more polite about it, both countries now favor bilateral and issue-by-issue negotiations and, in principle or practice, shun multilateral agreements. Both use extraterritorial means, and both impose duties or other coercive measures as bargaining tools.
This paradox should not be pushed too far as we are in front of unfolding events: The United States does walk back measures, sometimes very quickly, while China remains more predictable, mostly on the side of rigidity. What this demonstrates is that, seen from Beijing, small or middle nations have no agency, unless they have an irreplaceable asset and no vulnerability to trade or security threats. Very few cases of agency remain in a world where the United States and China are the first and second economic and military powers — with the ensuing dependencies from their partners.
To counter trade fragmentation and, more broadly, the breakdown of international rules, do these other nations have the wherewithal to form coalitions based on shared interests: What Thucydides would have called a Lacedemonian League or, more aptly, an Achaean League? This coalition would have to counter Athens (the United States) when needed, while excluding Sparta or Macedonia (China) in principle. That is a tall order, yet that may be our challenge in the immediate future.
This article was originally published as the introduction to China Trends 23, the quarterly publication of the Asia Program at Institut Montaigne. Institut Montaigne is a nonprofit, independent think tank based in Paris, France.