10

Europe to Stay on the Fence on China

Extract from our "Europe to Stay on the Fence on China" research paper, published on the 19th of May 2023. Register for a free trial* to access the full paper.

The structural competition between the US and China could intensify further. We believe Europe will most likely stay non-aligned – against the US’ wishes – for at least several years.

  1. Europe’s economic growth is twice as sensitive to China as the US is. Further, still recoiling from the impact of the Russian gas embargo, Europe would very unlikely decide to decouple from China now – an economy 15 times the size of Russia.

    2.  

  2. Europe remains committed to the Green Transition, an area where a partnership with China would be sensible. China is already the world’s biggest producer of solar panels, windmills, and EV batteries. With China’s cooperation, the Green Transition in Europe would be less inflationary and expensive.

    3.  

  3. A strategy of sitting-on-the-fence would provide Europe with the highest option value in balancing the risks and opportunities in dealing with the US, China, and much of the Global South. The US’ insistence for global primacy and power projection is meeting increasing resistance from the rest of the world; it is unclear who might eventually ‘win’ the contest.

    4.  

  4. Europe’s decision to remain unaligned would have major (positive) implications for China. In turn, investors should expect China to take exceptional actions to persuade Europe to remain on the fence and to avoid provoking Europe by crossing Europe’s red lines. Can we guess whether China would favour Airbus or Boeing in the coming years?

    5.  

The full report contains the following sections:

  • Europe is quite exposed to China’s economy
  • Single or double shock?
  • Europe’s Green Transition
  • The US’ quest to maintain global primacy
  • China to court Europe
  • Bottom line
  • Appendix 1. Germany and China
  • Appendix 2. France and China

* Access to a free trial of our research is limited to professional investors. Terms & Conditions apply.

Find out more about our research service by clicking on the brochure below:

Apply today for a FREE trial of our research service, and start receiving our insights. A trial of our research will enable you to:

  • Establish a robust intellectual partnership and leverage our forward-thinking approach to gain unique, accessible insights into complex market issues, enhancing your investment strategies.
  • Access a team of leading FX experts, economists, and strategists to deepen your understanding of the macroeconomic landscape, empowering you to identify potential risks and opportunities.
  • Stay ahead of the competition with our expert analysis and insights, increasing the potential for improved investment decision-making and enhanced risk management.

Sign-up for a FREE Trial*

Please enter your name.
Please enter a message.
Send

*For professional investors only, subject to terms & conditions. By submitting your details, you consent to your data being collected and stored for the purposes of Eurizon SLJ Capital Limited providing information regarding your enquiry and related services. If you have any questions about your data please contact us at research@eurizonslj.com

Subscribe to our insights

If you are interested in our content, please sign up below and we will deliver Eurizon SLJ insights right to your inbox.

    I consent to my data being collected and stored for the purposes of providing me information regarding my enquiry and related services. If you have any questions about your data please contact us at research@eurizonslj.com

    Envelopes on a wood background
    Sources
    Disclosure

    This communication is issued by Eurizon SLJ Capital Limited (“ESLJ”), a private limited company registered in England (company number: 09775525) having its registered office at 90 Queen Street, London EC4N 1SA, United Kingdom. ESLJ is authorised and regulated by the Financial Conduct Authority (FRN: 736926). This communication is treated as a marketing communication intended for professional investors only and is provided only for information purposes. It has not been prepared in accordance with legal and regulatory requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. It does not constitute research on investment matters and should not be construed as containing any recommendation, advice or suggestion, implicit or explicit, with respect to any investment strategy or financial instruments, or the issuers of any financial instruments, or a solicitation, offer or financial promotion relating to any securities or investments. ESLJ and its affiliates do not assume any liability whatsoever for the contents of this communication, save to the extent agreed in any written contract entered into between ESLJ and the recipient, and do not make any representation or warranty as to the accuracy or completeness of any information contained in this communication. Views are accurate as at the time of publication. Opinions expressed by individuals are their own and do not necessarily reflect those of ESLJ or any of its affiliates. The value of any investment may change and an investor may not get back the original amount invested. Past performance is not an indicator of future performance. This communication may not be reproduced, redistributed or copied in whole or in part for any purpose. It may not be distributed in any jurisdiction where its distribution may be restricted by law and persons into whose possession this communication comes should inform themselves about, and observe, any such restrictions.

    ESLJ-300523-I1