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9 January 2011

With half the Christmas presents opened in Europe last month having started life on Chinese production lines, it seems only fair that the European Union should want to sell more of its own goods to the moneyed Chinese and redress its large bilateral trade imbalance.

But when word spread from the corridors of Brussels in the New Year that leading eurocrats wanted to start selling arms to China, questions were inevitably raised as to how far Europe should be willing to go in order to conquer the Chinese market.

The EU, like the US and others, slapped an arms embargo on China following the Tiananmen Square massacre of 1989. But since then the world has changed. Europe is broke. Barely solvent EU member states such as Spain and Portugal see Chinese credit as the ultimate lifeline and think that lifting the embargo – which the Chinese hate, and have lobbied against for years – is a worthwhile concession for ensuring that China rides to their rescue.

Even for some European countries that don’t need bail-outs, lucrative arms deals with China would be economically welcome, yet their window of opportunity is closing. Within a few years, selling arms to China will be like carrying coals to Newcastle: Europe simply won’t have many weapon systems that Beijing, which is steadily closing the military technology gap, can’t build itself.

In December, the EU’s high representative for foreign affairs, Catherine Ashton, appeared to endorse the “sell now” position when she told EU leaders that the embargo was a “major impediment” to relations with China. However, an EU official told Monocle that French media reports suggesting the ban would be dropped in 2011 were inaccurate. EU leaders were discussing the embargo, she admitted, but any decision to lift the ban would stem from an improvement in China’s human rights record, not from economic considerations.

Alex Neill, head of the Asia programme at the Royal United Services Institute, thinks there is “no chance of the embargo being lifted in the near to medium term”. While some EU states clearly want to scrap it, all 27 members would need to agree in order for the policy to be changed, Neill points out. “The US will have come down very heavily via their various missions in Europe and Brussels to prevent a lift taking place,” he says, adding that countries such as the UK remain unconvinced by China’s progress on human rights.

China’s impressive military development demonstrates that Beijing has been able to circumvent the West’s arms embargo in any case. It is therefore the ban’s symbolism, rather than the arms themselves, that is most important. But if China’s leaders were to make economic support for the eurozone dependent on the embargo being lifted, it would be interesting to see where human rights stood on Europe’s list of priorities.


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