“This week the two countries will restart government
consultations after a pandemic hiatus, but amid the events in Ukraine and rising
U.S., Chinese tensions, common ground may be elusive.
BERLIN — When Germany and China launched their government
consultations a decade ago, Angela Merkel was still chancellor and their
relations seemed an endless opportunity for trade and profit. The dialogues were
a time for pomp and circumstance, trade deals and signing ceremonies, red
carpets and military salutes.
But on Tuesday, Germany’s chancellor, Olaf Scholz, and
China’s premier, Li Qiang, will relaunch the consultations after a three-year
hiatus during the pandemic in a very different world — one with new
calculations over political vulnerabilities and economic dependencies.
The two countries return to the talks nearly as estranged
partners, their relations strained by events in Ukraine, Beijing’s deepening
courtship with Moscow and China’s simmering tensions with the United States,
Germany’s most important ally.
“These consultations seem out of sync with the times,” said
Thorsten Benner, director of the Global Public Policy Institute in Berlin.
“Government-to-government consultations are usually something you would do with
your democratic allies. The challenge is to balance the new realism we are
facing with the old, Merkel-style of doing China consultations.”
These consultations will be the first for Mr. Scholz, as
well as the first visit to Berlin for Mr. Li as premier, who will be
accompanied by a large train of ministers. There is little doubt their missions
will be at odds, even as they try to shape areas of common interest.
For Germany, the meeting will be an opportunity to assert a
new stance, one in which China is still one of its most critical economic
partners but also a “systemic rival.” That means Berlin will try to shield its
critical technologies and encourage its businesses to diversify away from
Beijing.
For China, it will be an opportunity to convince its largest
European trading partner to stick to business as usual — and drive a wedge
between Berlin and Washington.
How to maintain necessary economic ties with China, in the
shadow of growing U.S. pressure to align with it against Beijing, is a
balancing act Germany is still struggling to master.
One German official privately called it Berlin’s “three-body
problem.” Keenly aware that Washington is its security guarantor, German
officials no longer have the luxury of treating its economic and political
interests separately.
Relationships it once treated as bilateral and distinct —
German-Chinese, German-American and American-Chinese — now feel tangled
together. Security concerns have also intruded on economic ambitions in ways
that did not preoccupy Germany before.
Ukraine forced Germany to reconsider
economic relationships it had taken for granted, like its dependency on cheap
gas from Russia, which once provided 50 percent of its supply. Germany managed
to pivot to other supplies, narrowly avoiding a severe energy crisis, though
not a recession.
By comparison, an event like a Chinese attack on Taiwan that
sets off a U.S.-Chinese military confrontation would be far more painful.
(China is a nuclear power, just like the US. There has never been a military confrontation between two nuclear powers and there never will be (K.))
German officials believe they would be (???) compelled to get involved, after having
pushed so hard for Asian nations to support Europe against Russia’s invasion of
Ukraine as a violation of territorial sovereignty.
The economic consequences would be even more severe: More
than a million German jobs depend directly on China, and many more indirectly.
Nearly half of all European investments in China are from Germany, and almost
half of German manufacturing businesses rely on China for some part of their
supply chain.
For China, too, this is a trying moment.
Its post-pandemic economic recovery has been slower than
expected. Some Western companies have also been wary of making new investments
in China, as President Xi Jinping embarks on a push to fortify national
security this year — including a broadening of counterespionage laws that has heightened
police scrutiny of Western companies in China.
Relations with Germany are especially important: It is
China’s largest European trading partner and source of European foreign
investment.
“The fact that Germany has been talking about de-risking or
becoming less dependent on the Chinese market naturally worries China,” said Hu
Chunchun, an associate professor at Shanghai International Studies University.
During talks in Berlin, German officials will most likely
offer China a sense of what is coming in their long awaited China strategy
paper, which was delayed by months of internal wrangling within Germany’s
government over how tough its stance should be. The paper is now expected to be
made public in July.
A leaked original draft reflected a much tougher line on the
need to diversify economic interests away from China, particularly in areas
like critical infrastructure, as well as raw materials for technologies needed
for a carbon-neutral economy, such as solar modules and electric car batteries.
That tone is expected to have been softened somewhat under
pressure from Mr. Scholz, who is wary of too much shock to an economy that has
dipped into recession.
German officials will make clear that they have no intention
of changing their “One China” policy, acknowledging Beijing’s goal of unifying
with Taiwan while maintaining “friendly, but unofficial” relations with the
Taiwanese.
They will also underline a message Mr. Scholz has repeatedly
stressed: that Germany has no plans to “decouple” from China, as U.S. officials
once urged. But, rather, it will lean into the concept of “de-risking.”
The problem, analysts say, is defining what de-risking
actually means.
“Does it mean getting rid of risk or minimizing it? How fast
do you do it? There is a lot of leeway in that term,” said Mr. Benner. “Scholz
is walking a fine line. He does ‘de-risking lite.’ He is very big on
diversification, but he doesn’t want to discourage investment.”
In April, Chinese officials raised concerns with Germany
about news reports that said Berlin was considering limiting the sale of
chemicals used in semiconductors to Beijing. The U.S. has been seeking to
enlist European and other allies in its push to block Beijing’s access to
critical technologies like semiconductors, an effort that has infuriated China.
“They need to keep the Europeans as far away from the
Americans as possible,” said Mikko Huotari, executive director of the Mercator
Institute for China Studies, of the Chinese delegation’s goal this week.
“Germany plays a huge role in that.”
Beijing is still banking on the fact that many European
companies rely so heavily on Chinese consumers that they cannot afford to
distance themselves from China, said Paul Haenle, a former director for China
on the National Security Council in both the Bush and Obama administrations.
“Chinese leadership has calculated that Europe is still very
much at play,” he said.
With Germany, in particular, China has cards to play: The
biggest and most powerful German businesses — the chemical producer BASF, and
automakers like Volkswagen — have bucked the trend of many other, increasingly
wary German companies, and doubled down on their investments in China.
Late last year, China lifted its strict pandemic
restrictions and reopened its economy, rolling out the red carpet to encourage
foreign investors to pour money into China. Volkswagen’s chief executive,
Oliver Blume, was one of the first multinational business leaders to visit
China. The country is the automaker’s largest sales market.
“China feels that because of this dependency from a handful
of big German companies, in the end, Germany will always be able to compromise
or at least strike a deal with China,” said Philippe Le Corre, a senior fellow
for the Asia Society Policy Institute’s Center for China Analysis.
Indeed, Germany’s biggest challenge may not be a reckoning
with Beijing but with its own companies — and making clear that in the future,
they must proceed in their economic dependencies on China at their own risk.
It makes the path for Germany to transform its relationship
with China possible, but risky, the analyst Mr. Huotari said: “There is a way.
Whether it is going to be a painful one, we have to see.” “
Now, babies, we will do de-risking of relations with China
by destroying our huge Chinese market, and, as a result, de-industrializing Europe (Americans blocked their market for us already). I hope you
will like political fallout. Good luck with that.
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