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Foreign Policy

Caught Between China and the U.S. - How will President Biden Re-Engage with Europe?

Feb 08, 2021

The Trump administration’s lack of transatlantic cooperation encouraged Europe to seek a more autonomous foreign policy. Although the will for a degree of geopolitical independence exists, different European countries have different interests, especially with respect to their trade relationships with China. 

While  French foreign minister Jean-Yves Le Drian recently argued that the E.U. made decent use of the last four years "to affirm its sovereignty in areas like security, defense, and strategic autonomy,” he did not note the growing divide between countries in Europe and their different levels of dependence on Chinese markets. 

For example, Germany is China's 5th largest trading partner, while France is 17th or 18th. These different degrees of trade partnerships  have likely led Germany to pursue a less hostile relationship with Beijing for fear of economic repercussions, while France is more likely to follow the U.S. These varying economic interests affect what European countries,  in this case France or Germany will side with the U.S. against China. Germany exported $400 billion in goods to China over the last four years and ultimately needs Chinese markets as export destinations. While French firms also have market opportunities and will continue to invest in Chinese production sites, they are less dependent and have less to lose economically. 

The U.S.-Germany relationship had previously been stable in areas such as international climate protection, pandemic control, relations with Iran, and NATO reform. Germany celebrated Biden’s victory last November because of Trump's political volatility and his persistent calls for Germany to increase military spending and balance its trade relationship. But regardless of who is in Washington, the U.S. will likely disagree with Berlin on issues like Nord Stream 2 or Germany's trade relationship with China. 

What Can President Biden Change? 

President Biden has changed his tone on China significantly over the last few years. In 2019, Biden dismissed Trump's arguments about China and said, "China is going to eat our lunch? Come on, man.” This statement seemed to have implied that China is not a strategic or economic threat to the United States. 

However in April 2020, when Biden penned a Foreign Affairs op-ed titled "Why America Must Lead Again: Rescuing U.S. Foreign Policy After Trump," he said that: 

“If China has its way, it will keep robbing the United States and American companies of their technology and intellectual property. It will also keep using subsidies to give its state-owned enterprises an unfair advantage—and a leg up on dominating the technologies and industries of the future." 

Besides demanding market reciprocity, unlike the Trump administration’s use of tariffs, Biden called on allies throughout the world to oppose China based on humanitarian concerns. Biden stated that his administration could organize a coalition to address concerns about Xinjiang, Hong Kong, and Taiwan. Should the humanitarian pitch convince European allies and the general public, Biden could use this to ignite additional pressures on Beijing regarding trade and technology. In short, Biden will likely ditch bilateral negotiations and tariffs in favor of multilateral pressure. 

Although Biden criticized tariffs against China, which he blamed for recessions in U.S. manufacturing and agriculture, his aides later walked back some of his statements. Biden also went on record expressing concerns about the Chinese-owned application TikTok, which Trump threatened to ban. But when Biden says that the U.S. will "work with allies and partners to develop secure 5G networks and address threats in cyberspace," it is unclear how convincing this will be to Europe’s China-friendly nations.  Biden has also not commented on whether or not he will reverse Trump-era tariffs on European steel or aluminum. The current U.S. trade deficit with Europe is $170 billion, but it will be tough to forge any new transatlantic trade deals since both progressive Democrats and Republicans are critical of trade deals. The U.S. Congress will also remain somewhat hawkish on China, leading to either little change or change that further hurts the U.S.-China relationship and isolates the European Union. 

It is also unclear how Biden will react to Europe's push for the NextGenerationEU initiative, the largest stimulus package ever financed through the E.U. budget. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe for a greener, more digital, and more resilient future. Questions on a digital tax on tech giants, Airbus and Boeing's subsidies, a coherent policy on China, and the green transition will undoubtedly reveal points of contention between Washington and Brussels. At the same time, climate change and the pandemic response will create some common ground since Biden re-joined the Paris accord and the World Health Organization. 

Concerns about China's involvement in Europe will remain, but Biden also has the opportunity to foster transatlantic agreement on other topics. In truth, Biden’s policies on China might resemble Trump’s, but with softer rhetoric. He will try and court European allies by weaponizing  Beijing’s human rights record, but perhaps he can win Europeans over with discussions about  expanded stimulus, digital markets, and green supply chains. If western economies continue to suffer due to the coronavirus pandemic with insufficient fiscal relief, internal divisions will continue to rage, and both U.S. and European unity will suffer. 

It will take work to win over a significant number of democracies, especially as individual states struggle to control the pandemic with limited fiscal space. Domestic and cultural divisions within the United States seem to have only gotten worse since imposed lockdowns have closed many small businesses and have put low earning households in precarious economic situations. The European Mediterranean is in serious economic trouble since coronavirus lockdowns have hit sensitive industries like tourism, construction, and real estate. Biden could advocate for expanded stimulus worldwide, and promote supply chains that are less sensitive to future pandemics and external shocks . In the era of remote and knowledge-based labor, Biden could work with Europe to pursue the NextGeneration EU Initiative. Although it will still be difficult to pass significant transformational legislation in a divided United States, Biden could use his diplomatic experience to encourage investment and partnerships across the Atlantic with a particular focus on European markets that have untapped potential. 

Europe and the United States can also lead the way in creating high-quality middle-class jobs by promoting land and ocean-based transatlantic supply chains independent of both the BRI and Chinese investment. This could be particularly important in Central Europe and the Eastern Mediterranean, regions that are hungry for U.S. investment, and offer market potential and skilled labor. While human rights should remain important, Biden should use the trend of international pragmaticism to further a transatlantic relationship that focuses on middle-class growth, next-gen infrastructure, and a sustainable green transition. This could be Washington’s winning formula for the U.S. in much of Europe and its immediate backyard.

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