US, Europe Don't Agree on How to Confront China, Experts Say
An Asia expert said that just as China's Made in China 2025 national strategic plan on manufacturing was a wake-up call for American policymakers, it did the same for Germany and German industries. “We are not so different from where the U.S. was the last four years,” Gudrun Wacker said during a joint webinar March 4 with the Hudson Institute and her think tank, the German Institute for International and Security Affairs.
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But she said Germany's methods differ completely on how to deal with rivalry and competition with China. “Our conclusion is if we can’t change China, and our leverage is limited, we have to do more to strengthen the European Union and make it more resilient,” she said.
The Hudson Institute's Peter Rough said he has some objections to the EU-China Comprehensive Agreement on Investment, including that it could lead to greater economic integration between Europe and China, which would constrict Europe's future policy options.
Wacker agreed the timing was terrible and sent the wrong signal. China's President “Xi Jinping made some concessions because he knew that this would make a trans-Atlantic reset more difficult,” Wacker said. “On the CAI, this is not an agreement. It’s an agreement in principle to have an agreement. So we’re not there yet, and it’s expected this will take about one and a half years, and it’s not clear at all if this will be ratified by the European Parliament.”
While Germany does not want economic decoupling, Wacker said, “I want to say that we are not at the verge of becoming a fiefdom of China.”
Noah Barkin, a Rhodium Group managing editor in the China practice, lives and works in Berlin. “I don’t think there’s any question that the U.S. and Europe are in a different place as far as China goes, right now,” he said during the webinar. He said Europeans still believe it could be possible to use the World Trade Organization to get China to follow a rules-based trading approach. “If you look at Washington these days, most people have given up on this notion,” he said. “There isn’t a lot of patience in reforming institutions like the WTO.”
Grappling with China's ambitions to dominate certain technologies is going to take decades, he said: “This is going to be a marathon. We're dealing with some very complex issue around technology and supply chains. And there's no real alternative to trans-Atlantic cooperation on China.”
Dealing with President Donald Trump for the past four years pushed Europe away from the U.S. somewhat, Barkin said, but China's aggressive diplomacy and trade actions against Australia as a form of diplomatic pressure have the opposite effect. “If this continues, then this is going to push Europe and the U.S. closer together,” he said.
Barkin said the U.S. companies are still dependent on China, and not a lot has happened with decoupling. But he believes targeted decoupling, particularly in areas that affect national security, is necessary. “Severing ties with the second-biggest economy in the world, I don’t think it’s going work,” he said. “Hopefully the two sides can come together on a more measured approach.”