China, Europe and the US: No natural allies anywhere

1. The end of the Cold War didn‘t create a unilateral world. The disaster of Bush’s Iraq war showed an overstretched superpower. Obama tried to overcome this overstretching through international cooperation. This ended with Trump’s America First. We live in a multipolar disorder.
2. Trump is not dividing the US. He is the product of a deep divide within the society. This divide deepened through the financial crisis of 2008. The crisis fuelled nationalism in all societies of democratic capitalism.
3.  For more than 50 years Europe and the US have been strong allies, based on mutual ideals, mutual interests and mutual institutions. The ideals were not really taken seriously, look at the wars in Vietnam, Iraq or Syria. For a long time, institutions like the World-bank, IMF or WTO eroded while merging countries like China, Brazil, India rose. With Trump these institutions are under massive attack. His tariffs provoke a massive conflict of interest between Europe, the US and China. “Europe is even worse than China.” (Trump) It is the end of the west. Suddenly China and Europe seem like natural allies.
4. The new economic war is not on tariffs. It is on economic dominance. It brings the world economy to the edge of a global recession.
5. The US-Strategy for the fight for economic dominance is titled America First. With president Xi China is pushing towards China 2025. Europe has no strategy, no answers to these challenges.
6. America First tries to maintain America’s role in the financial industry through massive tax reductions for companies, by defending the role of the Dollar as the only global currency and by protecting its less competitive producing industry and agriculture with tariffs and subsidies.
7. China 2025 targets economic leadership in crucial areas of the global economy, from renewable energies to electric driving and artificial intelligence organized from a more or less closed market China where intellectual property rights are open to state surveillance. International allies for this strategy are integrated into the infrastructure of the Belt & Road Initiative through massive investments.
8. Europe underestimated the disruption by Trump. Europe’s appeasement to America First – i.e. by promising to pay 2 % for defence – failed. The tariffs have been imposed – customs on cars will follow. Europe has had 27 China-Policies. The most relevant was the German. All Chancellors from Kohl to Schröder and Merkel had one advisor for their China-Policy: BDI – the Federation of German Industry. This policy is in a dead end road.
9. German Industry still makes a lot of money with their China business. But they lose strategic ground. New BMW-technologies for autonomous cars– in China called intelligent connected vehicles – are expropriated and could not be used outside China. China is also building a global monopoly on battery-cells in cars. Daimler is forced to sell their new electrical car not as Mercedes but Denza. The prospects of these companies are to become suppliers in a China dominated value chain.
10. If Europe does not find an answer to these US-China challenges, the world will see a new economic and political duopoly. Europe needs a strategy to defend the future of half a billion of its citizens.
11. Economically, Europe has to overcome its deficits and lacks in strategic industries like electric driving, IT and AI, renewables. There must be an adequate taxation for big companies as well as standards, to avoid global monopolies. Europe as the largest single market has the (soft-) power to do so.
12. Politically, Europe has to build up pragmatic and casual alliances. With China, Canada, Oceania, Japan and others: through trade agreements to substitute and reconstruct a WTO that Trump wants to destroy. With the US: through protection of intellectual property rights against China. With China: through infrastructure investments in poor and emerging countries – based on standards e.g. those of the AIIB.
13. Europe has to develop an assertive European foreign policy. We can no longer hide behind the US. The first step is avoiding a nuclear arms race in the Middle East. The Iran-Nuclear-Deal must be saved in cooperation with Russia and China. This conflict shows how essential it is to become independent from the SWIFT system. Europe needs the capability to counter unilateral US-sanctions.
14. Europe and the US are no longer natural allies. China und Europe will not become strategic allies.
15. But in pragmatic and casual alliances Europe and China will find more common interest in the future.