Presentation at the Global Interdependence Center\u2019s (GIC, Philadelphia) Conference in Prague\u00a0\u00a0at the Czech National Bank on June 14, 2010<\/p>\n
Introduction<\/p>\n
China, the U.S. and Europe (European Union, EU) are the economic powerhouses of the world. Much is regularly written about the relations between the U.S. and China, focusing both on political and on economic ties between the two countries. Relations between EU and China are discussed less frequently in the daily and weekly media.\u00a0<\/p>\n
There are several reasons for this emphasis on the relations between the U.S. and China. First, the U.S. and China are two powerful independent countries with their own decision-making.\u00a0 Second, Congress appears to hold more openly discussed views on China than officials within EU. Third, U.S. officials have in the past years expressed their irritation about China\u2019s undervaluation of the renminbi much more clearly and frequently than leading representatives of the EU have done. In particular the currency issue has frequently made headlines, partly because of China\u2019s various strong reactions against foreign (American) verbal exchange rate interventions.\u00a0\u00a0<\/p>\n
On the other hand, the Chinese see the European Union \u2013 we discuss Europe in this context as the EU \u2013 as an economic organization rather than a political one.1\u00a0 This is an important distinction to keep in mind. Furthermore, the EU is regarded as a very complex organization, quite hard to deal with. The Chinese hardly understand why national interests dominate EU meetings in these very difficult times. In Asia there is instead a desire for more harmony in the region when international problems are on the rise, but also more respect for the largest economy (i.e. China) \u2013 contrary to what Germany is currently experiencing.<\/p>\n
Limited tensions between China and the EU are usually caused by (smaller) trade frictions, sometimes also by varying interpretations of free trade and environmental improvements. But more interesting issues regarding China and the EU show up currently and will continue to do so in the (forthcoming) aftermath of the global and European crisis. This may concern both microeconomic and macroeconomic developments.<\/p>\n
China manifests itself as a country that increasingly has to be watched by means of interdisciplinary research. Politics, sociology, the environment and even psychology should be included in a future economic analysis. Pure macroeconomic analysis cannot capture China\u2019s economic future.<\/p>\n
This should be said despite the methodological difficulties that exist in interdisciplinary economic modeling. The current economic crises in some EU countries tell us, for example, that reasonable forecasts on European growth and financial markets for at least some years ahead cannot be made without including the political ability of reducing large fiscal deficits. And getting back to China: What will the new Chinese political leadership go for when it comes into power only a few years from now? China\u2019s economy is \u2013 as we well know – very closely linked to the political leadership of the country.<\/p>\n