the great trade war of continents

G7: Desperately Seeking Relevancy
Pepe Escobar, Asia Times, Jun 9 2021 (via Unz.com)

The upcoming G7 in Cornwall at first might be seen as the quirky encounter of “America is Back” with “Global Britain.” The Big Picture though is way more sensitive. Three Summits in a Row (G7, NATO and US-EU) will be paving the way for a much expected cliffhanger: the Putin-Biden summit in Geneva, which certainly won’t be a reset. The controlling interests behind the hologram that goes by the name of “Joe Biden” have a clear overarching agenda: to regiment industrialized democracies, especially those in Europe, and keep them in lockstep to combat those “authoritarian” threats to US national security, “malignant” Russia and China. It’s like a throwback to those oh so stable 1970s Cold War days, complete with James Bond fighting foreign devils and Deep Purple subverting communism. Well, the times they are-a-changin’. China is very much aware that now the Global South “accounts for almost two-thirds of the global economy compared to one-third by the West: in the 1970s, it was exactly the opposite.” (See Martin Jacques, below – RB)

For the Global South, that is, the overwhelming majority of the planet, the G7 is largely irrelevant. What matters is the G20. China, the rising economic superpower, hails from the Global South, and is a leader in the G20. For all their internal troubles, EU players in the G7 (Germany, France and Italy) cannot afford to antagonize Beijing in economic, trade and investment terms. A G7 rebooted as a Sinophobic crusade will have no takers. Including Japan and special guests at Cornwall: tech powerhouse South Korea, and India and South Africa (both BRICS members), offered the dangling carrot of a possible extended membership. Washington’s wishful thinking cum PR offensive boils down to selling itself as the primus inter pares of the West as a revitalized global leader. Why the Global South is not buying it can be observed, graphically, by what happened for the past eight years. The G7, and especially the Americans, simply could not respond to China’s wide-ranging, pan-Eurasian trade/development strategy, the Belt and Road Initiative (BRI).

The American “strategy” so far, 24/7 demonization of BRI as a “debt trap” and “forced labor” machine, did not cut it. Now, too little too late, comes a G7 scheme, involving “partners” such as India, to “support,” at least in theory, vague “high-quality projects” across the Global South: that’s the Clean Green Initiative, focused on sustainable development and green transition, to be discussed both at the G7 and the US-EU summits. Compared to BRI, Clean Green Initiative hardly qualifies as a coherent geopolitical and geoeconomic strategy. BRI has been endorsed and partnered by over 150 nation-states and international bodies, and that includes more than half of the EU’s 27 members. Facts on the ground tell the story. China and ASEAN are about to strike a “comprehensive strategic partnership” deal. Trade between China and the Central and Eastern European Countries (CCEC), also known as the 17+1 group, including 12 EU nations, continues to increase (see Chu Daye &c, below – RB). The Digital Silk Road, the Health Silk Road and the Polar Silk Road keep advancing. So what’s left is loud Western rumbling about vague investments in digital technology, perhaps financed by the European Investment Bank, based in Luxembourg, to cut off China’s “authoritarian reach” across the Global South. The EU-US summit may be launching a “Trade and Technology Council” to coordinate policies on 5G, semiconductors, supply chains, export controls and technology rules and standards. A gentle reminder: the EU-US simply do not control this complex environment. They badly need South Korea, Taiwan and Japan.

Wait a minute, Mr Taxman

To be fair, the G7 may have rendered a public service to the whole world when their Finance Ministers struck an alleged “historic” deal last Saturday in London on a global, minimal 15% tax on multinational companies (MNCs). Triumphalism was in order, with endless praise lavished on “justice” and “fiscal solidarity” coupled with really bad news for assorted fiscal paradises. Well, that’s slightly more complicated. This tax has been discussed at the highest levels of the OECD in Paris for over a decade now, especially because nation-states are losing at least $427b/yr in tax-dodging by MNCs and assorted multi-billionaires. In terms of the European scenario that does not even account for the loss of VAT by fraud, something gleefully practiced by Amazon, among others. So it’s no wonder G7 Finance Ministers had $1.6t-worth Amazon pretty much on their sights. Amazon’s cloud computing division should be treated as a separate entity. In this case, the mega-tech group will have to pay more corporate tax in some of its largest European markets (Germany, France, Italy, UK) if the global 15% tax is ratified. So yes, this is mostly about Big Tech, master experts on fiscal fraud and profiting from tax paradises located even inside Europe, such as Ireland and Luxembourg. The way the EU was built, it allowed fiscal competition between nation-states to fester. To discuss this openly in Brussels remains a virtual taboo. In the official EU list of fiscal paradises, one won’t find Luxembourg, the Netherlands or Malta. So could this all be just a PR coup? It’s possible. The major problem is that at the European Council, where governments of EU member-states discuss their issues, they have been dragging their feet for a long time, and sort of delegated the whole thing to the OECD. As it stands, details on the 15% tax are still vague, even as the US government stands to become the largest winner, because its MNCs have shifted massive profits all across the planet to avoid US corporate taxes. Not to mention that nobody knows if, when and how the deal will be globally accepted and implemented: that will be a Sisyphean task. At least it will be discussed, again, at the G20 in Venice in July.

What Germany wants

Without Germany there would not have been real advance on the EU-China Investment Agreement late last year. With a new US administration, the deal is stalled again. Outgoing chancellor Merkel is against China-EU economic decoupling, and so are German industrialists. It will be quite a treat to watch this subplot at the G7. In a nutshell: Germany wants to keep expanding as a global trading power by using its large industrial base, while the Anglo-Saxons have completely ditched their industrial base to embrace non-productive financialization. And China for its part wants to trade with the whole planet. Guess who’s the odd player out. Considering the G7 as a de facto gathering of the Hegemon with its hyenas, jackals and chihuahuas, it will also be quite a treat to watch the semantics. What degree of “existential threat” will be ascribed to Beijing, especially because for the interests behind the hologram “Biden” the real priority is the Indo-Pacific? These interests could not give a damn about a EU yearning for more strategic autonomy. Washington always announces its diktats without even bothering to previously consult Brussels. So this is what this Triple X of summits (G7, NATO and EU-US) will be all about: the Hegemon pulling all stops to contain/harass the emergence of a rising power by enlisting its satrapies to “fight” and thus preserve the “rules-based international order” it designed over seven decades ago. History tells is it won’t work. Just two examples: the British and French empires could not stop the rise of the US in the 19th century; and even better, the Anglo-American axis only stopped the simultaneous rise of Germany and Japan by paying the price of two world wars, with the British empire destroyed and Germany back again as the leading power in Europe. That should give the meeting of “America is Back” and “Global Britain” in Cornwall the status of a mere, quirky historical footnote.

G7 no longer able to order world around: Martin Jacques
Martin Jacques, Global Times, Jun 8 2021

Fine words will accompany the G7 summit this week. Much will be promised. And little will be delivered. It has long been like this. The G7 is no longer fit for purpose. Comprising the US, UK, Germany, France, Italy, Canada and Japan, in the 1970s the G7 was the overlord of the global economy. Today, the G7 is but a pale shadow of what it once was, reduced to the role of a declining faction within the global economy. It still talks in grandiose terms about its intentions, but the world has learnt to discount them. It is entirely appropriate that this week’s summit will be chaired by UK Prime Minister Boris Johnson, a grandmaster of verbal exaggeration and empty gestures. The role and importance of the G7 has been greatly diminished by the rise of the developing world. The latter now accounts for almost two-thirds of the global economy compared with one-third by the West: in the 1970s, it was exactly the opposite, the West enjoying a two-third share and the developing world just one-third. The most dramatic illustration of the G7’s waning authority came in 2008 when, at the height of the financial crisis, it was effectively displaced by the more representative G20. Ever since, the G7 has increasingly become an institution in search of a role. Under Biden, as if to confirm its eclipse as a global institution, there is an ongoing attempt to reframe G7 as the representative and champion of the democratic world in the struggle against autocracy, shorthand for China. To this end, South Korea, India, Australia and South Africa have been invited to attend the G7 summit this week. There is even talk of the G7 becoming the D10 (D being a reference to democracy). This, however, would only serve to emphasize the declining authority of the G7: from global leader to ideological sect.

The truth, however, is that this proposal is unlikely to gain assent either among existing G7 members or potential new members, excepting perhaps Australia. Here we get to the heart of the crisis of the G7. It is the rise of China, above all else, that has transformed the global economy, sidelined the G7 and, at the same time, reconfigured the various G7 economies. Good relations with China are fundamental to the economic prospects of Germany, France and Italy. That is why they are opposed to the G7 becoming an anti-China crusade. So is Japan; and likewise would-be recruits such as South Korea and South Africa. Here laid bare, then, are the fault lines of the G7 and any potential extended membership. The West is divided and fragmenting. The authority of the US is in decline, no longer able to get its way as it once was. The best illustration of the growing impotence of the G7 concerns its relationship with the developing world. For eight years, the West has been trying to find a way of responding to the China-proposed Belt and Road Initiative (BRI). The subject is due to be raised again at this week’s G7 summit. All the ideas that have been offered as a basis of a Western alternative to BRI have come to nought. This failure is extraordinarily significant and most revealing about the West on the one hand and China on the other. BRI is an eloquent articulation of China’s relationship with the developing world, rooted in its own semi-colonial past and its position as a developing country. The West, in contrast, has failed because its history has been precisely the opposite, one of colonization and the exploitation and subjugation of these countries. It has neither the experience, empathy nor motivation that is required. The existential gap between the rich Western world and the developing world is a multidimensional chasm.

A dramatic example of the West’s indifference to the needs of the developing world will be on full display at the G7 summit. Although the US and UK, and increasingly Western Europe, have vaccinated a majority of their populations against COVID-19, the UK, to take one example, has not exported a single dose of vaccine to the developing world. It has kept all its vaccines for itself, even though its existing stock far exceeds its own future needs. As each new variant spreads around the world, however, it has become patently clear to everyone that no country will be protected until every country is protected. In a pandemic, no country is an island. The US, which has so far failed to export a single dose of vaccine, is promising to export 80 million doses of vaccines later this year. Compare this with China’s record. In addition to the 777 million vaccinations already carried out in China, it has exported more than 300 million doses of vaccines to the developing world. Over half the vaccinations in Latin America, for example, have been sourced by China. It seems all too likely that the West will fail in its moral responsibility to vaccinate the developing world until it is too late and many millions have died unnecessarily.

The author was until recently a Senior Fellow at the Department of Politics and International Studies at Cambridge University. He is a Visiting Professor at the Institute of Modern International Relations at Tsinghua University and a Senior Fellow at the China Institute, Fudan University.

China-CEEC cooperation forges ahead amid noises. Major expo boosts trade while US sows discord between China, Europe
Chu Daye, Wang Cong, Yu Jincui, Global Times, Jun 8 2021

Chinese Vice Premier Hu Chunhua speaks at the opening ceremony on Tuesday.
Photo: Ningbo city government

China on Tuesday kicked off a major trade expo aimed at boosting trade with Central and Eastern European Countries (CEEC) with widespread participation by heads of state and businesses from the region, shrugging off recent disruptions and noise instigated by the US in Europe that has cast some uncertainty over massive China-Europe economic and trade ties. Underscoring China’s commitment to advancing win-win cooperation with European nations, Chinese President Xi Jinping sent a congratulatory letter to the opening of the second China-CEECs Expo and International Consumer Goods Fair in Ningbo, East China’s Zhejiang Province, expressing hope that all parties can take this opportunity to tap the potential of cooperation and broaden space for cooperation. At the opening, where major business deals in a wide range of areas including agriculture and e-commerce are expected, leaders from the CEECs, including President Milos Zeman of the Czech Republic and President Aleksandar Vucic of Serbia, struck a cooperative tone in their remarks, in stark contrast to recently rising anti-China voices on the continent as Washington seeks to drive an ideological and geopolitical wedge between China and Europe at the G7 meetings and US-EU meetings. The US, under President Joe Biden, may further step up its political maneuvers to pit Europe against China, but given the enormous shared economic and trade interests between China and European countries, short-term distractions and disruptions will unlikely derail long-standing pragmatic cooperation between China and Europe, according to Chinese and European leaders, businesses and analysts.

Unabated cooperation

The opposite diplomatic approaches adopted by the US, which is sowing political discord in Europe in a series of recent and upcoming meetings, and China, which increasingly opens its market to European businesses, was on display at the expo on Tuesday. Inside Ningbo’s 200k sq m exhibition hall, 425 exporters from CEECs are displaying their products, from wines and food to machinery equipment such as yacht and light planes, to 7k professional buyers and looking for closing deals. Leon Meredyk, manager of business development of Polish trading firm Vici Group, told the Global Times on Tuesday:

This is the first in-person expo after the pandemic, and we knew that the buyers would come. We shipped 2.2k containers of milk products to China in 2020, and this year, we aim at 3.2k containers. Our previous experience with the expo has been very fruitful and I think this time the result will also be good.

In the letter, Xi said that the expo is conducive for enhancing the Chinese market’s knowledge of products from the CEECs and expanding CEECs’ exports to China, noting that China plans to import $170 billion in products from the CEECs over the next five years and double China’s imports of agricultural products from the CEECs. Trade between China and the CEECs is increasing rapidly despite disruptions from the COVID-19 pandemic. In the first four months of 2021, trade grew 47.9% to $40.71b. To further boost trade between China and the CEECs, new agreements over agricultural trade were signed and new freight trains between Zhejiang and Budapest were launched on Monday on the sidelines of the expo. Also as part of the event, over 200 business meetings were scheduled between 68 firms from CEECs and 200 Chinese firms. Chinese companies are also eyeing investment opportunities in the CEECs, as the latter provides an accommodative environment in the region. Du Lingfeng, chief financial officer of Ningbo-based Minth Group, told a press briefing at a trade and investment symposium on Monday:

In terms of the company’s global footprints, we are careful in investing in countries that we consider high risk. In Europe, in particular CEECs, we found the political environment could accommodate us. Working with others will still triumph beating others in the next stage of globalization despite an increasingly complex world.

Minth announced deals in earlier June to invest in new-energy car accessories manufacturing plants in Serbia and the Czech Republic. However, China-Europe ties have entered a complex and uncertain period, as the Biden administration ramps up efforts to rally its allies against China over ideological and human rights issues. Ahead of the G7 summit and leaders meetings with the EU, US officials are stepping up pressure on European leaders in joining its attempt to antagonize China in core national interests issues regarding the island of Taiwan and the Xinjiang region. Amid US pressure, the EU has halted ratification of the China-EU Comprehensive Agreement on Investment (CAI). Lithuania also recently pulled itself from the China-CEECs cooperation mechanism, to the delight of some anti-China Western officials and media outlets. The country was absent from the expo in Ningbo. However, that seems to have little, if any, impact on the cooperation. At the expo, at least eight heads of state and senior officials from the CEECs, including Poland, Hungary and Greece, attended the opening ceremony via video conference. In addition to companies from the CEECs, firms from other European countries such as Germany were also in attendance. Addressing the opening of the expo via video link on Tuesday, leaders from the CEECs offered best wishes to the event and warned that a new Cold War is dangerous and a big mistake, in apparent reference to efforts by anti-China forces to stir tensions with China.

Pragmatism wins

Officials, business leaders and experts from the CEECs also spoke highly of cooperation with China and underscored the need for all sides to cool political tensions to focus on win-win cooperation. George Katrougalos, former Foreign Minister of Greece, told the Global Times in an interview:

I believe the reasons that made Greece and the other European states join the initiative are very much pertinent today. Multilateralism, mutual economic gains and shared prosperity are among the most important. Participating in cooperation initiatives with China does not conflict with participation in the EU to the extent that this participation is not against any European rule, legal or political.

Still, with the Biden administration constantly stepping up its meddling in China-Europe relations, more uncertainty and disruptions could arise, according to Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, adding that US pressure might force European countries to be reluctant in pursuing cooperation with China. Cui told the Global Times on Tuesday that despite short-term uncertainty and disruption, trade and investment deals will move forward eventually. He said:

Given the massive interests between China and Europe, no country or leader can derail the long-standing pragmatic economic and trade cooperation between China and Europe.

Charles Michel, president of the European Council, said in media interview ahead of meetings with Biden that despite the debate over the CAI within the EU:

I’m convinced personally that what’s on the table (CAI – RB) is a huge step in the right direction.

At the expo, European businesses have also expressed hope for the CAI to be moved forward to facilitate bilateral investment. Jan Zapletal, director of China and Southeast Asia Operations with CzechInvest, the investment agency of the Czech Republic, told the Global Times, noting that he was happy to see that (CAI – RB) on a table, and that his country is open to Chinese companies. He said:

I think this (CAI – RB) was a very generous offer from China, and I think Europe should benefit from it. So I’m quite curious about the further development.

One Comment

  1. Paul
    Posted June 10, 2021 at 11:29 am | Permalink

    That mask shot is dystopian theatre.

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