In early December, the president of the Council and the European Commission, Charles Michel and Ursula von der Leyen took part in 24th European Union-China Summit, where in decisive words they addressed president Xi Jinping. In the eyes of the European and American public – and against the background of the fresh Cold War between the United States and China – it seemed that the EU leadership was joining the force on the mediate State. Real threats were made to his address, which were a reaction to 4 points of inflammation. However, I fear that the Chinese authorities were alternatively amused by what they heard than concerned.
The first EU complaint concerns "a deficiency of balance in trade relations". Von der Leyen put it figuratively, statingthat "for 3 containers coming from China to Europe 2 return empty".
There is no uncertainty that the persistent trade imbalance can be an expression of a mercantylistic surplus strategy. However, accusing China of mercantylism smells hypocritical. Over the last 10 years current account surpluses China was on average 1.65 percent, while in the euro area it was 2.24%. During the same period, the main driving force of the European economy, Germany, recorded a gigantic 7.44% surplus.
The EU's eye is besides supported by the Chinese state, which boils down to dumping of exports to European markets. This complaint made sense in the late 1990s and after 2000, erstwhile the Union and the United States not only did not complain about Chinese dumping but did not hide the joy of China's introduction to the Western trade and capital circulation. But why rise these objections now erstwhile the charge of mercantilism is not based in reality?
In the end, Chinese batteries or electrical cars are competitive in Europe not due to the fact that the Chinese state subsidises them but due to the fact that it has made immense investments in their development. Europe is no match for Chinese quality present photovoltaic panels – with and without state aid.
In the past, Volkswagen, 1 of Major car manufacturers in China, imported parts and industrial robots from Germany. Today, the company acquires all the essential parts and production goods for its needs in China, adding another brick to the list of European regrets.
This trend not only covered the trade surplus. After many years of reliance on German engineers' projects in Volkswagen is presently ongoing employment process up to 3,000 Chinese engineerswho are to make another generation of full electrical cars for sale in China and Europe. In the broader perspective, while the EU has been imposing far-reaching savings across Europe, destroying investments in its industry, China has been expanding since 2008 investments to the planet evidence level of nearly 50% of national income.
Blame on Chinese mercantylism is surprising, especially among German industrialists who have argued over the last 50 years that Germany's permanent trade surplus with the remainder of the planet proves global request for high-quality German products. Regardless of what Von der Leyen tells Chinese leaders, the same industrialists know that their Chinese counterparts producing solar panels, batteries and electrical cars earned themselves the right to make akin claims.
The 3rd point referred to by Michel and Von der Leyen concerns the difficulties faced by European companies in contents Chinese government contracts. Together with the another 2 complaints, it is the foundation on which EU representatives have built arguments for imposing sanctions on Chinese exporters, in peculiar advanced tariffs on electrical cars (and green technology in general). Even though they claim to be authoritative investigation into Chinese electrical cars In Brussels, all this seems unconvincing.
The leaders of the European manufacture with whom I have spoken admit that they consider these threats to be a manifestation of the panic of the EU leaders, reasoning that Europe has ceased to be competitive in key areas. 1 of them asked a rhetorical question: “Does Von der Leyen truly think that the threat of duties on electrical cars BYD will increase [European] exports to China?”
It is clear that European companies are complaining about unequal playing conditions in China, especially regarding public procurement. However, they do not realize how this would change if, with large force from the US, the European authorities ban Chinese companies from participating in their own tenders. "Not to mention that since the pandemic European governments have been handing out state aid to the right and left," 1 of them told me.
The 4th charge of Michel and Von der Leyen presented to the Chinese leader afraid insufficient support China for European sanctions against Russia as part of a common front to end the invasion of Ukraine. Apart from the question of their effectiveness, this allegation exposes only EU hypocrisy: condemning bombing hospitals and targeting Ukrainian water, energy and food resources (as rightly so) by Putin, while silent erstwhile the same, if not worse, crimes in Israel are committed by the Gaza Strip.
Of course, hypocrisy is not the reason why Europe is rapidly losing capital and surplus on the current account. This has led to thoughtlessness in the face of the inevitable euro crisis over 10 years ago. evidence savings combined with mass money printing and permanent inability to make a banking union and a Capital Markets Union, for the next 13 years Europe has been characterised by unprecedented amounts of money in the financial circulation and unprecedentedly low investments in future technologies.
This is why Europe is falling behind the United States and China. The effort to remedy this by subjugating America and winning China is as sad as pointless.
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Copyright: task Syndicate, 2023. www.project-syncicate.org. She translated Anna Opara from English.
