Advertisement

Book of the week: the problems with Chinese trade

Book review: The Silk Road Trap Jonathan Holslag argues that Beijing has repeatedly outmanoeuvred Brussels by getting Europe to open its markets in return for vague promises that the Chinese will do the same.

The-Silk-Road-Trap-150

How China's Trade Ambitions Challenge Europe

Polity Press, £14.99

We hear a lot about American complaints that China isn't playing by the rules of global trade, but Europe has much more cause to be bitter. Jonathan Holslag argues that over the last 20 years Beijing has repeatedly outmanoeuvred Brussels by getting Europe to open its markets in return for vague promises that the Chinese will do the same. Needless to say, those promises from the People's Republic have never come close to being fulfilled.

Advertisement - Article continues below

China still imposes a huge number of restrictions on imports from Europe, as well as on investment by European firms into China, which are required to share intellectual property if they want to take part in projects. At the same time, China heavily subsidises its domestic firms, many of which are owned by the state, and are therefore allowed to run up huge debts, which the state-owned banks continually roll over. In some cases, Chinese firms engage in outright dumping, deliberately selling products far below the cost of production, in order to drive foreign rivals out of business.

Advertisement
Advertisement - Article continues below

Some people argue that although China hasn't opened up its market to the same extent as Europe, the European consumer has still benefited from a stream of cheap imports. Holslag has little time for this argument, pointing to Europe's chronic trade deficit with China, which has resulted in Europe accumulating large levels of public and private debts. Indeed, some countries, such as Greece, are now so indebted to China that they are essentially becoming Chinese colonies. He also worries that as China climbs the development ladder, producing ever more sophisticated goods, Europe is reduced to selling raw materials and agricultural products.

Advertisement - Article continues below

It's a stark warning, especially since Holslag provides a lot of data to illustrate the unequal flow of goods and capital between Europe and the Asian superpower. Still, it's hard to avoid the impression that we've heard a lot of this before 30 years ago, for example, when everyone worried about the rise of Japan, only for it to experience a "lost decade". The same could easily happen again. Chinese growth is starting to slow, and cracks are appearing in its financial system.

The Silk Road Trap is a one-sided look at the problems with Chinese trade, which dismisses any benefits. And it's a pity Holslag didn't spend more time on China's "soft power" efforts to lobby European policymakers, and the increasingly sinister co-operation between Chinese state firms and the military. Still, the book provides a powerful counterpoint to the increasingly complacent attitudes of European (and British) policymakers to a country that combines authoritarian politics with a state-directed economic system.

Advertisement
Advertisement

Recommended

Visit/spending-it/films/600911/theatre-review-the-visit
Films

Theatre review: The Visit

Friedrich Dürrenmatt's Swiss classic The Visit, transported to 1950s America, poses the question: how much would you kill for?
28 Feb 2020
Visit/519325/six-contrarian-books-for-christmas
Films

Six contrarian books for Christmas

Merryn Somerset Webb picks six of her favourite contrarian books to help you look clever and perhaps win a few arguments over the Christmas dinner tab…
9 Dec 2019
Visit/513323/coming-to-terms-with-anna-sorokin
Films

Coming to terms with Anna Sorokin

My Friend Anna: The true story of the fake heiress of New York CityWilliams is a solid writer who does a good job of explaining how she, and other int…
21 Aug 2019
Visit/513324/book-in-the-news-the-inside-story-of-spains-tumultuous-crisis
Films

Book in the news… the inside story of Spain’s tumultuous crisis

After the Fall Crisis, Recovery and the Making of a New SpainA book that goes beyond politics to offer a deeply sympathetic portrayal of a country.
21 Aug 2019

Most Popular

Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/investments/stockmarkets/601611/nasdaq-all-time-high-markets-and-the-real-economy
Stockmarkets

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020
Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020