Europe Turns Down Chinese Offer For Grand Alliance Against The US

Publicizing its growing exasperation in dealing with president Donald Trump who refuses to halt the tit-for-tat retaliation in the growing trade war with China - which is set to officially begin on Friday when the US slaps $34 billion in Chinese exports with 25% tariffs - but has a habit of doubling down the threatened US reaction to every Chinese trade counteroffer (after all the US imports far more Chinese goods than vice versa)...

... China has proposed a novel idea: to form an alliance with the EU - the world's largest trading block - against the US, while promising to open up more of China's economy to European corporations.

The idea was reportedly floated in meetings in Brussels, Berlin and Beijing, between senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, according to Reuters. Willing to use either a carrot or a stick to achieve its goals, in these meetings China has been putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month.

However, perhaps because China's veneer of the leader of the free trade world is so laughably shallow - China was and remains a pure mercantilist power, whose grand total of protectionist policies put both the US and Europe to shame - the European Union has outright rejected any idea of allying with Beijing against Washington ahead of a Sino-European summit in Beijing on July 16-17.

Instead, in the tradition of every grand, if ultimately worthless meeting of the G-X nations, the summit is expected to produce a "modest communique", which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO. Incidentally, the past two summits, in 2016 and 2017, ended without a statement due to disagreements over the South China Sea and trade.

Then there is China's "free-trade" reputation: a recent Rhodium Group report showed that Chinese restrictions on foreign investment are higher in every single sector save real estate, compared to the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China. And while China has promised to open up, EU officials expect any moves to be more symbolic than substantive.

Almost as if behind the facade of smiles and agreement, Europe has absolutely no belief that Beijing will ever follow through with its promises.

In other words, not even when faced with the specter of a full-blown trade war, is Europe willing to terminally alienate the world's biggest buying power: the US consumer, in exchange for some vague promises for "open trade" from Beijing.

That doesn't mean that China won't try however.

Vice Premier Liu He has said privately that China is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China’s Premier Li Keqiang and top EU officials.

Meanwhile, as the US-China trade war has drifted into the front pages of domestic propaganda, Chinese state media has been promoting the message that the European Union is on China’s side, putting the bloc in a delicate position according to Reuters.

In a commentary on Wednesday, China’s official Xinhua news agency said China and Europe “should resist trade protectionism hand in hand”.

“China and European countries are natural partners,” it said. “They firmly believe that free trade is a powerful engine for global economic growth.”

Or maybe Europe's position is not all that delicate, because when push comes to shove, Europe is nowhere near ready to abandon its trans-Atlantic trade routes:

“China wants the European Union to stand with Beijing against Washington, to take sides,” one European diplomat told Reuters. “We won’t do it and we have told them that.”

But why does Europe - which has so staunchly publicized its disagreement with Trump's policies - refuse to align with China? Simple: behind closed doors it admits that Trump's complaints about Beijing are, drumroll, spot on.

Despite Trump’s tariffs on European metals exports and threats to hit the EU’s automobile industry, Brussels shares Washington’s concern about China’s closed markets and what Western governments say is Beijing’s manipulation of trade to dominate global markets.

“We agree with almost all the complaints the U.S. has against China, it’s just we don’t agree with how the United States is handling it,” another diplomat told Reuters.

And while Europe's position is understandable, if hypocritical - after all if it believes that Trump's approach to dealing with an ascendant China is the right one, why not just say it - the attention will shift to China, and the admission that Beijing is terrified about the consequences of a full blown trade war.

As Reuters notes, China’s stance is striking given Washington’s deep economic and security ties with European nations. It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars worth of Chinese imports on July 6.

It also underscores China’s new boldness in trying to seize leadership amid divisions between the United States and its European, Canadian and Japanese allies over issues including free trade, climate change and foreign policy.

“Trump has split the West, and China is seeking to capitalize on that. It was never comfortable with the West being one bloc,” said a European official involved in EU-China diplomacy.

Wait, that's the exact same thing the media claims about Putin is doing, although usually in the context of some grand "Kremlin mastermind" when the establishment does not get the desired outcome. The irony is that whereas Putin is merely sitting back and enjoying the show, it is China that is actively engaging in secretive negotiations trying to shift the global balance of power.

“China now feels it can try to split off the European Union in so many areas, on trade, on human rights,” the official said.

So, when "they" say Putin, they really mean Xi? Confusing...

* * *

Never one to act without a long-term strategic plan, Beijing's approach to cozy up with Europe may have an entirely different motive than isolating Trump: China’s offer at the upcoming summit to open up reflects Beijing’s concern that it is set to face tighter EU controls. Just like in the US, the European Union is seeking to pass legislation to allow greater scrutiny of foreign investments.

Said otherwise, China is suddenly scrambling because it realizes that unless it locks up Europe, it may well be Trump who succeeds in convincing Brussels to sign a bilateral deal with the US, at the expense of cracking down even more on China, a move which would send China's annual GDP growth well below 6% as Beijing loses full access to its biggest trading partner.

Summarizing Europe's position, a third diplomat told Reuters quite simply that “we don’t know if this offer to open up is genuine yet,” adding that “it’s unlikely to mark a systemic change.”

To be sure, European envoys say they already sensed a greater urgency from China in 2017 to find like-minded countries willing to stand up against Trump’s “America First” policies. And yet, according to the Reuters report, Europe is not one of those "like-minded countries."

Almost as if everything that is publicly taking place on the international stage is nothing but a spectacle, one in which everyone's true motivations are 180 degrees the opposite of what is stated.

Comments

hooligan2009 Wed, 07/04/2018 - 09:17 Permalink

because it's the EU, the report is a lie. the EU will be actively pursuing more and more trade with China, whilst at the same time pursuing less and less trade with the US.

the EU's leaders are socialists. china is communist. they have much more in common with each other than with the US.

notice no-one in britain is even reporting that EU imposed tariffs against the US have a direct impact on britain?

bluez NidStyles Thu, 07/05/2018 - 03:25 Permalink

The Chinese System kinda sucks in general, although the people there are gaining in wealth. Deep down, everybody is ascared of China, and with damn good reason. But any fool knows that the China Monster is totally unstoppable.

Someday soon the Eurotards will abandon the formerly indispensible USSA, and hitch their wagon to China. That will make 9/11 look like minor toilet back-up.

In reply to by NidStyles

booboo ChaoKrungThep Wed, 07/04/2018 - 22:35 Permalink

under "international law" the "refugees" get "refuge" in the country they land. Parading through Europe raping and pillaging on their way to what fucking country best suits them is not "international law" quite the opposite. By the way if they are getting "slaughtered" it is due to the destabilization of their country by U.S. foreign policy. Maybe invite them in your home as guest and leave the kids with them while you and the wife paint the town. Double dare you to put your money where your pie hole sits.

In reply to by ChaoKrungThep

Harry Lightning peddling-fiction Wed, 07/04/2018 - 13:11 Permalink

The Chinks are starting to freak about how much money they stand to lose by trying to go head-to-head with Trump. Which is the grand strategy all along for Trump, he knows that the country with the trade surplus inevitably loses a trade war. The Chinese have big egos, which makes them argue first before allowing reason to prevail.In the end, the Chinese also are a very pragmatic and somewhat reasonable people, and the result of all this histrionics will be that they will accept a surplus of $500 billion as opposed to the present $750, which is a lot better than they will get if they keep escalating and retaliating.

Trump is playing the right cards in this hand.

In reply to by peddling-fiction

Harry Lightning Sinophile Wed, 07/04/2018 - 15:41 Permalink

Wrong about the fake money nonsense. Don't you understand that a national currency represents the assets of the country that issues it and not the assets of that country's government ? Money is a store of value that provides a medium of exchange of assets. Those assets are not the ones held by government but rather those assets held by the people involved in the exchanges of them.

Hence, the currency of a nation is not fake but a representation of the value of all assets held in that country. The concept that a government needs gold or a precious metal to infuse value in its currency is a fallacy created during a time when nation states needed to find a way to convince uneducated people that the money they possessed had value. The world is a smarter place today with respect to economics, and thus the old props needed to persuade the uninformed no longer are necessary. At least for mopst people.

Now, the real issue you should be taking with the value of a nation's currency is what is the net asset value of the nation the currency represents. In that evaluation, not only the assets but the debts of the entire nation are considered, which provides a much different view of the currency value. 

But even in that estimation, you must remember that the value of currency is directly related to its function as a medium of exchange. Exchange requires at least two parties, so therefore a currency's value is not only dependent upon the net asset value of the country it represents, but also the relative net asset value of that country and its trading partners.

In reply to by Sinophile

Baron Samedi Harry Lightning Thu, 07/05/2018 - 06:37 Permalink

-->Harry Lightning: "... currency of a nation is not fake but a representation of the value of all assets held in that country." - Might have been true when they started the con in 1913+; now 105 years after the Great Keynes Con, the U$D is 95%+ myth - and " ... the old props needed to persuade the uninformed ..." are awaiting the breeze that will take out the card house of debt.

It's a lot like waiting for next week's episode of a silent movie!

 

In reply to by Harry Lightning