While China was increasing global investment to record levels, Europe was shutting down its industries and stifling itself with austerity policies. Today, the EU is making complaints against China – and it needs to make them against itself.
At the beginning of December, the presidents of the Council and the European Commission, Charles Michel and Ursula von der Leyen took part 24th EU-China Summit, where they addressed President Xi Jinping with strong words. In the eyes of European and American public opinion – and amid a new Cold War between the United States and China – it looked as if the EU leadership was joining the pressure on the Middle Kingdom. In response to four explosions, real threats were made against him. But I'm afraid the Chinese authorities are more amused to hear them than worried.
The EU's first complaint concerns “imbalances in trade relations”. Von der Leyen put it graphically, declaresthat “out of three containers going from China to Europe, two return empty”.
Undoubtedly, persistent trade imbalances may be an expression of a mercantilist strategy of persistent surplus. However, accusing China of mercantilism smacks of hypocrisy. Over the past ten years, China's current account surplus has been average 1.65 percentIn the Eurozone, it was 2.24%. In the same period, the main driving force of the European economy, Germany recorded a gigantic 7.44%. Excess.
China's state support is also a thorn in the EU's side, amounting to dumping exports to European markets. This complaint made sense in the late 1990s and after 2000, when the EU and the United States not only did not complain about Chinese dumping, but also did not hide their delight in China's Western trade and capital flows. But why raise these objections now, when the accusation of mercantilism has no basis in reality?
Ultimately, Chinese batteries or electric cars are competitive in Europe not because the Chinese government subsidizes them, but because it has invested heavily in their development. Today, Europe cannot match the quality of Chinese products Photoelectric panels – both with and without state support.
Volkswagen in the past, one of them the greatest Car manufacturers in China imported parts and industrial robots from Germany. Today, the company sources all the necessary parts and production goods in China, adding to the list of European regrets.
This trend has gone beyond the trade surplus. After many years on the design of German engineers, Volkswagen is currently working on it Hiring process for up to 3000 Chinese engineers, which are expected to create the next generation of fully electric vehicles for sale in China and Europe. More broadly, while the EU imposed far-reaching austerity measures across Europe, eroding investment in its industry, since 2008 China has been increasing investments to a world record level of almost 50%. national income.
Accusations of Chinese mercantilism raise eyebrows, especially among German industrialists, who have argued for the past 50 years that Germany's persistent trade surplus with the rest of the world proves global demand for high-quality German products. Whatever von der Leyen says to Chinese leaders, those same industrialists know that their Chinese counterparts, who make solar panels, batteries and electric cars, have won the right to make similar claims.
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The third point of contention mentioned by Michel and von der Leyen concerns the difficulties faced by European companies. conclusion Chinese Government Contracts. Along with the other two complaints, it forms the basis on which EU officials have built their case for imposing penalties on Chinese exporters – namely high tariffs on electric cars (and green technology in general). Although they refer to officials An investigation into Chinese electric cars In Brussels, it all looks unconvincing.
European industry leaders I spoke to admit they see these threats as a manifestation of EU leaders' panic that Europe is no longer competitive in key areas. One of them asked a rhetorical question: “Does von der Leyen really think that the threatened tariffs on BYD electric cars will increase (European) exports to China?”
It is clear that European companies complain about the level playing field in China, especially when it comes to public procurement. However, they do not understand how this will change if – under enormous pressure from the US – 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 left and right,” one of them told me.
Michel and von der Leyen's fourth accusation was against the Chinese leader Insufficient support European sanctions on China against Russia as part of a common front to end the invasion of Ukraine. Apart from the question of their effectiveness, this accusation only exposes the hypocrisy of the EU: it condemns Putin's bombing of hospitals and the targeting of Ukraine's water, energy and food resources (quite rightly), while remaining silent when the same, if not worse, crimes are committed. Israel in the Gaza Strip.
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Of course, hypocrisy is not the reason Europe is rapidly losing capital and surplus on the current account. This was due to recklessness in the face of the inevitable euro crisis ten years ago. record holder savings Along with massive money printing and the inability to create a banking union and unification of capital markets, Europe was characterized by an unprecedented amount of money in financial circulation and an unprecedented low investment in future technologies for the next 13 years.
That is why Europe lags behind the USA and China. Trying to deal with this by delaying America and threatening China is both unfortunate and pointless.
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Copyright: Project Syndicate, 2023. www.project-syndicate.org. Translated from English by Anna Opara.
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