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What will happen in the coming years between China and the United States? What consequences will this have on the rest of the world, and in particular on Europe? The question will soon become pervasive. It is time to prepare for it.
For decades, the Chinese miracle has been admired and the American decline laughed at. Both are true: China has experienced a tremendous economic boom, eradicating even the most extreme poverty in the countryside, and building up a very modern industry, an industrious middle class, and a formidable military, especially naval, power. Meanwhile, the United States suffered a thousand economic, financial, racial and ideological crises; it suffered terrible domestic violence, tragic bombings, and numerous military setbacks abroad.
It was not clear that, at the same time, China was heading straight for formidable contradictions: a market economy cannot coexist durably with a dictatorship; one or the other must give way. And it is the Chinese market economy that is giving way: the big firms are passing one after the other under the control of the party, which does not accept to let young people, and especially party members, spend their time exchanging on social networks or playing video games or, worse, receiving distance education designed and provided by big private firms; by closing itself, the party will have to motivate these young people by something other than the increase in the standard of living, the purchase of luxury goods or trips abroad; and if it will be very difficult to detoxify those who have already tasted it (and who will live “lying on their couch”, as it is now whispered in China. ) The party may think that it can motivate the youngest, through patriotism alone, fed by a hatred of the foreigner designated as responsible for all the hardships to come. With a stated objective: to retake Taiwan.
In the US, other formidable contradictions will produce equally devastating consequences: Unable to ensure the growth necessary to support its debt by its expansion on the Chinese market, (and as each time a new crisis is announced), the United States will seek outlets in the military industry, and on the other markets, in particular in Europe, whose firms will suffer from a more unfair competition than ever from their American competitors, and whose shares will be bought at any price by American financiers scalded by their losses on the Chinese financial markets.
This seizure of the world economy should lead to strong global tension, if not to a war in the China Sea. Unless everyone realises in time what they have to lose in such an adventure: how could the US public debt be financed if the Chinese no longer bought it, or worse, started selling it? What would happen to the euro if the dollar collapsed in such a scenario? What would happen to the Chinese economy, and Chinese employment, if the US and European markets closed to Chinese products?
In any case, the worst can’t happen, since it’s in no one’s interest: the two economies are highly integrated; Chinese students are a big hit at American universities; on the whole, no one could undo such ties. This is also what analysts of the European situation wrote in 1913, noting the extraordinary intertwining of the British and German economies, governed by two grandsons of the same queen (George V and William II, both grandsons of Queen Victoria). And yet, war broke out, to the misfortune of all.
History teaches us that, when it is logical, and even when it is unreasonable, the worst always happens, and faster than expected. Unless very determined action is taken to prevent it.
From the simple European point of view, it is urgent to prepare for the hypothesis of the closure of the Chinese market for our firms, and the withdrawal of American troops, who will be occupied elsewhere. We will lose outlets, raw materials and essential components, which will make it impossible for the European economy to function, leaving it at the mercy of invaders that NATO will no longer be able to contain.
This is where, for the Europeans, the serious things will begin.
j@attali.com