Education,  Geopolitics,  Growth Challenges

European vs Asian integration: is China Asia’s Germany…and Japan its UK?

As Xi takes China’s reigns at the 2013 Chinese People’s Political Consultative Conference, it is worth a longer-term look at what might change in the region over his expected decade-long Presidency of the People’s Republic of China. In this commentary we do so comparatively, through the lens of regional changes underway in the European Union.

Less than two months ago, on the morning of 23 January 2013, the UK’s Prime Minister, David Cameron, finally dropped the long-awaited bomb: the UK will hold a so-called ‘in-out referendum’ on its membership of the European Union (EU) if his Conservative party wins the next general elections set to be held on 7 May 2015.

A lot of water will flow down the Thames until then and it is impossible to predict what the outcome of this referendum would be if it were ever to be held. According to YouGov 40% of voters would currently opt to stay in whilst 34% would leave the EU (the rest are unsure). History shows, however, how easy it is for the media ( – note that Britain’s two biggest-selling dailies, the Daily Mail and the Sun—combined circulation, 4.5m—are deeply Eurosceptic) and right–wing political parties or populist opinion-makers (see the rise of the UK Independence Party, UKIP) to hijack referendums of this kind. But although Cameron made this move purely for internal party management reasons it raises a deeper question on what Britain’s relationship with Europe should fundamentally be – a question that has been lingering ever since the UK joined the EU back in 1973.

The timing of Cameron’s demand for a new relationship in the shape of a new Treaty or of substantial renegotiations of existing ones is audacious to say the least. If anything, the EU crisis has indeed provoked a new wave of integration on the continent rather than a drifting apart. Hence the rather irritated or annoyed reaction from most EU partners to Cameron’s speech.

Without entering into the details of Britain’s options about which there is a lot of speculation in the media, let us look at where Europe is currently standing and where it is coming from – and why Britain’s potential exit may in fact be fitting into a broader picture of where the EU seems to be heading ever since the end of the Cold War…

Fact is indeed that Europe’s center of gravity has moved to the East of Europe almost overnight during the dramatic events of November 9 1989 in Berlin. Once the question of German re-unification was tabled shortly after by then-Chancellor Helmut Kohl Britain resolutely opposed it but Kohl went ahead anyway ignoring not just the UKs but also France’s objections. And Germany did not stop there but essentially went on to integrate one country after another from Eastern Europe into the EU in order to create a buffer with Russia. Within a few years, Germany was once again at the heart of Europe, a place it has historically occupied at the great risk to its neighbours and indeed the rest of the world…

For Eastern Europe, on the other hand, the consequences of WWII ended only after its countries joine NATO and the EU and today, most eastern countries want more integration, not less. They see the EU and NATO as institutions of the Cold War that now need to be modernized and integrated for Europe to become a true economic unit in a globalizing world where size matters perhaps more than ever.

Indeed, the old European community of the 50s 60s and 70s was built by those who had survived the war on the Western front but the EU today is being shaped by those who survived the Eastern front followed by 40 years of Soviet occupation. Today Germany looks East not West and as trade with the South has slowed and now all but stalled, trade with the East has increased and Germany has become the pole of attraction for most of Eastern Europe. The irony of it all is that the European project started as a way to Europeanize and thus contain Germany.  But now Germany is slowly but surely emancipating itself from its post-war history of being humble and subdued as the Union’s economic center of gravity has decisively moved to the east of the continent.

Poland, for example, has had no recession in the last 5 years – the only country in the EU that has continued growing throughout the crisis. Today, Poland leads an eastern bloc of 10 countries and 100 million people, and it wants the EU to become a superpower – led by Germany, its arch rival and enemy.

Initially, Eastern Europe was in fact much closer to the UK and the idea of a strong transatlantic alliance with the US. Recall Donald Rumsfeld’s dismissal of ‘old Europe’ in early 2003, at the height of intra-European tensions over its involvement in the Iraq war. At the time, the US skilfully divided Europe and strongly supported the eastward expansion of NATO as far as the three Baltic republics, in exchange for their commitment to the ‘coalition of the willing’. Over the following years, however, this commitment came at an ever greater political and human cost, and NATO’s credibility also came under ever greater scrutiny.

Once again, Europe is being shaped by its history. The idea of the continent has moved east and the experience of the eastern front is shaping the EU today. They want the EU to be more than trading bloc or a mere transaction – which is essentially how the UK views the EU. The eastern bloc, on the other hand, wants the EU to become the bedrock for their fledgling democracies and for their future security.

Viewed from this angle, the UK exit would in fact accelerate a historical process of integration and should perhaps therefore be seen as no more than a natural event or stepping stone that is part of this bigger process: the creation of a European Union worthy of that name.  

The view from Europe may present an interesting reference for what’s happening in Asia. Rather than forces shifting east as in Europe, they may instead be shifting south and west. This would be toward countries of the Association of South East Asian Nations (ASEAN) and to South Asia, especially India. Last month for example, after seven years of construction, a railway linking China’s south-west province of Yunnan with ASEAN countries became operational. The line will pass through Yuxi, Mengzi and Hekou in Yunnan, and onward to link China to Vietnam, Laos, Thailand and Singapore. This is expected to boost freight transportation and economic development along the line. It also enables freight along the line to by-pass the maritime freight journey through the more contentious South China Sea, and especially the difficult Straits of Malacca.

And its not just improved links to Laos and Vietnam that are changing China’s southern and western economic frontier. China, which is without a western seaboard, will this year complete construction of an 800km gas pipeline that will connect Yunnan’s capital Kunming to the Bay of Bengal, passing through central Myanmar. Next year, and oil pipeline will follow suit, with rail and road arteries following thereafter. Providing the route remains stable, the face of China’s ability to trade with the outside world will change, as well as will the ability of China’s hitherto more isolated Western and Southern provinces. Links to central Asian neighbours are being similarly nurtured.

It wasn’t long ago that Japan and the UK were atop the economic and geopolitical hierarchy, with leading economies and membership of the then highly powerful G8. While certainly not having fallen off the international radar, as economic walls across continents appear to be converging east from Germany and west and south from China, it may be that Japan and the UK feel more their island status in the years ahead. Making the most of it may require new bridges.  

Lauren has worked in economic policy and research at the World Bank, World Economic Forum, EIU and for the governments of Sierra Leone and Guyana. She has learned Chinese since 1995, and lived in Beijing for almost six years, on and off since 1997. Lauren has a PhD in Economics from Peking University, an MSc in Development Economics from the School of Oriental and African Studies (SOAS) and a B.A/B.Com from the University of Melbourne.

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