China-Europe Relations: Perceptions, Policies, and Prospects
Americans woke up to the growing importance of the Chinese-European relationship in 2005, when a proposal to lift the European Union's arms embargo on China led to a serious transatlantic clash. As Europeans have backed away (at least temporarily) from that proposal, Americans have again lost interest -- a mistake according to the authors of this comprehensive study of the Chinese-European relationship. The merit of the volume is that it includes contributions from some of the leading experts on the subject from both Europe and China as well as from the United States. Not surprisingly, they express many different views, but one thing they agree on is that Europe is paying more attention to China (its fastest-growing market and an emerging global player) and China is paying more attention to Europe (its largest trading partner and a potential geopolitical alternative to the United States). This is the most detailed study available of the growing relationship between these two global powers.
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America's economy is in its eighth year of sustained growth, transcending the German and Japanese "miracles." This is no fluke. America's unique brand of entrepreneurial capitalism is based on a series of advantages that explain the stunning success of the 1990s and provide the basis for extending this winning streak. These strengths include deft managers, technological innovation, and a culture that values rugged individualism -- all fueled by finance capital that can nimbly meet the needs of a globalized, rapidly changing economy. Furthermore, the era of the deficit is over. Pessimists who warn of inflation should be ignored; American business leaders understand that today's low level of inflation is self-perpetuating. America's prosperity is structural, not transient, and its lead over Europe and Asia will only widen with time. America had the twentieth century. It will also have the twenty-first.
Eurasia is the axial supercontinent. It is home to most of the world's politically assertive states and all the historical pretenders to global power. Accounting for 75 percent of the world's population, 60 percent of its output, and 75 percent of its energy resources, Eurasia's potential power overshadows even America's. For these reasons, the United States should begin paving the way to a transcontinental security system that will ensure Eurasia's future is more peaceful than its past.
Only a few years ago pundits were sure that the United States was losing to Asia and Europe and had to emulate their more state- directed economies to remain competitive. Now the conventional wisdom is that America is number one and that the rest of the world should adopt its more laissez-faire approach. In fact, neither caricature is right. Asia was booming and now it is slumping, but it will be back. Europe's underlying ossification will persist. But most important, while the U.S. economy is in a period of robust growth, nothing fundamental has changed. Its long-run growth rate has not accelerated, productivity has not risen, and the structural unemployment rate has fallen by one percentage point at most. Come the next recession, all this triumphalism will seem silly.
