Trip to Beijing, nerves in FAES

There is an economic fact that has gone somewhat unnoticed.

Oliver Thansan
Oliver Thansan
28 March 2023 Tuesday 21:27
21 Reads
Trip to Beijing, nerves in FAES

There is an economic fact that has gone somewhat unnoticed. For the first time since foreign trade records exist, China appears as Spain's main supplier, ahead of Germany, France and the United States.

11% of the goods that Spain buys in the rest of the world come from China. These are data from last year that confirm a trend that began in 2019. Only 2% of the goods that Spain sells to the rest of the world go to the People's Republic of China, a huge market made up of 1,412 million people. The peak of exports was reached in 2020 and began a dizzying decline from 2021, coinciding with the expansion of the pandemic. We bought a lot of masks from China and we couldn't sell them more meat and cheeses, since they were confined at home. This could be a cartoonish simplification of the movement of the balance. In reality, China has sold Spain more telecommunications systems, more electronics, more cars and more motorcycles.

Since imports have gone up and exports have gone down, the trade deficit with China has increased notably, and in a single year it has gone from 26.2 billion euros to 41.6 billion. This dynamic has relegated Germany to second place among supplier countries with a share of 9.4%.

The conclusion seems obvious. Spain needs to sell more goods to China to overcome the export slump derived from the epidemic, and for this it is convenient to maintain good diplomatic relations with Beijing within a very tense international framework.

The United States, as is well known, today does not want European countries to maintain fluid relations with China. We are in a second cold war and Henry Kissinger, about to turn one hundred years old, has already warned that this second cold war may be more dangerous than the first. Kissinger was the author of the bold American opening to China in the 1970s, a spectacular diplomatic move that finally split the communist bloc in two after the bitter Sino-Soviet split of the 1960s.

Obviously, the United States is much more concerned about German high-tech exports to the Asian giant than about Spain's modest sales of agri-food products. Pedro Sánchez has been prudent with China. In November 2018, six months after the motion of censure against Mariano Rajoy, the Spanish government rejected the Chinese offer to join the New Silk Road, an ambitious project to connect trade between Asia and Europe.

Italy did sign and all the alarm bells sounded in Washington. First they withdrew confidence in Matteo Salvini and then they applauded the formation of Mario Draghi's national unity government. And now they are demanding that Giorgia Meloni, a converted Atlanticist, break that accession treaty.

Sánchez is going to Beijing this week with three ideas. Remaining faithful to NATO in the war in Ukraine, defending greater autonomy for Europe in the commercial relationship with China (German line) and reinforcing its leading role in international politics while the first opposition party seeks the support of evangelical sects in Madrid. It's a tricky balance. Washington is watching and the FAES foundation has already warned that Sánchez wants to "betray" the West.