The Silk Road Trap is an enlightening take on what might be driving China’s grand economic plan and how Europe is not benefiting from it. In short, the book calls for realism about rebalancing the partnership with China.
The author, European academic Jonathan Holslag, professes not be a trade hawk or protectionist like, for example, some in the White House at present.
Rather, he comes across as a pragmatist and realist who seeks to ask the questions and do the work that European policymakers are not.
Instead of looking at this issue through the prism of corporate profitability, he tries to broaden his gaze and judge things from the perspective of the public interest.
By scouring Chinese policy documents and piecing policymakers’ speeches together like a jigsaw, the book offers an interesting take on why trade deficits are problematic and why Europe is being disadvantaged.
Most of the supporting data and analysis runs up to 2016, but this issue is very much in the here and now.
The book talks about how Europe has invested time and money in getting China into the World Trade Organization, but has, to one degree or another, subsequently failed in all of its policy objectives.
A clear message is that China is sacrificing short-term utility from consumerism so as to broaden its global reach by becoming more competitive in export markets.
State sponsored banks, using credit as a tool, play a huge role here.
It is refreshing to see a body of work that weaves together different aspects of statecraft: economic power, soft power and military power.
Readers will be left with the feeling that time is running out, so a rethink on Europe’s part is pressing.
It would seem that Europe needs to “elevate the playing field internally” in its markets (stronger standards, positive entrepreneurship, for example).
One can only hope that representatives of the body politic are carefully considering these issues in their long-term planning, and even have a read of Mr Holslag’s thorough enquiry on the subject.
Graham Bishop is investment director at Heartwood Investment Management
By Jonathan Holslag. Published by Polity Press
