Germany walks tightrope on China

The German balancing act between de-risking its political relationship with China while maintaining strong economic relations will be one of the main challenges both countries will face during government consultations on Tuesday, Claudia Schmucker, head of the Center for Geopolitics at the German Council on Foreign Relations (DGAP) told EURACTIV.

After German Chancellor Olaf Scholz received Chinese Premier Li Qiang on Monday, ministers of both countries will meet on Tuesday to enhance cooperation on several issues ranging from climate protection to sustainability.

Schmucker said that reconciling these different interests is one of the significant “balancing acts” in today’s consultations.

“Germany is really trying to walk the tightrope here, not to decouple and not to de-risk too much, while at the same time keeping strong trade relations and to move more towards the Americans,” she explained.

While Germany has adopted a much more critical tone towards the Eastern giant since the last consultations in 2018, Europe’s largest economy is still heavily dependent on China, with around 45.1% of products with high import dependency coming from there.

Germany already tried to square the circle when the government presented its long-awaited national security strategy last week. Scholz emphasised that he doesn’t want to de-couple the relationship with China but prefers “de-risking” instead – echoing EU Commission President Ursula von der Leyen’s China speech in March.

However, Scholz has yet to outline what this new approach should entail, as his social democrat party is still wrestling with reorienting its foreign policy.

New China Strategy

China has already been one of the most contested topics of Germany’s national security strategy. While the document was initially planned to be published in November last year, it was postponed due to disagreements on how to deal with Beijing.

The disagreements between the coalition partners are also visible in its upcoming China strategy. A first draft of the strategy was leaked in November last year and adopted a more confrontational tone.

The draft strategy for instance envisions an import stop of products from Chinese regions with human rights violations and a mandatory stress test for companies regarding “China-specific” risks.

The leak of the document already sparked outrage from the Chinese government, which called the document a “legacy of Cold War thinking”.

The Greens are especially outspoken when it comes to China. During a meeting with her Chinese counterpart, Qin Gang, Green Foreign Minister Annalena Baerbock openly criticised China for the tensions in the Taiwan Strait.

She also urged the People’s Republic “to convince Russia to end its aggression” in Ukraine.

“What China needs the least is a teacher from the West,” Gang snapped back.

However, while the Green-led foreign and economic ministries adopted a more hawkish approach towards China, Scholz’s Social Democrat Party (SPD) is torn on the matter.

Especially the right wing of the SPD, the Seeheimer Kreis, openly attacked the Greens and warned of a “one-dimensional German foreign and economic policy towards China” in a position paper.

This more consolatory approach of the SPD towards China is also seen in Beijing. When SPD party leader Lars Klingbeil travelled to China to uphold the dialogue with the Chinese Communist Party (CCP) earlier this month, he was welcomed with open arms by Prime Minister Li Qiang himself.

Qiang stressed the hope that “the SPD will play an important role in Germany and Europe” – highlighting that the SPD is seen as the reasonable partner in a coalition that otherwise tends to be critical of China.

Export controls

As Germany’s largest trading partner and crucial export market for its precious car industry, the SPD dares not to jeopardise economic relations and is still in search of a coherent position on the matter.

However, Tuesday’s government consultations also come at a crucial time for the EU as the Commission is set to propose its strategy to control investments and exports to China.

Scholz already declared that he is not a fan of such measures, as there would already be enough rules in place to “guarantee the security of our economy.”

Experts have meanwhile warned of a potential German “go it alone” approach when it comes to China.

“I think that we need to have much more European cohesion in our discussions or in our relations with China than we have at the moment. Germany is often accused of going it alone here,“ the expert Schmucker said.

“And then perhaps we can make this tightrope act a little easier if we do it in the group of 27 countries,” she concluded.

(Oliver Noyan | EURACTIV.de; Nick Alipour | EURACTIV.de)