In perhaps the most important factor of uncertainty for the global economy – and not only – the confrontation between the US and China is evolving, to the point that even leading American officials are openly expressing their concerns about the effects.
Additionally, Europe’s importance internationally is declining following Russia’s invasion of Ukraine. Europe seems to be suffering from economic sanctions more than the US and China and possibly more than Russia itself.
For Europe the consequences of the “disengagement” with Beijing can be much greater than for the US and the case leads to differences between the attitudes of the member countries as China is the most important trading partner for countries such as Germany. In fact, China’s decoupling will deprive the global market of the cheap goods it supplies the world with. This fact will not only have an upward effect on the prices of goods, but will also affect the competitiveness of countries with a large trade connection with China.
For Germany, for example, imports from China represent 12% of the total, while exports account for 8%. Overall, China accounts for 20% of German trade. French exports to China have been growing at a rate of 10% per year for the past 26 years, from €4.1 billion in 1995 to €48 billion in 2021.
It is indicative that French President Emmanuel Macron, after his visit to Beijing weeks ago, adopted a very different rhetoric from the American one, softer and with an emphasis on cooperation and understanding.
Beijing, for its part, invokes market rules and openly states that the US seeks to block China’s economic rise.
The Chinese believe that the US sees China as a threat, as it has done with Japan in the past, and that it is using geopolitics to intervene in the market and block China’s rise, especially in the area of technological innovation.
Moreover, China believes that these measures can only work for a short time, and that China will continue to strengthen its economy in order to provide prosperity to its citizens and also participate in international problems, green transition and global economic development. China has 3,000 universities, 70 million engineers and have mobilized $1 trillion in investment in 100 countries around the world.
Chinese economic policy has resulted in lifting 470 million people out of poverty, who today constitute the largest middle class in the world and will reach 700 million in a few years.
