China Asks EU Form Alliance Against United States

The EU’s entire economy is heavily dependent on trade, so it’s no wonder that the potential of a slowdown in global commerce has caused great concern among EU businesses. But even though a trade war would be perceived by most as a threat, and even though Trump’s policies are very unpopular in the EU, it still turned down a proposal by China to form an alliance against the US. Mostly because they agree that Trump is right about China.

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.

Source: Zero Hedge


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