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November 2009
Wolfgang Clement, Adecco Institute Chairman
The front page of a recent copy of The Economist, the renowned London-based business magazine, caught my attention. Under the headline "The odd couple", is a picture of Uncle Sam and Chairman Mao sitting up in bed together like a bride and groom on their wedding night, with a red rose lying on the cover in front of them.
After looking a bit more closely at the front cover, however, I noticed that Uncle Sam, in his stars and stripes hat, was looking noticeably more suspicious than his bedfellow Mao Zedong. Evil be to him who evil thinks – Mao is the more relaxed of the two, having casually hung his green hat with its red star on the bedpost. Obviously, China, as the rising power, is looking more optimistically into the future than the USA, even in times of economic crisis. Nevertheless, this portrayal of a symbolic partnership between what remain contrasting systems shows that the message from the American-Chinese meeting held in July of this year, which has already been boldly referred to as a “G2 summit”, has got through to Europe too. This summit heralded a new economic duopoly, precisely as alluded to only recently by President Obama. “Cooperation, not confrontation” is his declared objective in terms of relations with China. After all, American-Chinese relations are expected to dominate the events of the 21st century.
This would indeed be a major development that would, of course, impact on the role of the G20. Ten years ago, the world’s leading industrialized countries and the European Union came together, with the involvement of policymakers and central banks, to create a high-caliber platform from which to preside over the world's economic and financial woes. Naturally, China and the USA were included in this group. And just a few weeks ago, this platform was again a crucially important one when it came to defining concerted measures in the face of the global banking crisis and agreeing on a joint course of action.
We Europeans have of course been observing changes to the global economic structure for some time now. The leading Western industrialized nation and China, in its capacity as a new global economic power, are increasingly setting the tone on the international stage. And just to be absolutely clear about this – I very much welcome this cooperation between the largest debtor in the world, the USA, and its largest creditor, the People’s Republic of China.
The intertwining of the largest industrialized nation in the West with its gigantic public debt in excess of 1.85 trillion dollars owed to the People's Republic is exceptionally significant in the current financial and economic crisis. I would even, albeit cautiously, go so far as to refer to a new balance of power. The Chinese central bank now holds US Treasuries worth more than 800 billion US dollars. Holding such a huge amount of US government bonds gives China considerable influence over American economic, financial and monetary policy, but at the same time also highlights just how important it is to Beijing that the economy of its main debtor continues to function properly. The weaker the dollar becomes, the more value will be lost from China’s huge dollar reserves. This interdependence, as bizarre as it might sound, is a stabilizing factor in the current rounds of global crisis management. It is being supplemented by the enormous sums of public money, designed to boost growth, that are being pumped into the economy by both the Obama administration and those responsible in Beijing, in an effort to get the economy moving again. Ultimately, this injection of funds is also in Europe's interests.
But what role will the old continent assume in a world that is apparently, from an economic perspective at least, moving towards new centers of gravity? A glance at the statistics shows that Europe, and specifically the European Union whose ranks have swelled to 27 member states and almost 500 million people, remains the world’s strongest economic power, followed by the USA and, still some way behind, China. To take an example, the Chinese per-capita national product is currently around one fourteenth of the US level, which also demonstrates the extent to which the hard economic facts are sometimes obscured by the heady rates of growth notched up in Asia.
Nevertheless, the Europeans have themselves to blame if they have been pushed into the wings irrespective of their performance levels. After all, they are only rarely viewed as a single entity on the global stage. Rather, they are frequently perceived as fragmented individual states who are more interested in presenting their interests to the USA or China in a bilateral context than in pooling European resources. The member states of the European Union undertook, in the Lisbon Treaty, to do everything they could by 2010 to consolidate Europe’s leading economic and technological role in the world.
It seems almost ironic that it is now a very highly respected US institution, the Council on Foreign Relations, that is calling for urgent action from the Europeans to present a more united front to America. According to the study, President Kennedy, back in 1962, said that he did not see any rivals in a strong and unified Europe, but simply a partner. That was during the Cold War, which threw Americans and Western Europeans together. Since then, however, each US administration has of course attempted to impose its own interests over those of a divided Europe. According to the experts from the Council on Foreign Relations, this is still the case.
They are quoted in the study: “In Chorus, not solo, if they are to count for something in Washington’s world view, Europeans need above all to speak and act together, thus bringing their collective weight to bear. This is true in relation to the US as it is in relation to Russia or China – only even more difficult.”
The warning could scarcely be any clearer. I also understand it as an appeal to the Europeans to end their petty squabbles once and for all and to establish a strong European presence alongside the new “G2” community of interests. Against this background, we can only welcome the fact that now that the Lisbon Treaty has been ratified by the Czech Republic, the last EU member state to do so, the formal prerequisites are in place to guarantee the European Community’s ability to act. With the exception of issues relating to tax policy and (unfortunately) foreign policy, the EU of 27 states will in future feature more majority decision-making, whilst there will be fewer opportunities to use a right of veto, a stronger European Parliament, and also greater pressure to reach agreement within the Community.
My plea for a stronger European presence on the global stage in terms of international crisis management, kick-starting the economy, a global labor market and integration policy and, not least, exploiting all of the opportunities of energy and climate policy, in no way means that I have lost confidence in initiatives on the part of industry or in the prospects of bilateral relations. After three years, I am about to end my time heading the think-tank of a multinational company, the world’s largest provider of HR services, Adecco Group. During this time the London-based Adecco Institute has built up particularly close contacts with China in general, and with the Shanghai Academy of Social Sciences (SASS) in particular. We have exchanged tools and best practices in an attempt to alleviate the consequences of the global economic crisis on stressed labor markets in China and Europe. We have brought together companies, scientists and politicians from the Far East and Europe, and further joint initiatives are already in the pipeline.
These private networks do indeed benefit from well-functioning political structures but they are by no means dispensable. They are and will remain the drivers of change across the world, change that we must shape together and peacefully in the interests of the peoples of our countries.
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