“China is America’s banker and they have no interest in destroying themselves.”
The European Union’s High Representative for Foreign Affairs, Josep Borrell, said on Tuesday that. China is the “banker” of the United States and that the two countries are not seeking to “destroy” each other despite living through what he considers a new “cold war” and that this century will be marked by confrontation between powers. “It is a cold war between two parties that have no interest in the destruction of the other because they are too closely related,” Borrell said during a debate in the plenary session of the European Parliament dedicated to transatlantic relations.
The head of EU diplomacy recalled that in the Cold War period. “there was no trade, no financial relations” between the US and the Soviet Union. and, above all, the latter was not “the banker of the United States”. On the contrary, he stated that “today China is the banker of the US” and “it is China’s purchase of treasury bonds and credit to consumers that has made it possible for the US to continue in its financial dynamic.”
In addition, he recalled that the trade exchanges between China and the US are “in the order of billions per day”. Thus, he assured that Washington does not seek to “disengage” from China but to “reduce the risks”, in the midst of “a confrontation that will mark the century”. “This century will be the century of confrontation between great powers,” he commented, despite the will to “do everything possible to avoid a cold war.”
“We have every interest in avoiding, first, throwing Russia into the arms of China and provoking an alliance between authoritarian regimes….and then defend our interests,” he said. Borrell stressed that the European Union is not “equidistant” between China and the US, a country with which it shares “the same political and economic system”, but he made it clear that “we have our own interests and we have to ensure that US measures, which have collateral effects on third countries, do not have balancing effects against our interests”.
He referred in particular to the U.S. Inflation Reduction Act (IRA), the “system that the U.S. has pursued to fight climate change” consisting of “massive subsidies for renewable energy producers” that contrasts with the strategy used so far by the EU, he said. Europe, he recalled, has resorted for the time being to instruments such as the system of emission allowances emissions allowances or taxes such as the border emissions adjustment tax.
The U.S. has used more of the carrot and we have used more of the stick: measures that punish those who don’t comply
“USA has used more of the carrot and we have used more of the stick: measures that punish those who fail to complyand the US seeks to promote investment but does not take punitive measures,” he explained. In any case, he stressed that all solutions “must always respect the rules of international trade, and we have always defended this. And what the United States has proposed in many things, it does not do,” he lamented.
Borrell, on the other hand, welcomed the fact that the EU and the US have agreed, following last week’s visit of the President of the European Commission, Ursula von der Leyen, to the White House, to work on an agreement on critical raw materials “to make sure that they have access to the European market.” and to push for a dialogue on clean energy incentives “to strengthen each other’s capabilities”. Despite these efforts, Borrell considered that, with the IRA, Washington “has launched one of the most protectionist policies since the 1930s, and we have to take that very much into account”, while he considered that US President Joe Biden “is acting like a good social democrat”.
“There is little use crying over spilt milk now.”said Borrell, who called for investing “efforts and capabilities to use the new opportunities offered by this inflationary momentum”.