March 24, 2021 | Finding Alignment: The US, EU, and China
The US and EU are long-standing allies, but are shared democratic values enough to align against China?
Finding Alignment: The US, EU, and China
It’s becoming harder to ignore the European Union’s role in US-China relations. Yesterday, we focused on EU-China retaliatory sanctions and their short-term and long-term impacts. Clearly, such sanctions will exacerbate tensions in the short-term, but the sanctions themselves are largely symbolic. It’s also beginning to feel like the US’ desire to “strengthen and reaffirm” its alliance with the EU may be largely symbolic as well.
Secretary of State Antony Blinken delivered remarks today after consultations with NATO allies in Brussels, Belgium. Later in the day, the United States and European Union released a joint statement in which they “agreed to relaunch bilateral dialogue on China and work together to address Russia’s ‘challenging behavior.’”
These are part of US efforts to “restore America’s global standing” by rebuilding regional alliances and consolidating the primacy of the US-led rules-based order. It sounds like a fairly straightforward US policy until we consider that Secretary Blinken threatened to sanction Germany over the Nord Stream 2 pipeline just a day earlier.
Also, it’s not as if the United States and Europe are fully aligned on China either. Though China’s retaliatory sanctions yesterday helped unify the US-EU anti-China posture to some degree. However, as we outlined in yesterday’s notes, the US and EU have fundamentally different economic incentives for maintaining engagement.
The elephant in the room and the question few seem willing to ask is how is the European Union supposed to trust the United States as an ally after the US threatens sanctions while paternalistically lecturing EU members states on how “Nord Stream 2 is a bad deal — for Germany, for Ukraine, and for our Central and Eastern European allies and partners?”
Threatening to sanction the EU or any of its member states only incentivizes the EU to distance itself from the United States wherever it can. Firstly there’s plenty of evidence that sanctions don’t work. Secondly, the EU and China are working to deploy central bank digital currencies (CBDCs) with the clear purpose of mitigating the sting of US sanctions and reducing dependence on the US dollar.
We must be mindful that both the United States and European Union are tangled in a web of conflicting interests. The United States sees China as an adversary and strategic competitor and conversely defines the European Union distinctly as an ally. Reality is more complex, as many Europeans are skeptical that the US and EU can align around issues that matter for Europe, notably trade.
Although it’s still too early to draw definitive conclusions, so far, the Biden administration’s foreign policy comes across as somewhat inflexible. We’ll learn more about how this dynamic shapes up throughout the year. Still, in the meantime, it’s important to consider the possibility that we’re entering a completely new era in US-EU-China relations.
Related Notes:
Current Events and Additional Reading
US-China Relations
China Doesn’t Respect Us Anymore — for Good Reason
Sometimes a comedian cuts through foreign policy issues better than any diplomat. Bill Maher did that the other week with an epic rant on U.S.-China relations, nailing the most troubling contrast between the two countries: China can still get big things done. America, not so much.
For many of our political leaders, governing has become sports, entertainment or just mindless tribal warfare. No wonder China’s leaders see us as a nation in imperial decline, living off the leftover fumes of American “exceptionalism.” I wish I could say they were all wrong.
U.S. Won't Force NATO Allies Into 'Us or Them' Choice on China
The United States will not force any NATO ally to choose sides between Washington and Beijing, U.S. Secretary of State Antony Blinken said on Wednesday, although he warned that the West needed to show authoritarian states that democracy was superior.
European allies France and Germany are looking for a strategic balance in relations with Beijing and Washington that ensures the European Union is not so closely allied with one of the world's two big powers that it alienates the other.
"The United States won't force allies into an 'us-or-them' choice with China," Blinken, on his maiden voyage to Europe as Washington's top diplomat, said at the NATO headquarters in Brussels.
The New Concert of Powers
The international system is at a historical inflection point. As Asia continues its economic ascent, two centuries of Western domination of the world, first under Pax Britannica and then under Pax Americana, are coming to an end. The West is losing not only its material dominance but also its ideological sway. Around the world, democracies are falling prey to illiberalism and populist dissension while a rising China, assisted by a pugnacious Russia, seeks to challenge the West’s authority and republican approaches to both domestic and international governance.
Anatomy of a Flop: Why Trump's U.S.-China Phase One Trade De2w4579 al Fell Short | Chad Bown
China Tech
Intel Challenges Taiwan’s TSMC in Contract Chipmaking Business
Nikkei Asia — U.S. chip titan Intel is challenging Taiwan Semiconductor Manufacturing Co. in the contract chipmaking segment with plans to ramp up production capacity and win over Apple and other key global clients from its Asian rival.
CEO Pat Gelsinger said on Wednesday that Intel will expand chip production capacity in the U.S. and Europe, and offer “world-class manufacturing services” to woo customers such as Apple and Qualcomm, two key customers of TSMC.
Intel’s entry into the foundry segment — the business of making chips for other companies — comes just over a month after Gelsinger took over as CEO and marks a major strategic shift for the company, which for decades has reserved most of its production capacity for its own use. It also comes as the global tech industry grapples with a severe shortage of semiconductors.
China Regulatory
China’s tech giants face a reckoning with the regulators
Consumers occupy a peculiar role in China’s tech landscape. They are valued customers of the gigantic platforms such as Tencent, ByteDance and Alibaba, whose strategists try to anticipate their every need. But they tend to lack a collective voice, meaning it is hard to fight privacy violations or manipulative selling strategies. Consumers are also citizens: once grievances rise to a certain level, government regulators start to listen, to fend off any social disturbance. But this is a politically tinged process. Regulators want to push public opinion in the direction of their own agendas, using state propaganda. China’s consumer associations, which sometimes write damning reports about companies, are government-affiliated and often run by retired officials.
Photo by Samuel Marques Lucio on Unsplash