As always, the Europeans are happy to pocket the benefits of U.S. pressure that forced Beijing to change its trade rules and practices.
But they also do things differently. Here is the German example.
During his speech in Beijing last Friday, German Minister for Economic Affairs and Energy Peter Altmaier said that “we shall take seriously (Xi’s) promises.” Washington, however, wants to codify the Chinese “promises” in the form of binding legal documents, drawing out the negotiating process and allowing China to keep recording surpluses on U.S. trades.
Germans did not negotiate; they ran down China’s trade surpluses 27.1% over the last three years. But Washington wanted to talk while its trade deficit with China soared 11.6% last year.
A much more interesting difference is the way Germany and the U.S. manage their trade with China.
A decline of China’s trade surplus with Germany over the last three years was due to a 22.5% increase of German exports.
By contrast, U.S. exports to China last year fell 7.5%, and in the first two months of this year they crashed 20.4% from the same period of 2018.
Clearly, Germany relies on pragmatic and reciprocal measures to manage trade and investments with China, while the U.S. wants structural reforms of the Chinese economy, with changes in the way China manages its aggregate demand and industrial policies. And to make sure China does all that, Washington insists on an enforcement mechanism with a permanent threat of trade sanctions.
Germany, and the EU trade commissioner, are not asking China for a similar bilateral trading regime.
The other much more important difference is that, unlike Germany and the rest of the EU, the U.S. is locked into an adversarial strategic posture with China in a number of acute security crises in the Indo-Pacific region. The U.S. is also competing with China for technologies that will determine global military and political dominance in the years to come.
U.S.-China trade is an essential part of that nexus.
This content was originally published here.