STEVEN KUO: It’s not just US vs China — the EU is watching
Two of the world’s largest economies have been at loggerheads in 2020, and neither side will step back. When the US closed the Chinese consulate in Houston after accusing Beijing of espionage, the predictable retaliation came with the shutting of the US consulate in Chengdu.
Last week, Donald Trump put Hong Kong executive Carry Lam on the list of 11 Chinese leaders singled out for targeted sanctions. China retaliated by putting US senators on its sanctions list. Pushing back on Chinese tech companies, Trump has announced that he intends banning popular apps TikTok and WeChat.
What we are witnessing is a championship fight. That the Chinese have lasted this long, matching the US punch for punch, round for round, shows how powerful China has become. Sure, it is taking a beating, but the US just can’t score the knockout punch. The unipolar liberal global order, where the US-led West called all the shots, is no more.
While we watch the prize fight it is easy to forget another elephant in the room. China’s largest trading partner is not the US, after all. It is the EU. In March, the European Commission published its new strategy on China. Doing away with diplomatic niceties, the EU named China a “systemic rival” for the first time, complaining that Chinese companies are winning due to state subsidies and the playing field is not level for European companies.
The EU has denied China developing country status, which would confer benefits under World Trade Organization rules, and chastised Italy for taking part in China’s Belt & Road Initiative. While the US has been making all the noise, the EU has been quietly nursing its growing discontent with China.
Most polls indicate that Trump will lose the US presidential election in November, but few analysts expect his Democratic rival, Joe Biden, to let up on pressuring China if he wins. Confronting China is probably the only issue on which there is bipartisan agreement in the US right now. However, while Trump has alienated everybody, Biden is likely to work with allies — Nato, the EU, Japan, South Korea — to contain China. He may even improve US relations in the Middle East, where China has been courting Iran in recent years.
In Africa we have a proverb: when two elephants fight, it is the grass that suffers. When Trump banned WeChat, the JSE took a knock because the app is owned by Chinese tech giant Tencent, in which SA’s Naspers has a substantial stake. In China there is also a proverb: Yubang xiangzheng yuweng deli — when the snipe and clam fight, the fisherman benefits! Korea’s Samsung is looking forward to a bumper catch for both its handsets and its 5G infrastructure equipment sales as the market anticipates Chinese retaliation against Western companies Nokia and Ericsson in China for the US shutting down Huawei in the West.
From an SA standpoint, we know African farmers have had a hard time trying to export to Europe due to EU farm subsidies. Now, the shoe is on the other foot and EU companies are crying foul. For almost two decades SA has been broadly aligned with Russia and China on the UN Security Council, against the Brits and Americans. You thought we were on the side of the West? Who do you think lobbied China to veto Britain’s proposed sanctions on Zimbabwe back in 2008? Thank heavens we did away with British interference in Southern Africa, look at the Libyan debacle!
The Chinese economy is recovering from the pandemic. The US is still struggling to cope with Covid-19 and its economic fallout. It is Angela Merkel’s actions during the current German presidency of the council of the EU that will shape the direction of the future multipolar global order.
• Dr Kuo, a former lecturer at the Shanghai International Studies University in China, is a research associate at the University of Pretoria’s Gordon Institute of Business Science.
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