A quiet revolution has begun in Europe against America’s directives

Guest article by Gabor Steingart: A quiet revolution against America’s guidelines has begun in Europe.

As Joe Biden, foaming at the mouth, announces restriction after restriction against China, the West’s economy abides by its own laws. The buzzword is: de-coupling.

The good news for the Americans is that the European economy has understood the buzzword of de-coupling and is decoupling.

The bad news for the USA: The European economy is decoupling itself from America’s political guidelines and not from China as desired. The US President is no longer accepted as a guardian. Europe is emancipating itself.

Despite all the martial declarations by Joe Biden and the moderate background music by Olaf Scholz, who is proud to have dimmed de-coupling down to de-risking, the economy decides differently every day.

It operates its own value-based policy, except that its values ​​are dialogue and partnership. You don’t want to lecture the Chinese, you want to do business with them.

Every medium-sized company knows that German morality cannot be sold abroad.

And so a quiet revolution has begun, whose greatest rebellion is politely ignoring American mandates. Here are the facts.

  • According to Eurostat, the value of imports from China to Europe almost doubled between 2018 and 2022. China is by far the largest supplier of goods to the EU.
  • According to the OECD, imports of electronics (plus 14.88 percentage points), industrial machinery (plus 8.76 percentage points) and cameras (plus 4.45 percentage points) into the EU have risen particularly sharply over the same period. And this despite fears that China is using their technology for espionage.
  • China is the EU’s largest supplier of rare earths and other important raw materials for the energy transition and digitization, data from the EU Commission show.
  • Sales by European car manufacturers to China have boomed. Last year alone, the value of car exports amounted to 24 billion euros.
  • Trade flows also work in the opposite direction: three of the best-selling electric vehicles in Europe last year were Chinese imports. According to a recent Allianz Trade study, sales of Chinese-made cars in Europe could reach 1.5 million vehicles by 2030 – equivalent to 13.5 percent of last year’s EU production.

Olaf Scholz and Ursula von der Leyen won’t like to hear what Marianne Schneider-Petsinger, project leader of the Chatham House Global Trade Policy Forum, has to tell them: “In Europe there is a big gap between what government thinks and what companies do.”

Europeans are in good company. American companies are also resourceful when it comes to ignoring the White House’s guidelines or only adhering to them pro forma.

Products from China are still of central importance

According to the OECD, imports fell by five percentage points between 2018 and 2022, unlike in the EU. But American companies’ ties to China are closer than official figures indicate.

  • Alternatively, the supply chain is being redirected: For high-tech products, China’s share of US imports fell by 14 percentage points between 2017 and 2022, while imports from Taiwan and Vietnam — countries that in turn import heavily from China — are the largest gained market share, according to a study by the University of California, San Diego.

Products from China are therefore still of crucial importance for the manufacture of sensitive products in the USA. Chad Bown of the Peterson Institute for International Economics think tank explains: “All we can read from the OECD data is that the location of final assembly changes before shipment to the United States. It could be that the same companies that used to do the final assembly in China are now doing it in Vietnam, Cambodia, Bangladesh or Thailand.”

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