Opinion | Why Europe must break with US on China policy to avert global economic disaster

The prospect of the global economy splitting into rival US and China camps is growing more likely, but Europe can help prevent this

Only an enlarged European community that includes Britain and moves away from US foreign policy can provide the needed counterbalancing force

Reading Time:3 minutes

Chinese President Xi Jinping (right) welcomes German Chancellor Olaf Scholz at the Great Hall of the People in Beijing, on November 4. Photo: AFP

Published: 1:30am, 4 Dec 2022

The view that the global economy is destined to split into two rival camps – one led by the United States and the other by China, with others relegated to being “camp followers” – is unfortunately gaining ground. Yet this will become a reality only if it is passively accepted and not actively challenged.

The great divide will not happen overnight, but it is under way. There is still time to devise countervailing measures and create counterbalancing poles of influence, but this will require radical policy actions going beyond the US-China arena.

A potential catalyst for change is in sight, although it will come only at the expense of deeper economic recession. It is that the prospect of growing economic hardship in Europe and the US will force politicians to adopt less rigidly ideological attitudes.

The cost of inaction could be devastating. On the economic side, inflation could become entrenched because production of goods will become less efficient and more costly in a fractured global system. As prices rise, so too will wage demands, and so on, upwards.

Trade and investment between the two great economic powers will suffer as sanctions and counter sanctions multiply, and the economic fate of other powers that are reduced to becoming satellites of these two will suffer as a consequence. Physical confrontation will become a real possibility.

No other single power can compete, in terms of economic and diplomatic clout, with the world’s biggest and second-biggest economies, and new alliances among multiple smaller nations would be too unwieldy. Only an enlarged European community can provide a needed third pole.

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