Why is European Union so irrational in regards to trade with China?

In summary, the EU and China have agreed to avoid any trade protectionist measures. The US is behind this decision because China owns a lot of US debt and this helps to monetize the debt. Japan is the country with the most public debt to GDP, but the difference is that Japan's debt is mostly owned by the Japanese.
  • #1
Tosh5457
134
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The trade balance between EU and China is -156.3€ billions, yet today EU agreed with China (http://uk.reuters.com/article/2012/09/20/uk-eu-china-summit-idUKBRE88J0QR20120920) to avoid trade protectionist measures. They keep doing this because China keeps buying EU countries' bonds and has many euro-denominated assets. I honestly think EU is selling itself, by giving money and economic power to foreigners. And this could be handled differently even with the debt EU countries have. For example, Japan is the country who has the most public debt to GDP (230% in 2011 - http://en.wikipedia.org/wiki/List_of_countries_by_public_debt), well ahead European Union's. But the difference is that Japan's debt is mostly owned by the Japanese (http://www.usatoday.com/USCP/PNI/MONEY/2012-01-08-PNI0101biz-ask-stevePNIBrd_ST_U.htm), so the interest money goes to their citizens.

The trade balance of China and US is also terrible for US. What is the West doing? Where does this irrationality come from?
 
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  • #2
Interesting article I came across today:
http://www.bbc.co.uk/news/world-us-canada-19667754
Perhaps the moment in Britain's decline that American policy makers should be focussing upon is 1956. During the crisis caused by an Anglo-French invasion of Egypt, the US stopped the fighting by threatening to pull the plug on the British economy.

It marked the end of Britain's ability to act as an independent global power, and it was the country's indebtedness to the US that caused it.
 
  • #3
Tosh5457 said:
The trade balance between EU and China is -156.3€ billions, yet today EU agreed with China (http://uk.reuters.com/article/2012/09/20/uk-eu-china-summit-idUKBRE88J0QR20120920) to avoid trade protectionist measures. They keep doing this because China keeps buying EU countries' bonds and has many euro-denominated assets. I honestly think EU is selling itself, by giving money and economic power to foreigners. And this could be handled differently even with the debt EU countries have. For example, Japan is the country who has the most public debt to GDP (230% in 2011 - http://en.wikipedia.org/wiki/List_of_countries_by_public_debt), well ahead European Union's. But the difference is that Japan's debt is mostly owned by the Japanese (http://www.usatoday.com/USCP/PNI/MONEY/2012-01-08-PNI0101biz-ask-stevePNIBrd_ST_U.htm), so the interest money goes to their citizens.

The trade balance of China and US is also terrible for US. What is the West doing? Where does this irrationality come from?

What is their trade debt holdings of foreign nations vs debt out?

For example, $4.74 trillion of US debt was owned by foreign countries. And the US owns about $6.76 trillion of foreign debt.

http://www.treasury.gov/press-center/press-releases/pages/tg1285.ASPX
 
  • #4
Everyone is out of ideas as to who will fund more massive spending debt. China is handy and so having them buy the debt allows the leaders in the West kick the can down the road a little longer. The US prints its own money so it can monetize its debt at the cost of inflation. The EU may make moves in that direction as well.
 
  • #5
Tosh5457:

German 10 year bonds offer 1,5% per year, while in the same time inflation should be round 2% (now it's 2,2%)

It means that effectively you would pay Germans 4,8% of your deposit in real terms for asking them to keep it for ten years. Do you consider that as a poor business for those in Europe? (not mentioning gains from increased trade exchange)
 

1. Why does the European Union impose tariffs on Chinese goods?

The European Union imposes tariffs on Chinese goods in order to protect its domestic industries and promote fair competition. This is because China has been accused of engaging in unfair trade practices, such as dumping (selling goods at a lower price than their production cost) and subsidizing its industries, which can harm European businesses and lead to job losses.

2. How does the European Union determine which goods to impose tariffs on?

The European Union uses a number of factors to determine which goods to impose tariffs on, including the level of competition from Chinese imports, the impact on domestic industries and jobs, and the potential for retaliation from China. The decision is also based on the principles of free and fair trade, as well as the EU's trade agreements and policies.

3. Why does the European Union have a trade deficit with China?

The European Union's trade deficit with China is mainly due to the fact that it imports more goods from China than it exports. This is partly because Chinese goods are often cheaper than European goods, and also because EU countries have different levels of industrialization and specialization, leading to different trade patterns with China.

4. How does the European Union address human rights concerns in its trade with China?

The European Union has a number of mechanisms in place to address human rights concerns in its trade with China. This includes the incorporation of human rights clauses in its trade agreements, regular human rights dialogues with China, and the use of trade sanctions or restrictions in cases of serious human rights violations. However, critics argue that these measures are not always effective in promoting human rights in China.

5. How does the European Union's trade with China impact its economy?

The European Union's trade with China has both positive and negative impacts on its economy. On the one hand, it provides consumers with access to cheaper goods and can create new market opportunities for European businesses. On the other hand, it can lead to job losses in certain industries and contribute to the EU's trade deficit. The EU also faces challenges in ensuring a level playing field with China due to its different economic and political systems.

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