Dispute over Dalai Lama highlights challenges
Financial Times[Tuesday, November 27, 2007 10:45]
By Mure Dickie in Beijing

When Chen Feng, head of China’s Hainan Airlines, was asked last month about his plans to open new routes to Germany, he responded with an angry tirade against the “impolite” and “unfriendly” Berlin government.

“I am working like an entrepreneur, but I am a Chinese entrepreneur, so I am very upset,” said Mr Chen, referring to a meeting in September between Angela Merkel, the German chancellor, and the Dalai Lama, Tibet’s exiled spiritual leader. “People have to work in friendship.”

Mr Chen’s frosty tone – echoed by Chinese officials who have ditched several bilateral exchanges with Germany over the Dalai Lama talks – highlights the challenges now facing Sino-European Union relations.

China’s soaring trade surplus has drawn warnings of possible EU counter-measures, fuelled by Beijing’s unwillingness to let its currency appreciate against the euro. Friction over Chinese barriers to EU businesses is also growing. A tougher tone towards Beijing taken by Ms Merkel and President Nicolas Sarkozy of France has upset Chinese leaders.

“German government chilly on China,” complained Beijing’s Communist party-controlled Global Times newspaper in a recent headline. Despite such strains, however, Chinese officials and analysts say they remain upbeat about the prospects for EU ties.

“It’s normal to have these kinds of disputes,” said Zhu Liqun, assistant principal at the China Foreign Affairs University. “EU-China relations are growing more complex because the relationship is expanding.” Even with the recent tougher tone from Berlin and Paris, Chinese analysts say Beijing appreciates the EU’s less confrontational and more co-operative strategy for influencing China compared with America’s more direct approach.

While Chinese officials no longer tend to emphasise the EU’s role as a counterbalance to US hegemony in a “multipolar” world, they still see Brussels as a valuable moderating influence. Professor Zhu says China is also keen to learn from the EU, seeing it as a reference model for ways to balance social and economic progress and to achieve regional integration and multilateral co-operation. Still, Chinese diplomats have been disappointed by their failure to make progress towards a lifting of the EU’s arms embargo or recognition as a market economy.

China’s recent economic success, meanwhile, does not appear to be making it more willing to accept European advice, whether on the death penalty, human rights, currency value or the openness of its markets.

A survey of EU companies released by the European Chamber in Beijing this month found widespread dissatisfaction with a lack of government transparency, China’s record on intellectual property protection and cumbersome bureaucratic procedures. Jörg Wuttke, the chamber’s president, feels the investment climate is not improving, but is keen to point out that European calls for freer markets align closely to the interests of China’s own smaller and privately owned enterprises, a key source of future growth.

He is also sanguine about the impact of disputes such as that sparked by Ms Merkel’s meeting with the Dalai Lama. “Things like this come and go and I don’t see a direct translation into the business sector,” he said.

The ferocity of Beijing’s reaction to the Dalai Lama meeting may reflect in part a feeling that it can afford to “punish” Berlin without provoking a general reaction from an EU, for which true unity in foreign policy remains a rarity.

“China recognises that even if it takes a very tough approach on individual EU countries, it will not lead to overall deterioration of its relations with the EU community,” said Jin Linbo, senior fellow at the China Institute of International Studies.

Some analysts say Chinese policymakers should be careful not to overreact to tougher talk from Europe, whether over political or economic issues.

“The Chinese government should maintain a normal attitude – neither servile nor supercilious,” said Ding Chun, a specialist on European issues at Fudan University in Shanghai. “The response should be relatively moderate. You want to make it easier for others to treat you as an equal partner.”

Certainly, the ire of Hainan Airlines’ Mr Chen over the Dalai Lama meeting could threaten the carrier’s future engagement with Germany. For the time being, a company official said on Monday that the airline had not changed its plans to fly from Beijing to Berlin four times a week from next May.