Speaking at a press conference Friday, Chinese Foreign Ministry spokesperson Hua Chunying hailed the latest EU trade figures, which were released last month, as “good news for both China and the EU.”

The statistics, shared with Newsweek by the EU’s official European Statistical Office, showed that the volume of Chinese-EU trade from January through September of this year to be 425.5 billion euros, or roughly $516.8 billion, overtaking the U.S. and EU’s 412.5 billion euros, or about $501 billion, from those same first three quarters of 2020.

The pivotal month was July. A report accompanying the figures went into brief detail.

“In the first nine months of 2020, China was the main partner for the EU,” it stated. “This result was due to an increase of imports (+4.5%) while exports remained unchanged. At the same time trade with the United States recorded a significant drop in both imports (-11.4%) and exports (-10.0%).”

Back in Beijing, Hua saw the shift as a sign of robust ties between China and Europe, noting how the EU has for years been China’s largest trading partner, with room for even greater development.

“As important trade partners to each other, China and the EU are highly complementary in economies and boast huge potential in broad cooperation areas,” Hua said.

President of the European Commission Ursula von der Leyen speaks to a media briefing after an EU-China Summit on June 22 in Brussels, Belgium. She said: “The COVID pandemic and a number of major bilateral and multilateral challenges show clearly the EU-China partnership is crucial, be it in terms of trade, climate, technology, and the defence of multilateralism. But for our relations to develop further, they must become more rules-based and reciprocal, in order to achieve a real level playing field.”THIERRY MONASSE/GETTY IMAGES

The fluctuation plays out during a difficult time for the global economy, which has been assailed by the COVID-19 pandemic. The disease was first observed in China, but the country has experienced an early recovery, allowing it to quickly resume trade while the disease has ravaged other countries, especially in the West and worst of all in the U.S., which continues to see daily record-breaking infection and fatality figures.

China and the U.S. both made a point to provide global assistance to demonstrate their status on the international stage, sometimes disparaging one another’s position.

But with European countries also hit hard by a disease that has induced national lockdowns and various disruptions to everyday life, Hua said the latest trade figures were “fully demonstrating the resilience and potential of China-EU economic and trade relations.”

She argued this bodes well for both of them.

“The fast growth of China-EU trade has strongly boosted the socio-economic development and improved the well-being of the people on both sides,” Hua said.

She referenced how in September, the latest year included in the relevant EU trade numbers, China and the EU signed the China-EU Geographical Indications Agreement to promote mutual agricultural trade, and how talks are progressing on how to promote additional investment to “scale China-EU economic and trade cooperation to new heights.”

This model of cooperation with China, she said, applied not only across Europe but the world.

“Going forward, while fostering a new development paradigm, China will expand opening-up and provide more opportunities to the EU and other countries,” Hua said. “We also hope the EU will keep its trade and investment market open, and work with China to uphold economic globalization and the open and free environment for trade and investment.”

The pace at which China has moved to reclaim its 19th-century title as the world’s largest economy has caused consternation among many in the West. Currently, at second and having lagged as low as fifth when the Chinese Communist Party took over in the wake of World War II and civil war with nationalist forces now exiled to Taiwan, China is projected to top the list in about a decade or so.

In Europe, countries such as France, Germany, and the United Kingdom – which has formally exited the EU – have accused China of abuses in economics, human rights, and geopolitical disputes in Asia.

But Paris and Berlin have also had a difficult relationship with Washington under President Donald Trump, who has adopted a combative stance against Beijing and has sought to redefine the transatlantic relation with European allies as well. With the current administration set to leave office next month, the EU has already begun formulating a new strategy to work with President-elect Joe Biden.

The European Commission released on Wednesday an 11-page document entitled “A new EU-US agenda for global change.” The report lays out a framework urged to be the “lynchpin of a new global alliance of like-minded partners.”

The strategy mentions China specifically as “a negotiating partner for cooperation, an economic competitor, and a systemic rival.”

And while it calls for measures to address an increasingly powerful Beijing, the EU also offered a rebuke of the Trump administration’s approach, which launched a trade war that rocked the international market.

“As open democratic societies and market economies, the EU and the US agree on the strategic challenge presented by China’s growing international assertiveness,” the report said, “even if we do not always agree on the best way to address this.”

“I’m not going to make any immediate moves, and the same applies to the tariffs,” Biden told the Times. “I’m not going to prejudice my options.”

Rather, he would aim to “develop a coherent strategy” alongside U.S. allies, with whom he wanted “to get us back on the same page” in the opening weeks of his term.

A day after the report and Biden’s interview was released, the Chinese Communist Party-run Global Times outlet published an editorial expressing skepticism as to the ability of the U.S. and the EU to produce a joint approach to tackling China due to their diverging positions and priorities.

“Europe may be reluctant to promote new Western unity with the US at its center, and on the basis of the Trump administration’s radical policy toward China. New frictions will be inevitable,” the article read. “But if, on the other hand, Europe gets to define Western unity and the US makes fewer decisions and provides more resources, then Washington will never accept it.”

The publication ultimately dismissed the concept of a “so-called China challenge and the threat brought about by China” as “to a large extent, imaginary.”

But that threat appears as real as ever in political circles in Washington, where the U.S.-China Economic and Security Review Commission released a 575-page report as part of its annual review presented to Congress on the challenges to the relationship between the two countries. The report’s authors said the focus of this year’s edition for the first time in the commission’s two-decade history was China “surpassing” the U.S. rather than “catching up.”

The report identified Europe as one of the key arenas in which China was looking to expand its influence.

As for Hua, responding to a long list of allegations of Chinese economic and political misconduct in comments sent to Newsweek by Beijing’s embassy in Washington, she railed against a commission that she argued on Thursday “has always been ideologically biased against China,” asserting that “there is no factual basis for the vilification and smear of China in various reports it has fabricated.”

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Negotiations for the agreement took nearly seven years, and there were intense discussions between the EU Commission and top Chinese officials throughout 2020. In the last days of the year, a decision was made to go ahead with the agreement. Germany’s Chancellor Angela Merkel, acting as EU term president, and Chinese President Xi reportedly pressed to close the agreement. But there is an important nuance here: the agreement has not been actually been signed yet, as the negotiations took place via video conferencing. And for the agreement to come into force, ratification by all EU member states as well as the consent of the EU Parliament is necessary.

It is clear that this process will be quite painful and there is a good chance that it could fail. In fact, it is even possible to go further and claim that Germany is betting on this possibility.

So why has Germany followed such a path? There are three reasons: First of all, Germany is heavily dependent on its trade with China. It was its trade with China that saved Germany from the global financial crisis in 2008. Moreover, trade with China is still highly significant to Germany today, with trade volumes of around 250 billion dollars. Secondly, Germany and to a large extent France, have been particularly uncomfortable with the European Union being treated as a second-tier power by the United States under the Trump administration.  Brexit has been the last straw in this context. The message given to the United States with the agreement was that Europe is far more important than the United States thought and that the EU cannot be ignored. Finally, with the CAI agreement, China has also been warned about the importance of Europe within the scope of great power competition.

At this point, it is necessary to draw attention to the race between France and Germany in order to become the dominant power in the EU after Brexit. With Brexit, France has become the EU’s sole nuclear power and its most powerful one in terms of conventional forces as well. France’s historical approach to European autonomy is a well-known phenomenon. Trump’s unilateral policies and his refusal to take Europe into account enabled France to draw Germany to its side within the scope of European autonomy. However, with the election of Biden, Germany is expected to return to its traditional approach in the context of transatlantic relations. This has been made clear in speeches by the German Defense Minister, Annegret Kramp-Karrenbauer. Kramp-Karrenbauer emphasized that an autonomous capacity in military and political matters can strengthen Europe’s hand within the context of existing transatlantic ties with the United States. She also added that Europe could not provide nuclear deterrence without the US nuclear umbrella. The main reason for this approach is to prevent France from taking the helm of the European Union in the absence of the balance provided by the United Kingdom. The struggle of these two powers to gain the leadership of Europe lies at the root of many problems in European history. It was the presence of the United States in the continent after the Second World War that kept these two powers from any conflict. The US presence has been also the most essential factor in Europe’s welfare today. For this reason, the US presence in the continent and the continuation of the transatlantic relationship have been of vital importance for Germany.

Against France’s clear military superiority, Germany has undoubted economic superiority. The economic locomotive of the European Union, so to speak, is Germany. Germany needs China and Asian economies to maintain this superiority. In this context, it does not hesitate to oppose any attempt that will jeopardize its commercial relations with China. In this respect, the attempts of the United States to cut off trade relations with China altogether cannot find any support from Germany. However, Germany also looks for ways to balance the assertive and aggressive attitude of Xi Jinping’s China. For this reason, it wants to use its relationship with the United States as leverage against China as well.

When all these elements come together, it is an indisputable fact that Germany is in a very delicate position. In fact, the CAI agreement itself is a consequence created by such a balance. Germany forced the conclusion of such an agreement for the sake of not spoiling its relations with China, and it has restored confidence in China. On the other hand, the message was given to the United States, especially to the incoming Biden administration, that Europe is an important power that cannot be ignored. Nobody will be able to blame Germany if the agreement is not implemented due to an EU member state refusing to ratify it. This means that Europe, and Germany, hold some serious leverage against the United States as well as China.

Looking ahead, both great powers will have to play the game by taking Europe into account. In fact, the European Union, and especially Germany, could gain a crucial position in playing a balancing role that will keep the great power rivalry between the US and China from getting out of hand. Hopefully, the result will be a more balanced and stable global order. Such will be one of the most important tasks of the new administrations in the United States and Germany in the coming period.

The views expressed in this article are those of the authors alone and do not necessarily reflect those of Geopoliticalmonitor.com or any institutions with which the authors are associated.

Source: https://www.eurasiareview.com/12012021-eu-china-investment-agreement-casts-europe-as-a-great-power-oped/

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US President Donald Trump’s attacks on the international trading system, by imposing tariffs and engaging in virulent anti-trade rhetoric, have left America’s commercial partners worldwide scrambling for an appropriate response.

Leaders of the European Union and China, the US’s most significant trading partners, were meeting in Beijing on Monday for their annual EU-China summit, with global and bilateral trade and investment relations topping the agenda.

Read more: China warns of ‘biggest trade war in history,’ vows ‘counterattack’ against US tariffs

“It is a common duty of Europe and China, America and Russia, not to destroy this (world) order, but to improve it. Not to start trade wars…but to bravely and responsibly reform the rules-based international order,” European Council President Donald Tusk said in Beijing. He spoke after a meeting with Chinese Premier Li Keqiang that was also attended by European Commission President Jean-Claude Juncker.

Li told reporters it was up to China and the US to “work things out.”

“China does not want a trade war with the US. Noone emerges as a winner from a trade war,” he said.

The talks between EU and Chinese officials were to focus on a raft of global economic and security challenges, including the Iran nuclear deal, the situation in Syria and climate change.

Given the current escalation in trade tensions by the imposition of tit-for-tat tariffs, both sides were expected to express their support for a rules-based international trading system under the auspices of the World Trade Organization (WTO).

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