German Chancellor’s China visit and growing divide between Berlin and Washington

German Chancellor Olaf Scholz was on his second visit to China in mid-April. He carried with him the traditional business delegation, which forms the fulcrum of Germany’s China policy. He visited Bosch Hydrogen Powertrain Systems in Chongqing before proceeding to the financial capital of Shanghai. On his final day, he was on the formal part of his visit to Beijing, where he met Premier Li Qiang and concluded the day with a meeting with President Xi Jinping.

It was Scholz’s first visit since the German China Strategy was announced in 2023, which annoyed China. Premier Li and a delegation of senior officials visited Berlin in June 2023. The strategy aimed at reducing dependence on the Chinese market in critical areas and bringing Germany into coherence with the EU’s move for de-risking. superpower.

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The US expectation was that Scholz would push the Ukraine crisis agenda more than the economic cooperation agenda. For Germany, economic cooperation with China is more critical and direct. With Ukraine, they are part of a larger game plan in which they don’t see themselves as the linchpin. Scholz took up the Ukraine issue; there is no clarity on what the Chinese said on what they will tell Russia to do.

On the economic side, German business remains concerned that the promises China made to provide better access to them with Chinese state-owned companies for access to the Chinese market and controls over the use of German technology are slow, if at all, in fulfilment. China, on its part, complains that it is not getting the kind of support they expected from Germany, and though they are still major investors and trading partners, they face greater constraints in Europe and in Germany.

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China was Germany’s leading trade partner for the eighth consecutive year in 2023, with €254.1 billion traded in goods and services more than German trade with the US but a 15.5 per cent diminution from 2022. German exports to China were €7.3 billion.

China would like Germany to be more autonomous of US action, just as Germany expects China to show greater autonomy from Russia on the Ukraine issue. Perhaps both are misplaced perceptions. The US believed that Germany did not do enough for the coalition. Germany is showing that, given its own constraints and limitations, it is still trying to maintain a strategic autonomy over China, which has now more or less been vanquished with regard to Russia.

Germany is aware that the Biden administration has set up close and direct contacts with Xi and his team. United States Secretary of State Antony Blinken visited China after Scholz, Janet Yellen at the Treasury, and Jake Sullivan as the NSA support Biden-Xi discussions.

Germany sees the US speaking more loudly but also doing more to engage China to prevent a breakdown. The political de-risking that the US has undertaken has led Germany to believe that it should not attempt economic decoupling but stick to the EU-led de-risking strategy on the economic side.

Berlin is apprehensive that post-November US elections there could be a jolt in US politics, which would again leave Europe in general and Germany in particular. in the lurch. Therefore, Germany sees it as prudent to have its own understanding of China, which is not dependent on the US.

Scholz’s second visit to China. still obtains the trend set by his SDP predecessor, Chancellor Gerard Schroeder, who visited China six times between 1998 and 2005. The Christian Democratic Union’s (CDU) Angela Merkel visited China 12 times in the 16 years that she was Chancellor. Not only does Scholz want to keep the strategic autonomy from the US, but even domestically, he wants to keep hold of the China policy within his government.

The Greens-led Foreign Ministry, particularly Foreign Minister Annalena Baerbock, seeks a more demanding German policy towards China, linking it to human rights and possibly reducing the impact of the economic aspects on the policy.

Scholz has not agreed with this approach and continues the dominating thoughts of German industry through the links that the Social Democratic Party (SPD) has with the Federation of German Industries (BDI) and believes that derisking would continue, which would be a strategic economic concept but would not be economic alone.

An analyst told me that Olaf Scholz’s visit to China focused on the concerns of German businesses regarding unfair competition and inadequate access to networks and public tenders. He discussed this with various stakeholders, including students at Tongji University in Shanghai and members of the German Chamber of Commerce. Scholz emphasised the importance of maintaining competitiveness without resorting to protectionist measures and pledged to raise these issues in his political meetings.

German industry is anxious about the growing unfair practices they encounter in China, including access to the competitive landscape. Many German companies operating in China feel marginalised and disadvantaged compared to their Chinese counterparts, including those in the EU. They worry about losing market share and fear the potential repercussions of any retaliatory measures if punitive actions, such as anti-dumping tariffs, are taken against Chinese imports under the China Strategy.

This cleavage between the SPD and the Greens prevents Germany from playing a greater role within Europe. Strategically, most analysts believe that Scholz’s visit to China shows the persistent policy of Germany, as the largest economic player in Europe, constrained by a similar central role within the EU, NATO, and other organisations that are more strategically inclined.

This is perhaps because Germany’s assessment is that the international system today lacks stability and is facing crisis after crisis. The US and others believe that Germany could play a bigger role in the Ukraine by supplying weapons, by pushing China more, and by playing a role in West Asia. Germany sees that this instability also impacts Europe. German strength comes from its economy.

If the economy spirals into instability, then Germany believes that whatever role it can play within Europe and beyond will be in jeopardy. Therefore, Berlin, in the post-COVID and Ukraine crisis periods, is trying to stabilise its China policy so that its economic heft does not diminish. Despite the difficulties, it is willing to wait to reach a proactive and strategic foreign policy option for some time.

The writer is a former ambassador to Germany, Indonesia, Ethiopia, ASEAN and the African Union. He tweets @AmbGurjitSingh. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.