America's actions are pushing Europe into China's arms
Has the US under President Trump 'lost China' once again, motivating it to find other trade partners, markets, and suppliers?
In 1949, as the communist forces of Mao Zedong prevailed, there was handwringing in the US over the question: "Who lost China?" Perhaps an arrogant query to begin with - as if China was the US's to lose anyway - the premise has taken on new meaning today.
Has the US under President Trump 'lost China' once again, motivating it to find other trade partners, markets, and suppliers? The ancillary question is about another major force in the Cold War that is also changing shape: A Europe rebuilt after WWII under the Marshall Plan by the US is now increasingly alienated by Trump as well. Helped to rebuild and face down the so-called communist menace, Europe is now more firmly embracing China in trade and other exchanges than ever before.
Today's question could be whether the US has actually "lost" Europe as well and in the process only further empowered the relentless march of China.
Though some European countries have a long history in China, as pro-US players in the Great Game of fighting communism, they were wary of forging too close bonds for fear of disturbing their powerful cross-Atlantic partner.
Italy, which had one of the strongest indigenous communist movements after WWII, seemed on better terms than many as shown when Mao allowed filmmaker Michelangelo Antonioni to make a documentary about the lives of ordinary Chinese in 1972 during the depths of the Cultural Revolution. When China's "reform and opening-up" began some 40 years ago, German manufacturing giants were among the first arrivals and remain a major industrial force in the country today.
There are many other examples, but despite the engagement, no Western European country bought into the overarching, increasingly global development strategy coming out of Beijing. That appears to be changing. This year Italy became the first G7 country to sign up for Xi Jinping's signature Belt and Road Initiative. Perhaps a bigger manifestation of change is several European governments that have joined the Asian Infrastructure Investment Bank, China's answer to the World Bank. The UK was the first to participate, later followed by Germany, France, Italy, and Switzerland.
The Chinese have also been leasing, buying, and connecting to European transport facilities. Rail links for cargo can now move goods from China overland to Poland on a significant scale. Chinese companies bought and privatised the port of Piraeus in Greece, and are making big investments in Italy's Adriatic port of Trieste. They are also investing heavily in the Belgian port of Zeebrugge.
The moves come after disastrous meetings between Trump and various European leaders and institutions. He has in turn shocked Nato, the G7, and the EU with his tweets and threats. Like most long-standing trade partners, Europe too has been threatened with import duties.
The latest came on the eve of the G20 summit in Japan last week. "European nations were set up to take advantage of the United States," Trump told Fox News. "They have worse trade barriers than China." He again singled out the European auto industry as a potential target for the next round of import duties from the US.
Another variable in the equation is Russia's Vladimir Putin, who proclaimed in the run-up to the G20 that political "liberalism is obsolete", a clear snub to the very foundation of the European Union. With the US president more in Putin's camp than theirs, EU leaders find themselves between a rock and a hard place.
Dutifully, European Council President Donald Tusk defended the core liberal values of Europe in response. "The global stage cannot become an arena where egotists would dominate in some regimes and nationalistic emotions would dominate over economic terms," Tusk said.
"We came here (to the G20) to defend and promote liberal democracy. Whoever claims liberal democracy is obsolete also claims freedom is obsolete, the rule of law is obsolete, and human rights are obsolete. In Europe, these are essential and vibrant values."
The statement clearly highlights the tough situation for Europe. Still committed to open markets, free trade, and the rule of law, it doesn't have a good fit with China. Yet Beijing is offering a steadier hand, abundant capital and business that help the real economy. For years European auto manufacturers have sold more cars in China than anywhere else in the world, including their home market.
The best solution could be to weather Trump for another year and a half until a new president could be elected. As the polls stand now, Trump's popularity with the American electorate is seriously underwater.
Yet even with a new US president the old order will not likely be entirely restored. Europe has learned its erstwhile Atlantic partner can turn against it, while the Chinese have discovered foreign consumers will continue to pay for the vast range of goods it makes, even at higher prices due to import duties. The US trade deficit actually hit a record high in 2018 despite the tariffs Trump imposed - claiming they promote purchase of US-made goods.
Has Trump forced China and Europe into each other's arms? Yes, but how long and well the embrace lasts will be left for history to decide.
Jon Van Housen and Mariella Radaelli are editors at www.luminosityitalia.com