new economy

　　

Hong Kong's "***" website published on June 28 entitled "No matter how fierce the rhetoric, the United States, the European Union and China need each other" article, the author is the Russian Institute of World Economy and International Relations Innovation Center researcher Daan Pototsky. The full text is as follows:

After U.S. Secretary of State Ken Blinken's visit to Beijing this month, some political commentators rushed to declare that he had received a cold reception and that his meetings with the Chinese had not been satisfactory.

However, while hostile rhetoric from Western officials has heightened tensions, US-China economic cooperation has increased, as has cooperation between the two countries and with the European Union. Bilateral trade between the United States and China reached a record $690.6 billion last year. Meanwhile, trade between the EU and China totaled $847.3 billion last year.

What could explain this contradiction between public rhetoric and economic reality? The answer is simple: the three economies are highly interdependent.

The prospects for decoupling are limited. Lithium is essential for the production of electric vehicle batteries and is crucial for the global green transition. China's share of global lithium supply reached 24 percent in 2022, and the figure is expected to rise to 32 percent by 2025.

China also dominates the international market for rare earths.

External constraints are not the only factor preventing the world's largest economies from decoupling; capital markets are also closely linked. Japan is the largest foreign holder of US Treasuries, with $1.1tn as of January; China is the second largest holder with $859 billion.

China needs the US and EU. U.S. imports of goods and services from China totaled about $564 billion last year. What other country has that kind of purchasing power? The EU also needs China, because the Chinese market is an important counterweight to the EU's growing dependence on the US.

Interdependence also has a personal dimension. Shareholders and investors not only benefit from interdependence, but also drive it, making it less likely that the overall economy will decouple.

In this context, Hong Kong has the potential to once again become an important neutral zone in the global economy. As an international trade and financial center, Hong Kong has long played an important role in promoting economic cooperation between the East and the West. With its unique status as a special administrative region, Hong Kong can serve as a bridge between the United States, mainland China and the European Union, helping to ease tensions and promote economic cooperation.

Despite the political rhetoric, the economic realities of interdependence are pushing business elites in the United States, the European Union, and China toward cooperation. Hong Kong's special status may be crucial to fostering this cooperation and ensuring that the global economy continues to prosper.