Throughout his campaign and from the start of his presidency, Donald Trump’s blatant disdain for NATO and his open support for Brexit and populist, Euroskeptic parties across the continent have riled European leaders. At the NATO and G7 summits in Brussels and Italy last week, Trump further poisoned transatlantic relations by refusing to support NATO’s doctrine of collective defense and then signaling that he would withdraw from the Paris climate agreement, which he did on June 1. As German Chancellor Angela Merkel balefully declared, “The times in which we could rely fully on others—they are somewhat over.” She did not specifically mention the United States, but her message was clear.
As Trump alienates his Western allies, and the United Kingdom begins its departure from the EU, China has been quietly reaching out to Western nations. Both Beijing and Brussels hope to move ahead with economic globalization, and during the annual EU-China Summit held in Brussels on June 1–2, the two sides forged a new green alliance to combat global warming, a clear nose thumbing at Trump. With the EU and the United States increasingly divided, this moment may mark the beginning of a new China-EU axis in global politics.
A MONETARY AXIS?
One of the areas in which China and the EU have developed strong ties is in the monetary field. Beijing has traditionally supported the euro, which is the only serious alternative to the dollar, and has diversified its foreign exchange reserves—the world’s largest—so that it now holds over one-third in euros and just slightly more than half in dollars, a decrease of around 30 percent since 1999, when the European common currency came into circulation. What this means is that in the last several years, Beijing has swapped dollars for euros, a trend that is likely to continue in future.
China’s diversification of its foreign reserves has accelerated since August 2011, after Standard & Poor’s downgraded the credit ratings of the U.S. federal government from AAA (
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