The EU’s rapprochement with Beijing: welcome to Kitobo

The human imagination gives birth to many strange and unreal. To such creatures of the fancy are Chimera creatures, which is a mixture of different types, it is not viable in the real world, but still exist in our imagination. In fact, they should not be. But they still exist because all we can think of, there is at least virtual.

We are not talking about Donald trump, which we also talk about the global economy. The zero years were marked by cooperation between the US and China: two ideologically opposed themselves to each other, competing powers, economic interests which are so crossed that they came to work without signing a formal contract.

British economic historian NiAl Ferguson (Niall Ferguson) called this incredible Alliance “Chimerica” (“Chimerica”): emerging major power, China has provided a weakening superpower with cheap capital. America could consume more than it produces, and to Fund the ever-increasing military budget. China, in turn, could produce more than otherwise he would be able to implement and invest their rapidly growing savings in the world currency — the dollar. No agreements were not. Has been provided by the mutual freedom of action.

Since the financial crisis of 2008, this model came under pressure: economic and political. Many perceived more quickly compared with USA, the rise of China as a threat to American jobs. The Beijing leadership, in turn, announced that China being a superpower, no longer intends to continually engage in cheap exports, and the need to provide more consumption to its citizens. Chimerica, the great Chimera of the global economy, proved unsustainable.

Now the situation is heating up significantly. And we’re back to Donald Trump.

Trump did not attach much importance to cooperation

The current US President during election campaign actively threatened China with penalty fees. Although after meeting with XI Jinping, which took place a few weeks ago, he became more reserved in his choice of words, but the threat sounded before has not disappeared. Foreign economic growth in China since the financial crisis in General has declined considerably. But compared to USA it is still a Grand: five times the German.

Europe is shocked by the fact that America trump publicly distancing your partner from the other side of the Atlantic. His verbal attacks during the visits of NATO, the EU and the summit “the Big seven” in the last days showed that the US is no longer a reliable partner: whether it’s about climate change, international trade and collective security, the US President and his men do not allow to doubt that do not attach much importance to global cooperation. They feel bound by previous agreements and commitments only partially.

Under strong pressure at home, the President used his speech in Europe in order to impress energetic speeches and emphasized undiplomatic behavior. The more he goes on the defensive in Washington, the less he can take political steps in the United States, the more he will use foreign policy platform for his lengthy rough rhetoric. On the one hand, this was to be expected, but it’s not making it any easier.

The failure of trump from classic to America’s role as the leader acts destabilizers. As a consequence, the global economic policy is classified again. The other two major economies — the EU and China – looking for new partners with whom you will work on international issues.

Thursday and Friday will be a regular summit EU — China. Premier Li Keqiang meets with European Council President Donald Tusk and European Commission President Jean-Claude Juncker. The agenda is vast: trade, climate change, migration, foreign policy and security policy. Many people want to in the German economy there was a greater convergence of the two trading superpowers.

Now appears CICOPA?

In contrast to the model Chimerica in which the deficit country (USA) and the country with a surplus (China) was connected to each other tacit cooperation, there are two profitable region. It will fundamentally change the political original position. Does not bind them, so to speak, a magnetic mutual exchange of goods and capital. To cooperation, they do not stimulate the logic of the balance of payments, CITEPA can only function on the basis of open agreements. This means that joint projects should be implemented in the economic and political interests of both parties.

Two areas require particularly intensive European-Chinese cooperation: international trade and policy climate.

China and the EU carried out between a large part of world trade. The EU is the largest trading partner of China; China is the second largest trading partner of EU (after USA). Both parties are fundamentally interested in the stability of the world trading order. While trump seems not to care about the intricacies of international agreements and conflict resolution mechanisms under the world trade organization (WTO), the EU and China could save the system and prevent a slide into protectionism empty.

Trump wants to raise the old industry

We, as a leading Western power, supported by global economic institutions in the postwar period: the international monetary Fund, the world Bank, the predecessor of the WTO — GATT. When the US no longer want (or can’t) play this leading role, Europe and China should work together to fill the global vacuum of regulation.

Also in the field of climate policy they have similar interests. While the administration trump understates the importance of climate change and wants to revive polluting the world old industry, Europe and China are interested to continue to follow the path outlined in the Paris agreement of 2015. Although not necessarily of environmental beliefs, but rather for purely economic interests.

Because rapid advances in performance when using renewable energy sources promises a solid competitive advantages: electricity is generated from wind and solar, would be an extremely cheap fossil fuels at some point simply cease to be competitive. To implement this scenario planning for security: devices, networks, energy saving technologies, mobility — all this requires long-term investment. A turning point in energy policy and climate or zig-zag course, on the contrary, destroy the foundations of the calculations and hinder technological innovation.

China and Europe together could go the way of long-term abandonment of fossil energy sources, regardless of the twists and turns of Donald trump.

However, it is also clear that CICOPA — a very unlikely pair: the evinces China’s claims to leadership in the region and beyond. Projects such as the new silk road, Beijing is likely trying to develop its own Imperial dominance. The EU, by contrast, a relatively loose Association of smaller countries without a strong center, gradually weakening due to Breccia and the split between North and South, East and West that emerged during the crisis of the past years. (Note on proposed reforms for the Eurozone, appointed for consideration on Wednesday). Remains uncertain whether Europe will be able in the future be seriously perceived by the partner.