Angry China versus everyone in Cold War 2.0

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Via Bloomberg:

The European Union is hammering out the first bloc-wide rules to prevent foreign investments from threatening national security, as Chinese acquisitions foster political unease.

Negotiators representing EU governments and the European Parliament may agree on draft legislation to screen foreign direct investments on November 20, according to Franck Proust, a French member of the 28-nation assembly.

Both sides have settled on 95 per cent of the text and the goal at the meeting in Brussels is to bridge differences over the remaining part, which includes the politically sensitive matter of how far EU members can push concerns about FDI with their peers, said Proust.

As said a number of times, China’s campaign to steal its way to the top is an attack upon the entire trading world not just the US. Smart nations such as Germany are particularly vulnerable given their intellectual property advantages. That’s why it rejected Chinese overtures when the trade conflict began. Although it may not say so openly, Europe will be quietly cheering the Trump hard line on IP theft in its various forms.

The same China versus all dynamic blew up the APEC meeting, also at Bloomie:

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A U.S. official familiar with the talks said China balked at some language related to trade. At issue was a pledge by the governments to fight “all” unfair practices, which China objected to including in the statement, said the official, who asked not to be identified as the discussions were private. The 20 other nations endorsed the language, the official said.

Papua New Guinea’s Prime Minister Peter O’Neill said the issue of World Trade Organization reforms was the main cause of disagreement among leaders. Nations have been calling for key changes at the WTO, including around dispute settlement, while the Trump administration has threatened to pull out of the body if it doesn’t treat the U.S. more fairly.

The tensions reportedly boiled over as summit host Papua New Guinea tried to draft the communique. Agence France-Presse news agency said that Chinese officials attempted to “barge” into the office of the country’s foreign minister to influence the document. Chinese officials denied the report, which said police had to be called.

Add the recent revelations of embedded PLA spyware in Chinese chips and we can expect two things.

First, the push back against unfair Chinese trade practices will intensify worldwide in governments and corporations. We have repeatedly noted executives to date seeking a middle path between the US hard line and Chinese reprisal. But as the conflict grows, these will all fall in behind the US.

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Second, China will get more and more angry about it!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.