The price of addiction to a capricious hegemon

At this moment, the commercial war between the United States and China is a theatrical conflict that is limited to news and day -to -day analysis, to detect who won the battle of the last 24 hours. Until these rapid fluctuations truly reach the real economy will take a while, during which the EU should weigh well how beneficial it would be a commercial approach to China, to shelter from the Trump administration.

A commercial war cannot be won, but the camps that are not good in the chapter of self -sufficiency will come out even more soaked. Europe, and then America, are much less self -sufficient than China, and the pandemic crisis has clearly demonstrated this. From the point of view of the parity of the purchasing power, China is already an economy of almost two larger than America. The Ukraine war has shown how important this aspect is: the Russian economy can produce weapons at much lower prices than the Western opponents in the war by power of Romania. In nominal terms, the German economy is 2.5 times higher than that of Russia, but in terms of the parity of the purchasing power, the Russian economy is almost 1.5 times stronger than the German one.

The European Union has begun to signal a proximity to China against the background of the tariff war started by the Trump administration. Spanish Prime Minister Pedro Sanchez has a visit to Beijing, saying that he has the support of President Ursula von Der Leyen to declare that China is an EU partner, not a systemic competitor and rival, as the official EU documents show. Overnight, a good part of the European press forgot about the authoritarianism of the China regime, the violation of human rights in the Xinjiang’s ugura region, the non -observance of the copyright, the obstacles placed in the European investments in China, the trap of the debts that China extends to the governments of the world and of all the sins of which the same press has been accused of China. Moreover, now the EU itself seems to be in a situation similar to these governments to which they asked not to accept the poisoned apple of China.

A commercial war between the United States and China can leave America to orient itself to imports from Vietnam or India, while it will develop its peak industry to maintain its technological leader position. On the other hand, China can have the opportunity to even get off the American economy, to give up the huge American debts it has accumulated and to become self-sufficient in the sector of high technology (an area that would not have reached the current level of development in the absence of the US commercial disputes started in Donald Trump’s first presidential term). All in order to prepare the reunification, peaceful or not, with the Taiwan.

There are analyzes that suggest that President Donald Trump has tried to get an image victory in the United States by imposing high rates on China, relying on sweetening Beijing and immediate negotiations. The Trump administration followed a tactic similar to the one that the Reagan administration applied in the commercial dispute with Japan, in the 1980s. Now, China, should either greatly appreciate its national currency and thus sabotage exports or accept the huge tariffs imposed by the United States. But China is not Japan: it does not have a constitution dictated by American officials 80 years ago and does not host the most American military bases and the largest American military container outside American borders. China is no longer so addicted to the American market, and Xi Jinping’s communist regime has to defend, in turn, an image in the eyes of the fellow citizens.

The tariff war started by the Trump administration is currently a roll that rolls. The question is whether the high American officials who want to complete the total China can be stopped or if this conflict will develop their own and uncontrollable dynamics, in which case Europe will suffer, not having the resources and economic strength of the United States and China and promoting a conflict with Russia.

Many hot heads in Brussels believe that Europe can oppose the United States in a possible tariff war, as it has done so far in the conclusion of the Ukraine war. But Europe would be in a delicate situation in a potential commercial conflict with the US not only for which commercial surplus with America (and therefore would have much more to lose in the case of rates increase). Economist Yannis Varoufakis draws attention to a much worse aspect – the loans offered by Federal Reserve, of which the EU could need a great need in the case of a new economic crisis, especially that Europe will be more indebted to the year, against the background of the new weapons and economic recovery based on the military industry.

« Who saved capitalism in 2008? Beyond China (yes, China saved capitalism through huge investments), capitalism was saved by Federal Reserve, which borrowed the central banks of the euro and Japan about 600 billion dollars. Something similar happened in 2020, when the Pandemia sowed the fear in the Western financial circuits. Then Fed offered $ 450 billion to the world dependent on the Almighty Dollar« , writes Varoufakis.

Whoever believes that Europe and Japan can afford to play hard against Washington is unable to imagine how big the dependence of Europe and Japan on the United States. « For the moment, Trump does not control Federal Reserve. At least so it seems. But Federal Reserve may not want to ruin his relationship with the Trump administration. And that would mean that Federal Reserve will stop jumping so quickly to Europe when a bail -out will be needed, as was the case in 2008 and 2020. Just the idea that, at the next crisis, Federal Reserve could hesitate to intervene to maintain the liquidity of financial markets can make the whole of the rates of children.« Writes Varoufakis.

« For European, British and Japanese leaders in the public and private sector, the moral is: addiction to a capricious hegemon is a price. And now you start to feel what this price is”.