The US and Europe are stepping up their defense against China

What to expect from the new round of confrontation between the US and China?

In 2019, before the coronavirus hit the global economy hard, the trade war between the № 1 and № 2 economic giants cost the world's GDP more than 1%.

In November, a truce was concluded between the parties — the so-called phase one, which suspended further growth of import duties on both sides. Despite its limitations and fragility, phase one agreement gave much hope for some stabilization of relations between the two countries, with the prospect of further settlement after the November US presidential election.

The coronavirus pandemic put the problems of US-Chinese relations on the back burner, but only for a short time.

The events of the past few weeks have brought the US-China standoff back to the top of the global agenda.

And almost every such event was followed by a painful reaction from the financial markets.

The rhetoric about China's territorial claims in the South China sea is getting tougher. Possible sanctions in response to the expansion of the Chinese authorities into the political system of Hong Kong are discussed.

Pressure continues on Huawei: employees of the company may be denied entry to the United States. Huawei may already be blacklisted in the US by TikTok.

Yesterday's us demand to close the Chinese Consulate in Houston within 72 hours escalated the confrontation to a new level: the number of columnists and media outlets who draw analogies to the cold war between the US and the USSR has sharply increased.

There are indeed plenty of analogies: first of all, there is a wide range of mutual claims, both in regional terms and in terms of various spheres of activity — trade, technology, innovation, and security.

Moreover, new States are becoming involved in the confrontation with China. TikTok and dozens of other Chinese mobile apps are already blocked in India. Australia is facing economic sanctions from China in response to calls to investigate the sources and progress of the pandemic.

A landmark event was the decision of the UK government to exclude Huawei's participation in the development of 5G networks in the country. Then it may be the turn of the European Union.

The Chinese authorities, for their part, declare their readiness to take retaliatory measures.

It seems that the moment is coming for a more active reset of European-Chinese relations. Not the least thanks to the UK.

Five years ago, London's relations with China were the most trusted among the g-7 countries, with prospects for Chinese participation in the construction of the British nuclear power plant, the growth of British exports to China, as well as the influx of Chinese technology and investment in the program of the industrial revival of the Northern regions of England.

By now, there is little left of these prospects: Chinese investment has been limited mainly to British logistics and real estate, nuclear power plant construction is likely to be suspended, and commodity flows and technologies have been going in the opposite direction to what was expected.

Recent surveys show that in the UK, 60-80% of respondents do not trust China. The ban on Huawei's participation in the development of 5G was a logical continuation of growing distrust within the country and pressure from North American partners.

EU countries have long sheltered from pressure and calls from the United States to toughen their position on China with the moderate and pragmatic approach of the United Kingdom. Now, the more drastic and decisive steps of Boris Johnson's government are pushing Europeans to make a difficult choice.

On the one hand, many on the continent still have hopes for possible benefits from trade and Chinese investment.

On the other hand, the problems of national security, technology leaks, copyright violations, and growing trade deficits are becoming more acute — here, European claims against the Chinese side are almost identical to those of the US.

Therefore, an active rethinking of relations with China is also taking place on the European continent: in one of last year's strategic reviews, the European Commission gave China the definition of a “systemic competitor”.

This year, the coronavirus pandemic has acted as a catalyst for this rethinking — in recent months, the EU has repeatedly stated that China is overly persistent in its attempts to broadcast its vision of the crisis in the European information field and through European structures, including using elements of disinformation and propaganda.

The traditional problem for the EU in dealing with such global challenges is the lack of unity.

The position of supporters of the continuation of the previous policy of open economic cooperation is still strong and, in particular, has the support of the German government.

There is also a noticeable difference in regional approaches — countries such as Poland, the Czech Republic, Hungary, and Italy have until recently tried to advocate a more active rapprochement with China in the hope of obtaining economic benefits, primarily in the form of Chinese investment.

However, the actual inflows of Chinese capital to the same Eastern and Central Europe are still very far from expectations and insignificant compared to the financial infusions of the EU itself. And just like in the UK, European society is growing distrust of China.

The escalating confrontation between the US and China remains one of the key global threats that can greatly affect the global economy and financial markets.

Although neither side is interested in such an escalation, the situation is such that the more contradictions escalate, the more likely it is that the conflict will break out in one of the hottest spots of contact, whether it is Taiwan, Hong Kong or the sphere of cyber technologies.

Both the US and China are rapidly moving towards further economic and technological disengagement, involving the rest of the world in it. And so far there is no reason to expect that this process can be reversed or even stopped.

To do this, the Chinese authorities would have to radically revise their long-term economic and geopolitical strategy.

It is also unlikely that the US administration will significantly change course in the event of a change in the President as a result of the November elections.on the contrary, the two leading parties are competing with each other in demonstrating a hard line towards China to voters.

What can really change is the role of the European Union.

If the sharp attacks of the Republican administration against European allies remain in the past, the US and the EU may become much closer. Even with a much more moderate approach of the EU, the US position in the confrontation with China, in this case, can significantly strengthen.

And it will also mean continuing to polarize the world. The confrontation between China and the West can stretch for decades and survive many changes of government.

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