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Will Europe defect to China?

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President Biden is moving to engage Europe to rebuild the transatlantic partnership. The Chinese regime, however, doubts he will succeed in his endeavor. Traditional American allies, the Communist Party has declared in its Global Times, “are economically dependent on China.”

China beat the United States last year as the largest merchandise trade partner with the European Union, whose exports to China rose 2 percent. European Union imports from China jumped over 5 percent. At the same time, the European Union exports to the United States fell 8 percent and imports fell 13 percent. Such a feat by China is even more dramatic since European Union trade volume declined when exports fell 9 percent and imports fell over 11 percent last year in the coronavirus crisis.

China touts how it has overtaken the United States in the trade rankings. Xinhua News Agency called the increase with European Union and China trade a hard won victory. But trade includes services, which when added to the data will show the United States is still by far the largest European Union trade partner. “The headline that China replaced the United States as the major European Union trade partner is meaningless,” said Gregory Copley, the president of the International Strategic Studies Association. “Statistics for 2020 are distorted so the United States should not worry about the European Union gaining more trade with China.”

Copley doubts that China, with a stumbling economy, can maintain trade momentum. Whether one believes China grew by more than 2 percent last year, the country will not be able to continue that trend until it vaccinates its population. Despite months of a head start, it still has no shot proven to be both effective and safe. The United States, on the other hand, has two such coronavirus vaccines and will soon have its third one.

Further, American merchandise trade is more beneficial to the European Union than that from China, which last year flooded the bloc with imports, notably medical supplies and home electronics, which have been popular across a continent locked down to prevent the spread of disease. So as a result, the European Union trade deficit with China rose about 10 percent. Meanwhile, the European Union maintained a healthy trade surplus with the United States, which just declined by less than 1 percent.

European firms, like most American firms, are frustrated by a worsening business climate in the biggest market in the world. “There is a growing chorus of complaints from most European businesses that find it difficult to repatriate profits, export data, and protect technology in China,” said Theresa Fallon, the director of the Center for Russia Europe Asia Studies based in Brussels. Yet she said China holds one advantage. “Perceptions matter and these figures make it look like China is rising and the United States is in decline. Who do you want to hitch your cart to?”

The answer with the European Union is China. The European Council on Foreign Relations found that most citizens doubt the United States could make a comeback as the global leader because it is unlikely to resolve its internal divisions. Moreover, a majority of those in the bloc believe China could become more powerful than the United States in the next decade, therefore the people of the European Union in general think they should stay neutral in the matters of China and the United States.

These startling opinions of the United States have been led by Germany, the heart of the bloc economy and Berlin looks like it is throwing in its lot with Beijing. Its growth strategy is based on China so many of its leading figures turn a blind eye on Chinese human rights atrocities. Volkswagen chairman Herbert Diess famously said he was not aware of the Chinese detention centers in his now infamous interview from 2019.

China rising to the top of the trade rankings comes soon after Brussels and Beijing signed the Comprehensive Agreement on Investment. The deal two months back was seen as a slap in the face of President Biden, who promised to strengthen ties with traditional American allies as one means of dealing with China. Beijing wanted to rush the announcement with an effort to avert his goal. China is making great strides in eroding, and perhaps one day ending, the critical historic transatlantic alliance. The European Union has already started to defect to China.

Gordon Chang is a columnist and the author of “The Coming Collapse of China.” You can follow his updates online on Twitter at @GordonGChang.

Tags Business China Economics Europe Finance Government International Trade

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