China-US summit : why the EU is more present than ever

Abstract

It would be in the long-term interest of the EU to take the lead in discussions about global monetary order and avoid being a passive spectator of decisions taken in Washington or Beijing. For China, a strong Euro is an important element to diversify risk, challenge the predominance of the US dollar and prepare the conditions for the emergence of a new monetary order where the Yuan will also have a role. This explains why the Chinese have repeatedly intervened in recent weeks to reassure markets and the Europeans that they will continue to buy more Greek, Portuguese and Spanish bonds. By doing so, they have helped keep the Euro afloat and the value of the Yuan down. China is indeed playing the European card in the tug-of-war with the US over currency valuation. In these days in Washington it is not only about the arrival of China on the world scene, but also of what the Euro has become in the past decade. It is also about the relations between the EU and China that, especially in economic and monetary dimensions, are challenging the US-led international order created in the aftermath of the Second World War.