As U.S. Tries to Isolate China, German Companies Move Closer

 

"Some are expanding in China, reluctant to leave a huge market they need to finance operations back home.

As Washington seeks to throttle economic ties with Beijing, two powerful engines of the German economy, Volkswagen and the chemical company BASF, are broadening their huge Chinese investments.

Volkswagen, which has more than 40 plants in China, announced a new effort to tailor models to Chinese customers’ wishes, with features like in-dash karaoke machines, and will invest billions in local partnerships and production sites. It’s part of a theme unveiled by the German automaker last year: “In China for China.”

BASF, with 30 production facilities in China, is pushing ahead with plans to spend 10 billion euros ($10.9 billion) on a new chemical production complex that would rival in size its massive headquarters complex in Ludwigshafen, which covers about four square miles.

Throughout Germany, executives are aware such investments run contrary to efforts by the United States to isolate China economically. They counter that revenue from China is essential for their businesses to thrive and grow in Europe.

Martin Brudermüller, BASF’s chief executive, said earnings from China allowed the company to effectively offset losses from Europe’s high energy costs and stringent environmental rules.

“Without the business in China, the necessary restructuring here would not be so possible,” Mr. Brudermüller told reporters at his company’s annual earnings conference in February. “Name me just one investment in Europe where we could make money.”

Executives at Volkswagen privately concede the automaker is in a similar quandary. High energy and labor costs have left the company heavily reliant on sales from China to help underwrite operations in Europe.

Now ever-closer business ties are coming under scrutiny in Berlin. For months, at the urging of Chancellor Olaf Scholz, a policy proposal has been making the rounds of German ministries aiming to reset the country’s relationship with China, its largest trade partner. The aim is to strike a balance between diversifying Germany’s ties throughout Asia to avoid dependence on Chinese imports, while acknowledging the importance of doing business with China.

The Biden administration has pledged to make the United States more competitive with China by expanding American infrastructure and manufacturing, rather than negotiating new trade deals.

German lawmakers and business leaders have made clear that their relationship with China is more nuanced: open to vigorous trade while trying to diversify into other Asian markets.

It is a policy being developed after a bruising year when sanctions on Russia shut down natural gas shipments to Germany, a move that reminded lawmakers of the costs of relying on autocratic nations for materials essential to its industrial backbone. In the case of China, a big problem is Germany’s dependence on its imports.

Germany depends on China to provide essential technology products, including mobile phones and LEDs, as well as raw materials, including lithium and rare earth elements. These are critical to Germany’s plans to make a transition to cleaner energy and transportation.

Such a reliance must be carefully considered as Germany thinks strategically about its future dealings with China, said Katrin Kamin, a director of the Kiel Initiative in Geopolitics and Economics. Reducing its ties anytime soon is not a reasonable option.

“Germany will not be able to simply relax its relations with China in the short term,” Ms. Kamin said. “The dependencies are too great for that.”

The European Union has had a bumpier relationship with China. A breakthrough trade and investment deal between the bloc and China, a product of years of talks that was approved in 2020, was shelved less than a year later, after Beijing imposed sanctions on E.U. lawmakers for criticizing China’s treatment of its Uyghur population. The deal would have made it easier for companies to operate on one another’s territory.

Last week, Ursula von der Leyen, president of the European Commission, traveled to Beijing with President Emmanuel Macron of France as part of an effort to “rebalance” economic ties with China. She called for the revival of talks about trade, but pointed out stumbling blocks like the support China offers its domestic manufacturers and the restrictions it places on foreign companies.

“China is a crucial trade partner, but E.U. businesses face many discriminatory hurdles,” Ms. von der Leyen said after meetings with organizations in Beijing. “European companies have so much to offer China. But they need a level playing field to invest and provide their goods and services.”

She told reporters that the stalled trade deal was not discussed in talks with China’s leader, Xi Jinping, during the trip.

With foreign trade sales of €297.9 billion last year, China has been Germany’s biggest trading partner for seven years in a row. But Germany’s trade deficit with China has grown increasingly lopsided, a trend that worsened during the supply chain disruption caused by the coronavirus pandemic. Last year, imports from China expanded by a third, to €191 billion, while exports grew only 3 percent, to €107 billion.

One area where Germany has long dominated ties with China is the automobile industry.

German automakers, including BMW and Mercedes-Benz, sell roughly a third of all vehicles they produce in China — exceeding sales in all of Western Europe.

 But recent data shows that Germans appear to be losing their grip on the Chinese market, especially as the popularity of domestically produced electric vehicles surges.

Auto insurance registration records show that only 2.4 percent of all electric vehicles sold in China last year were made by Volkswagen, while BMW and Mercedes failed to crack even 1 percent, according to the German business daily Handelsblatt. By comparison, German brands continue to dominate the Chinese market for combustion engine vehicles, but their popularity is giving way to E.V.s.

Perhaps ominously, Chinese electric brands, such as BYD and Nio, are entering the German market, posing a threat to German automakers on their home territory.

In a clear sign of his priorities, within months of taking over as the chief executive of Volkswagen in September, Oliver Blume spent weeks touring China and returned vowing to strengthen his company’s partnerships there.

“We have to cooperate much more closely with our local partners in order to listen to the customers in the Chinese region,” Mr. Blume told reporters at the company’s annual earning meeting last month. “This will be part of a strategy for 2030.”

A study by the Kiel Institute showed that decoupling from China would be very costly for all of Europe, but especially Germany, given the strength of its economic ties. Calculations by the institute, based on gross domestic product from 2019, showed that Germany could lose income worth more than €131 billion. And it could be even more if China retaliated.

Berlin would like to avoid another round of the upheaval it experienced after recent sanctions on  Russia launched, leading to an energy war that cost Germany its affordable supply of natural gas. That will mean continuing to balance economic interests with security concerns, Jörg Kukies, an economic adviser to Mr. Scholz, told a gathering of German and American trade leaders.

“We want to have a positive approach to China,” Mr. Kukies said. “Not an anti-China approach.””

Pasaulis gali pajudėti Rusijos ir Kinijos link

     „Praėjusį rudenį, praėjus aštuoniems mėnesiams nuo naujosios pasaulio netvarkos, kurią sukėlė konfliktas Ukrainoje, Kembridžo universiteto Bennetto viešosios politikos institutas parengė ilgą ataskaitą apie pasaulinės viešosios nuomonės tendencijas prieš ir po konflikto protrūkio.

 

     Nenuostabu, kad duomenys parodė, kad konfliktas pakeitė visuomenės nuotaikas išsivysčiusiose demokratijose Rytų Azijoje ir Europoje, taip pat JAV, suvienijus jų piliečius prieš Rusiją ir Kiniją ir nukreipdamas masinę nuomonę labiau proamerikietiška linkme.

 

     Tačiau už šio demokratinio bloko ribų tendencijos buvo labai skirtingos. Dešimtmetį iki Ukrainos konflikto viešoji nuomonė „daugelyje šalių, besidriekiančių nuo Eurazijos iki Afrikos šiaurės ir vakarų“, buvo palankesnė Rusijai, net kai Vakarų viešoji nuomonė tapo priešiškesnė. Panašiai žmonės Europoje, anglosferos ir Ramiojo vandenyno pakrantės demokratijose, tokiose kaip Japonija ir Pietų Korėja, nusisuko prieš Kiniją dar prieš Covid-19, tačiau Kinija buvo vertinama daug palankiau Artimuosiuose Rytuose, Afrikoje į pietus nuo Sacharos ir Centrinėje Azijoje.

 

     Putino konfliktas Ukrainoje šias tendencijas pakeitė tik pakraščiuose. 2022 m. Rusija tapo mažiau populiari, tačiau apskritai besivystančių šalių viešoji nuomonė po konflikto Rusijai vis dar buvo šiek tiek šiltesnė, nei JAV ir (pirmą kartą) Kinijai, nei Amerikai. Tiek, kiek Ukrainos konfliktas sukėlė naują geopolitinę kovą tarp Amerikos vadovaujamo „jūrinio demokratijų aljanso“, kaip teigiama ataskaitoje, ir režimų aljanso, įsitvirtinusio Eurazijoje, atrodė, kad Euroazijos aljansas turėjo stebėtinai gilius potencialo rezervuarus ir liaudies paramą.

 

     Šis geopolitinio kraštovaizdžio skaitymas per kelis mėnesius buvo patvirtintas. Už anglosferos ir Europos ribų bandymai karantinuoti Rusijos ekonomiką nesulaukė ilgalaikio palaikymo, o diplomatinės izoliacijos bandymai – taip pat.

 

     Rusijos karinės pajėgos veikia visoje Afrikoje. Maskva randa norinčių energijos pirkėjų nuo Pietų Azijos iki Lotynų Amerikos. Putino režimas ką tik sušaukė taikos konferenciją su Sirija, Turkija ir Iranu, tikėdamasis stabilizuoti savo poziciją Sirijoje ir nustumti nuošalyje JAV ir jų kurdų sąjungininkus. Nutekinti dokumentai iš JAV žvalgybos rodo, kad Egipto prezidentas Abdel Fattah el-Sisi neseniai leido Rusijai parduoti slaptus ginklus, nepaisant jo šalies, kaip Amerikos sąjungininkės ir pagalbos gavėjos, statuso.

 

     Apskritai, remiantis naujausia Economist Intelligence apklausa, už Vakarų aljanso ribų buvo lėtas paramos iš Ukrainos atsitraukimas: praėjusiais metais šiek tiek sumažėjo šalių, smerkiančių Rusijos veiksmus, o neutralių ir Rusiją remiančių šalių skaičius pakilo. Be to, didėjančią Rusijos neišsiskyrimą lydi didėjanti diplomatinė ir ekonominė įtaka jos sąjungininkei Kinijai, kuri vaidina lemiamą taikdarystės ir galios tarpininko vaidmenį Artimuosiuose Rytuose, o jos partnerės vėlgi yra oficialios JAV sąjungininkės, tokios, kaip Saudo Arabija.

 

     Neaišku, ar Bideno administracija turi puikią strategiją, pritaikytą šiai realybei. Nors Baltieji rūmai priešinosi tam tikriems vanagiškiems raginimams stiprinti susikirtimą su Maskva, jie buvo linkę priimti vanagišką geopolitinio kraštovaizdžio, kuris vis labiau skirstomas į demokratiją ir autokratiją, liberalizmą ir autoritarizmą, portretą. (Pavyzdžiui, tai liūdija neseniai sušauktas Bideno viršūnių susitikimas už demokratiją, kuriame sąmoningai buvo pašalintos dvi NATO sąjungininkės – Vengrija ir Turkija, nes jos laikomos nerimą keliančiais demokratijos smukimo pavyzdžiais.)

 

     Kaip Walteris Russellas Meadas pažymėjo „The Wall Street Journal“, šis rėmelis tam tikru mastu aiškiai apibūdina tarptautinę tikrovę. Tai taip pat atitinka Bideno vidaus politinę žinią, kuri painioja „tarptautinę kovą už liberalią demokratiją“ su „vidine kova su populistiniu G.O.P.

 

     Tačiau, kaip toliau teigė Meadas, ši kryžiaus žygio už demokratiją vizija rizikuoja strategiškai nugalėti save. Užsienyje jūs tiesiog negalite kurti aljansų, reikalingų Kinijai ar Rusijai apriboti, jei negalite dirbti su šalimis, kurios nepripažįsta angloamerikietiško liberalizmo ar eurokratų procedūrų. Jums reikia būdo konstruktyviai elgtis ne tik su monarchijomis ir kariniais valdovais, bet ir su politiniais modeliais, įvairiais apibūdinimais kaip populizmas, neliberali demokratija ar švelnus autoritarizmas, su lyderiais, panašiais į Indijos Narendros Modi ir Turkijos Recepo Tayyipo Erdogano stilių, jei nenorite, kad pasaulis priklausytų Maskvai ir Pekinui.

 

     Panašiai ir namuose, jūs negalite sutelkti tvarios abiejų partijų paramos demokratijai palankiai didelei strategijai, jei nuolat siejate šią strategiją su savo konfliktu su jūsų vidaus politiniais oponentais. Arba, jei jūs nuolat tai siejate su vertybėmis, kurios priklauso tik jūsų pačių politikai koalicijoje. Didelė strategija, supaprastintai sutapatinanti demokratiją su socialiniu liberalizmu ar progresyvizmu, niekada nesulauks ilgalaikio respublikonų įsigyjimo ir ji visada bus kito rinkimų ciklo įkaite.

 

     Šis paskutinis punktas yra labai svarbus, norint suprasti Amerikos pasaulinį iššūkį. Kai kurie liberalūs vanagai gali manyti, kad neliberalizmo iššūkis pirmiausia yra režimų, primestų nenorintiems gyventojams, iššūkis – kad Artimųjų Rytų, Afrikos ir Centrinės Azijos elitas yra palankus Rusijai ir Kinijai, nes nori mėgdžioti jų negailestingą valdymo būdą, tačiau šių šalių gyventojų atsidurtų liberalų stovykloje, jei tik batas nuliptų nuo jų kaklo.

 

     Bennett instituto ataskaita turėtų suabejoti šia prielaida. Tai ne tik parodo, kad ne vakarietiškos masinės nuomonės yra palankios Kinijai ir Rusijai. Taip pat pateikiama įrodymų, kad išsivysčiusių demokratijų ir besivystančio pasaulio atsiskyrimą lemia ne tik politinio vadovavimo ar suvoktų interesų, bet ir pagrindinių vertybių skirtumai.

 

     Įspūdingiausia diagrama yra giliai ataskaitoje: ji rodo socialiai liberalių vertybių indeksą (matuojant sekuliarumą, individualizmą, progresyvias idėjas apie seksą ir narkotikus bei asmeninę laisvę) per pastaruosius 30 metų visame pasaulyje. Tai, ką matote diagramoje, rodo, kad dideles pajamas gaunančios demokratijos tampa vis liberalesnės po Berlyno sienos griuvimo. Tačiau beveik nesikeičia likusio pasaulio vertybės, nėra jokių požymių, kad socialinis liberalizmas įsigali ne tik tose šalyse, kuriose jis jau buvo galingas 1990 m.

 

     Tai sukuria iššūkį visiems, ketinantiems organizuoti JAV užsienio politiką pagal dabartines progresyvias vertybes. Galbūt jūs galite suvienyti mūsų artimiausius sąjungininkus, turtingą ir senstantį mūsų liberalios imperijos branduolį, siekdami tokios ideologinės vizijos.

 

     Tačiau kyla reali ir didėjanti rizika atstumti visus kitus."

 

The World Could Move Toward Russia and China

"Last fall, eight months into the new world disorder created by conflict in Ukraine, the University of Cambridge’s Bennett Institute for Public Policy produced a long report on trends in global public opinion before and after the outbreak of the conflict.

Not surprisingly, the data showed that the conflict had shifted public sentiment in developed democracies in East Asia and Europe, as well as the United States, uniting their citizens against both Russia and China and shifting mass opinion in a more pro-American direction.

But outside this democratic bloc, the trends were very different. For a decade before the Ukraine conflict, public opinion across “a vast span of countries stretching from continental Eurasia to the north and west of Africa,” in the report’s words, had become more favorable to Russia even as Western public opinion became more hostile. Similarly, people in Europe, the Anglosphere and Pacific Rim democracies like Japan and South Korea all turned against China even before Covid-19, but China was regarded much more favorably across the Middle East, sub-Saharan Africa and Central Asia.

Putin’s conflict in Ukraine shifted these trends only at the margins. Russia did become less popular in 2022, but overall, developing-world public opinion after the conflict was still slightly warmer to Russia than to the United States, and (for the first time) warmer to China than to America, too. To the extent that the Ukraine conflict betokened a new geopolitical struggle between an American-led “maritime alliance of democracies,” as the report put it, and an alliance of regimes anchored in Eurasia, the Euroasian alliance seemed to have surprisingly deep reservoirs of potential popular support.

This reading of the geopolitical landscape has found vindication in the months since. Outside the Anglosphere and Europe, the attempts to quarantine the Russian economy have found little sustained support, and the attempts at diplomatic isolation likewise.

Russian military forces are active across Africa. Moscow is finding willing energy buyers from South Asia to Latin America. Putin’s regime just convened a peace conference with Syria and Turkey and Iran, in the hopes of stabilizing its own position in Syria while sidelining the United States and its Kurdish allies. Leaked documents from U.S. intelligence indicate that President Abdel Fattah el-Sisi of Egypt recently authorized secret arms sales to Russia, notwithstanding his country’s status as an American ally and aid recipient.

Overall, according to a recent Economist Intelligence survey, outside of the Western alliance there has been a slow bleeding of support from Ukraine: The number of countries condemning the Russian actions fell slightly in the past year, and the number of neutral and Russia-supporting countries rose. And Russia’s growing non-isolation is matched by increasing diplomatic and economic influence for its ally China, which is playing a crucial role as peacemaker and power broker in the Middle East — with, again, official U.S. allies like Saudi Arabia as its partners.

It’s not clear that the Biden administration has a grand strategy calibrated to this reality. While the White House has resisted some hawkish calls for escalating brinkmanship with Moscow, it has tended to accept the hawkish portrait of a geopolitical landscape increasingly divided between democracy and autocracy, liberalism and authoritarianism. (Witness, for instance, Biden’s recently convened Summit for Democracy, which deliberately excluded two NATO allies, Hungary and Turkey, because they’re considered worrisome examples of democratic backsliding.)

As Walter Russell Mead noted in The Wall Street Journal, this framing clearly describes international reality to some degree. It also fits with Biden’s domestic political message, which conflates an “international fight for liberal democracy” with an “internal struggle against the populist G.O.P.”

But as Mead went on to argue, this crusade-for-democracy vision risks being strategically self-defeating. Abroad, you simply cannot build the alliances required to contain China or Russia if you can’t work with countries that don’t embrace Anglo-American liberalism or Eurocrat proceduralism. You need a way to deal constructively not just with monarchies and military rulers but also with the political models variously described as populism or illiberal democracy or soft authoritarianism, with leaders in the style of Narendra Modi of India and Recep Tayyip Erdogan of Turkey, if you don’t want the world to belong to Moscow and Beijing.

Likewise at home, you cannot rally sustained bipartisan support for a pro-democracy grand strategy if you’re constantly linking this strategy to your conflict with your domestic political opponents. Or, for that matter, if you’re constantly linking it to values that are the province of only your own political coalition. A grand strategy that equates democracy simplistically with social liberalism or progressivism is never going to get sustained buy-in from Republicans, and it will always be hostage to the next election cycle.

This last point is crucial to understanding America’s global challenge as well. Some liberal hawks might like to believe that the challenge of illiberalism is primarily a challenge of regimes imposed on unwilling populations — that Middle Eastern, African and Central Asian elites are favorable to Russia and China because they want to imitate their ruthless mode of rule but that the inhabitants of these countries would be in the liberal camp if only the boot came off their neck.

The Bennett Institute report should cast doubt on that assumption. It doesn’t just show that non-Western mass opinion is favorable to China and Russia. It also offers evidence that a divergence in fundamental values, not just a difference in political leadership or perceived interests, is driving the split between developed democracies and the developing world.

Here the most striking chart appears deep in the report: It shows an index of socially liberal values (measuring secularism, individualism, progressive ideas about sex and drugs and personal freedom) worldwide across the past 30 years. What you see in the chart are high-income democracies becoming steadily more liberal since the fall of the Berlin Wall. But there is hardly any change in the values of the rest of the world, no sign that social liberalism is taking hold outside of countries where in 1990 it was powerful already.

This creates a challenge for anyone intent on organizing U.S. foreign policy around current progressive values. Maybe you can unite our closest allies, our liberal imperium’s rich and aging core, around that kind of ideological vision.

But you run a real and growing risk of alienating everybody else."