Shocked, Shocked to Find Europe Cutting Deals With China Behind Our Back

Europe and China yesterday signed a Comprehensive Agreement on Investment after seven years of negotiation. Why now? As I report at Asia Times, German Chancellor Angela Merkel and French President Emmanuel Macron pushed the deal through to pre-empt anything that the new U.S. Administration might have to say on the subject.

From my article:

Representatives of the incoming Biden Administration tried and failed to stop the European Union from signing an investment treaty with China this week.

After seven years of often-stalled negotiations, German Chancellor Angela Merkel and French President Emmanuel Macron pushed for a final agreement on the Comprehensive Agreement on Investment (CAI) before the new US Administration takes office January 20.

A German government official, speaking on background, said that Europe wanted to present Washington with a fait accompli before the new administration could have a chance to exert pressure on the Europeans to keep a distance from China. China of course was on board for that.

“Members of the Biden team in Brussels campaigned against the deal with China in order to be able to exercise more pressure on China in future negotiations,” reported the center-right German daily Die Welt.

Deputy National Security Adviser Matthew Pottinger said, “Leaders in both U.S. political parties and across the U.S. government are perplexed and stunned that the EU is moving towards a new investment treaty right on the eve of a new U.S. administration.”

Perplexed? Germany now sells more to China than it does to the US, thanks to China’s economic snapback and America’s continued economic weakness. East Asia (not just China, but South Korea and Taiwan) crushed the pandemic in weeks, while we still can’t distribute the vaccine we have. Last month China signed the Regional Comprehensive Economic Partnership with fifteen other Asian countries, eliminating most tariffs on imports from Japan among others. U.S. economic importance is shrinking.

China has a $1.4 trillion, five year budget to support high tech R&D and investment. China outspends us 10:1 on quantum computing research. China is determined to lead the Fourth Industrial Revolution-mobile broadband, quantum communications, quantum computing, Artificial Intelligence, self-programming industrial robots, self-regulating farms, autonomous vehicles, and so forth. It’s no wonder that Europe and Japan are cutting deals with China. China is where the market is, and, increasingly, where the technology is.

Beijing is using trade and investment deals with Europe and Japan to batter its own industry into shape, as I reported at Asia Times.

There’s a lot of talk from the Biden camp about multilateral diplomacy to shape up an alliance of democracies to contain China. It looks like the Biden Administration has been made irrelevant before it takes office.