“Money talks and shit walks,” is an old saying that I’ve found generally describes the world we’re living in. In fact, I suspect this saying explains why the European Union recently signed what will be a damaging “free trade” agreement with the People’s Republic of China—it will be damaging to the West and the cause of liberty as it combats China’s totalitarianism and it will ultimately be self-destructive to the Europeans. Yet, sign away they did—happily, in fact—on the dotted line.
We must now ask ourselves a simple question: Why? What is it about China that lured the Europeans in?
The answer is simple: the Europeans no longer believe that the United States is the strong and vibrant power that it was during the Cold War. Since the disastrous Iraq War and subsequent 2008 Great Recession, the election of their great bugaboo, Donald J. Trump and the rise of his nationalist ethos in the United States, and the subsequent disastrous handling of the COVID-19 pandemic, most Europeans believe that China, not the United States, is the future.
Europe can say how strongly committed to our cause they are; they can keep taking our money and accepting our defensive umbrella…but they don’t really mean it anymore. And this recent deal proves it.
What It’s All About
The Comprehensive Agreement on Investment between the People’s Republic of China (PRC) and the European Union (EU) has been ongoing since 2013. The deadline to get the deal done was the end of 2020. For seven years, the two sides danced around each other. But now that the United States, the world’s largest economy in GDP terms and the world’s second-largest economy in PPP terms (behind China’s), appears to be mired in a succession crisis—and after four years of President Donald Trump waging trade wars upon various European states and tweaking American partners in Germany, France, and elsewhere, the Europeans appear to have believed the window of opportunity was now.
According to a 2017 Eurostat analysis, China holds 16.4 percent of the world’s PPP, the United States had 16.3, and the EU had exactly 16 percent. In 2020, when the novel coronavirus propagated from Wuhan, China to the rest of the world, creating a devastating pandemic, China and many of the other Asian states responded to the disease in efficient ways that helped to mitigate the spread, while the Western countries were completely ravaged by it.
heading into 2021, it is projected that China’s economy will grow by eight percent when all other economies are effectively standing still. In 2020, during the pandemic, China’s economy grew by two percent when most others either stopped growing or contracted.
Europe’s economy has been battered by a succession of crises of the last decade, from having to deal with fallout from the 2008 recession, debt crises, the rise of Euroskeptical governments in many of its members—especially the United Kingdom—Europe’s leaders have wanted to reorient their shared economy and diversify it to make it more competitive.
The recent departure of Britain from the EU has also meant that one of the strongest pro-American voices in the EU was removed from the equation. It should come as no surprise that, as the British depart the EU, the continental economic customs union with a high external tariff reorients itself away from the maritime, Anglo-American, Atlantic powers and closer toward the Eurasian powers of China and, to a lesser extent, Russia. What we could be witnessing is the birth pangs of a pan-Eurasian trading zone stretching from Vladivostok and Beijing through Berlin and to Lisbon.
Plus, many EU leaders have long resented what they viewed as an overdependence on the United States. The Trump Administration’s trade policies highlighted how dangerous to the EU’s leadership that dependence on the Americans is and the EU has striven to mitigate that risk. These leaders believe that China will be one source of necessary diversification. The fact that China’s economy remains so dynamic in the post-pandemic period also makes China far more attractive than any other trade relationship.
It is telling that the EU sat on finalizing the deal with China for seven years. The Obama Administration managed to slow down the EU’s interest in the deal. The Trump Administration, however, exacerbated the transatlantic divisions over trade. Still, the EU did not finalize the deal until they were certain that President Donald Trump had, in fact, lost his reelection bid.
Recognizing that a more favorable Joe Biden Administration was set to replace the Trump Administration, the Europeans opted to finalize the deal in the dark days when Trump was a lame duck and before Biden could exercise any real power.
The German, Not European, Union Strikes Again
During the signing ceremony which was conducted over Zoom, China’s President-for-Life Xi Jinping appeared with Germany’s Chancellor Angela Merkel and France’s President Emmanuel Macron. Interestingly, the trade deal with China’s was Merkel’s pet project. Considering that Germany is the real power in the European Union (with France coming a close second behind Germany in the EU), this should be considered first-and-foremost a German-led deal.
Chancellor Merkel announced last year that she would not seek another term as Chancellor. With her term ending in 2021, after having experienced a disruptive relationship with Washington over the last four years—not only over trade, but over German policies with Russia as well as Germany’s lack of adequate support for NATO—Merkel believed the deal with China was an essential aspect of her legacy.
The deal’s timing was predictable, though, odd.
This is because a year ago, the European Union had declared China a “systemic threat” and a “rival.” Of course, that was in 2019, when Trump’s reelection bid appeared to be a fait accompli. After the COVID-19 pandemic, the economic downturn in the United States, and the race riots which plagued the country over the summer, Trump’s political fortunes reversed seemingly overnight—and German and French leaders recognized an opportunity to exploit and did so.
Although, President-Elect Joe Biden has been preferred over Trump by both European leaders as well as China’s leaders—he’s viewed by them as more predictable than Trump—the Europeans ignored Biden’s request for them to wait until after his election to finalize the deal.
Both China and Europe clearly wanted to box the Americans out of the deal. Even though Biden called China’s Xi Jinping a “thug” and has called for warmer relations with Europe over the last year, European leaders likely assumed that any deal they crafted with China would not be impacted by the Biden Administration, so long as the deal was finalized beforeBiden assumed office in January 2021. And so, here we are.
The last four years have been particularly tough on China. While Trump was a controversial American president, both at home and abroad, and Trump’s trade war had mixed support, the fact remained that Trump’s trade war on China posed significant problems for China’s leadership. The pandemic allowed for China to potentially display the superiority of their system over Western systems.
China used the economic slowdown and subsequent social upheaval and political uncertainty in the West—especially the United States—as an opportunity to turn the COVID crisis into an opportunity and, like the EU, they took it: distancing their economy from the United States and moving closer to Europe.
As for the concessions that the EU and China made to each other to get the deal done: the Europeans assert that they got a “level playing field” with China. Supposedly, European companies will no longer be required to perform the tech transfers to Chinese state-owned entities.
What’s more, proponents of the deal in Europe are highlighting the fact that China has committed itself to “work towards” the ending of forced labor, a key aspect of China’s labor market. China has made many promises to many countries over the last several decades. Rarely do they ever follow through on their commitments—let alone respect the wishes of those with whom they enter into agreements with.
Here’s something for the Europeans, who prize the EU being a purported stalwart defender of human rights globally, how can China embrace International Labor Organization (ILO) standards, as they promised to do if the deal was signed, if the Chinese regime refuses to even acknowledge that they have forced labor camps in Xinjiang Province? It’s a ridiculous move that will only benefit the PRC. And the Europeans know that. And they don’t care.
China is Winning
It is China that wins a major victory. Not only does this reinvigorate Xi Jinping’s tenuous grip on power by granting a major economic victory for his country during tense periods of social unrest in Hong Kong and uncertainty brought about by COVID-19, but it also forces a geoeconomic realignment to occur wherein America’s long-time European partners move away from Washington and into the arms of Beijing. This, after Beijing recently entered into a free trade deal with multiple Asian powers—including long-time American allies, such as Japan and Australia.
Ultimately, it is likely that, just as they did with trade with the United States, it is the Chinese who will benefit most from this relationship in the long-run. After all, China seeks to move its economy from an old manufacturing/production model to a new, innovation and consumption-based knowledge economy.
By gaining greater access to European markets, China can continue to move up the socioeconomic development ladder with much greater efficiency while negating any real threat from the Americans that is meant to contain their growing power and stunt their development.
Brandon J. Weichert is the author of Winning Space: How America Remains a Superpower (Republic Book Publishers) and can be followed via Twitter @WeTheBrandon.