Europe will face stern challenges in the coming years. Image: REUTERS/Toby Melville
Explore and monitor how Economic Progress is affecting economies, industries and global issues
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:
The increasingly sharp rivalry between the United States and China could have negative economic and other consequences for Europe. But instead of forging a strategic vision suitable to this risk, European leaders are, as per usual, preoccupied with their own problems.
Donald Trump’s election as president of the United States may have hastened the end of the “American Century” and of the US-led postwar international order. True, the world’s political and economic center of gravity had been shifting toward East Asia well before 2016, and the idea of China rising to global power in the coming “Pacific Century” is not new, either. But Trump’s actions, together with those of his Chinese counterpart, Xi Jinping, have brought the increasingly sharp superpower rivalry to center stage. Unfortunately, Europe has yet to produce a coherent response.
The current US-China trade dispute has the potential to trigger a global recession. But even this conflict is only part of a far larger power struggle, including in the technology sector, to determine whether the new rising star (China) or the incumbent (America) plays the leading global role.
For most of the period since China began its modernization drive under Deng Xiaoping in the late 1970s, its policy was not to challenge the existing geopolitical and strategic order, and to avoid a confrontation with the US at all costs. But Xi’s speech at the Communist Party of China’s 19th National Congress in October 2017, and the several current Chinese initiatives aimed at challenging US dominance, indicate that China will no longer hide its strength and bide its time, as Deng enjoined.
China’s new assertiveness is evident in its military fortification of reefs and small islands in the South China Sea, as well as in the “Made in China 2025” strategy, which aims to make the country the world leader in the key industries of the future within a decade. And with its massive “Belt and Road Initiative” (BRI), China wants to use investments in trade and transport infrastructure to establish its geopolitical and commercial dominance in Eurasia, Europe, the Middle East, and Africa.
Faced with this increasingly obvious challenge to its leadership, the US has also changed its strategy and adopted a more confrontational stance toward China. Although Trump is leading this shift, American anger, fear, and frustration about China extend far beyond the White House and the Republican Party, and deep into Democratic Party ranks.
For starters, the US is taking a harder line on trade. In the past, the American market was generally open to Chinese exports – without such access, China’s rapid economic growth would never have been possible. But the Trump administration wants to end this openness and turn the countries’ bilateral trade from a tool into a weapon. The US is also toughening its stance toward the BRI, and has criticized Italy’s recent decision to endorse the initiative.
Technology is another big American concern. The US and China are engaged in a bitter contest in the field of artificial intelligence and continue to clash over Chinese telecoms firm Huawei, one of the country’s leading global companies.
Senior Huawei executive Meng Wanzhou, the daughter of the company’s founder, is currently awaiting extradition to the US after being arrested in Canada last December for allegedly violating US embargo rules concerning Iran. At the same time, the Trump administration is putting heavy pressure on its European allies to exclude Huawei from their telecoms markets because of espionage concerns (although the US has yet to produce evidence of this publicly).
The arrival of this new twenty-first-century global order does not bode well for Europe, as these initial trade and technology skirmishes make clear. But, as per usual when confronted with a major global challenge, Europe is largely navel-gazing and preoccupied with internal problems, including Brexit.
But Europeans cannot afford to remain aloof. Europe will be one of the first casualties if the current dispute between China and the US turns into a full-blown trade conflict. Should that happen, the two superpowers will demand that Europe take sides – precisely the kind of choice it does not want to make, because the US and China are its two main export markets. Similarly, Europe would most likely face Chinese retaliation if it decided to shut Huawei out of its national markets.
In addition, Europe’s leaders must recognize that China is rapidly building an alternative political system in which a single party digitally controls the masses. Whatever one’s view of Trump, this will not happen in the US.
The global geopolitical balance is changing quickly, and Europe must adapt. Instead of looking inward, European leaders need a credible strategy toward the two superpowers – and China in particular.
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
The views expressed in this article are those of the author alone and not the World Economic Forum.
More on Economic ProgressSee all
March 1, 2024
February 28, 2024
Karin Strohecker, Jorgelina Do Rosario and Libby George
February 26, 2024
February 23, 2024
Stephen Hall and Rebecca Geldard
February 19, 2024
February 16, 2024