The Chinese puzzle, Joe Biden and the European Union

Martin Wolf, the great analyst of Financial Times, a few years ago defined China as a “premature superpower”. A series of circumstances would have advanced the place of predominance of the People’s Republic, but without consolidating or maturing the foundations necessary to be there. Attentive to the geopolitical impacts of the current pandemic and the meager results of the trade war with the United States, this concept has perhaps already lost its rigor.

China was ubiquitous in 2020 but not only because of the plague of the coronavirus, the origin of which is attributed to Wuhan from where it would have been transmitted to the world. The end of the year indicates that these two protagonists, the disease and the Asian power, will continue to centralize the scene forward, although for very different reasons. Contrary to what one might have assumed just a few months ago, the People’s Republic reached this January 2021 as one of the few winners of the drama that shocked the world. This condition determines the place it intends or that it will definitely occupy on the world stage after the change of power in the United States, the other pole of the geopolitical transformation that will take place in the months to come.

There are three episodes in these hours, also linked by the pandemic, that must be observed. One refers to the advancement of the times of development and hegemony of Asian power on the back of the asymmetries that the disease has brought about. Another, the escalating crackdown by Xi Jinping’s regime, deliberately ignoring the global protest, with the significant case of the arrest of journalist Zhang Zhan. Finally, the historic embrace that Germanized Europe has just crowned with an unprecedented investment agreement with the Asian power.

The first item on this list was detected, among others, by the Center for Economic and Business Research, a powerful London-based institute, which determined that China will overtake the United States as the world’s largest economy. in just seven years, much earlier than expected. They attribute it to the fact that the Central Empire ends 2020 with an estimated growth of 2%, the only large economy with an increase in its GDP. On the contrary, the United States will contract by about 5%, which will allow Beijing to close the gap. An important element of this assessment is provided by the fact that the People’s Republic has already overtaken North America in the third quarter of the year which ended as the European Union’s largest trading partner.

It is this condition that gives meaning to the pact announced last Wednesday between the European bloc and the People’s Republic, firmly promoted by the German Angela Merkel to leave him bound before the end, on December 31, of her rotating presidency of the EU. A temporary problem that could indicate that he was not destined to outright ignore the United States and especially its imminent president Joe Biden because everything indicates that it happened. The episode actually confirms that the Atlantic relationship is damaged and it will take time to stitch it up, even if it will barely return to levels prior to Donald Trump’s anti-European campaign. But, in addition, it confirms that the United States is not what it was today, even if the EU is far from constituting what some of its leaders suppose or dream, an autonomous superpower between the two. giants.

The Sino-EU agreement has unique advantages for both sides. It provides Beijing with a significant and pragmatic ally in the pure north of the world for its technological and strategic developments such as the Silk Road. In return, it cancels the obligation of mixed association with Chinese companies for European companies investing in the People’s Republic; The criterion of intellectual property is broadened and the importance of the issue of public subsidies that facilitate competition from Chinese companies is put on the agenda. But essentially opens the huge Chinese market to Europeans where consumption, according to Goldman Sachs calculations, will explain this year that more than half of the national GDP begins: about $ 8.4 trillion against a product of $ 15.6 trillion.

The deal is the second high-profile deal that the Chinese Empire has crowned in the final weeks of this dramatic 2020, aside, by the way, the renewal of the controversial secret pact with the Vatican. In November, Beijing launched the Regional Comprehensive Economic Association (RCEP), the free trade agreement the most important in the world, which brings together 15 Asia-Pacific countries which represent 30% of the world economy. It was the most complete synthesis of the overhaul of the geopolitical map. This space was led by the United States with the so-called trans-Pacific agreement that Barack Obama built and from which Trump walked away in 2017. Beijing, which was not in this pact, He has now left the United States out of this huge wealth-generating machine.

Biden excludes recovering this initiative. He knows that gaining the support of a possibly Republican-dominated Senate for a multilateral deal would be a mission impossible. China has unlikely allies on Capitol Hill. But Biden is ready to rebuild bridges with Europe and seeks to speak with one voice to reconfigure the bond with China. He has an understandable urgency. The last years of insularity and geopolitical abdication of the United States, as well as the soap opera of Trump denying losing the elections and turning against American democracy, they have emboldened Chinese communism, which considers itself insensitive to international pressure.

The case of Zhang, sentenced to four years on absurd charges for reporting what was really going on in Wuhan at the start of the pandemic is an example of such behavior which adds to the pressure on Hong Kong or to the repression of the Uyghur minority. in the province. of Xinjiang. As stated in Foreign Affairs, Michéle Flournoy, vice-minister of defense under Obama, “the greater the confidence of the Chinese leaders in their own capacities, the more the doubts which they maintain on the capacities and the resolution of the United States are great”.

This dynamic, where the emerging power considers the one it still governs as decadent, stroll in a very dangerous risk area. “A strategic miscalculation could lead the Chinese leaders to conclude that they should – for example – advance on Taiwan, and be a fait accompli that a weakened and distracted US should accept,” warns the former official.

These factors, along with the economic and therefore political growth of power, are what make China in the main puzzle that Biden will have to face. Flournoy raises the need to create a deterrent to convince the Chinese leadership that the United States not only has “the capacity to crush any aggression, but also that there is the will to do so. Today, Beijing doubt both aspects “.

The war between China and the United States is not commercial, although it has been drawn up in these terms with the balance of an extraordinary sObrecosto in the pockets of Americans. According to a report by FortuneU.S. businesses have spent up to $ 46 billion by the end of 2019 on tariff-generated spending. But there is worse data. Bloomberg Economy He recently estimated that the trade war, aside from the pandemic, had reduced some $ 316 billion in the North American economy by 2020.

The war, which had these costs and little profit, was in fact for technological supremacy. “The Chinese Communist Party has understood that technology is the path to power,” he warned a few months ago. The Economist. The West notably rejects the “Made in China 2025” initiative, a gigantic state structure supporting the development of semiconductors, robotics, supercomputers, artificial intelligence and telecommunications.

Lorand Laskai, a researcher at the Council on Foreign Relations, argues that the aim of the program “is not so much to join the ranks of high-tech economies like Germany, the United States, South Korea and Japan, but to replace them entirely “. Made in China 2025 exists to achieve self-sufficiency by replacing technologies and to be the superpower that dominates the world market in critical industries. A nightmare for America

Biden is betting on the economic power of his country with his allies to limit Chinese claims, as he proposes in his famous article Why America Must Lead Again. The Democrat, although he maintains tariffs against China for now, He claims that unlike Trump, he has a strategy not only to feign harshness. Part of this is a $ 300 billion fund for research and development, as well as another $ 400 billion package to boost local production of critical and high-value supplies, such as equipment. medical devices, 5G telecommunications equipment and vehicles. electric

The goal is that the United States is not dependent on China, a decoupling that will moderate the formidable interaction of their country with the Asian economy. But that will mean higher taxes for investments in those items, and of course the rising cost of products that would replace the ones the Asian giant is offering cheaply. A difficult policy and unclear results that will depend on the quality of alliances, especially economic, that the United States can rebuild; China, meanwhile, seems to be trying to get its clothes back to what they were for centuries.
Copyright Clarín 2021

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