Credit:<\/span>AP<\/cite><\/p>\nThe EU sanctions were the first it has imposed on China since the Tiananmen Square massacre in 1989 and came just ahead of US Secretary of State Antony Blinken\u2019s arrival in Brussels in the latest leg of his whirlwind tour of traditional US allies as the new Biden administration tries to repair the damage done by Donald Trump\u2019s \u201cAmerica First\u201d approach to international relations.<\/p>\n
Joe Biden\u2019s virtual meeting with the leaders of Australia, Japan and India last week, and in-person meetings between Blinken and US Secretary of Defence Lloyd Austin in Japan and South Korea was designed to shore up US relations in the Asia Pacific.<\/p>\n
Now Blinken wants to follow up a thawing of trade hostilities with Europe that developed under the Trump administration \u2013 earlier this month the US and EU agreed to suspend all tariffs linked to a dispute over subsidies to Boeing and Airbus \u2013 with an attempt to restore relations with the EU and NATO.<\/p>\n
The international sanctions triggered an immediate and hostile response from China and the way an angry China responded to the EU\u2019s sanctions won\u2019t hurt Biden\u2019s cause.<\/p>\n
On December 31 last year China rushed to sign an investment pact with the EU \u2013 despite the EU being urged by the incoming Biden team not to ink the deal before it had an opportunity to discuss common concerns about China\u2019s economic policies and human rights abuses.<\/p>\n
The EU signed up, conditionally, anyway after China\u2019s Xi Jinping ordered his team to make last-minute concessions to get the deal done before Biden was inaugurated and to create a hard-to-remove wedge between the incoming administration and the EU.<\/p>\n
The agreement gave the EU greater access to China\u2019s markets and is supposed to abolish forced technology transfers and create greater transparency around state subsidies for industry.<\/p>\n
China\u2019s decision to target members of the European Parliament who have been critical of its policies has created uncertainty as to whether the investment pact will be formally ratified by the EU, with members of the parliament warning that China\u2019s sanctions put the deal at risk and that lifting them was now a pre-condition for ratification of the agreement.<\/p>\n
That keeps alive the Biden administration\u2019s hopes of enlisting the EU and its massive market for Chinese goods \u2013 along with its traditional allies in the Asia Pacific and, perhaps, unaligned countries like India that have friction in their own relations with China – in its efforts to contain China\u2019s economic and geopolitical ambitions.<\/p>\n
The obvious co-ordination behind the various Uighur-related sanctions announced by the US, EU, UK and Canada will concern China\u2019s leadership. It could be a foretaste of worse to come if the pre-Trump band really does get together again.<\/p>\n
The flurry of activity \u2013 and the acrimonious first meeting between senior US and Chinese officials in Alaska last week, where both sides used blunt and very undiplomatic language to criticise each other \u2013 has rebutted any suggestion that the Biden administration will be softer than its predecessors on China.<\/p>\n
Indeed, ahead of the Alaskan meeting, the administration imposed sanctions on another 24 Chinese officials for their actions in reducing Hong Kong\u2019s autonomy after China decided to introduce a \u201cpatriotism\u201d test for public officials in Hong Kong. That set the tone for the meeting.<\/p>\n
China is understandably unhappy with the latest Xinjiang-related sanctions, saying they were based on \u201cnothing but lies and disinformation,\u201d disregarded and distorted facts and grossly interfered in China\u2019s internal affairs. It also said they \u201cseverely undermined\u201d China-EU relations, which the US will see as a win.<\/p>\n
China\u2019s concerns about western sanctions is that its reach is limited outside its own jurisdiction whereas sanctions imposed by the US and its traditional allies have far wider application because of the US dollar\u2019s role in the global financial system and global trade.<\/p>\n
Those individuals and entities sanctioned in China and Hong Kong lose access to the international financial system and any assets they have offshore are at risk of being frozen.<\/p>\n
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Hong Kong lawmakers \u2013 including Hong Kong\u2019s chief executive, Carrie Lam \u2013 have, for instance, lost access to their bank accounts and credit cards because US sanctions and the power of the dollar in global finance have forced even non-US banks operating in Hong Kong and China to comply with its directions.<\/p>\n
The two countries most impacted by western sanctions \u2013 China and Russia \u2013 have been trying to develop a response to dollar domination and the weaponisation of the dollar-centric global payments system by first Trump and now Biden. It will inevitably be a topic of discussions this week during a two-day visit to China by Russia\u2019s foreign minister, Sergei Lavrov.<\/p>\n
China and Russia have been trying to denominate their own trade deals in each other\u2019s currencies and encourage the use of the renminbi and rouble in transactions with other countries \u2013 in China\u2019s case \u201cde-dollarisation\u201d is one of the ambitions of its \u201cBelt and Road\u201d initiative.<\/p>\n
They\u2019ve had limited success. While the use of China\u2019s currency has increased it remains at low levels and the US dollar\u2019s share of global foreign exchange reserves and trade invoicing, while somewhat lower than its peak, remains dominant.<\/p>\n
Their best hope was to capitalise on Europe\u2019s disenchantment and disengagement from Trump\u2019s America, its own long-held ambitions for a larger role for its own currency and its resentment over the profligacy with which the Trump administration wielded the dollar\u2019s dominance without consultation.<\/p>\n
The energy and alacrity with which the Biden team is re-engaging and its prioritisation of alliances over its own immediate interests \u2013 making the removal of China\u2019s trade sanctions on Australia\u2019s exports a pre-condition for any meaningful improvement in its own relationship with China, for instance \u2013 is, however, a demonstration of Biden\u2019s commitment to rebuilding what Trump fractured.<\/p>\n
The obvious co-ordination behind the various Uighur-related sanctions announced by the US, EU, UK and Canada will concern China\u2019s leadership. It could be a foretaste of worse to come if the pre-Trump band really does get together again.<\/p>\n
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