Chapter 11: Comparing Irish And Chinese Politics Of Regulation ~ The Irish Asia Strategy And Its China Relations

IrishAsiaIn its Asia Strategy, the Irish Government calls for closer cooperation between Europe and Asia and a higher profile of Irish business, society and politics in this core region of the global economy. While the focus in general rests on trade and investment, there is one area where Ireland as Europe’s Celtic Tiger has much to share with its distant partners: regulatory reform and innovation as a key driver for economic modernisation and competitiveness. From an academic perspective, the analysis of regulatory regimes, states and capitalisms has enjoyed years of impressive development. While some have focused on a better understanding of the evolution of regulation and their impact on political systems or the world economy, a second stream in regulation research seeks criteria for an evaluation of existing regulation and the promotion of better regulation. Case studies from different jurisdictions are frequently used to highlight practical and theoretical issues. In this paper, the experience of two states experiencing impressive rates of economic growth but exhibiting contrasting political systems are analysed to isolate areas of convergence in regulatory development. China and Ireland are of vastly different size but the Middle Kingdom dwarfs most other states. The comparison is, however, made more plausible by Ireland’s need to accommodate EU regulatory strictures and China’s adjustment to an open market economy. Further, though small, Ireland does not operate in an international political vacuum. Like other western democracies that are “open, integrated, and rule-based, with wide and deep political foundations”[i] and, as such, represents a typical liberal democracy. Nevertheless, to acknowledge the clear differences between the cases chosen, the paper concentrates on aspects of the Irish experience that might signal useful insights for China in the areas of transparency, innovation and competition.

Thirty years after the Chinese leadership initiated the policies of reform and opening up to the outside world, the People’s Republic of China (PRC) is a remarkable economic success story and an increasingly opaque puzzle for academic research. Its ‘Socialism with Chinese Chracteristics’ has seen average annual growth rates of more than 10% since 1980. By World Bank standards, China in 2006 was the fourth largest economy in the world, a major trading nation and holder of the largest foreign exchange reserves. At the same time, its ‘Socialist Market Economy’ exhibits fundamentally contradictory features: while there are comparatively free markets in some sectors of the economy that tempt observers to compare today’s China with the Manchester of the early 19th century, private property rights have only recently found their way into the constitution and are still subject to the interpretation and protection by a judiciary under direct control of the political leadership. China’s rule by law – not to confuse with the concept of rule of law – is executed by courts and bureaucracies under direct control of the Leninist apparatus of the Communist Party of China, which, according to the constitution, leads all Chinese political institutions and exerts the democratic centralism as part of the dictatorship of the people.

The interdependence of social orders that links the existence of a market order with a pluralist democratic system that guarantees rule of law points at an implicit instability of China’s political and social order. But, while doomsayers had their fair share of academic and public interest in the 1990s, the survival of CCP rule in spite of fundamental changes in the economic and social system requires further analysis. There is no consensus among China watchers on the nature of its political order. Characterisations include soft authoritarian, adaptive authoritarian and neo-consociational. Similary, opinion on the direction of its future development ranges from enhanced state capacity stabilising party rule to decreased state capacity destablising the CCP. It is obvious nevertheless that somehow China’s hybrid political and economic order is a survivor.
Part of an explanation how exactly the Chinese leadership has managed to maintain political control and economic dominance in an increasingly pluralist social and market economic environment lies in its proven track record in institutional learning and innovation. At the same time, a global trend towards the introduction of new forms of governance, particularly of quasi-independent regulatory bodies, is recalibrating the traditional relationship between governments, societies and markets in well-established OECD countries as well as in emerging markets.
While the rise of the regulatory state, the post-regulatory state and regulatory capitalism has led to an intensive debate about efficiency and legitimacy, its implications for non-democratic states with emerging market orders has been painfully neglected.[ii] The global trend to redefine the relationship between governments and markets, between state and non-state actors in the area of economic activity, however, has changed the perception of social orders and has a direct impact on the institutional and policy change of states in an interdependent world. Read more

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Chapter 12: Ireland And The ASEM Process: The Case Of The Asia-Europe Foundation ~The Irish Asia Strategy And Its China Relations

IrishAsiaIreland’s Asia Strategy is also embedded in the context of the wider relationship between the European Union and Asia. The relationship has been dramatically transformed from one of European political and economic dominance to a partnership of equals”. Dermot Ahern, Minister of Foreign Affairs, 2006.[i]

The inaugural Asia-Europe Meeting (ASEM)[ii] was convened in Bangkok, Thailand, in 1996, in a uniquely ambitious endeavour to build a multi-faceted platform where Asia and Europe could encounter each another in a modern context. This innovative model of engagement, with its emphasis on a flexible structure and informal dialogue, arose from a mutual recognition that the relationship between the two regions needed to be strengthened in light of the increasing interdependence in the economic, social and political spheres. The ASEM process as it has developed is based on an equal partnership and its activities are grouped into three pillars: political, economic and socio-cultural.

ASEM has its roots in the recognition in Asia and in Europe that the relationship between the two regions requires strengthening taking into account the growing importance of Asia and the integrating and enlarging Europe.
The three pillars of ASEM – political, economic, social/cultural/intellectual – have allowed for increasingly intensive engagement between the two regions since the outset of the process.
The process was driven largely from the Asian side with much of the initial impulse coming from Singapore. On the European side the push for improved interaction and greater co-operation came from the European Commission. Despite preoccupation with the implementation of the Maastricht Treaty provisions for the launching of the single currency programme, the European Commission responded positively and facilitated the inaugural meeting of the Heads of Government from the EU and East Asia in Bangkok. The fact of the meeting taking place was an important indicator of a readiness to engage more effectively in mutually beneficial interaction. Subsequent discussion between officials from both sides set out tentative procedures to be pursued.

In the words of Kishore Mahubani, the Singaporean diplomat charged by his Government with the task of convincing the European and Asian Governments to join in the initiative to develop ASEM, the rationale was simple. “There were three major growth centres in the world: North America, East Asia and Europe. In this triangular relationship, the connection between North America and Europe was strong, so too was the transpacific connection between North America and East Asia. The missing link was the relationship between Europe and East Asia”[iii]. Three years into the process, a review of the progress by a Vision Group of eminent persons was initiated. The report of the Vision Group makes interesting reading; the Group saw
“the gradual integration of Asia and Europe into an area of peace and shared development, a prosperous common living sphere in the 21st century, a sphere in which our knowledge, wealth, cultural heritage, democratic ideals, educational assets, intellectual aspirations are closely intertwined and exchanged without barriers or constraints. [The group] envision the active integration of our intellectual forces and a vibrant exchange of culture and the arts between Europe and Asia…[and] also visualise the progressive opening of markets with the eventual goal of free flow of goods and services by the year 2025”.[iv] Read more

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Chapter 13: Ireland’s Unique Asia Strategy – The Irish Strategy In European Comparison ~ The Irish Asia Strategy And Its China Relations

IrishAsia13.1 Introduction
Historically, Ireland’s human and cultural links with Asia have been underdeveloped[i] The Irish Asia Strategy, launched in 1999, was designed to strengthen Ireland’s ties with Asian nations. Until 2004, the fundamental aim of the strategy involved outlining a series of challenging targets and objectives, with a view to increasing Ireland’s political, trade and investment connections with Asia. Several new embassies [ii] and consulates[iii] were founded in order to achieve this end, and there was a notable increase in trade-related and high-level political visits between Ireland and the continent. Efforts were also made to heighten awareness of the Irish national brand through a state-funded campaign. The first phase of the strategy resulted in the doubling of the average value of exports to China (2003–2005), compared to the trade statistics for the previous 3 years[iv]. Two-way trade between Pakistan and Ireland also increased: By 2006, exports to Pakistan were valued at € 67.8 million, and sales by Irish companies in Pakistan more than doubled over the last three years.[v] However according to the Irish Exporters Association’s (IEA) annual report, 2005 exports to Asia fell by 1% to € 6.6 billion, with exports to Thailand and South Korea falling the most. Exports to Japan remained fairly static during this period[vi]. What about India and other Asian nations? Why only mention these nations?
The second phase of the strategy (2005-2009) has been designed to encourage Irish foreign direct investment (FDI) in Asian countries, and vice versa. “The objective at this stage of the strategy is to intensify the wider range of interaction with the priority Asian countries and to encourage indigenous Irish companies to avail of business opportunities there”[vii]. Sectors such as education, tourism and R&D have been targeted as key sectors of the Irish economy where Ireland can attract investment from Japan, China, India, South Korea, Thailand and the Philippines. Enterprise Ireland’s 2002 report indicates a stark lack of awareness of Ireland inside Asia[viii]. To counteract this trend, the Department of Arts, Sport and Tourism has established a new organization named Culture Ireland/Cultúr Éireann to promote awareness of Irish arts and artists abroad, as embedded in the second phrase of the Asia Strategy[ix]. Thus far, the success of phase two is difficult to judge. Exports to China and Hong Kong rose by 38%, while exports to the Philippines surged ahead with a 106% increase[x]. Following Japan[xi] and China, Singapore ranks as the third most important Asian market for Irish exports. The average value of Irish goods exported to Singapore per annum during the period 2003–2005 was € 792 million, up 25.9% on average annual exports in the previous three years, with the result that Singapore now accounts for 12% of total Irish exports to the Asian region[xii].

However in his 2007 article “Irish Trade Statistics: Policymakers opt for spin and delusion rather than confront challenging facts,” Michael Hennigan highlights that many of these trade statistics can be misleading. He illustrates his case regarding the aforementioned 106% rise in trade with Philippines, pointing out that “former US naval base north of Manila, at Subic Bay, is a major Asia-Pacific hub for FedEx, one of the world’s biggest airfreight companies. Therefore shipments from Irish-based multinationals to Subic likely have ultimate destinations elsewhere in the Region”[xiii]. He also points to the fact that “foreign-owned companies account for about 87% of total exports from Ireland”[xiv].
This raises some interesting questions: Who does the Irish-Asia Strategy serve? Is it designed to promote Irish companies in the Asian Market, or to retain foreign companies in Ireland by providing them with logistic and marketing support in Asia, thus allowing multi-national companies to operate in Ireland while competing in the Asian market? Should Ireland try to compete in Asia and gain market share in these emerging markets, or should Irish companies only enter these markets to benefit from low-cost labour intensive manufacturing?
In order to gain some insight into these topics and approach these questions, we will first closely examine Italy’s and Germany’s relations with arguably the most highly-profiled Asian market, China, and explore whether Ireland can learn any lessons from our European neighbours’ experiences. Both countries have enjoyed a long history of trade with China and both have dealt with China’s rise as a superpower in alternative ways; one cooperating with China in low-cost high-labour production through a lattice of industrial organisations; the other attempting to use China’s growth to increase its percentage share of the world market. China by no means represents Asia as a whole. Each country in Asia produces its own opportunities and challenges, but it would be beyond the scope of this paper to analyse Italian and German trade history with each country in Asia. China however does represent a wide range of the opportunities, as well as a variety of the challenges, which are  experienced by participating in business in Asia. And China clearly enjoys a very prominent position within the Irish Asia Strategy. Read more

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Chapter 14: Ireland, China And The EU – Foreign Policy In A Europeanised Context ~ The Irish Asia Strategy And Its China Relations

IrishAsia14.1 Introduction
The ever-expanding economic and political strength of China has garnered high levels of interest from the heads of the European capitals, including Ireland, over the past decade. Over the past deacde or so, a series of programmatic policy papers from the EU and bilateral agreements have established an increasingly institutionalised relationship. From the European perspecitve, China has provided a test of European strategy of constructive engagement, with the EU being characterised as a civilian, normative or soft power. Where, then, does Ireland fit into this framework? Since the early 1990s, Ireland has increasingly sought to engage China as part of its wider Asia strategy, which has involved meetings with heads of state, diplomatic conferences, as well as bilateral political dialogue on issues such as environmental protection, human rights and education policy. From these emerged one of the the most significant policy documents with regards China in Irish history, the Asia Strategy. This document laid out plans for business agreements, economic benefits and cultural dialogue between the two countries. It has been one of the most successful policies in relation to China and its relations between a member of the EU since 1985. In order to assess the relationship between Ireland and China, the wider context of EU relations with China must first be assessed. It will then become possible to understand the ever-growing relationship between China and Ireland on the individual level.

14.2 EU – China Relations: A Brief Overview
What is now called the European Union first officially recognised the government of the People’s Republic of China as the legitimate government of China in 1975 and concluded its first bilateral trade agreement in 1985. Since the 1980s, the European Union has developed its long-term relationship with China based on political, social and economic developments[i]. This has involved numerous diplomatic and political meetings and agreements that have included the signing of a Trade Agreement on April 3 1978, an EC-China agreement on textile trade signed on July 18 1979 and the creation of a delegation of the European Commission in Beijing on October 4 1988. However this relationship was not always as amicable as initially invisioned. Following the June 4 1989 incident in Tiananmen Square, relations cooled between the two, with the EC imposing a number of sanctions on China, including an arms embargo[ii]. It was not until October 1990 that the Council and European Parliament decided to gradually re-establish bilateral relations with China.

There was not much significant political activity between the two until the EU-China Energy Dialogue that was established in 1994 and as a result bilateral relations expanded at a rapid pace. In June of that same year a new bilateral political dialogue opened between the EU and China. This was accompanied, on July 15 1995, with the publication of the European Commission’s first official communication on China entitled ‘A Long-Term Policy for China-Europe Relations’. Increasing relations resulted in the creation of a Dialogue on Human Rights issues, which was released in January 1996. In 1998 the next official Communication was released by the European Commission entitled ‘Building a Comprehensive Partnership with China’. One of the most important bilateral agreements took place on May 19 2000 with China concluding a market access agreement with the EU, which was an essential milestone in China’s WTO accession process. The EU has opened its markets to China, since then, because of the benefits to its citizens as well as to obtain reciprocal market access. It has also used this as a way of promoting economic and political lineralisation within China. 2001 saw the European Commission publishing the Communication ‘EU Strategy towards China: Implementation of the 1998 Communication and Future Steps for a more Effective EU Policy’. This was followed by the March 1 2002 European Commission China Country Strategy Paper 2002-2006. On September 10 2003 the European Commission adopted a policy paper entitled ‘A Maturing Partnership: Shared Interests and Challenges in EU-China Relations’. This was followed, on October 13 of the same year, with China releasing its first ever policy paper on the EU. In March 2004 the European Union becomes the biggest trading partner of China, with China becoming the second largest trading partner of the EU. In February 2005 the first ever EU-China Financial Dialogue meeting was held. On March 20 2006 the first ever EU-China bilateral consultations with a focus on Climate Change Partnerships were held. October 24 of that year saw the Commission adopts its Communication entitled ‘EU-China: Closer Partners, Growing Responsibilities’, as well as a policy paper on trade and investment. Over the years the EU has become one of the most significant trading partners of China. Read more

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The Irish Asia Strategy and Its China Relations ~ About the authors

IrishAsiaFan Hong
Fan Hong is Professor of Chinese Studies at University College Cork (UCC) (2010). She received her BA and MA in China and PhD at Strathclyde University in Glasgow. She was Chair in Chinese Studies at De Montfort University in UK before becoming the first director of the Irish Institute of Chinese Studies (UCC) since its funding in 2006 and first Head of School of Asian Studies since its founding in 2009. She has published extensively on Chinese historical and social issues.

Jörn-Carsten Gottwald
Dr. Habil. Joern Gottwald held positions at Free University Berlin and University of Trier before joining the UCC in 2006. He has published internationally on political and economic reform in China, European China policies and the politics of financial services regulation in Europe and China.

Sha Hailin
Dr. Sha Hailin is the former Ambassador of the People’s Republic to Ireland. He is now the Deputy Secretary General of Shanghai Municipal Government.

Martin King Whyte
Martin King Whyte is Professor of Sociology, Harvard University. He held positions at University of Michigan in Ann Arbour and George Washington University. He has published widely on China’s social and political transformation in comparative perspective and is considered one of the leading experts on modern Chinese society.

Geir Sigurdsson
Geir Sigurdsson is Professor at the School of Humanities, University of Iceland, and Head of the Icelandic Centre for Asian Studies. His internationally acclaimed research covers issues in Chinese philosophy, contemporary Chinese society and education.

James Cuffe
James B. Cuffe is currently a PhD student with the IICS (UCC). He wrote his MSc thesis on Irish-Chinese relations and conducts research on social change in China.

Sean Gorman
Mr. Sean Gorman is Secretary General of the Department of Enterprise, Trade and Employment. In this function, he has been a key organiser of the creation and implementation of the Irish Asia Strategy.

Peter Ryan
Mr. Peter Ryan was the Director of Intellectual Exchange at the Asia Europe Foundation and had been posted at Irish embassies in Tokyo, Seoul and Singapore. He has just returned to Ireland and is now working on European Union Affairs at the Department of Foreign Affairs.

Tom Hardiman
Dr. Tom Hardiman has been a leading civil servant of the Republic of Ireland and has held various top positions at RTE, Bank of Ireland and IBM. He is the Governor for Ireland at the Board of the Asia Europe Foundation and the Chairman of the Board of Chester Beatty Library in Dublin.

Michael Garvey
Michael Garvey was the Head of Enterprise Ireland, Shanghai, and is now Head of Enterprise Ireland in Kuala Lumpur. Michael witnessed the evolution and implementation of the Asia Strategy working ‘on-the-ground’ in Asia.

Pat Ledwidge
Pat Ledwidge is the Director for Docklands Development, Cork City Council, and a leading member of the Shanghai-Cork Group overseeing the cooperation between the twinned cities of Shanghai and Cork.

John Armstrong
Dr. John Armstrong was a lecturer with the China Foreign Affairs University, China’s leading college for the training and education of future diplomats, and is now an assistant professor at Fudan University in Shanghai, one of China’s top five universities in the field of international relations. His research focuses on issues of EU-China relations and Chinese foreign policy.

Niall Duggan / Deirdre Cody/ Benedikt Seemann
Niall Duggan is a PhD student with UCC who has researched and published on Chinese foreign policy. Deirdre Cody worked on Chinese foreign policy before joining a major Swiss enterprise. Benedikt Seemann is working for a major political party in the Federal Republic of Germany. He has published on German China policies and has been involved in the drafting of the new Asia strategy of the CDU.

Neil Collins
Prof. Neil Collins is the Head of Department of Government at UCC. He has published broadly on issues in public administration and regulation and is currently co-writing a book on China’s political system.

Andrew Cottey
Dr. Andrew Cottey is Senior Lecturer with the Department of Government at UCC, and Jean Monet Chair in European Integration Studies. He has published widely on European Foreign and Security Policy and EU-China relations.

Natasha Underhill

Natasha Underhill is a PhD student with the Department of Government at UCC specialising on issues in international relations and security.

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The Irish Asia Strategy and Its China Relations: Appendix I ~ A Decade Of The Asia Strategy 1999 – 2009

IrishAsiaForeword by the Taoiseach, Bertie Ahern, T.D.

The launch of the next phase of the Asia Strategy marks an important point in the development of political, economic and cultural relations between Ireland and Asia. Following my visit to China in 1998, I authorized the establishment of an Asia Strategy. The aim of this Strategy was to ensure that the Irish Government and Irish enterprise work coherently to enhance the important relationships between Ireland and Asia. It set out a series of challenging targets and objectives with a view to increasing our political, trade and investment ties in the region.
The first five years of the Strategy have been extremely successful. Targets have been met and in many cases considerably exceeded. The two priority markets identified in the Strategy – China and Japan – saw very substantial increases in exports from Ireland during the period. The success of my visit to China in early 2005, with a large accompanying trade mission, is in part a reflection of the achievement to date of the Asia Strategy.
The Government is fully committed to supporting the second phase of the Asia Strategy. I consider it to be essential that we maintain the momentum in strengthening our relations with Asia as we move forward into the next phase. The new Strategy 2005-2009, proposes even more ambitious goals and objectives, building on the achievements of the first five years. It targets not only priority markets but also emerging markets in the region. Most importantly, it seeks to increase the level of Irish exports to € 9 billion over the period.
The new Asia Strategy will be driven by a high-level oversight group. The group will ensure that the Strategy continues to respond to the dynamics of the Asian market. The Group will report to Government on an annual basis.
The next five years promise to be an exciting and challenging time for us. I am confident that we will see tremendous progress for Ireland in establishing a firm presence in Asia. I commend this next phase of the Asia Strategy and look forward to following its progress in the
coming years.

Foreword by Micheál Martin, T.D, Minister for enterprise, trade and employment

In A Decade of the Asia Strategy 1999 to 2009 we note with satisfaction what has been achieved in the last five years and set challenging objectives to be realized in the next.
The Taoiseach directed political focus on Asia some five years ago. All members of the Government share his enthusiasm and commitment for greater interaction between Irish people and those of Asian countries. That is in our mutual interest.
Regular communications and increasing familiarity with Asian peoples are still of relatively recent origin. Yet, linkages have been established across a wide spectrum in recent years. The political, business, educational, media, cultural, social and other relationships that now exist will deepen and widen in the future.
In addition, the presence in Ireland of growing numbers of Asian students, workers and tourists is welcome and also a relatively recent development. It is advancing the process of mutual understanding, while simultaneously conferring economic benefits and responding to manpower needs. We recognize the importance of this contribution and will facilitate its development in a way that respects and values those coming here.
This twenty first century is often referred to as the century of Asia. There are many more decades ahead before it runs its course. The Irish people and Government want to realize the opportunities that each will bring for national and global advancement in all spheres of activity.

The development of trade is the primary objective of the Asia Strategy. Business with priority Asian countries grew significantly during its first phase. Trade statistics last year, when compared with those in 2003, show heartening trends. Our exports to China increased by 19%, to Singapore by 17%, to Korea by 15%, to Thailand by 14%, to Japan by 12%, to India by11% and so it goes on. This growth reflects the hard work of confident and adventurous Irish business people. It reflects the dedication and commitment of motivated State representatives working cooperatively in Asian countries in a national endeavour to further develop trade and business there. That endeavour also engages the support of the President and of the Government of Ireland in concerted efforts to progressively capitalize on trade development opportunities that currently exist, and that are in prospect in the decades ahead.
We could be overwhelmed with considerations of scale and distance. We are not. We are already succeeding and our increasing trade statistics are plotting that success. I know that the publication of A Decade of the Asia Strategy, and the objectives, targets and review mechanism that it comprehends, will add even greater impetus and coherence to this important and strategic endeavour.
In this century Asia will be the economic fulcrum of the world. Its cities, many with populations that are multiples of our own, now provide dozens of markets of millions. With these demographics, marketing and trade development opportunities to sustain and enhance our export-led economic growth are beyond bounds.
We will now renew our commitment and efforts. Cooperatively we will continue to realize our trade development and related objectives. When the strategy for another decade comes to be written in 2009, we will have met and, hopefully, surpassed targets now set out. Of that, have no doubt. Read more

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