05.06.2018 Author: Vladimir Terehov

The Latest Round of Sino-European Maneuvers in Response to US “Protectionism”

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Among the key participants in the new global “post-Cold War” game there are signs of turmoil, which became visible one and a half years ago with the emergence of Trump administration’s policy course under its overarching slogan “hit those robbing our nation with tariffs on imports”. And the label “thieves” does not only encompass the US main geopolitical rival, China, but also US allies.

These strong words are supported by concrete numbers. The annual trade deficits between the USA and China, the European Union and Japan are $370 billion, $120 billion and $60 billion, respectively. The three “culprits” cannot counter this “invoice” with anything, but they do need to somehow respond to these serious accusations from the US (and even more serious ‘counter-measures’).

Hence the situation the US “opponents and allies” have found themselves in is starting to resemble a bee hive, with more frequent back-and-forth visits by high-ranking government officials, forums and science conferences, all under a unifying counter slogan “say no to protectionism and economic separatism on a national level”.

A distinct flurry of activity is notable in the Sino-European Union link, despite the fairly complex relations among its participants, as previously discussed in NEO. It is worth reiterating that the EU (as well as the US and practically all the trade partners of the rapidly developing China) noticeably lose out when trading with the Chinese. Not as much as the Americans, but by a fairly substantial annual amount of $200 billion at fairly consistent trade volume levels with China (of around $600 billion).

Up until now there has been little observable progress in the negotiations on concluding bilateral free trade agreements (still possible in the summer of 2017 between Japan and the European Union). The EU countries (especially Germany) are becoming increasingly suspicious of Beijing’s de facto buy up of Western European manufacturing assets,  in particular those specializing in high tech.

All of this has resulted in a noticeable drop in enthusiasm at one of the key final destinations of the Chinese project, New Silk Road (NSR), i.e. Europe, towards the completion of this endeavor. Why build new “smooth silk” transport routes when even the existing ones flood European markets with cheap Chinese products, thus bankrupting local manufacturers?

The enormous initial financial investments in projects such as NSR are not made in order to ensure comfortable travel conditions for hordes of tourists to be transported along these future routes.

Brussels is rattled by China’s increasing reach via the 16+1 negotiations in Eastern Europe. New connections are taking shape with the four Visegrád countries, which include Poland, the Czech Republic, Slovakia and Hungary.

Still, when faced with the common threat of a trade war with the world leader, who employs the same methods of applying economic pressure on both “opponents and allies” when solving purely political problems (for example in the case of Iran), China and the EU are trying to search for joint counter measures as well as smooth over problems in their bilateral relations.

While speaking at the latest session of the National People’s Congress in China, the Foreign Minister Wang Yi mentioned the existence of “several disagreements” with the EU, but then pointed out that both sides support “safeguarding free trade and continuing negotiations between the EU and China aimed at concluding mutual investment agreements.”

Beijing has become the destination for political and economic pilgrimage for practically all the European politicians of influence. High-ranking Chinese officials are in turn actively touring various European countries just as frequently.

Out of the recent meetings of this nature, it is worth mentioning the visit to Beijing on 15 May by Federica Mogherini, responsible for EU’s foreign policy, and the political tour to France, Spain and Portugal on May 16-19 by Chinese Foreign Minister Wang Yi, who felt the need to “synchronize watches” with the EU member states before heading to Buenos Aires for the G20 Foreign Ministers’ Meeting.

However, undoubtedly, the most important meeting out of those previously mentioned was Angela Merkel’s work-visit to Beijing held on May 24-25 at the invitation by her Chinese colleague Li Keqiang. It is notable that at the same time, France’s former president François Hollande was also visiting China and met with China’s leader Xi Jinping, who expressed “full confidence” in the prospects for Sino-French ties.

We have repeatedly noted the special piety reserved for Angela Merkel in China, where the German chancellor is viewed as the most influential politician in Western Europe.

During the meeting with Merkel, Xi Jinping noted the fact that the current chancellor’s 11th visit to China underscored the importance of the bilateral ties between the two countries, with the cooperation width and depth reaching an “unprecedented level.” The Chinese leader welcomed “Germany’s desire to take advantage of the opportunities that the new set of reforms, initiated by China, presents”.

Merkel, for her part, having noted “the enormous changes happening globally nowadays”, emphasized the need for “enhanced communication and coordination efforts by China and Germany on the international stage, such as the upcoming G20 summit”.

Reuters reported that the meeting between Xi and Merkel points to its underlying motive of attempting to counterbalance Donald Trump’s protectionist policies.

In the meantime, there are no observable attempts to depict this coordination of Sino-German (Sino-European) efforts as being uncompromisingly anti-American in nature. China as well as the EU are very keen on retaining their access to the American market. Likewise, the US also needs to maintain trade and economic ties with China and the EU, which explains the continuing efforts to resolve the trade and economic problems in the US relations with China and with the EU.

Still, it is important to remember Japan, a country with the 3rd largest economy in the world, or perhaps the 4th largest, if the EU is viewed as an independent economic entity.

Thus, it is better to talk about the complex trade and economic (and inevitably political) maneuvers in the context of a strategic global rectangle “USA-China-EU-Japan”.

Russia’s significance in the current global economic relations, as the saying goes, leaves much to be desired. In terms of trade volumes, the Russian Federation substantially trails those within the binary links in the previously mentioned rectangle.

Hence the Russian leadership’s meme “economic development” has taken center-stage in its public rhetoric. And transforming these words into real action has become a key aspect that will determine Russia’s position in the currently changing new world order.

Vladimir Terekhov, expert on the Asia-Pacific Region issues, exclusively for the online magazine “New Eastern Outlook.”


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