Differentiated EU Member State Economic Relationships with China: Can Winners and Losers Agree?

Duncan Freeman

Economics dominate the EU-China relationship. At the same time, the different positions of Member States and the difficulty of the EU in maintaining a united policy on China across many issues is ascribed to the competing economic interests of the Member States in their relations with China. Scholars have focused on the tradeoff between economic and political interests in the bilateral relationship with China and argue that this is a significant factor in the distribution of economic benefits of the EU's relations with China among Member States. The distribution of economic benefits is strongly influenced by China's political interests and its ability to use it as a tool to divide Member States (Fox and Godement, etc). This paper argues first that the EU-China economic relationship is largely determined by deep-seated domestic economic structures within the EU Member States, rather than simply being a function of the bilateral relationship or of a tradeoff with political interests. Secondly, that the relationship can no longer be seen simply in terms of trade in goods, but also Foreign Direct Investment, portfolio investment and services. Furthermore, the increasing complexity resulting from structural change in China will redistribute benefits among Member States in their relationship with the EU. This creates a differentiated set of economic relationships with China that determine how much Member States benefit, and the degree to which their interests can be unified.

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