US-EU-China Triangle

Summary

This panel discussion focused on the complex relationships between the United States, Europe, and China, exploring potential conflicts and economic interdependencies. Graham Allison introduced the concept of the “Thucydides Trap,” suggesting a high likelihood of conflict between rising and established powers like China and the US. The panelists debated Europe’s role in this dynamic, with some arguing for strategic autonomy while others emphasized the need for closer alignment with the US.

The economic aspects of these relationships were highlighted by Belen Garijo, who described the challenges of operating a global company across these regions. Fred Hu offered a perspective from China, emphasizing the potential for economic cooperation and growth. The panel discussed the impact of political changes, particularly the potential return of Donald Trump to the US presidency, on international relations and trade policies.

There was significant debate about Europe’s position and future prospects. Some panelists expressed pessimism about Europe’s ability to assert itself as a major player, while others saw potential for increased European autonomy and influence, particularly in areas like defense and climate policy. The discussion also touched on the importance of considering the Global South in these geopolitical dynamics.

Throughout the conversation, there were differing views on the likelihood of conflict versus cooperation, the economic trajectories of the three regions, and the best strategies for navigating the complex international landscape. The panel concluded with a mix of cautious optimism and concern about the future of global relations among these major powers.

Keypoints

Major discussion points:

– The Thucydides Trap and likelihood of conflict between the US and China

– Europe’s role and position between the US and China

– Economic integration and trade relationships between the three regions

– The impact of Trump’s potential re-election on US-China-Europe dynamics

– China’s economic growth and its implications for global trade and power dynamics

Overall purpose:

The goal of this discussion was to examine the current and future state of relations between the United States, Europe, and China, considering geopolitical tensions, economic ties, and potential scenarios for conflict or cooperation.

Tone:

The overall tone was analytical and somewhat cautious, with panelists offering differing perspectives on the likelihood of conflict and Europe’s position. There were moments of optimism, particularly regarding economic opportunities, but also serious concerns about geopolitical risks. The tone became slightly more contentious when discussing Europe’s past decisions and future prospects, with some disagreement among panelists.

Speakers

Speakers from the provided list:

– Jamil Edmond Anderlini

Role: Moderator

Expertise: Journalist, runs Politico in Europe

– Graham Allison

Role: Professor, Douglas Dillon Professor of Government at Harvard Kennedy School

Expertise: International relations, creator of the “Thucydides Trap” concept

– Belen Garijo

Role: Chair and CEO of Merck

– Sir Robin Niblett

Role: Distinguished fellow at Chatham House

Expertise: International relations, European affairs

– Fred Hu

Role: Founder and chair and CEO of Primavera Capital

Expertise: Investment, Chinese economy

Additional speakers:

– Audience member

Role: Audience participant

Affiliation: Nature (publication)

The Complex Dynamics of US-China-Europe Relations: A Panel Discussion

This panel discussion explored the intricate relationships between the United States, Europe, and China, delving into potential conflicts, economic interdependencies, and strategic considerations. The conversation was moderated by Jamil Edmond Anderlini and featured diverse perspectives from experts including Graham Allison (political scientist), Sir Robin Niblett (foreign policy expert), Belén Garijo (business leader), and Fred Hu (economist and investor).

Thucydides Trap and US-China Relations

Graham Allison introduced the concept of the “Thucydides Trap,” which posits a high likelihood of conflict between rising and established powers. Applying this to the current global landscape, Allison suggested a significant risk of war between China, as the rising power, and the United States, as the established power. However, he tempered this dire prediction by noting that a catastrophic war between the US and China would have no winners due to their nuclear arsenals.

Interestingly, Allison also proposed that a potential Trump administration might surprise observers with more positive US-China relations, contrasting with the general expectation of increased tensions. He even made an optimistic prediction that US-China relations could improve within a year. This view was somewhat echoed by Fred Hu, who emphasised China’s aim to be a responsible stakeholder in global stability and prosperity.

Europe’s Position and Strategy

The panel engaged in significant debate about Europe’s role in this dynamic. Sir Robin Niblett highlighted Europe’s dependence on the US for security, particularly in light of the Ukraine conflict. He suggested that Europe’s support for US interests in the Indo-Pacific was partly motivated by a desire to ensure continued American commitment to European security.

Fred Hu advocated for Europe to maintain strategic autonomy between the US and China, arguing that this middle position offers flexibility and opportunities for cooperation with both powers. This concept of strategic autonomy refers to Europe’s ability to make independent decisions on foreign policy and security matters.

Belén Garijo emphasised the need for Europe to address competitiveness issues and unite politically. She argued for a pragmatic approach, urging Europe to “stay on course, do not blame anyone, try to… connect and collaborate and stay constructive, manage our risks.” Garijo stressed the importance of investing in technology and achieving unity among EU member states to close the technology gap with other major powers. She highlighted the need for Europe to focus on its strengths, such as sustainability and healthcare, while also improving its competitiveness in areas like digitalization and artificial intelligence.

Economic Integration and Trade Relations

The economic aspects of these relationships were a crucial part of the discussion. Belén Garijo described the US, Europe, and China as interdependent trading partners and strategic allies, highlighting the complexities faced by global companies operating across these regions.

Fred Hu emphasised the ongoing importance of China’s economic growth and consumer market for the global economy. He also highlighted China’s role in green energy and the potential for partnership with Europe in this area. However, Sir Robin Niblett pointed out that Europe faces a significant trade deficit and investment imbalance with China, while also noting a growing investment imbalance with the US.

The panel discussed Germany’s “three big bets” – relying on Russia for energy, China for markets, and America for security – and how these are now seen as problematic in the current geopolitical context.

Global Power Dynamics and the Role of the Global South

Graham Allison broadened the discussion by identifying the US, China, EU, and the Global South as key global players. This perspective was echoed by other panellists, with Sir Robin Niblett suggesting that Europe could play a larger role in relations with the Global South.

Fred Hu noted the diverging interests between the US and Europe on various global issues, further complicating the international landscape. This observation highlighted the need for nuanced approaches to global challenges and alliances.

Unresolved Issues and Future Considerations

The discussion left several critical issues unresolved, including how Europe can effectively balance its relationships with both the US and China, the future direction of US-China relations (especially under a potential Trump administration), and how to prevent escalation of conflicts between major powers. The role of the Global South in shaping future global dynamics also emerged as an important area for further consideration.

An interesting side note was a bet made between Robin Niblett and Jamil Edmond Anderlini regarding Europe’s future, highlighting the uncertainty surrounding Europe’s trajectory in global affairs.

Conclusion

The panel discussion revealed the complex and multifaceted nature of the relationships between the US, China, and Europe. While there were areas of agreement, such as the importance of economic interdependence and the need for Europe to improve its competitiveness, significant differences emerged regarding the likelihood of conflict, Europe’s strategic positioning, and the impact of China’s economic growth on global trade relations.

The conversation highlighted the challenges facing policymakers in balancing economic interests with security concerns in an increasingly multipolar world. As the global landscape continues to evolve, the insights from this panel underscore the need for careful diplomacy, strategic thinking, and a willingness to adapt to changing circumstances, while also considering the growing importance of the Global South in shaping future global dynamics.

Jamil Edmond Anderlini: Good morning, everybody. Welcome to… I’m amazed this session is so full on a Friday morning. This is, I think, a credit to our brilliant panellists. Needs no introduction, but I’ll do it anyway. Graham Allison, a professor, Douglas Dillon Professor of Government at Harvard Kennedy School, and also the populariser of the concept of the Thucydides Trap, which we’ll be talking about a little bit today, obviously pertinent to the topic. Here we have Belen Garijo, who’s the chair and CEO of Merck. Next to her is Robin Niblett, who used to run Chatham House, now is a distinguished fellow at Chatham House, and I think I’ve known you nearly 20 years. Anyway, quite a long time, great to see you. And then Fred Hu, last but not least. When I met Fred Hu, he was running Goldman Sachs in China. That is 20 years ago, actually, this year. And he literally has not changed at all in 20 years. I’ve got white hair, I’m getting older, but this man has not changed at all. He is now, and has been for quite a long time, the founder and chair and CEO of Primavera Capital, one of the leading investors, maybe even the leading investor out of China, and an old friend. So my name’s Jamil Andolini. I run Politico in Europe, but I spent 22 years of my life living in China, primarily working for the Financial Times. And three years ago, I disrupted myself and I joined Politico and I moved to Brussels. And when I spoke to some of my contemporaries at the Wall Street Journal, New York Times, they were very scornful. And they said to me, Jamil, what are you doing? The news is all in Asia, the news is all in China. Europe is a news desert. And I was a little bit worried. I thought, God, this is late 2021, remember? And I thought to myself, gosh, this is a bit worrying. Maybe they’re right. And I arrived and Mr Putin proved them completely wrong, sadly. And since then, it’s been a rollercoaster. I’m actually an American who spent most of my life in China, who now lives in Brussels. So who better to moderate the panel? we’ll be speaking about today, which is the topic of the United States, Europe and China, the triangle. What does it mean? What does the future hold? With all the changes we’re seeing in the world, I think this is a very, very important topic, not least for us here in Europe. So I’d like to turn to you, Professor, first of all. You popularized, you, I guess, invented this idea of the Thucydides trap. Why don’t you, for those of us, many of you will know what this is, but why don’t you just very briefly explain what that is?

Graham Allison: Well, thank you very much. It’s an honor to be on the panel with such a distinguished group. As I think your characterization of it’s right, Thucydides had a big idea. And unfortunately, too many people today who don’t read, don’t know who is Thucydides. So just for one second, he’s the father and founder of history. If you’ve never read his book, The History of the Peloponnesian War, shame on you. I don’t think you should participate in strategic conversations if you’re not familiar with him. So that’s just a professor’s advertisement for a second. As a Chinese friend of mine says, I’m the best press agent Thucydides ever had because there have been more copies of his book, The History of the Peloponnesian War, in Mandarin, sold in the seven years since I published my book than in the previous two millennia. So good for Thucydides. Thucydides’ big idea was that when a rapidly rising power seriously threatens to displace a major ruling power, most often this turns out to be a war and frequently a catastrophic war. So he wrote about the rise of Athens and the fear that this instilled in Sparta. His one-liner, which is probably the most frequently quoted one-liner in Western national security studies, is it was the rise of Athens and the fear that this instilled in Sparta that made the war almost inevitable. look at this in my book, Destined for War, last 500 years, 16 times we saw rapidly rising power, seriously threatening major ruling power, 12 ended in war, four in no war, a war inevitable? No? Likely? Yes? And if I were taking the situation today, I think if Thucydides were commenting he would say, more or less we’re right on track for a war. This looks like between China and the United States, and my old colleague and mentor Henry Kissinger who died a year ago, the last two years of his life every couple of weeks he would call up and say, Graham, I’m hearing more and more echoes of 1914, more and more similarities because when a rapidly rising power seriously threatens a ruling power, it’s like a seesaw of power and it’s shifting. And what does it shift? It shifts my perception, I used to be looking down on you, now I’m looking up, shifts my psychology, who the hell do you think you are? Why are you challenging me in this area, this area, this area? It affects the politics. I used to be able to push buttons and something happened. I push the button and now some of the power is drained to you and it doesn’t happen. Maybe the contrary of the thing that I thought. So this pattern as a rising power seriously threatens a ruling power, I mean it’s rooted in animal and human behavior ultimately if you think about it in an established incumbent and a disruptive upstart, and the dynamic is somewhat like it, but in the national situation. I think to conclude though, the structure in my view and in Thucydides view, Thucydides was not a fatalist. He wrote this book because people screwed up in ways that they could have done otherwise and he was hoping they would learn something from it. So the same thing with my ambition or aspiration, I would say 75% of the story is in the structure. So that’s why if I were betting it, I think in the next decade or two we’ll see a catastrophic war between China and the US, if I were betting. And Henry thought that. leaves 20-25% of agency for actors. And I think intelligent actors in Beijing and in Washington and in Europe could conceivably do things differently, some of which they may even do now. So I said on Monday or Tuesday, whenever the first show was, I’m trying to be as optimistic as I can. I believe a year from now we will have been surprised on the upside in the U.S.-China relationship.

Jamil Edmond Anderlini: So I have two quick questions for you. One is, in a catastrophic war between the United States and China, who wins? That’s one question. And the second one is, if the U.S. and China are going to engage in a catastrophic war, what role does Europe have to play?

Graham Allison: Okay, good question. So again, problems with professors talk too long. But in a mad world in which you have, quote, mutual assured destruction, which occurs when two powers have nuclear arsenals large enough each to destroy the other after they’ve been attacked, there’s no winners. Because if I succeed in killing every last one of you at the cost of erasing my country from the map, as Ronald Reagan kept reminding people, a nuclear war cannot be won. Because at the end of the war, however much you’ve done to the adversary, if you’ve lost your own country, don’t put that in the win column. So I say that’s the two stories are, you know, it’s a good way to lose-lose. A war between the U.S. and China doesn’t have to escalate to a nuclear war, but would likely do so. Because otherwise somebody loses at a stage of an escalation ladder in which they could take another step hoping that you would stand out. So that’s, and I’m sorry, what was the second?

Jamil Edmond Anderlini: What’s Europe’s role in that scenario, in a war?

Graham Allison: Well, I mean, it’s conceivable you could duck. But I think a world after there’d been a catastrophic nuclear war between the U.S. and China has enough other climatic effects, you know, could be a nuclear winter, could be this or could be that. I think Europe has a role to remind the major actors in Beijing and in Washington that we live on a small planet, and so don’t screw it up.

Jamil Edmond Anderlini: Robin, I’d like to turn to you and ask you whether you agree that we’re headed for, 75%, I think he’s saying, a chance that we’re headed for a catastrophic Sino-US conflict.

Sir Robin Niblett: Well, fantastic to be on this panel. I think of it as the US-Europe-China panel, especially as I’m a Brit. I’m not sure I should speak on behalf of the EU, but obviously Europe includes the EU, and the EU doesn’t include the UK anymore, but that’s fine. When I look at this idea of it being a triangle, I find it amusing that the EU or Europe is stuck in the middle, because in a way, although it looks like it’s a power of the same size, if you look at defence budgets, collectively larger than China’s, you look at GDP, it’s ahead of China’s at the moment, they’re less than America’s. Of course, Europe can’t make decisions as Europe, the way the United States and China can, so I always find the triangle thing very interesting. We might get into that later on, but I don’t want to duck your question. Where would Europe stand on this? Of course, it would all depend how the war started, and if the war started where it was sensed that China was the aggressor and America was having to defend the values that it has also defended in Europe for the past 80-plus years, there would be pressure for many European governments, certainly those in NATO, to join. So I don’t think this would be an EU question, this would be a NATO question at that point. Although it’s outside the North Atlantic area, so it’s not technically a NATO question, it would present leaders with an almost impossible choice. Of course, the UK’s nuclear capability is deeply interconnected with America’s. France’s is not, so there’s some interesting dynamics there. I just think we could get into a conflict, I think as Graeme was saying, so far short of outright war. The interesting question might be, what would we do if China blockaded Taiwan? And America treated that sort of as an act of war, but not one to lead right up the escalatory ladder that Graham described and got going. Would Europe, the EU, UK, step forward and maybe try and help break that blockade? There it gets interesting. And I think that if we look at where we are today, Trump has come into power, so it adds complexity. But Europeans depend more for their security day on America than they did pre, when you were over there and before you came back, pre the full-scale invasion. And therefore, part of our way of telling America, stay with us in Europe, help us deal at least while we transition to maybe being able to take on Russia for ourselves, can’t at the moment, is to show that we care about security in Asia Pacific as well. So we’ve seen closer relationships with Australia, deepening of security relationships with Japan. You’ve had freedom navigation operations in the Indo-Pacific involving Dutch, the British, the French, the Italians. So at the moment, we are trying to say to America, stay with us in Europe, we’ll be with you in the Indo-Pacific. Now, that had been the kind of Biden deal. Of course, we’re now post-Biden, clearly, and it all gets a lot more complicated. Maybe I’ll just stop there. I’ll speak for too long.

Jamil Edmond Anderlini: Of course, the danger of that, to go back to Henry Kissinger’s analogy, is Europe is aligning itself with America, we’ll help you in Indo-Pacific, but you help us with Russia. That sounds very much like sleepwalking into conflict, as we saw in 1914. It’s either sleepwalking into conflict or it’s effective deterrence.

Sir Robin Niblett: I think we’re in a world where…

Jamil Edmond Anderlini: I think that’s what they would have said in 1913, effective deterrence.

Sir Robin Niblett: I believe humans learn. I really do. And if we look at how we’ve handled the global financial crisis, we learn. China has learned, definitely, does not want to make and repeat mistakes of previous great powers, definitely not that of the Soviet Union. So I’m on the more optimistic end of the 75-25. And I think as a European, we definitely want to be on the optimistic side of that calculation.

Jamil Edmond Anderlini: Madam Gurijo, one of the ways traditionally we’ve thought about how to avoid conflict like this is closer economic integration and better aligning the interests of the big industries. If you think about the founding of the European Union, how did we do it? We got an economic coal and steel agreement so that we wouldn’t have to fight each other because the interest of all of us is in making more money and not fighting. How do you, your company is very large in both the United States and in China. How do you see that economic integration? Do you see it disintegrating? Do you see it coming? I don’t think you see it coming closer, but maybe you do. I’d love to hear your perspective.

Belen Garijo: Yeah. Okay. Thank you very much. I’m very pleased to be here with this prestigious panelist. Let me tell you in a few words how important the three continents are for Merck. We, our heritage and our headquarters and our operations are proudly European. We have the largest percentage of the workforce in the U.S. and the largest source of revenue in China and Asia Pacific. So we are a real global company, right? And we have operated flawlessly in the three continents simply because we have been able to use our strength and our resilience and fully understand the expectations and how to compete in these countries. So Europe, the U.S. and China are highly interdependent and interconnected. They are competitive. rivals, but they are also trading partners, right? And they are, in a way, strategic allies. So I don’t think conflict is going to be good for anyone. It’s going to cost a lot of money.

Jamil Edmond Anderlini: Put it another way, setting aside who is at fault or anything, do you see it getting more difficult to have a position like yours? As you said, main workforce in the United States, main revenue in China, heritage from here. Is that getting harder with Donald Trump’s election, with Xi Jinping’s turn inward, and Europe’s, what would we say about it? Indecision.

Belen Garijo: Let me put it this way. We prepare for risk scenarios, for all kinds of risk scenarios, because the main topic that we are confronted with at this time is volatility and uncertainty. You know, everybody speaks. We have heard recently Mr. Trump, the president of the Commission has made major commitment to address big roadblocks on European competitiveness, but this is going to be a multi-year effort, right? Getting Europe more competitive is going to be a multi-year effort and we need to move with speed and the sense of urgency that is required to catch up on certain topics. Innovation and growth, to generate an environment in Europe that is favourable to the industry and to growth, to future growth, sustainable growth. So, is it more difficult for us to compete? The answer is yes and no. I mean, we are operating differently, definitely yes, and as I mentioned, preparing for risk scenarios, but you know, something that I have noticed during the conference this year is that the tonality, both coming from… President Trump, and also from the President of the European Commission, is actually much more positive on China, because they need each other. And they are now much more realistic on our ability to enter any kind of derisking, decoupling, you name it. And Trump stated yesterday, during the connection to all the audience at Davos, that he was expecting to be closer to China, to collaborate with China. Do we believe that or not? It’s still to be seen, right? The same has been said by the President of the Commission. So I think, you know, my aspiration, our dream, what we are trying to do in each and every country is obviously use our resilience of having played in China for almost 100 years, in Europe for 356, and in the US for many more, right? To establish our operations with very strong proximity to our customers in order to be able to serve our customers and patients in the best possible way.

Jamil Edmond Anderlini: So you referred to Europe needs to move quickly and get its act together. As I say, I’ve lived in Brussels for three years now. And when I first arrived, I thought I was leaving, you know, China to move to a place with a clean air of democratic freedom. And I arrived and I was like, wow, this is more bureaucratic than communist China, like this place moves slowly. And I have a theory that the election of Donald Trump and his sort of animus towards multilateral institutions, particularly the United, the European Union, that is perhaps just the sort of exercise. that the European Union needs to get its act together. Because we have seen the European Union act at moments of crisis. If you look at COVID, if you look at the euro crisis, Mario Draghi and whatever it takes, if you look at the Russian invasion, full-scale invasion of Ukraine, these are moments when the very, very slow and lumbering European Union suddenly gets its act together. So, would you agree with me, just a short answer, would you agree with me that Trump is the crisis that Europe needs?

Belen Garijo: No, I do agree with you that we are acting united in crisis, right? And that is why I believe that the game-changer is going to be political willingness. Today, one of the biggest challenges that we have in Europe is the fragmentation and the so-called, I mean, I call it disconnect between the European process level and the member states. So, what is happening, I have experienced during the crisis, during the forum, speaking to some of them, is that they realise that they have two hats, right? That they have to be the leaders of their countries and their states and deal with their issues locally, but that they have a hat to lead in Europe that they have to activate very fast. So, it takes political willingness to really get the EU Council united in the face of a potential crisis.

Jamil Edmond Anderlini: Yes, I agree. Great. OK, good. Fred, I’d like to turn to you. So, this week, I’ve been meeting with some Chinese companies, not as many here as some other years, but I’ve been meeting with some Chinese companies and some investors based in China. And the mood is not wonderful. When I talk to them, some companies are facing headwinds. There are some investors who are trying to restructure, effectively, Chinese companies to make them look more American so that they can get different deals. How are you seeing it on the ground as one of the major, major… of private investors in China. What’s your sense of the relationship and how that affects the economic environment?

Fred Hu: Well, you know, China at the moment, you know, China has experienced a number of years of uncertainty, economic headwinds, but as we speak, you know, China’s economy is picking up, you know, in momentum, in growth momentum. Confidence has been dampened by up to three-year draconian zero COVID policies. You know, some of the regulatory uncertainties and of course, rising geopolitical tension, you know, none of it, you know, is conducive to, you know, confidence, right? But as, you know, since September last year, it’s very clear the government has been resetting its priority, going back, pivoting back to the traditional pro-growth, pro-business policy agenda. And I think that’s really good news, not only for Chinese entrepreneurs, Chinese companies, multinational companies like Merck operating in China, for investors, of course, but also actually for global stability, because China, you know, given the sheer size, you know, it’s really such an important play in the world economy and actually, you know, source of growth, you know, still a dispensable engine to global growth. So I actually, in this China-U.S. relationship, I’d like to actually offer a little bit of different perspective from the conventional wisdom, right? Conventional wisdom is because, you know, if there’s a rising tension between U.S. and China, Europe, we should automatically lean towards U.S., right, you know, against China, because, you know, we share democracy. culture heritage, and we have military alliance. Of course, those are true. But this shared political system or tradition does not guarantee you have complete converging interest. And that’s guaranteed. There’s no conflict. In fact, the Hustitas trap, the ancient inspiration for Graham’s famous book, the tension between the ancient Athens and the Spartan. These are all Greek civilization. Exactly identical, but they’re still in the war with the disastrous consequences. So I would say right now, for European leaders, political and business, think especially with Trump, too. Actually, there are significant divergences in interest. For example, trade, definitely, I think the US has turned in much more protections, not just Trump or TAF, but Biden, exactly the same, industrial policy, CHIPS Act, IRA. That’s all highly protected at the expense of European companies. On tech, the US is bound to have unquestioned, unqualified global dominance in AI. What the European will get? You’ll be at mercy of the three hyperscalers and pay a very high price if there’s no choice, no optionality. On climate, Trump, too, is the same, which is definitely moving opposition from Europe and China. On health, Trump has pulled the US out of WHO. I think it’s also at odds with the European interest. Let me just highlight that there are divergences. For Europe, being the middle is a very good position. You have flexibility, where it makes sense for you. You can work with the US more land, where you can also work with China. Of course, you can also compete against China if so sealed. It just doesn’t mean. You know, Europe has to blindly move with the U.S. in the next step, okay? You have to deprive yourself of freedom, of autonomy, of liberty. So my advice is more like Charles de Gaulle’s advice, okay? Europe should find a way to maintain a measure of independence with dignity, with confidence. That’s in the best interest of Europe. And by the way, by extension, it’s also in the best interest of the world because the biggest danger, just again, keeping Graham’s warning in mind, is a headlong confrontation between the U.S. and China, right? That would be a disaster for the whole world. So Europe can do its part to prevent that from happening by being a confident mediator, bridge connector, so to preserve that kind of symbiotic interrelationship on trade, on investment, and on other global vital interests.

Jamil Edmond Anderlini: Certainly many people in Europe, including the President of France, agree with you. This is the concept of strategic autonomy for Europe, which allows Europe to play a sort of in the wind, blowing in the wind between China and the U.S. Third pole would be a very optimistic way of putting it. I hear what all of you are saying. Obviously, the political environment has changed drastically in the last week. If you look at the cabinet of Donald Trump, the serious players in that cabinet are very known for their hawkish views towards China. I’m going to shamelessly rip off a phrase, which I love, and I’ve been using it all week, and some of you may have heard it before, but don’t tell the person who made it up that I’m using it. The best line I’ve heard about Trump, too, is that the velociraptors have learned how to open the doors this time. If you think back to the last Trump administration, the levers of government have been very, very hard. were a new and interesting tool for that administration. This time around, they’ve worked out how to use the levers of government. And what they want to use it for, many of them, Marco Rubio, you could go through the list, have been very outspoken in their views. So, what is Europe… And what is Europe to do? I mean, Robin, you wanted to jump in.

Sir Robin Niblett: Well, I just wanted to come in and maybe say something about Europe, but Fred paints a positive picture as to why Europe should go back to that kind of middle position. As you know, Macron, of course, who was the big supporter of European strategic autonomy, has flipped on this since the Ukraine war. And China’s support for Russia, at least through dual-use technology, through narrative support and so on, and, let’s say, building that alternative world order that both he and Vladimir Putin have talked about, that has infuriated European leaders and diplomats. I was in Beijing back in July. The toughest panel, tougher than the Americans who were there, were the Europeans. A lot of it on Ukraine, but some of it also on trade. And, of course, the big fear, you’re saying China’s growing again, that’s great, growth for China, but it’s growing to eat Europe’s lunch, is what it feels like in Europe. A lot of the companies, especially in Germany, but in other parts of Europe as well, are now facing an onslaught of export-led growth rather than consumption-led growth from China. What it’s doing is adding to the anxieties about China. And when you look at the trade pattern here, the structural element of this, bilateral trade between the US and the EU is about 1.5 trillion. The EU has a surplus of roughly 150 billion in goods, which Trump always talks about, but it has a 100 billion deficit on services. So the net is about 50 billion. in Europe’s favour. That’s very little, 1.5 trillion. EU-China trade is close to 800 billion. In 2023, last time we had full official figures for, European deficit was 300 billion of that. And that’s not even the most interesting number. I think the most interesting number is foreign investment. European countries and American companies’ stock of foreign investment in each other’s markets is 5 trillion. You know, Merck and companies, $5 trillion built over the time. The stock between the EU and China is about 320 billion. It’s minuscule. Now, of course, the worrying thing for Europe, you’re absolutely right, Fred, that with Trump coming in, he’s going, ah, that’s a dependency. I’ll tax any companies that have been foolish enough to locate themselves in America if their governments don’t do nice things to our exports, because he doesn’t think about trade in the same way. But I think the issue of Ukraine, where it goes, maybe Trump will take it to a different place, but the shape of the trading pattern that China and Europe had that was so positive for so long was because it was positive for Europe and sort of positive for China as well. But right now, the feeling in Brussels, at least, and European capitals I talk to, is deeply worried about China.

Belen Garijo: But can I react to this, because you said we can disagree?

Jamil Edmond Anderlini: Please, I want you to disagree. I said you have to disagree, in fact.

Belen Garijo: So, you know, is this issue the consequence of China aiming to eat our land, or is this the consequence of the inaction in Europe for many years, right? The caution, the risk aversion, the lack of investment, the fragmentation. I mean, we cannot blame anyone at this time for what has been the tonic in Europe for the last decade, right? I was discussing yesterday with someone, and he was talking to me, he was telling me, it’s not 10 years, it’s even more. You know, we have talked about Eurosclerosis 15 years ago, right? So honestly, I think we have to really stay on course, do not blame anyone, try to… connect and collaborate and stay constructive, manage our risks, of course, manage our risks by identifying what scenarios could emerge, mainly on trade and technology, but we have to stay on course. We have to fill the technology gap, and for that we need to invest, and for that we need the member states to be united. We have to create an environment which is more simple, in which you cannot wait for 10 years to establish a reasonable presence in hot areas like semiconductors. We need to think of something we have been discussing for many years, which is the Capital Markets Union, to avoid that 300 billion that we could use to foster innovation and buy technology in Europe go abroad. I could continue.

Jamil Edmond Anderlini: And I could join you. I follow German politics very, very closely. We are owned by Axel Springer, a German company, so I follow it very, very closely, and my argument is that Germany in particular, but I would say it applies a bit more broadly to Europe, made three big bets. Russia for cheap energy, China for big open markets, and America for security. My argument is those bets paid off for a while and are now big losing bets for Germany, but when I talk to German politicians, most of them, or especially the ones in power for another week or two, I find nothing but nostalgia, nothing but a wish to go back to those three bets. No other plan than please give us back our markets, our energy, and pay for our security forever. It’s quite a switch.

Belen Garijo: I don’t know who you are talking to, but this is not what I hear in Germany from the people I talk to.

Jamil Edmond Anderlini: The next leadership? Or the current one?

Belen Garijo: Obviously, obviously, you know, the next leadership is actually, obviously…

Jamil Edmond Anderlini: Obviously, it’s an election, so we don’t know who it is, but we can…

Belen Garijo: Exactly, we shouldn’t talk about this because we are in an electoral period, but what I can say, and I have witnessed that, is if there is a country in Europe that has built bridges with China at all times, this is Germany.

Jamil Edmond Anderlini: Well, exactly, but China is now a smaller and smaller shrinking market for the car companies and for others. Anyway, I’m going to let Professor… And then I want to give the audience a chance to ask a couple of questions.

Graham Allison: Great conversation, and I encourage you to have some contrarian views. Always, please. With respect to Europe, I’m as pessimistic as you are, sadly. I love Europe. I’m an anglophile from having the opportunities. I wish Europe would stand up and become a player. Every year, it seems a sadder story. So I’m pessimistic on the Europe piece. On the triangle, I think if we’re being analytic about it, we’re worth to take the various issues and try to consider where the parties are and are likely going. And I think Jay Shanker’s concept of a multi-aligned world is what we’re going to see above all the three parties. So with respect to green, there’s going to be some quite similarities between China and Europe. And not Trump. He thinks this is a fraud, a fake. If you look at international institutions, he’s withdrawing from all of them. Europe and China will still be multilateral. So the WTO, the WHO, blah, blah, blah. We could go through the whole list, but I think it would be an interesting analytic exercise to see how… You should do it. I may do, because I like the way you did. You can publish it in Politico. I’ll come back to you. To finally get to one that’s slightly different from your view, I think obviously the consensus is that the Trump administration will look like the Republican hawk alternative to the Biden. administration. And if it were the Rubio administration, that’s what it would be. But I made a bit of a fuss on Tuesday, I guess, making a bet, and I’m happy to offer the bet to you if you want it as well, that a year from now, if we have the good fortune to be here, that we’ll have been surprised on the upside in the relationship between the U.S. and China. Because if you ask the question…

Jamil Edmond Anderlini: Fifty-year… Fifty-year M&B.

Graham Allison: If you ask the question, is Donald Trump a China hawk, if you study him, you’ll be shocked.

Jamil Edmond Anderlini: I actually somewhat agree with you. I’d like to give Fred a chance to…

Fred Hu: So, you know, you’re condemning Europe for, or Germany in particular, making three, you know, big wrong bets. I respectfully disagree. You know, you’re a Wittig. You know, Germany has, you know, the biggest economy in Europe and the highest benefit from being open to trade. And, you know, and over the last 20 years, you know, America is a very shining example, but, you know, you also mentioned the German big auto companies. You know, it has been, you know, really, really, China has been the number one market, has the number one source of revenue, number one source of profits. OK. Last few years, of course, the going is getting tougher, OK, just because, you know, the slowing down in China’s economy, but also the immediate transition from, you know, IECE mobility to, you know, EV, right? So I think German companies are quite a little bit unprepared. But, you know, this is maybe also opportunity in disguise because Germany, like China and, you know, we’re committed to green, right, you know, climate, energy transition. That’s, you know, of course, it would be a mistake for Germany or Europe to depend on Russian gas because, you know, we need to have renewable energy. And here, China could be really the ideal partner for Germany and Europe at large to work with because China has managed to develop what is solar, wind, you know, really, really affordable, commercially competitive source of energy without, you know, government subsidy, right? So and then in terms of the size demand. There used to be a shrinking demand. That’s totally wrong. A few years, the Chinese economy is not growing as fast as it could be, but that is changing right now, and the domestic consumption in China right now is abnormally low. So as this normalizes, China has to join the U.S. as really the demand of last resort. So when 700 million Chinese middle-class consumers start to have the confidence to spend again on everything, on health care, on mobility, on food, China really will join the U.S. as two of the most important motors. So the Chinese middle-class consumers are bigger than the U.S. compared to the EU population. So as the Chinese economy rebalances, it becomes a more and more important source of energy.

Jamil Edmond Anderlini: I would respectfully correct my earlier statement. Chinese demand is shrinking for, or in many cases for, European exports, not overall. I’ve got time. I have two minutes left. I’ll let one person ask a question, so the lucky person. A question, not a statement, not your view, but a question to our amazing panelists. Who would like to go? Wow. You’re just blinded by the brilliance. One person over there. Thank you.

Audience: Magdalena Skepa, Nature. The panel’s conversation was representing really mainly the perspective of Europe, to some extent the perspective of the U.S. What is the perspective of China? I guess it’s a question to Fred.

Fred Hu: Thank you so much. You know, I think China’s story is really rejoining the global economy. Really, China leads the way for the global south. Many still, we still have low-developing countries, you know, find the path for sustainable. for economic development, to reduce poverty, to really increase quality of life. In that, China also realized, as China grows, it has a big stake in the global stability and the prosperity. So yes, I think there are a lot of frictions, differences, but China, I think, is aware of this, the stake, as a responsible stakehold, and ready to work with the US and Europe as partners. Here, the panel would be perfect if we also have, it’s US, Europe, China, and the global South, right? But I think China can definitely play a more constructive role for global stability and prosperity.

Jamil Edmond Anderlini: We have 17 seconds, so I think that’s, unless someone would like to say something very, very short, in 15 seconds.

Sir Robin Niblett: I’m gonna be optimistic, as a Brit, about Europe. I think we will step up on defense, we are ready. You can look at the numbers, Britain, France, Germany, others investing big ways. I think we will be more autonomous at the end of this. Maybe we will become, rather than just the squeezed middle, I think Europe might start to have a bit more of an identity, and it is partly in the relationship with the global South. Europe has realized Africa is part of its future. And if you look at how the COP 29 meeting went, you look at the trade agreements the EU is trying to do right now, it is trying to find a different route that gives me some optimism for the future. And I wanna put that down as a Brit.

Jamil Edmond Anderlini: So I’ll go on the other side of that bet as well. Fine, go for it. And that’s 50 euros. Euros, yes.

Sir Robin Niblett: How about, I’d rather do pounds, actually.

Jamil Edmond Anderlini: No, no.

Graham Allison: On Fred’s comment, I think it’s a very important one. If we try to think of it in terms of the globe, there’s eight billion people. So there’s the US, there’s China, there’s the EU, and there’s the global majority.

Jamil Edmond Anderlini: Yeah. Absolutely.

Graham Allison: They don’t happen to have much voice, but I think that’s in the big picture.

Jamil Edmond Anderlini: For another panel. Thank you so much to my amazing panelists. It’s wonderful to see you all again, and thank you to the audience. See you next year. Bye. Bye.

Agreement Points

Importance of economic integration and interdependence

speakers

– Belen Garijo
– Fred Hu

arguments

US, Europe and China are interdependent trading partners and strategic allies

China’s economic growth and consumer market remain important for global economy

summary

Both speakers emphasize the interconnectedness of global economies and the importance of maintaining economic relationships between the US, Europe, and China.

Need for Europe to improve competitiveness

speakers

– Belen Garijo
– Sir Robin Niblett

arguments

Europe needs to address competitiveness issues and unite politically

Europe may step up on defense and develop more autonomous identity

summary

Both speakers argue that Europe needs to take action to improve its competitiveness and develop a more autonomous stance in global affairs.

Similar Viewpoints

Both speakers express a more optimistic view of future US-China relations, suggesting potential for positive developments despite current tensions.

speakers

– Graham Allison
– Fred Hu

arguments

Trump administration may surprise with more positive US-China relations

China aims to be responsible stakeholder in global stability and prosperity

Unexpected Consensus

Potential for improved US-China relations under Trump

speakers

– Graham Allison
– Fred Hu

arguments

Trump administration may surprise with more positive US-China relations

China aims to be responsible stakeholder in global stability and prosperity

explanation

Despite the general expectation of increased tensions, both speakers suggest the possibility of improved US-China relations, which is unexpected given the current geopolitical climate.

Overall Assessment

Summary

The main areas of agreement include the importance of economic interdependence, the need for Europe to improve its competitiveness, and the potential for positive developments in US-China relations.

Consensus level

Moderate consensus on economic issues and Europe’s role, with some unexpected agreement on potential positive US-China relations. However, there are divergent views on the likelihood of conflict and Europe’s strategic positioning, indicating a complex and nuanced discussion without full consensus on all issues.

Different Viewpoints

Likelihood of US-China conflict

speakers

– Graham Allison
– Sir Robin Niblett

arguments

Thucydides Trap suggests high likelihood of war between rising and ruling powers

Europe depends on US for security but is trying to show support in Indo-Pacific

summary

Allison suggests a high likelihood of conflict between the US and China based on historical patterns, while Niblett implies a more optimistic view of potential cooperation and deterrence.

Europe’s strategic position

speakers

– Fred Hu
– Sir Robin Niblett

arguments

Europe should maintain strategic autonomy between US and China

Europe may step up on defense and develop more autonomous identity

summary

Hu advocates for Europe to maintain strategic autonomy between the US and China, while Niblett suggests Europe might develop a more autonomous identity focused on defense and relations with the Global South.

China’s economic impact on Europe

speakers

– Fred Hu
– Jamil Edmond Anderlini

arguments

China’s economic growth and consumer market remain important for global economy

Germany/Europe benefited from open trade with China but faces challenges now

summary

Hu emphasizes the ongoing importance of China’s economic growth and consumer market for the global economy, while Anderlini highlights the challenges Europe now faces from its previous reliance on Chinese markets.

Unexpected Differences

Trump administration’s potential approach to China

speakers

– Graham Allison
– Jamil Edmond Anderlini

arguments

Trump administration may surprise with more positive US-China relations

Germany/Europe benefited from open trade with China but faces challenges now

explanation

Allison’s optimistic view of potential positive surprises in US-China relations under a future Trump administration contrasts with the general expectation of a more hawkish approach, which Anderlini’s comments seem to imply.

Overall Assessment

summary

The main areas of disagreement revolve around the likelihood of US-China conflict, Europe’s strategic position between the US and China, and the impact of China’s economic growth on global trade relations.

difference_level

The level of disagreement among the speakers is moderate. While there are clear differences in perspectives, particularly regarding Europe’s role and the future of US-China relations, there is also some common ground in recognizing the interconnectedness of global economies and the need for strategic thinking. These disagreements reflect the complexity of navigating international relations in a multipolar world and highlight the challenges facing policymakers in balancing economic interests with security concerns.

Partial Agreements

Both speakers agree on the need for Europe to become more competitive and united, but they differ in their focus. Niblett emphasizes defense and autonomy, while Garijo stresses economic competitiveness and political unity.

speakers

– Sir Robin Niblett
– Belen Garijo

arguments

Europe may step up on defense and develop more autonomous identity

Europe needs to address competitiveness issues and unite politically

Similar Viewpoints

Both speakers express a more optimistic view of future US-China relations, suggesting potential for positive developments despite current tensions.

speakers

– Graham Allison
– Fred Hu

arguments

Trump administration may surprise with more positive US-China relations

China aims to be responsible stakeholder in global stability and prosperity

Key Takeaways

There is a significant risk of conflict between the US and China due to shifting power dynamics, as described by the Thucydides Trap concept

Europe is in a challenging position between the US and China, needing to balance security, economic, and strategic interests

Economic integration between the US, Europe, and China is complex and evolving, with concerns about trade imbalances and competitiveness

China’s economic growth and large consumer market remain important for the global economy despite recent challenges

The global power dynamics are shifting to include not just the US, China, and Europe, but also the Global South

Resolutions and Action Items

Europe needs to address competitiveness issues and achieve greater political unity

European countries should increase defense spending and develop more strategic autonomy

Unresolved Issues

How Europe can effectively balance its relationships with both the US and China

The future direction of US-China relations, especially under a potential Trump administration

How to prevent escalation of conflicts between major powers

The role of the Global South in shaping future global dynamics

Suggested Compromises

Europe could act as a mediator between the US and China to help prevent confrontation

Increased economic cooperation between Europe and China in areas like renewable energy and climate change mitigation

Thucydides’ big idea was that when a rapidly rising power seriously threatens to displace a major ruling power, most often this turns out to be a war and frequently a catastrophic war.

speaker

Graham Allison

reason

This introduces the core concept of the ‘Thucydides Trap’, providing a historical framework for understanding current US-China tensions.

impact

Set the tone for the discussion by framing the US-China relationship in terms of historical patterns of conflict between rising and established powers. Led to further exploration of potential conflict scenarios and Europe’s role.

Europeans depend more for their security day on America than they did pre, when you were over there and before you came back, pre the full-scale invasion. And therefore, part of our way of telling America, stay with us in Europe, help us deal at least while we transition to maybe being able to take on Russia for ourselves, can’t at the moment, is to show that we care about security in Asia Pacific as well.

speaker

Sir Robin Niblett

reason

Highlights the complex interdependence between Europe and the US, especially in light of the Ukraine conflict, and how this affects Europe’s stance on China.

impact

Shifted the discussion to consider Europe’s strategic position and motivations in the US-China dynamic, prompting debate about whether this approach risks escalating tensions.

For Europe, being the middle is a very good position. You have flexibility, where it makes sense for you. You can work with the US more land, where you can also work with China. Of course, you can also compete against China if so sealed. It just doesn’t mean. You know, Europe has to blindly move with the U.S. in the next step, okay?

speaker

Fred Hu

reason

Offers a contrarian view on Europe’s position, suggesting strategic autonomy rather than automatic alignment with the US.

impact

Challenged the assumption of inevitable European alignment with the US, leading to a more nuanced discussion of Europe’s options and interests in the US-China dynamic.

So honestly, I think we have to really stay on course, do not blame anyone, try to… connect and collaborate and stay constructive, manage our risks, of course, manage our risks by identifying what scenarios could emerge, mainly on trade and technology, but we have to stay on course. We have to fill the technology gap, and for that we need to invest, and for that we need the member states to be united.

speaker

Belen Garijo

reason

Provides a pragmatic business perspective on Europe’s challenges and the need for unity and investment.

impact

Refocused the discussion on concrete actions Europe could take to improve its position, rather than just reacting to US and China.

Overall Assessment

These key comments shaped the discussion by introducing multiple perspectives on the US-China-Europe dynamic. The conversation evolved from an initial focus on potential conflict between the US and China to a more nuanced exploration of Europe’s role and options. The comments highlighted the complexity of the situation, touching on historical patterns, current geopolitical realities, economic interdependencies, and the need for strategic thinking. This led to a rich debate about Europe’s position and potential strategies in navigating the tensions between the US and China.

How would Europe respond if China blockaded Taiwan and America treated it as an act of war?

speaker

Sir Robin Niblett

explanation

This scenario explores the complex dynamics of Europe’s potential role in a US-China conflict over Taiwan, which is a critical geopolitical issue.

How can Europe maintain a measure of independence and autonomy between the US and China?

speaker

Fred Hu

explanation

This explores the potential for Europe to act as a mediator or bridge between the US and China, which could be crucial for global stability.

How will the trade patterns and economic relationships between the EU, US, and China evolve in the coming years?

speaker

Sir Robin Niblett

explanation

Understanding these evolving economic relationships is crucial for predicting future geopolitical dynamics and potential conflicts.

How can Europe address its technological gap and create an environment more conducive to innovation and growth?

speaker

Belen Garijo

explanation

This is crucial for Europe’s future competitiveness and its ability to maintain relevance in the global economy.

How will the perspective of the Global South influence the dynamics between the US, Europe, and China?

speaker

Fred Hu and Graham Allison

explanation

Including the perspective of the Global South is important for a more comprehensive understanding of global geopolitical dynamics.

Will Europe step up on defense and become more autonomous in the near future?

speaker

Sir Robin Niblett

explanation

This is important for understanding Europe’s future role in global security and its relationship with the US and China.