The United States, the European Union, and China need each other, no matter how fiercely they speak
On June 28th, the website of the South China Morning Post in Hong Kong published an article titled "No matter how fierce the language is, the United States, the European Union, and China need each other". The author is Dan Pototsky, a researcher at the Innovation Center of the Russian Institute of World Economy and International Relations. The full text is excerpted as follows:
After US Secretary of State Antony Blinken visited Beijing this month, some political commentators quickly claimed that he was treated coldly and the meeting with China was not satisfactory.
However, despite hostile remarks from Western officials exacerbating tensions, economic cooperation between the United States and China is still increasing, and cooperation between the two countries and the European Union is also increasing. Last year, the bilateral trade volume between the United States and China reached a record breaking $690.6 billion. At the same time, the total trade volume between the European Union and China reached 847.3 billion US dollars last year.
What can explain the contradiction between such public statements and economic reality? The answer is simple: these three economies are highly interdependent.
The prospect of decoupling is limited. Lithium is a necessity for producing electric vehicle batteries and is crucial for global green transformation. China's share of global lithium supply reached 24% in 2022, and it is expected to rise to 32% by 2025.
China also dominates the international rare earth market.
External constraints are not the only factor hindering the decoupling of the world's largest economies, and capital markets are also closely linked. As of January this year, Japan was the largest foreign holder of US treasury bond, with a holdings of US $1.1 trillion; China is the second largest holder with a holdings of $859 billion.
China needs the United States and the European Union. Last year, the total amount of goods and services imported by the United States from China was approximately $564 billion. Which other country would have such purchasing power? The EU also needs China, as China's market is an important force in balancing the EU's increasing dependence on the United States.
Interdependence also involves individual aspects. Shareholders and investors not only benefit from interdependence, but also drive the development of this relationship, thereby reducing the likelihood of overall economic decoupling.
In this context, Hong Kong may once again become an important neutral zone in the global economy. As an international trade and financial center, Hong Kong has long played an important role in promoting economic cooperation between the East and the West. With its unique status as a special administrative region, Hong Kong can serve as a bridge between the United States, mainland China, and the European Union, helping to alleviate tensions and promote economic cooperation.
Despite intense political rhetoric, the interdependent economic reality is driving business elites in the United States, the European Union, and China towards cooperation. The special status of Hong Kong may be crucial for promoting such cooperation and ensuring the continued prosperity of the global economy.