At a meeting that brought together German and Chinese businessmen in Dusseldorf in mid-September, official discussions revolved around marketing, trade and investment strategies between China and Europe. But during the coffee break, another topic imposed itself on the conversations: Where is the trade confrontation between the United States and China heading?
The question is not new, but its timing is more sensitive. Beijing announced that Chinese President Xi Jinping will visit the United States between September 23 and 25, and will meet US President Donald Trump in Washington on the 24th of the same month.
The summit comes months after Trump's visit to Beijing last May, which contributed to calming some aspects of the dispute but did not end the confrontation between the two largest economies in the world.
A European dilemma in dealing with China
For Chinese companies operating in Europe, the situation does not look comfortable. A Chinese businessman who participated in the Dusseldorf meeting and requested to remain anonymous says that the weakness of the Chinese economy is pushing companies to search more urgently for foreign markets. The man had managed for decades the European branch of a Chinese government company in Dusseldorf.
He believes that the restrictions imposed in the United States and the European Union have become more stringent, and that political differences play an increasing role in economic decisions.
From his point of view, as long as the confrontation between Washington and Beijing continues, it will not be easy for the European Union to expand its cooperation with China, even when it has economic interests in doing so.
This dilemma is clearly visible in the electric car sector. The European Union wants to accelerate the transition towards electric mobility and reduce carbon dioxide emissions, but at the same time it imposed additional duties on Chinese electric cars, after an investigation concluded that Chinese companies benefit from government support that gives them an unfair competitive advantage.
Europe is stuck between Washington and Beijing
The American position is tougher towards Chinese cars and technology. Trump uses tariffs as a central tool in his trade policy, at a time when Washington imposes broad restrictions on the export of advanced technologies to China, especially high-performance chips used in artificial intelligence.
On the other hand, Beijing has a very important pressure card in the form of rare earth minerals, which are used in industries that begin with phones and batteries and do not end with weapons and advanced technologies.
Thus, Europe finds itself facing a difficult equation. It is still highly dependent on the United States in the security field within NATO, but it is also economically and industrially dependent on China for markets, raw materials, and supply chains that are difficult to replace quickly.
"The Second China Shock"
In her State of the Union address on September 16, European Commission President Ursula von der Leyen struck a clear tone on China. She said that what she described as the "second China shock" was no longer a future threat, but had become a reality in Europe.
The “first China shock” dates back to the period of China’s accession to the World Trade Organization about a quarter of a century ago, when low-cost Chinese goods invaded many global markets.
But the second shock, according to the European vision, is different. China is no longer just a manufacturer of cheap goods, but has become an advanced technological and industrial competitor in sectors such as batteries, electric cars, communications, and clean energy.
Von der Leyen said that the effects of this are visible in European factories and industrial areas, warning of a decline in manufacturing in some industrial centers.
The European Commission indicates that the Union's trade deficit with China has reached about one billion euros per day. The Union also still depends on China for more than 80 percent of a number of vital raw materials, and the percentage of some rare earth elements reaches about 90 percent.
Brussels wants to reduce this dependence and rebalance trade with Beijing. Von der Leyen summed up her position by saying, “Words are good, but actions are better.”
America and China: a balance of power, not decisiveness
In Washington and Beijing, both sides realize that complete decoupling of their economies will be extremely difficult. However, competition continues on multiple levels. The United States limits China's access to some advanced semiconductors, while Beijing uses its strong position in the rare earths market as a negotiating tool. The two countries are also competing for leadership in artificial intelligence, space, and other future technologies.
However, not all experts believe that the US-China confrontation should end with Saddam. Miko Hotari, director of the Mercator Institute for Chinese Studies (MERX) in Berlin, believes that Washington and Beijing are heading into a long phase of strategic competition, with no indications of the ability of either party to achieve decisive superiority in the foreseeable future.
He said in an interview with DW that (Chinese President) Xi does not necessarily need to achieve a major breakthrough in Washington, but rather he needs time. The same applies to the United States. Hotari describes the situation as a "strategic impasse."
Trump-Xi summit: Economy first?
Trump said he would talk to Xi "about everything." American preparations indicate that trade, rare earth materials, and artificial intelligence will be among the main files on the table. The summit also comes before the US midterm elections in November, which adds an internal dimension to it for Trump.
Among the files that have been raised for months is the possibility of concluding major commercial deals, including Chinese airlines purchasing American Boeing aircraft.
Canada is moving towards Europe
Amid this polarization, other countries are trying to find more room to maneuver. Canada has become one of the most prominent examples. In January, Canadian Prime Minister Mark Carney said during the World Economic Forum in Davos that the old world order was over, calling on middle powers to strengthen their cooperation so that they would not become mere tools in major power conflicts.
Von der Leyen recently floated the idea of creating “associate member” status for Canada in the European Union. There is no such membership legally at the present time, but the idea reflects the desire to build a deeper relationship between the two parties.
Carney expressed interest in expanding the partnership with Europe without seeking full membership in the Union.
Europe is blown away by international polarization
As for Trump, he criticized the idea and threatened to take trade measures if he considered the Canadian-European rapprochement directed against the United States.
Huotari believes that Beijing, in turn, is intensifying its attempts to improve its relations with countries traditionally allied with the United States, especially those looking for a greater margin of independence.
With Xi Jinping's arrival in Washington in the middle of this week, all eyes will be focused on what the two presidents can agree on. But for Europe, the most important question may be different: Can it maintain its own seat at the table, or will it ultimately find itself forced to choose between Washington and Beijing?
Prepared in Arabic: Alaa Jumaa / Reviewed by: Salah Sharara
