China, Europe Seek Closer Ties in Era of Trump

China shares an interest with European countries in an open world economy.

Li Keqiang Angela Merkel
Chinese premier Li Keqiang walks with German chancellor Angela Merkel in the garden of Schloss Meseberg, May 26, 2013 (Bundesregierung/Guido Bergmann)

China and the European Union are stepping up their cooperation in the era of Donald Trump.

Reuters reports that the two are keen on a summit in the next few months in order to promote free trade and international cooperation.

For the Chinese, it’s about sending a sending a message to Washington that it has friends in Europe.

The Europeans seek Chinese support for international institutions like the World Trade Organization and the United Nations, which Trump has chided.

But that doesn’t mean a new great-power entente is in the works.

Time for Europe to step up

I wrote here earlier this month that Trump’s “America First” policy could leave not just the United States but the whole world worse off. Europe, I argued, should lead in a different direction. By continuing to liberalize trade, arbitrate disputes through international organizations and uphold international law, including the rights of refugees, it might prevent a return of the days when every nation had to fend for itself.

Jyrki Katainen, the former Finnish prime minister and European commissioner in charge of competitiveness and growth, agrees.

He recently told the Financial Times that Europe’s liberal virtues are more relevant now.

“What we can offer — stability, rule of law, a rules-based system of multilateralism — has more political support than before,” he said. “We want to use the opportunity and momentum.”

Europe is accelerating trade talks with countries in Latin America that were left in the cold by Trump’s sudden withdrawal from the Trans Pacific Partnership. The European Commission also hopes to conclude a trade pact with Japan.

A trade deal with China is still a bridge too far, though.

Walk the talk

China shares an interest with Europe in an open world economy, but it doesn’t always like the openness to go both ways.

Cecilia Malmström, the EU’s trade commissioner, has urged China to “walk the talk” on economic reform.

European officials were heartened when the Chinese president, Xi Jinping, defended globalization in his first address to the World Economic Forum in Davos, Switzerland last month.

But, as Malmström points out, his country still makes life difficult for foreign investors, with opaque requirements, and exporters, with onerous restrictions and discretionary licensing procedures.

Critical Germans

No European country is bothered more by this than Germany, the bloc’s largest exporter and China’s fifth largest trading partner.

It has at times taken China’s side in trade disputes, including in a years-long standoff with the European Commission over Chinese solar panel exports.

The two also made common cause against Barack Obama at the G20 when Trump’s predecessor pushed for a “rebalancing” of global trade in favor of net importers. A Sino-German pact stopped that proposal in its tracks.

Now the Germans are starting to sound more critical.

Klaus Larres reports for The Diplomat that politicians in Germany are frustrated China is freely investing across Europe, and buying up high-tech companies, while not allowing foreign businesses to acquire significant stakes in China.

German carmakers, for example, are forced into joint ventures if they wish to invest in the automobile industry in China. But Larres writes they can’t even choose their Chinese venture partners and are not allowed to be a majority shareholder either.

On a visit last year, Sigmar Gabriel, the German vice chancellor, hectored the Chinese. He called for a “level playing field” and “fair competition” and warned that Europe would no longer allow “foul play”.

Fighting protectionism, Gabriel added, does not mean “accepting and adapting to unfair and aggressive trade practices.”

Perhaps an America that turns inward will convince the Chinese to heed his advice?