EU crisis: Top official warns ‘we should prepare for the worst’ as US-China tensions soar

Both the US and China are strategically important partners for the EU, with both countries providing important markets for European goods. Every day Europe and China trade goods worth more than 1billion euros, while in 2018 the US imported 25.48 billion euros worth of German cars. Moreover, the US is a vital defence partner, that has ensured European security and stability in the post-war years.

However, EU officials worry that Europe’s economy could be severely affected as the EU increasingly gets dragged into the bitter dispute between the two superpowers.

Sabine Weyand, director general of the powerful trade department in the EU Commission, warned an audience of business leaders in Brussels that the EU economy faced an uncertain 2020.

She said: “When it comes to trade, we have a rough road ahead of us.

“We should prepare for the worst in 2020.”

Presidents Trump and Xi Jinping

Presidents Trump and Xi Jinping (Image: GETTY)

Michel Barnier and Sabine Weyand

Michel Barnier and Sabine Weyand (Image: GETTY)

She added: “We can see that US and China trade is increasingly used as a weapon in the struggle for technological and economic supremacy.”

Huawei provides a perfect example of the challenges Europe faces in protecting its economic and security interests, as China and the US fight each other for supremacy.

The Chinese telecom company was founded in 1987 by the former People’s Liberation Army engineer Ren Zhengfei.

It has grown to become the world’s top provider of telecom equipment, with over $100 billion in revenue and 180,000 global employees.

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Donald Trump

Donald Trump (Image: GETTY)

Huawei’s success has challenged US economic dominance, leading the Trump administration to take various measures against the company.

In May, the Commerce Department put Huawei on a so-called entity list, which bans American corporations from supplying foreign companies deemed potential security threats.

And as recently as August the White House released a rule that restricts government agencies from doing business with the Chinese telecom giant.

The rule covers direct purchases of telecom gear and video surveillance equipment and services.

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Xi Jinping

Xi Jinping (Image: GETTY)

Ren Zhengfei/Huawei founder

Ren Zhengfei/Huawei founder (Image: GETTY)

The US has also threatened its economic partners with reprisals if they don’t follow Washington’s lead in its dealings with Huawei.

This has caused a serious dilemma for Germany, which is considering whether to use Huawei components in its 5G network.

The US Ambassador Richard Grenell warned the German government that intelligence-sharing would be curtailed if it pressed ahead with its plans.

Brexit Moments

Brexit Moments (Image: EXPRESS)

To compound Germany’s problems, the Chinese Ambassador threatened economic reprisals against Germany if Huawei was excluded from the 5G network.

The ambassador said: “If Germany makes the decision to exclude Huawei from the German market, it will have consequences.”

The threat was directed at German car makers, such as VW, Daimler and BMW, which generate a third of their sales in China.

The European Union

The European Union (Image: GETTY)

All these factors are complicating the EU’s efforts to strike a trade deal with China.

Beijing is playing hardball in negotiations and the prospect of easier market access and better protection for European investors in China are still far away.

And so Ms Weyand sees no chance that the investment protection agreement between the EU and China that is planned for the end of 2020 will come into being.

Additional reporting by Monika Pallenberg 

source: express.co.uk