EU should act together and avoid confrontation given the economic boom of China

September 01, 2010

The European Union has gone from observing the economic expansion of China to considering it as a threat, according to the PhD thesis presented by Andoni Maiza at the University of the Basque Country (UPV/EHU). This economist analysed and evaluated public policies adopted by the EU since the 1978 reforms which sparked the economic boom in the Asian giant. He also makes forecasts and puts forward recommendations for the future. The work is entitled, Public policies of the European Union toward the economic awakening of the Chinese giant.

The PhD thesis defines the strategy of the EU regarding China as reactive and short-term, due to a lack of overall vision and perspective on dealing with the accelerated economic expansion of the Asian country. When the foundations of this expansion were laid in the 80s, the EU was involved in a complete process of internal consolidation. Due to this fact, Mr Maiza explains, European companies were slow to react and, as a result in the following decade they had less presence in China than other powers. It was only then that mechanisms of cooperation began to be boosted and which, while they were not due to a clearly predetermined strategy, they managed to establish and consolidate the role of EU leadership in China in the final years of the 1990s and the beginning of the new millennium.


However, over the past five years, the EU has been taking a more protectionist attitude towards China. As explained in his thesis, European countries, especially those with greater technological capacity (Germany, France, The UK, Sweden and Finland), see China having benefited more from the EU than viceversa, this being due to the fact that the political and economic reforms awaited by the EU and other world powers in the Asian country were slow to come about. European countries find difficulties in accessing the Chinese market and with insufficient protection for the rights of intellectual property, resulting in Chinese producers taking advantage of European technologies to corner world markets.

Mr Maiza believes that the protectionist policy of the EU towards China is justified given problems such as dumping, the lack of mechanisms for health and safety with children's toys and with medicines, as well as false copies. Nevertheless, the economist in his thesis questions if this attitude aims to hide certain structural deficits of the European economy when managing the increase of competitiveness in the new international economic scenario.

Exigent in priority questions only

Looking to the future, the thesis forecasts greater rivalry between China and the EU in sectors that are strategic for the latter, and a likely greater role of protectionist policies.

However, Mr Maiza views it as recommendable that the EU have a strategy that distances itself from the politics of confrontation - the very contrary of the attitude of the United States towards the Asian giant. Due to the internal problems that the reforms suggested might cause for China, the author of the PhD warns that its government acts with caution. He thus believes that it is recommendable that European public policies concentrate their attention on a just a few priority questions. He also considers it of interest to undertake a joint approach with countries not seen as a threat for China. Likewise, he stresses the need for a common strategy by the whole EU, far from the practices carried out to date, in which some of the big European powers have acted unilaterally and for short-term benefits.

Finally, Mr Maiza believes that the European economy should go in the direction of specialisation in order to face Chinese competition; concretely, producing top-range goods in the case of products such as footwear and automobile parts, or providing post-sales services in the case of industrial equipment. He also considers it viable in the future for the introduction onto the Chinese market of European companies specialised in environmental and recycling technologies.
About the author

Mr Andoni Maiza Larrarte (Andoain, 1975) is a graduate of Business Administration and Management from the Faculty of Economics and Business Sciences at the University of Deusto (Donostia-San Sebastian campus). He drew up his thesis under the direction of Mr Jaime del Castillo Hermosa and Mr Ricardo Bustillo Mesanza, professor and senior lecturer respectively at the Department of Applied Economics V in the Economics and Business Sciences Faculty at the Sarriko (Bilbao) campus of the UPV/EHU. Currently, Mr Maiza is the business-administration manager for the Sisters of Charity's Saint Vincent de Paul network at grant-aided schools.

Elhuyar Fundazioa

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