The United States views the investment deal the EU negotiated with China shortly before the new year as a strategic mistake, if not an affront to the Biden Administration.
The new president promises to strengthen international organizations, consult with allies, and forge an alliance of democracies to counter powers like China. However, Biden’s progress towards Europeans has not been reciprocated so far.
“The willingness to fall into the open arms of Americans and be part of an American-led anti-chinese alliance is not particularly great, whether in Brussels, Berlin or Paris. The investment agreement is a clear sign that the EU wants to chart its own course in China’s politics,” writes the German newspaper Handelsblatt.
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An unprecedented study by Prognos AG – a Basel-based consulting and analytics company – sheds light on this. The authors speak of a “long-term shift in the balance of economic power.” In the next two decades, “no region of the world will show as much economic growth as East Asia and the Pacific.” As a result, in 2040, the region will achieve an economic performance greater than North America, Western and Central Europe combined, and China remains the main driver of this process.
The United States has shifted its position toward China and now sees it not primarily as a market but as a political competitor. The economic dominance of the West is set to decline in the next 20 years, which may be accompanied by further deglobalization and individual economies may suffer significant losses in the process, the publication explains.
“In the context of rivalry between the United States and China, the EU must defend free trade and oppose protectionism,” warns Bertram Brossard, director-general of the Association for the Bavarian Economy, who commissioned the study.
From the perspective of the Biden Administration, the concept of decoupling the economies of Europe and the US is too radical, Handelsblatt says. “I don’t think that separating the economies of China, the United States, Europe, Japan and India is a realistic prospect. It is almost impossible to unravel these ties,” Biden’s advisor Nicholas Burns told the newspaper.
Yet hardly anyone in Washington thinks that deepening economic ties with China, which makes an investment deal possible, is a good idea, the newspaper continues. In principle, Biden and his team share the view of the previous Administration that China’s authoritarian social model poses a threat to liberal democracy.
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Unlike Trump, Joe Biden does not intend to put his country first, but rather wants to build a “united front of friends and partners against China’s abusive behavior.“
The representative of the German Social Democratic Party responsible for foreign policy in the Bundestag, Nils Schmid, believes that the EU should not ignore the geopolitical context when shaping its trade policy.
In a statement to Handelsblatt, Schmid stressed that the agreement is not a “great sin” and does not interfere with close cooperation with the Americans. With all this, “the treaty must be studied very carefully” so as not to spoil relations between Brussels and Washington, which have priority. To avoid excessive dependence on the Chinese market, the Social Democrat does not advocate isolation, but rather cooperation with China’s neighbors.
“We also need agreements with other countries in the region,” he told Handelsblatt.