Europe, it seems, has something of a dilemma. Should it remain closely aligned with the U.S. (or as closely aligned as it ever is), the democracy on which it depends for much of its defense, and, given the increased importance of U.S. exports of liquified natural gas (LNG), for a crucial part of its energy needs? Or should Europe try to maintain a course that ensures that it avoids the economic inconvenience of too abrupt a break with China, a hegemon on the rise and one that is run on fascist or quasi-fascist lines (whatever Beijing’s ruling party may call itself)?
Bloomberg (November 19):
In October, President Joe Biden restricted the sale of semiconductors and chipmaking equipment to China in a bid to stem its economic development, and asked key allies to comply — raising fears of a split in the global economy.
Fears?
The “global economy” has always been split and will always be split. The idea that it is some seamless, unified whole bears no connection with political or trading reality. The only question is how sharp those splits will be.
What writers for Bloomberg (an organization owned by a billionaire with some interesting views on China) mean by a “split” in the global economy is a global trading system in which (roughly, speaking) Western players belatedly recognize the fundamental difference between the rules under which they operate and Chinese mercantilism. There’s also the small matter that China is not only a powerful (and unfair) competitor, but also one that it is using its economic success to fund an increasingly alarming strategic threat.
This worries some members of the EU less than it should:
French President Emmanuel Macron [has] called for engagement with Beijing and resisting efforts to divide the world into competing blocs. That followed similar appeals from German Chancellor Olaf Scholz, who visited China earlier this month, and efforts by Dutch Prime Minister Mark Rutte to coordinate with other key chipmaking nations in resisting US pressure.
“Now, progressively, a lot of people would like to see that there are two orders in this world,” Macron said in a speech to business executives at the Asia-Pacific Economic Cooperation CEO summit in Bangkok. “This is a huge mistake, even for both the US and China.”
“We need a single global order,” he added, a line that drew extended applause.
The French leader’s comments in particular show Europe is finding its footing in carving out a middle ground when it comes to China. While calls have grown in some European capitals to get tougher with Beijing on issues related to human rights and democracy, the sweeping US export controls on chips — which may soon be extended to other strategic technologies — have shifted the conversation from fears about China to concern about American overreach.
With Germany heading toward recession and Europe facing a harsh winter without cheap Russian oil and gas, “there is little appetite for confrontation with Beijing,” said Noah Barkin, managing editor of the Rhodium Group’s China practice.
It might have been thought that with Europe facing an energy crisis as a result, in part, of its failure to look at the political risks beneath a superficially smooth trading relationship (for natural gas, and other resources) with authoritarian, expansionist Russia, Macron, Rutte and Scholz would have learned some lessons. But no . . .
Back to Bloomberg:
Xi sought to exploit the divisions [between Europe and the US] on his six-day trip to attend the Group of 20 summit in Bali and APEC in Thailand, during which he met with roughly 20 leaders . . . . In a meeting with Rutte in Bali, Xi urged the Dutch leader to avoid “decoupling” as the US piles pressure on ASML Holding NV, which has a virtual monopoly on a type of machine needed to make the most advanced chips.
“We must oppose the politicization of economic and trade issues and maintain the stability of the global industrial chain and supply chain,” Xi told Rutte . . .
Again, if there is one thing that the last few years ought to have shown it is that, when it concerns trading with hostile, or potentially hostile, authoritarian powers, the politics are already there. To ignore or to take no account of those risks is in itself a political decision . . .
Bloomberg:
Though major European leaders are increasingly resistant to rising pressure from Washington, they are far from reaching a consensus on how to deal with an increasingly assertive China.
Former Soviet bloc countries in particular are coming to view Beijing’s economic influence over the continent with suspicion. Finnish Prime Minister Sanna Marin on Thursday warned of Europe’s technological dependency on China, noting the risks of becoming too reliant on an authoritarian regime.
To be a stickler, Finland is not a “former Soviet bloc” country, although it came perilously close to becoming one. That said, it clearly understands the dangers of such a dependency. As does Lithuania, a country that was occupied by the Soviets and has some . . . views on China.
However:
In an extended metaphor during his APEC speech, Macron likened the US and China to “two big elephants” in a jungle.
It’s not too hard to see in Macron’s comments echoes of the old notions of ‘moral equivalence’ between the U.S. and USSR that were used by some western Europeans during the Cold War to justify a form of neutralism that, generally speaking, worked in the Soviet interest. That’s not a good look.
And nor is the Dutch reluctance to cooperate in U.S. efforts to restrict the export of advanced chipmaking equipment to China (something explained by the fact that ASML, a leader in this field, is Dutch).
In a later (November 22) story, Bloomberg reports the objection of Dutch foreign-trade minister Liesje Schreinemacher to simply accepting U.S. leadership in the imposition of export controls designed “to undermine Beijing’s ambition in building a chip industry at home and improve its military capabilities.” The Dutch, on the other hand, want “to maintain access to China as a major market.”
What could go wrong?