Coalitions aren't easy

US-EU co-operation to control Beijing already undermined

The past four years have seen geopolitical tensions rise between the US and the People’s Republic of China, fanned in particular by the administration of outgoing President Donald Trump. For Mr Trump, the US’s past accommodation of China’s rise had meant a sequence of “bad deals”, which he saw necessary to unwind. The incoming administration, under Joseph R Biden, will likely take a somewhat less confrontational tack. That said, it is clear that the overall attitude to Beijing in Washington DC has altered considerably over recent years, as has popular opinion among voters in many democratic countries. Though less openly confrontational than earlier, the notion that China is a strategic and systemic rival has been thoroughly internalised by US policymakers.

The big difference over the next few years, according to most public statements from future Biden administration officials, is that measures taken to address Beijing’s distortions of the international system or violations of international law and norms will no longer be unilateral. Mr Biden’s White House will, it is said, work with allies. This is a welcome development, particularly viewed from New Delhi. A unilateral effort from the Trump administration on trade in particular meant that friends and allies of the US kept on getting hit by friendly fire.

Yet it is far from clear how strong US-led alliances are in the economic domain after four years of Mr Trump. In this period, various actors have found ways large or small to compromise with Beijing — whether in Southeast Asia or Europe. Indeed, the US’s closest allies on the European continent have just concluded a bilateral investment agreement with China. The timing — giving no chance to the incoming US administration to object — is likely to irritate a few people in Washington. The timing is clearly an attempt, probably successful, to undermine US-EU co-operation on China before it has even begun. Rumblings from China that it might join the Trans-Pacific Partnership’s successor trade agreement are similarly attempts to stymie Japan-US co-operation on this front. From Europe’s point of view, little is given up to Beijing as most sectors are open to Chinese investment anyway. In return, China has promised to limit favourable treatment of its state-owned enterprises and make some services subsidies more transparent. Yet, of course, Beijing’s history in terms of international agreements suggests that whatever commitments have been made to get this treaty over the finishing line may never actually be implemented on the ground.

The fact is that the more Chinese capital and trading power embed themselves at the centre of a country’s economy, the less likely it is to be able to take a strong stand against Beijing. This dynamic is playing itself out in Australia right now, where significant lobbies in industry and among exporters are seeking a more conciliatory foreign policy approach from the federal government in Canberra. Within Europe, the dovish attitude of German Chancellor Angela Merkel reflects the broad softness towards China on the part of those who wield power in that export-oriented economy. The EU-China investment agreement reveals the folly of expectations that developing coalitions of the willing to deal with Chinese misadventures will be straightforward even if the US resumes leadership of the effort. For India, the implication is clear: An unwillingness to either choose sides firmly or to sign up to any major trading or investment bloc will hasten its marginalisation on the world stage.