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The Diplomat
17 hours ago
- Business
- The Diplomat
The Poker Game Between the US, China, and Europe
The EU is badly squeezed between the United States and China – but it still has cards to play, including at the upcoming China-EU summit. European Commission President Ursula von der Leyen and European Council President António Costa will be in Beijing on July 24, for a tense meeting with Chinese Premier Li Qiang – and, hopefully, with President Xi Jinping, though this is still unclear. The former high representative of the EU for foreign relations, Josep Borrell, famously referred to the April 2022 China-EU online talks as a 'dialogue of the deaf,' and the visit of then-Council President Charles Michel and von der Leyen to Beijing in December 2023 was hardly more productive. So, given that a lot of the topics from the agenda of previous summits will still be hovering over the negotiating table, will things be any different this time around? Low Expectations This will certainly be a contentious summit, which could well evolve into a shouting match. The EU has long raised the issues of a stubborn trade deficit, persistent obstacles to market access in China, discrimination against European companies, and a lack of reciprocity in bilateral relations. At the G-7 summit in Canada last month, von der Leyen issued one of her strongest rebukes of China to date, accusing Beijing of export restrictions and state-subsidized overproduction that choked international competition. The European Parliament, too, has condemned Beijing's rare-earth export restrictions as 'unjustified and coercive' and criticized China's 'quasi-monopolistic position.' And while licensing for European firms has been loosened somewhat, the procedures remain suspiciously slow and arduous. Over the past six months, Beijing has deployed a carrot-and-stick strategy in its approach to the EU – which includes more sticks than carrots. As part of a diplomatic campaign to cajole Europeans, last April China lifted sanctions on some members of the European Parliament, while simultaneously making more threats, such as opening new investigations into European beverages, dairy products, and meat. In addition, China is fuming over the European Commission's announcement on June 19, a month before the Beijing summit, about restrictions imposed on Chinese medical device producers under the bloc's International Procurement Instrument (IPI). Beijing wasted no time to proceed immediately to a tit-for-tat move by barring European companies from major Chinese government medical device contracts. The inclusion of two Chinese banks in the blacklist under the 18th EU package of sanctions slapped on Russia is yet another major irritant for Chinese leaders. While Beijing vehemently refutes accusations that China is providing substantive support to Moscow's military machine, a recent European Council press release clearly set out the EU officials' talking points, some of which will by no means be palatable to Chinese interlocutors: 'EU-China relations and current geopolitical challenges, including Russia's war in Ukraine.' Beijing is unlikely to stop supporting Russia, a strategic partner of China's. In early July, Foreign Minister Wang Yi stunned his interlocutors in Brussels by telling them unceremoniously that China did not want to see Russia defeated in Ukraine, quite a departure from Beijing's standard song sheet about not being a party to the conflict. Notably, this is the same Chinese official who offered an olive branch to Europeans at the Munich Security Conference in February, in stark contrast to U.S. Vice President J. D. Vance's inflammatory speech. Beijing's charm offense, however, turned out to be short-lived and purely performative, and European officials are now convinced that China is not really interested in patching things up. If Xi stays away from the summit, which marks the 50th anniversary of China-EU diplomatic ties, this will be a significant signal in itself. The talks are not expected to deliver any major outputs, and have been dubbed by some analysts a 'non-summit.' The get-together is likely to yield a bland statement on jointly combating climate change, at best. If, however, there is a last-minute breakthrough and white smoke does come out of the Beijing summit, it could take the form of a Chinese order with European aerospace giant Airbus by prioritizing it over Boeing. On the other hand, this would trigger an angry response from Washington, particularly with a view to a possible meeting between Xi and U.S. President Donald Trump later this year. A Three-Sided Poker Game The parallel negotiations between the U.S., China and the EU look a lot like a poker game, not without the usual attempts at outsmarting and peeking at the other players' cards. For example, China's restrictions on the export of rare earth elements and magnets target primarily the United States but European firms, too, are caught in the crossfire. Yet another manifestation of the triangular relationship may be the fact that, in an attempt to find common ground with Washington, von der Leyen has visibly hardened her tone toward Beijing. To a certain degree, a trade agreement between Washington and Brussels by August 1 may affect a possible deal between the U.S. and China by August 12 – if these deadlines are not pushed back again. For instance, if Washington and Brussels were to seal an agreement similar to the U.K.-U.S. deal with tariffs generally as low as 10 percent, other trading partners would be put at a disadvantage, and Chinese officials have already made it clear that Beijing will retaliate. Trump has sent a letter to von der Leyen threatening to impose 30 percent tariffs on EU exports to the U.S. This took Brussels by surprise, as European officials were hoping that the EU could strike a deal along the lines of the agreement between Washington and London. While the European Commission is putting together a package of countermeasures in case the EU-U.S. negotiations fail, this is not Brussels' preferred course of action. Being in charge of the EU's common trade policy, the European Commission has to stick to its guns, as its mandate is to defend the interests of the entire bloc. It has already deployed a growing list of legal instruments vis-à-vis China. As for the U.S., a first round of retaliatory tariffs targeting 21 billion euros worth of American exports has already been approved, but suspended until August 6 to allow time for talks with Washington. Moreover, the Commission has reportedly proposed a second package that covers U.S. aircraft, cars, machinery, and farm produce worth 72 billion euros, though it awaits a green light and looks more like a bargaining chip at this stage. While on August 6 Brussels may have to hit back with the first salvo of retaliatory tariffs, it will probably think twice before moving on to the second package. And it is unclear at present whether there will be sufficient political will in Europe for the use of the so-called Anti-Coercion Instrument (ACI), widely referred to as Brussels' 'bazooka.' This is mainly why von der Leyen herself has repeatedly stated that the EU should continue to seek a negotiated solution to the dispute with Washington. Apart from the United States being the largest trading partner of the EU, geopolitics is another major factor to be reckoned with. It is clear that Europe doesn't have the capacity to ensure its own security outside the U.S. nuclear umbrella and without American weaponry. Hence the recent agreement, albeit a shaky one, on a hike of Europeans' defense expenditure to 5 percent of GDP over time, including the purchase of arms for Ukraine. Similarly, a number of EU member states would rather avoid a confrontation with Beijing. A recent report released by the European Think-tank Network on China (ETNC) and titled 'Quest for Strategic Autonomy? Europe Grapples with the U.S.-China Rivalry' pointed out that 'national approaches to economic security remain inconsistent, with some countries showing signs of skepticism or only limited engagement.' The Rules of the Game The EU is badly squeezed between the United States and China – there's no hiding it. It is between a rock and a hard place, and in the most disadvantageous position in the triangle. At present, Europe may not have the cards, as Trump would say, and most probably Xi is of the same view. Hence the U.S. president's brass-knuckles attitude toward Europeans and Beijing's snubbing of the EU that will be on full display at the July 24 summit. However, being a huge market and a key trading partner of both the U.S. and China, the EU does have its cards, as long as it plays its hand smartly, which requires a clear-cut strategy. The 2019 Strategic Outlook defined China simultaneously as a 'partner, competitor and strategic rival.' There are European voices insisting that six years later this triple definition needs to be updated and enriched with a fourth component, with China seen as a 'security threat,' even if an indirect one. This is amply illustrated by the alignment of Moscow and Beijing, and their crusade against the Western liberal order. Things are equally complicated when it comes to the transatlantic bond, brutally shattered by Trump. The U.S. president, as well as his predecessors, has a point in calling for increased defense spending in Europe and this is already being done, albeit grudgingly, by NATO members. But Trump's conviction that the EU was formed to 'screw' the U.S. leaves little room for negotiations on the basis of a well-structured and mutually agreed-upon agenda. Add to that his obsession with viewing international politics as a poker game, whereby unpredictability, bluffing, and threats will do the trick. Can Europe change the rules of the game, as it stands today? Most probably not. Therefore, it will have to resort to the ploys and ruses used by the other players. In doing so, the EU may actually draw some lessons from China. When the trade war broke out a few months ago, Beijing stood its ground and cornered Washington, despite Trump's lofty statements early into his second term. Following Trump's 'Liberation Day' show on April 2, the Chinese and U.S. tariffs skyrocketed to 125 percent and 145 percent, respectively. Then Wall Street freaked out, Chinese rare earths exports to the United States slowed to a trickle, and in late June the two sides reached a temporary agreement for Beijing to speed up exports of critical minerals to the U.S. and for Washington to lift recent export controls on China. As for the Euro-American trade dispute, August 1 may not be the end of the line. U.S. Commerce Secretary Howard Lutnick stated in a recent interview that August 1 was a 'hard deadline' and the new tariff rates would come in on that day, but he also hinted that negotiations could carry on, so there may be a number of additional talks down the road. Gradual diversification away from dependence on both the U.S. and China, part of the notion of 'strategic autonomy,' is another possible way out of Europe's predicament. The EU is actively looking for new trading partners and sources of critical raw materials, with von der Leyen recently hosting Indonesia's president in Brussels for talks on a bilateral free trade agreement (FTA). On July 23, a day before the Beijing summit, Costa is to attend a get-together with Japan, a significant economic and political partner of the EU. Negotiations for an EU-India FTA are also under way and last February the entire European Commission visited New Delhi. Meanwhile, Brussels has already signed FTAs with Singapore, Vietnam, and a partnership agreement with four Mercosur countries. This is not very different from China's pursuit to co-opt the Global South, even if the developing world does not have the purchasing power and absorptive capacity of the U.S. and the EU. But even opening up to other corners of the world may not be enough. The biggest challenge for the EU will be to clean up its own act at home. Having 26 policies too many on every single issue in the 27-member bloc is an inherent European weakness that needs to be addressed as a matter of urgency. Speaking with one voice and not hesitating to play one's strong cards is an imperative, if the EU is to be taken seriously in the complex poker game in the China-Europe-U.S. triangle.
The Diplomat
2 days ago
- Business
- The Diplomat
What's Holding Back ASEAN on Renewable Energy?
The region's leaders must demonstrate the political will necessary to align national interests with a collective, climate-resilient future. 'We're baking bread in a dirty oven inside an enclosed room,' reflected Finian Lim, who leads public affairs at Trinasolar Asia Pacific. The main ingredients for solar energy – technology and capital – are already in place, he said. But in the absence of the right policy conditions, we might suffocate before we get to eat. Lim's metaphor, shared this week during a PRCA Asia Pacific webinar on ASEAN's energy transition, captures the challenge the region now faces. Southeast Asia stands at an important point in its energy transition. Electricity demand across the ASEAN bloc is projected to grow by 30 percent by 2030, fueled by expanding urban populations, rising incomes, and increased digitalization. Across ASEAN, governments are already demonstrating that rapid clean energy deployment is possible under promising conditions. Take Vietnam, which in 2020 became the third-largest solar market in the world, installing more than 17GW of capacity, far surpassing its 2025 targets. The growth was based on government subsidies, supplemented by a coherent feed-in tariff policy, clear timelines, and an open posture toward private capital. Indonesia and Vietnam have struck multibillion-dollar Just Energy Transition Partnerships (JETPs) with G-7 nations and multilateral lenders. These frameworks aim to accelerate coal phaseout and unlock renewable projects through concessional financing and capacity-building. Even Singapore, constrained in terms of land and natural resources, has positioned itself as a green finance and technology hub, introducing regional taxonomies – official definitions of what economic activities are 'green' or sustainable – and disclosure frameworks, to attract and direct both Singaporean and foreign funds into regional climate-aligned investments across ASEAN. In 2023, the region attracted just $32 to $40 billion in clean energy investment, far below the funds required (estimated at between $150 to $200 billion annually). Singapore's growing role in catalyzing international investments for ASEAN's energy ecosystem may help narrow this gap. On the technology front, the tools needed to decarbonize are no longer speculative. Smart microgrids – combining solar generation, battery storage, and digital control systems – are already being deployed in off-grid communities across Indonesia and Malaysia. In parallel, Singapore-founded digital services firm Temus has co-developed an environmental intelligence platform that integrates AI, sensors, and data to enhance visibility into carbon stocks, biodiversity, and land use. These digital platforms are helping to monetize natural capital and support more sustainable investment decisions in resource-rich geographies like Indonesia. AI-enabled energy management systems (EMS) are also increasingly critical for optimizing grid operations, allowing real-time balancing of supply and demand. Without such dynamic optimization, ASEAN could face systemic disruptions, similar to the brown-outs in Spain during its 2021 solar surge or California's rolling blackouts in 2020, where mismatches between generation and demand overwhelmed grid stability. Thailand's Provincial Electricity Authority, for example, has deployed EMS pilots that reportedly reduced peak loads by as much as 8 percent. Meanwhile, modular solar and battery energy storage systems are proving their viability in archipelagic states. In the Maldives, an Asian Development Bank-backed project has delivered solar and storage systems across more than 160 islands, slashing diesel dependency and saving millions annually in fuel costs. On top of being proven and commercially viable, the cost of solar PV and battery storage has dropped by more than 80 percent and 70 percent, respectively, over the past decade. What's now required is the policy infrastructure to scale their deployment across the region. In 2022, Singapore began importing renewable energy through the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), marking the first time clean electricity generated in Laos was transmitted across three borders and consumed in Singapore. Technically, LTMS-PIP worked. But the underlying policy architecture has not kept pace. ASEAN still lacks harmonized rules for renewable energy certificates, emissions factors, and carbon accounting. Without regulatory coherence, electricity may flow, but markets won't move. For instance, the ASEAN Power Grid was first conceived and formally articulated in 1997 to integrate national grids into a single regional network, enabling large-scale cross-border renewable trade. But progress has been uneven, hindered by slow policy alignment and fragmented bilateral arrangements. At its core, ASEAN's institutional model, which is built on consensus decision-making, makes regulatory convergence a slow and complex process. To fill the gap, some nations have turned to 'minilateralism': smaller, interest-aligned groupings aimed at specific challenges. LTMS-PIP is a prime example. This was not launched under ASEAN's formal architecture; it was a bilateral deal (Singapore-Malaysia) with Thailand and Laos serving as transit points, which worked because it was pragmatic and narrowly scoped. That said, even promising approaches like minilateralism have their limits. Geopolitical divisions within the region continue to complicate the broader multilateral cooperation needed to scale and replicate these solutions across ASEAN. Longstanding disputes, from Mekong River water-sharing issues to overlapping claims in the South China Sea , risk eroding trust and slowing cross-border infrastructure alignment. Domestic obstacles remain just as pressing. Many ASEAN countries still operate with outdated grid infrastructure, ill-equipped to absorb the variability of solar and wind power at scale. More than 3.4 million households across the region remain without access to electricity, and clean cooking solutions elude nearly 167 million people, according to the International Energy Agency. In addition to requiring technology and financing alone, energy transitions also require broad-based legitimacy. This is where public affairs plays a critical role. As Lim put it during last week's conference, ASEAN's clean energy future will depend on 'connectors, navigators, and advocates.' Solar energy, for example, gains legitimacy not just when it delivers power, but when citizens understand how it lowers long-term energy costs, reduces emissions, and supports local employment. A successful green transition in ASEAN could add up to $5.3 trillion to the region's collective economy and create up to 66 million new jobs by 2050, according to the World Economic Forum. The tools for this transition exist. But to unlock these gains, ASEAN leaders must demonstrate the political will necessary to align national interests with a collective, climate-resilient future.
Straits Times
5 days ago
- Business
- Straits Times
Trump says Brics ‘will end very quickly' if they ever form in a meaningful way
An attendant stands next to South African, Indian, Russian, Brazilian and Chinese flags during a plenary session of Brics Summit, in Xiamen, China on Sept 4, 2017. WASHINGTON - US President Donald Trump on July 18 repeated his threat to slap a 10 per cent tariff on imports from members of the Brics group of developing nations and said the group would end very quickly if they ever formed in a meaningful way. "When I heard about this group from Brics, six countries, basically, I hit them very, very hard. And if they ever really form in a meaningful way, it will end very quickly," Mr Trump said without naming the countries. "We can never let anyone play games with us." Mr Trump also said he was committed to preserving the dollar's global status as a reserve currency and pledged to never allow the creation of a central bank digital currency in America. Mr Trump announced the new tariff on July 6, saying it would apply to any countries aligning themselves with what he called the "Anti-American policies" of the Brics group. With forums such as the G-7 and G-20 groups of major economies hamstrung by divisions and the disruptive 'America First' approach of the US president, the Brics group is presenting itself as a haven for multilateral diplomacy. Since issuing the threat, Mr Trump has repeatedly claimed without evidence that the group was set up to hurt the United States and the dollar's role as the world's reserve currency. Brics leaders have rejected the claim that the group is anti-American. Top stories Swipe. Select. Stay informed. Singapore Critical infrastructure in S'pore under attack by cyber espionage group: Shanmugam Singapore What is UNC3886, the group that attacked Singapore's critical information infrastructure? Singapore Alleged Kpod peddler filmed trying to flee raid in Bishan charged with 6 offences Asia Indonesia court jails former trade minister for 4½ years in sugar graft case Singapore Singapore police in contact with Indonesian authorities over baby trafficking allegations Singapore NTU upholds zero grade for student accused of using AI in essay; panel found 14 false citations or data Singapore 7-year-old girl, cabby taken to hospital after vehicle pile-up in City Hall area Singapore Former NUH male nurse charged after he allegedly molested man at hospital Brazil in February nixed plans to push for a common currency during its presidency this year, but the group is advancing work on a cross-border payment system known as Brics Pay that would facilitate trade and financial transactions in local currencies. The Brics group expanded in 2024 beyond Brazil, Russia, India, China and South Africa to include members such as Iran and Indonesia. Leaders at the group's summit in Brazil voiced indirect criticism of US military and trade policies. Mr Trump has also taken aim at Brazil specifically, announcing a 50 per cent tariff rate on its imports, starting in August, and launching a separate investigation into what Washington called Brazil's "unfair" trading practices. REUTERS
Mint
6 days ago
- Business
- Mint
The Brics coalition is starting to gel into a real threat to the West
President Donald Trump announced last week that not only would he be placing a 50% tariff on Brazil, but he would also impose an additional 10% tariff on its fellow Brics members in an effort to counter the group's 'anti-American policy." The coalition—led by Brazil, Russia, India, China and South Africa—had just days prior renewed their pledges of solidarity and cooperation at its annual summit in Rio de Janeiro. The global-leadership">group has long been dismissed as a collection of developing countries with little in common other than historical border disputes and troubled economies. But in recent years, it has expanded beyond its original membership to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates and has extended invitations to Saudi Arabia. Turkey, Mexico, and others have applied for membership. Some of these countries lack punch or significance on their own. But they have all been carefully chosen to add to the coalition's collective strengths and levers of global influence. The Trump administration's tariffs may be an overreaction to this—but there are signs the group is methodically threatening the economic and geopolitical hegemony of the U.S. Brics is for China what the G-7 and the European Union are for the U.S. The G-7 and the EU, however, want for resources Brics is rich in. Brics dominates global production in magnesium, aluminum, and antimony, all of which are needed for ammunition production. It has more rare earths, industrial metals, and grains than the G-7, and produces more oil. The group also owns almost double the precious metals reserves of the G-7 and EU combined. Overall, Brics has significant advantages in the artificial intelligence and clean energy revolution. Iran, South Africa, Egypt, the U.A.E., and Indonesia control four of the world's six most important maritime chokepoints. And Brics member countries have a still-growing consumption base, with demographic growth trends exceeding the West's for at least the next 35 years. It is also emerging as a defense pact, with nuclear capabilities that counterbalance NATO's. From China and Iran aiding Russia in its war against Ukraine, to declarations regarding the attacks on Iran and the war in Gaza, Brics appear increasingly less shy about asserting its ambitions in the geopolitical arena. The Trump administration's swift push for a cease-fire in last month's conflict between Israel and Iran averted any opportunity for China or Russia to get involved. But their recent declarations of solidarity in Rio shows that the incident didn't go unnoticed. The U.S. still has the world's dominant currency. But Trump seems anxious about that, too. In January, his administration threatened to impose 100% tariffs on Brics if it attempts to de-dollarize. It has already developed multiple payment systems that successfully bypass the dollar settlement system, allowing Russia to evade U.S. or EU sanctions. These payment systems, however, don't amount to de-dollarization, as many of them are implicitly or explicitly pegged to the U.S. dollar. But they do show that the members are willing and able to devise ways that avoid the reach of the U.S. Everything suggests the adoption of a common currency will one day become one of Bric's goals, although that would take at least a decade to become reality. Meanwhile, Brics has expanded its intragroup trade by close to 200%—at the expense of imports from the G-7—in response to U.S. tariffs and the war in Ukraine. This has worked to keep Russia afloat. It has also acted as a hedge for China, which has seen U.S. and European markets shut out its products. While Brics cannot replace the U.S. as a destination for China's exports, they can certainly cushion the blow of tariffs on the Chinese economy. Trump's tariffs can only go so far to impede these short-run ambitions. But tariffs issue a significant message to the Brics coalition for the longer term: The member countries will need to disentangle their economic dependency on the West. From an investor's perspective, that means the emerging markets in Brics will profoundly change. Their opportunities, risks, and accessibility need rethinking by investors, both at a single asset and portfolio level. Maria Vassalou is the head of the Pictet Research Institute, part of the Geneva-based bank and asset manager Pictet.
The Hindu
14-07-2025
- Business
- The Hindu
Too close for comfort: On America's tariff and U.S.-Canada ties
On July 10, U.S. President Donald Trump announced a 35% tariff on Canadian imports, despite Ottawa rescinding a 3% digital services tax (DST) that was to go into effect on June 30; Mr. Trump had dubbed this as an 'attack on American firms'. Canada expected that it would generate about $5 billion from DST on revenues from Canadian-source digital services over five years dating it back to January 1, 2022. The 35% tax was imposed despite ongoing trade talks, which Canada was hoping would result in a trade deal by July 21 — as agreed upon between Canadian Prime Minister Mark Carney and Mr. Trump on the sidelines of the G-7 summit in mid-June. The new 35% tax, that was conveyed to Mr. Carney through a letter, which Mr. Trump sent to more than 20 U.S. trading partners, is likely to exempt items compliant under the 2018 United States-Mexico-Canada Agreement. Canada and the U.S. are each other's largest trading partners. In fact, despite Mr. Trump's constant refrain about the flow of fentanyl, the opioid coming through America's northern borders (less than 0.1% of what lands in the U.S.), what has rankled the American President is the trade surplus of about $63 billion in Canada's favour. This on-again-off again approach to tariffs as a stick against America's trading partners has forced even steadfast allies such as Canada to scramble to diversify. Hours before receiving Mr. Trump's letter, Mr. Carney posted a picture of himself with British Prime Minister Keir Starmer on X, saying, '... the world is turning to reliable economic partners like Canada.' America's action against Canada brings to mind a similar episode about a decade ago between close neighbours, India and Nepal. India closed land ports following the enactment of Nepal's new Constitution citing fears about the treatment of the minority Madhesi community that has had close ties to India. This action crippled Nepal's land-locked economy that was entirely reliant on Indian ports such as Kolkata and Visakhapatnam for its trade. Acute fuel and medicine shortages followed. Nepal's GDP collapsed from 3.3% in FY15 to 0.2% in FY16, and Nepalis began harbouring a deep resentment toward India. New Delhi's move forced Nepal to recalibrate its foreign and economic policy, eventually leading it to join China's Belt and Road Initiative in 2017 and accepting massive infrastructure funds from Beijing, much to New Delhi's dismay. This episode, between two vastly different nations, would serve Washington well to realise that mending a trade imbalance must not come at the expense of losing one of its closest allies with deep running cultural and linguistic ties, as Canada, with an economy that is one-eleventh that of the U.S. albeit with a trade surplus, now attempts to redraw its foreign and economic strategies.
