Transcript Economische Zaken

Ministerie van Economische Zaken
26 October 2006
The EU-US-China
Grand Triangle
Strategic Discord ~
Economic Interdependence
7/18/2015
Willem van Kemenade
www.willemvk.org
www.clingendael.nl
e-mail: [email protected]
1
New Policy Paper on
EU-China
Trade and Investment
• On Tuesday a new Commission document warned China of
increasing resistance in the EU against further openness towards
China. It takes a tough stance on IPR, subsidies, lax environmental
and social standards and lack of market-openness
• “There is a growing risk that the EU- China trading relationship will
not be seen as genuinely reciprocal”.
• “In key sectors such as automobiles, semiconductors, steel, or
shipbuilding, new policies are emerging which appear to be based
on a ‘China first approach’,” it says.
• The EC also voices grave concerns about foreign companies’ lack of
access to government contracts. China agreed this year to negotiate
entry into the WTO’s government procurement agreement (GPA) by
the end of next year.
• Due to the above, the EU is not willing to grant China MarketEconomy Status now.
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2
EU-China Trade 2005 – Top Ten
Accumulated 2005*
Imports
%
total
%
change
Exports
%
total
% (1)
change
Trade
total
%
% (1)
total
change
Trade(2)
balance
% (1)
change
157,819
100%
24%
51,678
100%
7%
209,497
100%
20%
-106,140
34%
Germany
34,721
22%
22%
21,210
41%
1%
55,931
27%
13%
-13,512
79%
UK
24,666
16%
20%
4,081
8%
17%
28,748
14%
20%
-20,585
21%
Netherlands
25,956
16%
38%
2,577
5%
10%
28,533
14%
35%
-23,378
42%
France
14,463
9%
24%
6,480
13%
21%
20,943
10%
23%
-7,983
27%
Italy
14,131
9%
19%
4,605
9%
4%
18,736
9%
15%
-9,525
29%
Spain
9,702
6%
36%
1,482
3%
29%
11,184
5%
35%
-8,220
37%
Belgium
8,379
5%
24%
2,636
5%
13%
11,015
5%
21%
-5,744
30%
Sweden
3,172
2%
25%
2,017
4%
-3%
5,190
2%
12%
-1,155
143%
Hungary
3,813
2%
12%
331
1%
3%
4,144
2%
11%
-3,482
13%
Denmark
2,883
2%
33%
837
2%
5%
3,720
2%
26%
-2,047
50%
EU 25*
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Eurostat
3
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4
Is there a European
Hank Paulson ?
• In September, US Treasury Secretary Hank Paulson, together with
Chinese vice-premier Wu Yi announced the creation of a biannual
“Strategic Economic Dialogue”.
• They said the new dialogue would “promote economic co-operation,
the growth of China-US relations” and contribute to “world economic
development as well as global economic stability and security.”
• The goals of the “dialogue” dovetail with the EU-paper and
proposals by global economists that the “rise of China” should be
handled in a globally coordinated way.
• China should shift away from export-led growth to domestic inland
markets and consumption-led growth.
• The EU and US should focus not on sectoral protection, but on coordinated global macroeconomic adjustment encouraging China to
boost domestic demand, modernise its inefficient financial system,
reduce the need for savings, reduce the purchase of hundreds of
billions of US treasury bonds and let the renminbi appreciate.
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5
Rise Of China, India, Benefits
Europe - EU Study
• The average EU household's yearly income could
increase by Euro 5,000 through 2050 if the EU embraces
the rise of China and India rather than trying to stop it, a
new EC study argues.
• The EU is split over whether to impose limits on the flood
of goods coming from Asia, with euro-zone
manufacturers of textiles, shoes and other products
clamoring for protection and retailers fighting for cheap
imports.
• The report, authored by economists Cecile Denis, Kieran
McMorrow and Werner Roger, acknowledges that
globalization has caused much pain as many industries
and regions have seen their competitiveness undercut
by cheap Asian imports.
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6
The US-China Economic Relationship:
“A Balance of Financial Terror”
• That’s how former Harvard president Larry Summers
described China’s hundreds of billions in dollar-holdings.
• The argument holds that both countries would be so
economically devastated by a trade or financial war -"mutually assured economic destruction" -- that neither
would trigger one despite growing trade tensions.
• By that logic, China won't stop buying billions of U.S.
dollars each month because to do so could prompt a
dollar collapse that would undermine the American
consumer and the global stability upon which China's
economic miracle rests. The U.S. would not implement
tough sanctions to punish China's undervalued currency
because such action could trigger inflation, higher
interest rates and recession.
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7
The EU-US-China
Grand Triangle ?
• China expressed its desire for a “strategic partnership” with the
EU in its first EU-policy paper in October 2003, when anger over
the Iraq War had reached its peak in Beijing and European capitals.
• An acrimonious dispute arose over China’s demand to lift the EU
arms embargo, imposed after the repression of 1989.
• The bungled dispute helped set in motion three global strategic
dialogues on how to deal with “the Rise of China” : one between
the EU and the US, another one between the US and China and a
third one between the EU and China. Dispute now “in coma”.
• As a result, trans-Atlantic inequality has been reduced; the
relationship between Washington and Brussels has become less
unbalanced as the US has become more aware of the limits of its
military power. Is the Bush administration taking the EU more
seriously now as a global strategic player ???
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8
“Axis of the Feeble”
(The Economist)
Gone with the wind is the newest “New World Order”
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9
The Galileo Satellite
Navigation System
• The EU on July 28, 2005 signed contracts with a group
of Chinese companies to develop a range of commercial
applications for Europe's planned Galileo satellite
navigation system.
• Although the US and EU signed an agreement on the full
complementarity and interoperability of the American
GPS system and Galileo, the Pentagon, which controls
the rival Global Positioning System is dismayed over
the potential military implications of EU-China Galileo
cooperation.
• Beijing has contributed $ 230 m to develop Galileo but
has also urged the EU to gain access to Galileo's
sensitive military data and technologies.
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10
Does the Arms Embargo still have
any meaning ?
• China’s access to Galileo's cutting-edge satellite-navigation
technology will increase Beijing's military power, despite the fact that it
is under “civilian, non-military” control.
• The EU countries, along with China and Israel, have been insisting on
the need to launch an independent, civilian-run system to avoid
dependence on America's military GPS. Washington cannot in fact
guarantee service continuity in the event of a major crisis.
• EU transport commissioner Jacques Barrot said earlier this month that
Galileo does have military applications.
• Consequently, a couple of crucial questions: first, whether the
European Union arms embargo against China retains any meaning;
and second, how Sino-European strategic relations will affect the
global balance of power.
• Experts have no doubt that the next generation of Chinese cruise
missiles will be guided by Galileo's (civilian) signals.
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11
China-EU Strategic
Partnership “Downgraded ?”
• At the Ninth EU-China Summit in Helsinki, the EU criticized China
for its close relations with Sudan. China abstained in the UN
Security Council vote authorising the transition from an AU to a UN
force in Darfur. China trades oil for arms with Sudan.
• China again urged the EU to lift the arms embargo, but China will
not get it free of charge. The price:
–
–
–
–
–
Releasing the remaining Tiananmen detainees
Abolish administrative detention and rehabilitation through labor
Ratify the UN Covenant on Civil and Political Rights
Offer more transparency over defence budget
Explain close relations to rogue regimes around the world
• Agreement was reached on the start of negotiations on a New
Framework Agreement, a broad legal foundation to replace the
1985 Trade Agreement.
• Negotiations may take at least three years to be completed.
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12
Will the EU gravitate back to the US or expand
its Strategic Partnership with China ?
• The EU has better relations with the US and with China
than the US and China have with each other but has it
done much with the leverage that this entails ?
• Educated Chinese consider the EU as: “weak, inconsistent,
protectionist and falling in line with the US too often”.
• The US and the EU still see eye to eye on many issues
regarding China, e.g. human rights, China’s close energysupply relations with rogue regimes: Burma, [Iran], Sudan,
Uzbekistan, Zimbabwe, trade issues, IPR-violations, etc.
• It is still quite conceivable that trans-Atlantic links will
regain momentum, particularly in the post Bush era and
will maintain their precedence over Europe’s halting
strategic partnership with China.
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14
Airbus’s New Great Leap into China
Chirac’s Harvest
•
•
•
•
Airbus's investment in a Chinese assembly plant for its single-aisle A320
jetliners in Tianjin carries risks for Franco-German European Aeronautic
Defence & Space Co., already scrambling to resolve manufacturing
problems with Airbus's A380 superjumbo and deciding when to let Airbus
begin building its planned A350.
Not only will the Chinese assembly line be expensive to establish and
operate, it will likely help China establish its own commercial-airliner
industry, a prized Beijing goal. While both Airbus and U.S. rival Boeing Co.
buy a variety of components from Chinese suppliers, Boeing has invested in
Chinese facilities only for servicing aircraft and training pilots and says it has
no plans to establish an assembly line there. But as Airbus's plant will
involve only assembly, the move apparently won't involve technology-trade
issues.
Nonetheless, establishing a strong Chinese foothold will be strategically
important for Airbus. China will need about 2,880 new jetliners, with a
catalog value of $280 billion, by 2025.
Moving already to begin filling that need, Airbus also announced Beijing has
signed a contract to buy a huge 170 planes, Airbus's biggest-volume order
to date -- clearly a boost as it recovers from its management and
manufacturing problems. AWSJ 27-10-06
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15
Europe and China to
Cooperate on Port Security
• Laszlo Kovacs, EU Customs commissioner announced
on September 20 that Europe and China will increase
customs cooperation to speed checks at British and
Dutch ports, to counter the threat of terrorism and fight
counterfeiting.
• New container-screening technologies will be tested to
create "smart and secure trade lanes" to serve as a
model for trade relations between Europe and Asia.
• The pilot project will be set up over the coming three
months with the participation of Hutchison Whampoa, a
conglomerate controlled by Li Ka-shing and based in
Hong Kong. It will center on Rotterdam; Felixstowe,
England; and Shenzhen, China.
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16
China’s Global
Technology Position
• China’s role in the world economy is largely defined by
its participation in global production networks, set up by
others, the Multinational Corporations (MNCs).
• Their dominant role derives from their control over standards
and intellectual property. The big question is whether
manufacturing and trading giant China, will also become a
technology giant.
• China now spends 1.4 % of GDP on R&D annually. The OECD
average is 2.3 %
• 85 % of high tech exports are from foreign invested firms, which
employ managerial skills and proprietary technologies of MNCs.
• China is in a “patent trap”, that requires it to pay substantial
royalties to the patent owners out of the sales of its
manufactures.
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Structural Obstacles against
Technological Progress
• China does have the techno-structure – the world’s largest number
of engineering graduates annually - the national will to introduce its
own standards and to achieve technological breakthroughs.
• However, China’s “industrial-strategic culture” encourages short
term profits, and excessive diversification. Most Chinese firms focus
on developing privileged relations with party officials, spurn
horizontal association and broad networking with each other and
forgo investment in long term technological development.
• Chinese firms continue to rely heavily on imported foreign
technology and components – severely limiting the country’s ability
to wield technological or trading power for unilateral gains.
• China's best hope for overcoming its technological and economic
weaknesses lies in a renewed focus on domestic political reform.
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Brussels or The Hague ?
Who’s in Charge ?
• Policy on most important issues, like trade & investment is made in
Brussels and in Geneva (WTO) and on energy/climate in Brussels
and/or Paris (IEA).
• The EU and China agreed a Partnership on Climate Change at the
September 5 (2005) China-EU Summit. One major objective of this
Partnership is the development and demonstration of advanced
‘zero emissions’ coal technology based on carbon dioxide capture
and geological storage.
• At the Helsinki Summit 2006 the two sides agreed to launch
negotiations on a new Partnership and Cooperation Agreement
which will encompass the full scope of their bilateral relationship,
including enhanced co-operation in political matters. These
negotiations will also update the 1985 EEC-China TECA.
• National governments continue to promote the interests of their
citizens and companies.
• Provincial and city governments around the world make their own
trade- and investment deals with Chinese provinces and cities.
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Chinese Outward Direct Investment
Escape from the Saturated China Market
• By 2006 Chinese companies had invested US$ 38 billion abroad.
China’s export-led boom is largely a creation of FDI, a substitute for
domestic entrepreneurship.
• China has developed overcapacity, which the saturated domestic
market cannot absorb. Chinese also have to compete with foreign
companies, making it difficult and expensive to maintain or increase
domestic market share.
• “Going abroad” is also a strategy that Chinese companies employ to
circumvent or avoid trade barriers – e.g. anti-dumping measures that
have been imposed on textiles, shoes, bicycles and TV sets.
• In 2005 the number of Chinese companies that moved to the
Netherlands has more than doubled. Sofar around 100 Chinese
companies have set up offices in the Netherlands, to include
multinationals like Haier, ZTE and Huawei.
• Chinese ODI will grow 22% p.a. in coming years with accumulated
ODI of $ 60 bn from 2006- 2010 of which 12% will be in Europe
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