Trump Is Driving EU into China’s Arms


This is a very interesting era of world trade war. We may suffer the consequence of such a war, which I hope is not serious, but we shall not fail to be entertained by the developments.

There was the possibility of a real war with military forces between China and the US but due to Chinese President’ Xi Jinping’s resolute fast construction of artificial islands, a military war between the US and China has been avoided.

The US sent two aircraft carrier battle groups to force China to accept Hague arbitration award that deprived China of all its historical interests in the South China Sea but failed as China challenged it with war. US military was well aware that with three airstrips on China’s artificial islands supported by Chinese airbases along China’s coast the US has significant geographical disadvantages to fight a war with China in the South China Sea. Other seas along Chinese coast are too shallow for US huge submarines to maneuver. The US has to invest tens of billions dollars to develop B-21 to attack China.

Now, China has deployed its J-20 heavy stealth fighter jets for air supremacy to make it impossible for the US to win a war near China.

However, Thucydides trap still works in spite of that. The US has to defeat China in order to prevent China from surpassing it. Trump is shrewd to resort to less risky trade war to destroy China or at least hinder China’s rise.

However, he does not seem shrewd enough in trying to break the de facto alliance between China and Russia. The alliance makes it impossible for the US to defeat China even if the US has developed B-21 bombers to bomb Beijing. The US simply cannot break the alliance due to Russia’s economic dependence on China.

Anyway, it is really burdensome to deal with the alliance of two strong powers. Trump is wise to strive to improve relations with Russia so as to be able to concentrate US strength in containing China. But he fails to realize the difficulty to overcome American politicians, media and people’s hostility towards Russia so that his efforts have backfired.

China, however, has been benefited by Trump’s efforts to improve US relations with Russia.

Russia is EU’s major challenge. The two sides have been contending to win over Ukraine for a long time due to their core interests there, but the US has no such conflicts of interests with Russia. Therefore there are no significant obstacles to surmount for improvement of US-Russia relations. Americans’ hostility towards Russia is ideological without major conflict of interests.

If US-Russia relations have improved, EU members have to increase their military budgets for their defense against possible Russian aggression. Removing one enemy while reducing the burden to protect his European allies, that is Trump’s wishful thinking.

However, Trump fails to see that in doing so he is pushing EU to China’s side.

In my previous posts I said China-Russia alliance was impossible if Obama did not pushed them together. The two neighbors have a long history of conflicted interests.

Now, China and EU does not have serious conflicts of interests. EU wants China to open its market while China is precisely doing so as its further reform requires that.

EU fears China’s influence in eastern and central Europe, but China can prove to EU that its influence is purely economical. China has do so in Central Asia to convince Russia. It can also prove that to EU in eastern and central Europe.

Reuters’ report today titled “Forcing China on trade with illegal action will not work: EU’s Malmstrom” precisely proves that the Trump-Putin summit and Trump’s threat of trade war with EU are pushing EU to China’s side.

China is now making every effort to set up a united front with EU against the US. Quite a few analysts believe that such a united front is impossible, but Trump is making it possible.

Comment by Chan Kai Yee on Reuters’ report “Forcing China on trade with illegal action will not work: EU’s Malmstrom” today, full text of which has been reblogged by him in his post today.

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Forcing China on trade with illegal action will not work: EU’s Malmstrom


Reuters Staff July 19, 2018

BRUSSELS (Reuters) – The United States and the European Union should work together to reform the World Trade Organization and illegal action will not work to solve issues in international trade, EU Trade Commissioner Cecilia Malmstrom said on Thursday

“Let us not forget that there are indeed problems in the international trading system, that we can agree upon. However, U.S. measures on steel and aluminum will not solve the overcapacity problem in China,” Malmstrom said.

“Trying to force the hand of China with illegal action will not work, and the U.S. may end up breaking the multilateral system,” she said.

“We need to come together to reform and strengthen the WTO,” she added.

Reporting by Robert-Jan Bartunek and Philip Blenkinsop

Source: Reuters “Forcing China on trade with illegal action will not work: EU’s Malmstrom”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


EU pushes China on trade, saying it could open up if it wanted


Christian Shepherd, Michael Martina July 16, 2018

BEIJING (Reuters) – China could open its economy if it wished, European Commission President Jean-Claude Juncker said on Monday, with the European Union calling on countries to avoid a trade war even as pressure mounts on Beijing over its industrial policies.

Playing host to Juncker and European Council President Donald Tusk, Chinese Premier Li Keqiang stressed the need to uphold free trade and multilateralism as the United States and China become increasingly mired in a trade dispute, with no sign of negotiations on the horizon.

U.S. President Donald Trump has warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods – nearly the total amount of U.S. imports from China last year – to combat what the U.S says are Beijing’s trade abuses.

China has sworn to retaliate at each step.

Long accused of protectionist tactics that make it a difficult place for foreign firms, China is trying to reverse that narrative amid the escalating trade war by approving huge investments, such as a $10-billion petrochemicals project by Germany’s BASF (BASFn.DE).

At a joint news briefing with Li and Tusk in Beijing’s Great Hall of the People, Juncker said that move showed “if China wishes to open up it can do so. It knows how to open up”.

Later, at a business forum, he said, “We need just and fair multilateral rules. The EU is open but it is not naive.”

At the business event, Li invited executives from European companies operating in China to share their problems.

Airbus (AIR.PA) complained about delays in government approvals that had “caused a great loss” for the company, and BMW (BMWG.DE) sought its greater inclusion in the creation of industry standards.

“Let me say we will ensure the implementation of the signed contracts and we will cut the time for approval procedures,” Li told Airbus China president Eric Chen, a pool report said.

Li also asked companies to tell him of complaints they had about the “theft of intellectual property” so that he could take “great measures”. The pool report did not make clear if any companies came forward.

Tusk urged China, the United States and other countries to avoid trade wars and reform the World Trade Organization, equipping it to combat forced technology transfers and government subsidies, complaints underpinning Trump’s tariffs.

“It is the common duty of Europe and China, but also America and Russia, not to destroy this order but to improve it, not to start trade wars, which turned into hot conflicts so often in our history, but to bravely and responsibly reform the rules based international order,” Tusk said at a meeting with Li.

“There is still time to prevent conflict and chaos.”

Later, President Xi Jinping met the European leaders and said the two sides should “join hands to defend multilateralism and a rules-based free trade system”, Chinese state television said.

Critics of Beijing’s policies say foreign firms compete with Chinese rivals backed by massive, market-distorting subsidies and government support, issues not sufficiently addressed under WTO rules.

Both China and Europe have stressed the need for trade differences to be tackled through the WTO, but the United States has said China’s unfair policies are too urgent and too big for the trade body to handle.

“BEST FRIENDS”

The China-EU meeting produced a communique affirming the commitment of both sides to the multilateral trading system. Leaders failed to find sufficient consensus for such a joint statement after meetings in 2016 and 2017.

The statement said Beijing and Brussels had submitted market access offers for the first time as part of investment treaty talks, adding that the exchange should open a “new phase” in the negotiations that both sides viewed as “a top priority”.

“The EU took note of China’s recent commitments to improving market access and the investment environment, strengthening intellectual property rights and expanding imports, and looks forward to their full implementation as well as further measures,” the statement said.

The two sides also agreed to establish a working group on WTO reforms.

European envoys say they have sensed a greater urgency from China since last year to find like-minded countries willing to stand up against Trump’s “America First” policies.

China’s ambassador to the EU on Sunday wrote in Chinese state media that the annual China-EU leaders’ meeting would focus on how the two sides could become a “standard of stability” amid the “din of unilateralism and protectionism”.

The EU, while sharing Trump’s concern over Chinese trade abuses if not his prescription of tariffs, has largely rebuffed efforts by China to pressure it into a strong stance against Trump.

There is deep scepticism in the EU about China’s commitment to opening its market further, besides concern that it seeks to divide the world’s largest trading bloc with its economic influence in Eastern Europe.

Nonetheless, European officials suggest that Trump, who has also targeted Europe with tariffs, has created a window of opportunity to show that EU-China relations can be a bulwark for global trade.

On the eve of his meeting with Russia’s Vladimir Putin, Trump on Sunday rattled allies once more by labeling the European Union a “foe” on trade. Tusk on Twitter called it “fake news”, saying America and the EU are “best friends”.

Reporting by Christian Shepherd and Michael Martina in Beijing; Editing by Nick Macfie

Source: Reuters “EU pushes China on trade, saying it could open up if it wanted”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China looks to get cozy with EU in annual talks as Trump tariffs bite


Reuters Staff July 16, 2018

BEIJING (Reuters) – The European Union will open an annual meeting with China on Monday, and will be looking to fend off overtures for an anti-U.S. alliance as China seeks a European counterbalance to U.S. tariffs.

Premier Li Keqiang will host European Council President Donald Tusk and European Commission President Jean-Claude Juncker in Beijing, where the two sides could reinvigorate long-running investment treaty talks with the expected exchange of markets access offers for the first time.
The meeting is expected to produce a modest communique affirming the commitment of both sides to the multilateral trading system. Leaders failed to find sufficient consensus for such a joint statement after meetings in 2016 and 2017.

This year’s talks come with the United States and China increasingly mired in a trade dispute with no sign of negotiations on the horizon.

U.S. President Donald Trump has warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods – nearly the total amount of U.S. imports from China last year.

China has sworn to retaliate at each step.

European envoys say they have sensed a greater urgency from China since last year to find like-minded countries willing to stand up against Trump’s “America First” policies.

China’s ambassador to the European Union, Zhang Ming, said in a commentary in the ruling Communist Party’s official People’s Daily newspaper on Sunday that the focus of the meeting would be how China-EU relations could become a “standard of stability” amid the “din of unilateralism and protectionism”.

China and Europe are “two major forces of stability and responsibility” that support inclusive globalization, Zhang said.

But the world’s largest trading bloc, while sharing Trump’s concern over Chinese trade abuses if not his prescription of tariffs, has largely rebuffed efforts by China to pressure it into a strong stance against Trump. [nL8N1U000T]

There is deep scepticism in the EU about China’s actual commitment to opening its market further, as well as concern that it seeks to divide the bloc with its economic influence in Eastern Europe.

Nonetheless, European officials suggest that Trump, who has also targeted Europe with tariffs, has created a widow of opportunity to show that EU-China relations can be a bulwark for global trade.

China and the EU are also expected to set up a working group on reforming the World Trade Organization during the talks.

European Commission spokesman Margaritis Schinas said on Friday that discussions with China would focus on “trade and investment, on the commitment to combating climate change and investing in clean energy and on foreign and security issues, including the situation on the Korean peninsula”.

Schinas said the two sides’ leaders would also talk about their joint commitment to preserving the Iran nuclear deal.

Reporting by Michael Martina in Beijing and Robin Emmott in Brussels; Editing by Robert Birsel

Source: Reuters “China looks to get cozy with EU in annual talks as Trump tariffs bite”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


With raft of deals, China and Germany swear to keep trade free


Thomas Escritt, Michelle Martin July 9, 2018

BERLIN (Reuters) – Germany and China signed a raft of commercial accords worth some 20 billion euros ($23.5 billion) on Monday, with their leaders reiterating commitments to a multilateral global trade order despite a looming trade war with the United States.

The deals, involving German industrial giants including Siemens (SIEGn.DE), Volkswagen (VOWG_p.DE) and BASF (BASFn.DE), come with the two leading exporting powerhouses being forced into an unlikely alliance in defense of the open global trade on which both their economies depend.

Speaking at a news conference alongside Chinese Premier Li Keqiang, Chancellor Angela Merkel said: “We both want to sustain the system of World Trade Organization rules.”

Li stressed the need to fight protectionism, saying China needed a stable and peaceful framework so it could develop further, and that was only possible with free trade: “We are against unilateralism – we are in favor of free trade.”

German Finance Minister Olaf Scholz agreed with Chinese central bank chief Yi Gang that German banks would promptly get market access in the financial sector in China, newspaper Handelsblatt cited sources involved in their meeting as saying. No one at the German Finance Ministry was immediately available to comment when contacted by Reuters.

Handelsblatt also cited the sources as saying China’s government had said that German companies and institutions would soon be able to issue bonds in renminbi in China.

Merkel said she hoped a Sino-European summit on July 16-17 would bring about progress on protecting investments and added: “I also hope that Germany and China can make a contribution towards ensuring that the world does not end up blundering into a spiral of trade conflicts.”

European officials have said China is putting pressure on the EU to issue a strong joint statement against President Donald Trump’s trade policies at that meeting.

QUALITY DEALS

Merkel said the deals reached with China were of a “new quality” and while China was a developing country, it was also a “really tough and very ambitious competitor” for Germany.

Li said China is prepared to open up its insurance and bond markets to foreign investors and has in place intellectual property guarantees to ensure that German companies need not fear losing proprietary technologies if they operate there.

German companies and politicians have complained that Germany has been more open to Chinese firms than the other way around. Merkel welcomed the opening of China’s financial markets but called for Beijing to open its markets further.

The deals agreed on Monday included BMW planning to source 4 billion euros’ ($4.7 billion) worth of battery cells from Chinese battery maker Contemporary Amperex Technology Ltd 300750.SZ (CATL) over the next few years.

That comes at a time when there have been warnings that Europe’s lack of its own production capabilities for the cells that power electric cars could leave its car industry exposed and too reliant on others.

Berlin tightened controls on foreign investment last year after a series of high-profile takeovers by Chinese firms, but Merkel said Germany continued to welcome Chinese investment in principle.

She said Berlin was currently discussing “core strategic interests” that affected Germany’s security and China had the right to a “clear and transparent answer” on what is possible and what is not.

The two leaders also expressed continuing support for the 2015 nuclear non-proliferation deal with Iran that was rejected by U.S. President Donald Trump, with Li warning of “unforeseeable consequences” if the agreement falls apart.

Additional reporting by Paul Carrel, Riham Alkousaa and Andreas Rinke; Writing by Thomas Escritt and Michelle Martin; Editing by Mark Heinrich and Peter Graff

Source: Reuters “With raft of deals, China and Germany swear to keep trade free”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Germany, China should help prevent further trade conflicts: Merkel


German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang react as they hold a news conference at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Fabrizio Bensch

Reuters Staff July 10, 2018

BERLIN (Reuters) – German Chancellor Angela Merkel said on Monday that she hoped a summit later this month between the European Union and China would take further steps toward protecting investments and help prevent further global trade conflicts.

“I hope that the upcoming EU-China in China brings more progress such as in investment protection agreements,” Merkel said at an economic event in Berlin attended by China’s Premier Li Keqiang.

“And I also hope that Germany and China can make a contribution toward ensuring that the world does not end up blundering into a spiral of trade conflicts,” she added.

The Sino-European summit is due to take place in Beijing on July 16-17. European officials have said China is putting pressure on the EU to issue a strong joint statement against President Donald Trump’s trade policies at that meeting.

Reporting by Michelle Martin, editing by Thomas Escritt

Source: Reuters “Germany, China should help prevent further trade conflicts: Merkel”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China says open for trade with east Europe as clash with U.S. ramps up


Tsvetelia Tsolova, Angel Krasimirov July 7, 2018

SOFIA (Reuters) – China remains open for trade with foreign partners and can only benefit from an economically strong Europe, its premier said on Saturday as he pressed for expanded ties with the continent’s eastern wing while waging a tariff war with Washington.

Li Keqiang told a summit with central and eastern European leaders that China would continue opening its markets and implementing other reforms that had fueled its economy, providing opportunities for EU members and aspirants in the bloc’s poorer half.

“It is two-way traffic,” Li said through an interpreter.

“…Opening up has been a key driver of China’s reform agenda so we will continue to open wider to the world, including widening market access for foreign investors.”

Li’s attendance at the seventh “16+1” summit in Sofia coincided with the first salvos in what risks becoming a protracted global trade war, as Washington and Beijing slapped tariffs on $34 billion worth of each others’ goods.

Some participating countries have begun doubting the value of the annual meetings, and China has come under pressure to show its courting of individual countries from the Baltics to the Balkans would not hurt the European Union as a whole.

“If Europe is weakened, it will only be bad news for China, not the other way around,” Li said. “This (16+1) platform needs to stay open. It needs to be transparent.”

Officials from the EU, World Bank, and European Bank for Reconstruction and Development were invited and Li said those organizations were welcome to jointly fund projects in central and eastern Europe.

KEEPING IT SWEET

Mindful of the need to keep relations with the EU on an even keel as his trade battles with U.S. President Donald Trump intensify, Li has been careful to stress China’s support for European integration and rules in trade and procurement.

He said China was ready to fund a Global Partnership Center in Sofia that should help Chinese companies understand EU market rules and adhere to them in the region.

Analysts have said Li, who will travel to Germany on Sunday ahead of a wider China-EU summit in Beijing, would avoid any issues that might irk western EU governments.

He is holding bilateral meetings in Sofia with all the leaders of the eastern countries. He said these were also not meant to divide Europe.

Some 18 bilateral agreements and memorandums were signed, but no new major deals were announced.

China has promised billions of dollars for development projects in the region as part of its Belt and Road strategy to carve out new export markets.

More than 1,000 business people from China and central and eastern Europe attended an economic forum alongside the summit, seeking deals in trade, technology, infrastructure, agriculture and tourism.

Bulgaria hopes the summit will help secure funds to build new infrastructure, mainly in the Balkans, which still lags richer western EU states.

“16+1 is a format that aims to strengthen Europe,” Bulgarian Prime Minister Boyko Borissov said in his opening remarks. “It gives more opportunities to those who joined the EU later to catch up faster.”

Last month Hungary finalised the construction timetable with Beijing for a Budapest-Belgrade rail link. But outside Hungary, Chinese investments have not met expectations.

Countries taking part in the summit include the region’s EU states, plus Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia.

Croatia will host the next 16+1 summit in 2019.

Writing by Jason Hovet; editing by John Stonestreet

Photo
Bulgarian Prime Minister Boyko Borissov and Chinese Premier Li Keqiang smile during the 7th Summit of Heads of Government of CEEC and China in Sofia, Bulgaria, July 7, 2018. Krum Stoev/EU2018BG/Handout via REUTERS

Bulgarian Prime Minister Boyko Borissov listens to Chinese Premier Li Keqiang during the 7th Summit of Heads of Government of CEEC and China in Sofia, Bulgaria, July 7, 2018. Krum Stoev/EU2018BG/Handout via REUTERS

Source: Reuters “China says open for trade with east Europe as clash with U.S. ramps up”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.