Germany: The call for a new policy towards China

After the 20th centurye Communist Party Congress, German Chancellor Olaf Scholz went to Beijing to meet with Xi Jinping. An opportunity to analyze Berlin’s China policy for Ernst Stetter, Special Advisor to the President of the Jean-Jaurès Foundation for Europe.

German Chancellor Olaf Scholz visited Beijing on November 3 and 4 to meet with China’s strongman Xi Jinping. This meeting took place after the 20th Congress of the Communist Party, which confirmed the almost absolute power of the Chinese president.

Although the intention of the German chancellor’s first diplomatic visit was to represent the world’s fourth largest economy, this visit caused a wave of reactions in Germany, Europe and the world.

However, the context has changed: while China considered itself a partner, it now considers itself an economic rival combined with a systemic and ideological rival. It clearly aspires to rise to the level of the leading political and economic power of the 21st century.

At least for now, China remains an important economic partner for Germany. According to the latest survey of the first TV channel ARD, 49% of Germans think that the Federal Republic of Germany should reduce its economic cooperation with China, a good third (34%) think that the current cooperation should be continued, and only 10%. ‘extend. On the other hand, a clear majority of the population (87%) wants the federal government to ensure that Germany is more economically independent from non-democratic countries and thus from China.

The war in Ukraine has brutally shown that Germany and Europe have ignored all warnings about Russian imperialism, and their people must now suffer the dramatic consequences. Such a mistake should not be repeated in Xi Jinping’s relations with China.

Chancellor Scholz has made it clear that it is undesirable to continue the economic-only policies of his predecessors, especially Angela Merkel. Before going to Beijing and in response to numerous criticisms, Olaf Scholz published an article in a German newspaper. PHASE where he said he was aware of major ideological changes in the People’s Republic of China and planned to speak more about controversial issues. Especially in the current political configuration, the German chancellor not only travels for himself and his country, but also acts as an ambassador for the free world. The fear of a Russian scenario is growing in the face of China, which puts its own interests above all else, takes increasingly harsh measures against members of the opposition, persecutes its own minorities and openly threatens Taiwan. As Thomas Haldenwang, president of the Federal Office for the Protection of the Constitution, said, “Russia is the storm, China is climate change.”

Germany is China’s main partner in Europe

The Federal Republic of Germany and the People’s Republic of China have maintained diplomatic relations since 1972. By 2021, China has become Germany’s largest economic partner with a trade volume of 245 billion euros.

Given the looming international crises and global challenges such as climate change and the Covid-19 pandemic, China-Germany cooperation and coordination are no less important. China sees Germany as a key partner in Europe. Therefore, China interpreted the German chancellor’s visit as a confirmation of the privileged relations between the two countries.

Despite these close relations, there are fundamental political disagreements between the two countries, especially in the management of human rights and individual freedoms, as well as in the interpretation of international law and multilateralism. German industry can no longer rely on the mantra of “political change through trade”. According to the president of the Association of German Industry (BDI), German industry must create “red lines to avoid being at the junction of dependency and blackmail”. On the other hand, the former head of the Volkswagen Group, Herbert Diess, emphasizes that it is undesirable to change the economic strategy because China is a very important growth market for the German industry. This line is slowly changing, as the Chinese market remains important to work quickly towards disengagement. Nevertheless, a large number of business leaders are becoming more cautious and new strategies are emerging, such as shortening supply chains.

In the near future, such a development may lead to a loss of growth. In the long term, gradual disengagement from dangerous dictatorships is not only morally necessary and politically beneficial, but also makes economic sense. The example of Russia clearly shows that we should not depend on one supplier. Almost all of Germany’s automotive and chemical industries have bet on China over the past two decades. This strategy of economic dependency is a colossal failure by their boards of directors and supervisors. He can’t go on.

Decoupling or redirection?

Germany’s main interest is that China opens its markets to German and European companies on the basis of equality and reciprocity, which is not currently the case. Although China demands transparency from its economic partners, it is increasingly isolating itself. In the long term, German and European investors will no longer accept such conditions. Thus, the Federal Association of Small and Medium Enterprises (BVMN) asks the government to be open to other regions of the world, such as the African continent or Mercosur in Latin America.

For now, Xi Jinping can be satisfied the status quo : A delegation of twelve German businessmen accompanied the chancellor on his visit, a testament to the extent of German investment and trade in China.

Finally, Olaf Scholz followed his instructions during his stay and mentioned it in his article PHASE. In a framework dictated by absolute hosts, he warned China against violent actions against Taiwan and pointed to the brutal persecution of the Uyghurs in Xinjiang.

These words were necessary in order not to expose oneself to the harsh criticism of international allies, as well as members of the government coalition led by the Minister of Foreign Affairs.

Although Germany is still seen as an economic partner by China, it remains too small militarily and too weak politically for Beijing to consider it a real geostrategic force on a global scale.

We should also look carefully at China’s investments in Europe. China is notorious for its habit of inserting itself into key sectors of European industry in order to acquire technology and transfer it to China. To this systematic looting of intellectual property must be added massive investments in infrastructure such as seaports. It seems appropriate to reorient this economic policy in the face of an open door to China’s intervention. This could happen quickly under existing laws. It is a matter of political will. Economy Minister Robert Habeck thus recently used the tool of foreign law to ban two acquisitions of German companies by Chinese investors who are clearly interested in German know-how, which is more sensitive than semiconductors and chip manufacturing.

Germany must be aware of its true status in Europe and the world. This status implies a revision of its China policy. In addition to the massive separation of their economies with Beijing, it is more Europe and the West that refuse to allow division in order to follow a common strategy and speak with one voice against China.

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