German Chancellor’s first China Visit: Opportunities and Liabilities

It is going to be the first visit to China for German chancellor Olaf Scholz who took office late last year with a three-party coalition (SPD, Greens, and FDP).

On Friday (November 4), he is scheduled to meet “President” Xi Jinping, according to his office’s website, and following that, a meeting his planned with him and Li Keqiang, his actual colleague as head of a government. Bilateral relations, international topics such as climate change, Russia’s “war of aggression” against Ukraine and the situation in the east Asian region are said to be on the agenda. “Federal Chancellor Scholz will be accompanied by a business delegation during his visit”, the office’s statement concludes.

dongnanweishi_scholz_and_companies
Not everybody’s first visit
Shanghai’s “Jiefang Daily” suggests*) that

many European companies have experienced serious economic problems this year, because of the energy crisis, high inflation, rising interest rates and problems like the economic slowdown. It is crucial for these European companies to make up for these losses in Europe by profiting from the Chinese market. Brudermüller for example, CEO at Germany’s chemical giant BASF, plans to further expand BASF’s “favorable investments” in China. It’s business report shows that unlike in Europe, results in China have been positive.
欧洲很多企业今年以来由于能源危机、高通胀、利率上升和经济放缓等遭遇严重经营困难。对这些欧洲企业来说,用中国市场的收益弥补在欧洲的亏损至关重要。比如德国化工巨头巴斯夫集团首席执行官薄睦乐就打算进一步扩大巴斯夫在中国的“有利投资”。业绩报告显示,与在欧洲的亏损不同,巴斯夫集团在中国的增长一直是正向的。


Michelin’s business report, said to have been published on October 25, also shows rapidly rising sales in China, in contrast with an eight-percent drop in Europe, “Jiefang Daily” reports.

Michelin’s handsome China numbers notwithstanding, the “Global Times”, a Chinese paper for a foreign readership, blames a “sour-grape” mentality for France’s differences with Germany’s China policy. Those differences probably exist, with Paris being more skeptical about Chinese “opportunities” than Berlin, but you might consider Germany’s dependence on Chinese export markets as a liability, rather than as an opportunity, just as well.

While the SPD remains highly cooperative when it comes to China business, both its coalition partners have advised caution. And while it may be difficult to forecast a trend of future German investment in, exports to and supply chain connections with China, there are statements from German business circles you wouldn’t have heard a few years ago.

China itself rather bets on protectionism, but wants to get into the act globally, including in Germany (China setzt selbst eher auf Abschottung, will aber überall in der Welt mehr mitmischen, auch bei uns in Deutschland),

German weekly “Focus” quotes Martin Wansleben, head of the Association of German Chambers of Industry and Commerce.  Scholz should champion clear-cut rules.
It isn’t only France that is concerned about Germany’s economic dependence on China. “Voice of America’s” (VoA) Chinese service, too, points out that “the West shows growing concern about Chinese trade practices and its human rights record”, as well as unease about “Germany’s dependence on the world’s second-largest economic body” (对德国对中国这个世界第二大经济体的依赖感到不安).

VoA also quotes a German government spokesman as saying that while Berlin’s view on China had changed, “decoupling” from China was opposed by Berlin.

When you keep pressing people for a while, the main problem appears to be China’s aggressive policy against Taiwan. Most Germans (this blogger included) never expected that Russia would really invade Ukraine. Now that this has happened, peoples’ imagination has become somewhat more animated – and realistic.

The Social Democrats are more skeptical than its middle- and upper-class coalition partners when it comes to the West’s human-rights agenda, and rightly so. (If China put all its SOEs on international sale, you wouldn’t hear a word about the Uyghurs from Western governments anymore.)

But the Russian-Chinese alliance is a fact, and so is that alliance’s preparedness to annex third countries. That is something the Social Dems can’t ignore. If the press, the oppositional CDU/CSU and the SPD’s coalition partners statements are something to go by, the tide of German integration with China’s economy is being reversed.

“Nothing speaks against German SMEs continuing to import their special nuts and bolts from China”, a columnist mused on German news platform t-online last week, but not without a backup source.

China’s propaganda doesn’t look at Scholz’ visit in a way isolated from its other global contacts. In fact, the German visitor is mentioned in a row with General Secretary of the Communist Party of Vietnam Nguyễn Phú Trọng, Pakistan’s Prime Minister Shehbaz Sharif, Tanzania’s President Samia Suluhu Hassan – all of them bearing testimony, or so the propaganda suggests, of how attractive “Chinese opportunities” (中国机遇) actually are.

But Germany’s dependence on China, while worrying and in need to be cut back substantively, shouldn’t be viewed in an isolated way either. Scholz visit won’t even last for a full day, without an overnight stay, and also in November, Scholz will travel to Vietnam. Statistics appear to suggest that German industry will find backup sources there – if not first sources just as well.

And Annalena Baerbock, Germany’s foreign minister and one of the leaders of the SPD’s China-skeptic Green coalition partner, is currently travelling Central Asia. All the countries there “once hoped to be a bridge between Russia, China, and Europe,” German broadcaster NTV quotes her – the European Union needed to provide Central Asia with opportunities. Options beyond Russia and China, that is.

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Notes

*) “Jiefang” actually “quotes foreign media”, but Chinese propaganda is often very creative in doing so – therefore no names here.

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