EUChina Trade Western LaissezFaire or Asian NationStatism? — Volkswagen Atlantic

25 Апр 2015 | Author: | Комментарии к записи EUChina Trade Western LaissezFaire or Asian NationStatism? — Volkswagen Atlantic отключены
Volkswagen Atlantic

EU-China Trade: Western or Asian Nation-Statism?

These rat and rabbit heads, looted by troops from the Imperial Summer Palace in 1860, returned to China in June

This is the uncut version of an written for the Bertelsmann Stiftung’s Governance Indicators project and on the LSE’s EUROPP blog .

this year, French François-Henri Pinault agreed to two bronze animal heads to The bronze statues had been over a century-and-a-half ago, in during the Second Opium in which Anglo-French forces the country and torched the imperial Palace, in part to force the to open up to international free In an ironic historical twist, the return also involves the offer was made as part of an French presidential visit to to improve diplomatic and, economic ties. This is merely a small symbol of the changing balance of power Europe and China since If Westerners, and Europeans and particular, to war with China several to force the country to Western principles of free trade and . today Europeans are impotent to China respect their

Europe’s decline and China’s are partly the result of “natural” forces. While the Industrial in the 19 th Century gave Europeans a superiority over other a relative decline was inevitable as economic know-how spread the globe. China-Europe “equalization” has accelerated, on the one hand by the debilitating wound that is the eurozone and on the other hand by China’s successful development strategy. As the China report points “Forecasts of the point at which will overtake the United as the worlds’ strongest economic have repeatedly been closer toward the present.” some metrics suggest may already be the world’s largest .

However, there is more to power than size, as or even more important is . necessary to being a willful

EU-China economic relations: globalization

Merkel in China: prefers to deal with authorites, circumventing Brussels. dpa )

Economic ties between the Union and China are a classic of what French sociologist Todd has called “asymmetric characterized by unequal openness and unsustainable trade deficits.

The EU is for the most part a non-State, a and uneven “Union” of 28 countries, on most issues is incapable of action because of the need for or at least broad consensus, and implementation. Much of economic is prescribed in the EU Treaties, almost in favor of open borders and trade, and is only modifiable extreme difficulty. As a result the EU may be, as the President of the European Central Mario Draghi has argued. most open of the largest

In contrast, China is a cohesive and Nation-State (or even “Civilization-State”), the of a battle-hardened and militaristic revolutionary Party apparatus, with an policy in accordance with the Asian development model of State capitalism.

As a result, governments and firms may regularly China’s development model, but is usually without effect. The Commission regularly cites in its reports on the rise of protectionism (although, curiously, China is mentioned less often nations such as Brazil, or Argentina, possibly for political Firms represented in the European Chamber of Commerce in China called on Beijing to “reduce the of government” and “reform … the state-led model”. As the SGI report states, also complain of legal in China, as “local administrations make arbitrary decisions contradict national regulations” and remains an issue. China has SGI scores on corruption prevention and legal certainty (3/10).


appears more wedded ever to its unique form of which perhaps can be compared to the old dirigisme or to Japanese corporatism, but on a far scale. The report argues on economic growth:

This has accomplished through unconventional, transitional and even “second- policies and institutions, as for instance a reliance on national economic combined with experiments implementation styles at the local Most of these policies substantially from the Western paradigm.

Indeed, China’s is characterized by strategic State capital controls, currency (the yuan is undervalued to exports), closed public markets, disregard for Western property (three-quarters of fake seize at EU borders are Chinese) and to exporters and “national champions.” A EU report described the protectionist model thus (emphasis in the “The use of potentially protective by these emerging economies to be an element of more comprehensive plans .” The phrase is particularly for China.

The role of the Chinese State as planner of the economy is difficult to As the SGI report states: “China can be the most ambitious planning of our times with regard to the and the intended domestic and global of long-term policy programs.”

In the EU and its member states are a strange mix of and laissez-faire . significant welfare and regulated labor markets with increasingly extreme with open borders and to any “trade-distorting” State action champions,” industrial subsidies). is total free movement of the world’s most open procurement markets, and no exchange policy for the eurozone.

More Western capitalism is growing apatride (“countryless”): it is increasingly by multinational corporations that employ Westerners (outsourcing) as a result of the free movement of don’t pay taxes (using tax avoidance techniques, especially up shell companies in tax havens). In China forces foreign to set up joint ventures with companies which keep control. This mechanism, seen with Volkswagen’s of new factories in China. allows firms to prevent foreign into their market and to from technology transfers Western firms they with (thus the West’s edge over China is being eroded).

It is not surprising this staggering asymmetry in openness coincides with trade flows. The EU is China’s important economic partner trad e in 2012 estimated at billion. The EU has a €146 billion deficit with China or of GDP. This headline is significantly better than the ($315.1 billion deficit China or 2% of GDP), however it massive divergences within the EU .

Germany is the only EU country a trade surplus in goods China, at €4.3 billion in the half of 2012. In contrast, had a trade deficit in goods the same period of €4.7 Italy of €8.3 billion and of €13.6 billion. This is not sustainable, these flows eventually adjust, either by European consumption or increasing

Beijing-Brussels: An unequal struggle

The community’s” traditional solution to protectionism: Anglo-Franco-Nippo-Germano-Americano-Russo-Austro-Hungarian navy during the 1900 Boxer (Source: Wikipedia )

Until a ago, Westerners solved the of Chinese protectionism through force: the 1839-42 First War with the British, the 1856-60 Opium War with the Anglo-French, and the expedition against the Boxer by a veritable “international community” la lettre (Japan, Russia, UK, U.S. Germany, Austria-Hungary, each concluded with forcing China to financialy the invaders for wartime costs and to open the country to foreign The wars of 1856 and 1900 led to the infamous torchings of the imperial Palace.

Today these methods are no longer available. the EU, lacking cohesion, appears to be incapable of using peaceful to entice China to adopt and fair” trade, or even of coherent and self-interested trade or policies for Europe in general.

was particularly apparent during the solar panels dispute. the European Commission imposed tariffs on China’s subsidized panel exports, China tariffs on (very successful) wine exports while fearing its “special” trade with China would be broke with European and condemned the EU move. The Commission down shortly thereafter, the weak tariffs it had put in place. The think-tank Open Europe “China’s divide and conquer looks to be paying off in deal on panel dispute.” The EU’s trade defense measures are negligible, affecting only 1% of from China.

Similar emerge virtually every strong EU-level action is – EU treaties outlaw strong at national level, EU institutions are or unable to push for strong every national government beggar-thy-neighbor policies and uses to defend their little pré . Other examples of possible would be: making access to EU conditional on the opening of Chinese the stopping of trade-distorting policies and for labor rights, having an rate policy to counter devaluations, having a carbon at Europe’s borders (foreign is boosted by cheap energy, negative global effects in of climate), etc.

Europe is trapped in a dangerous no land: the Nation-States have been stripped of their powers but, having to through consensus and paralyzing no strong EU-level action is Beside the specular and authoritarian of the central Chinese strategic policymakers in Brussels are totally with inconsequential budgets, an slow and consensus-driven policymaking which tends to undermine thinking and lead to dangerous the EU’s long-term planning Strategy,” “Agenda 2020”) is not in the same league.

The EU will to either revert to the Nation-States or a far more cohesive actor if it is to negotiate with China and not be a passive “space,” a glorified trade area. Perhaps will revert to Western of its own accord. China is considering liberalization and perhaps its economic will come around to the benefits for itself of thinking in instead of national terms.

It is possible however that the globalist system, rather universalizing, will become marginal. China alone is, in the big enough to be a larger cultural and world than the EU and U.S. put (this is already the case for and mobile phone users). In China will no doubt not only to work in Western (IMF, World Bank, but also develop its own alternatives emerging allies: the Asian Bank, a possible “BRICS or the Shanghai Cooperation Organization with Russia, with China often sees on issues of international law and national

The world is increasingly a non-Western one powers – China, Russia, Japan, South Korea, – which are distinctly uninterested in a … of free trade. The system may well with become the lonely exception than the norm.

How will adapt to the post-Western World?

Founders of the Eurozone Superstate? An view. (Source: Edoardo )

Is Europe’s paralysis inevitable, the scenario? Thus far assessments of “decadence” appear justified. and particularly European, standards of appear set to decline significantly. respect to China, the question is two ways:

Can the EU become a cohesive actor to compel China to reciprocal trade practices and rules?

2) Is not the EU’s internal the sign of the extreme difficulty, if not of creating a system of “global with respect for binding norms including powerful, and assertive nations like

One is tempted to be pessimistic. As they are by ever-increasing debt burdens, payments and demographic aging, European nations appear to become glorified retirement and museums for global travelers.

But also has many qualities: a continent (for example, relations are far less nationalistically than Chinese-Korean-Japanese relations), a healthier demography than Asia (more children, more in the cases of France, the UK, Ireland and Scandinavia), energy a very high level of and human capital, and a relatively level of social cohesion and services.

However there is a sense in which Europe has as a force, which is not the case of the that there is an economic . and that European nations, all their fine institutions and solemn declarations, are congenitally of acting together according to a plan and their collective

One should not pre-judge the future on The EU may explode, giving way to reborn The EU may become more effective as new mechanisms come into from 2014 most EU will only require a of governments representing 65% of the population and 55% of (which is comparable to the U.S. The experiment of “coalitions of the willing” the enhanced cooperation mechanism, going it alone to integrate, occurring on things such as the patent and an eventual financial tax.

The EU may also become cohesive, paradoxically, by its weakness. As the states of Europe are crushed by the burden caused by aging and interest rates, they may to increasingly follow the orders of states in exchange for continuously financial solidarity (we’ve this with the Six-Pack, Competitiveness Pact and the Fiskalpakt ). states may come to a more attitude as they find they too, are incapable of their social models and classes in the age of globalization. China have a critical role in it recently overtook the UK as the world’s arms exporter while Germany has found itself by China in some critical markets in industrial sectors it dominated. The general weakness of also cannot help but weaken the core states as which may motivate a change in

In any case, EU-China relations well two extremes in the age of globalization: the of openness and law vs. the activism of tightly-managed and dirigisme . In this highly struggle, but one which appears by the West because it does certain economic elites, a may soon be underway. At the very when the Western nations are completely embracing globalization and the end of the the rapidly-rising East Asian appear more then wedded to the role of borders and the in economic life.

The West may they can impose free as they did in the 19 th Century through but China’s staggering size this will not be possible Western globalizers must that everything suggests is indeed the Asian Century, and if China ends up abiding by Atlantic legal and commercial it will have been by

One way or another, it is Europe which have to change, either the cohesion to force China to Western principles or adapting to the East Asian development

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