BERLIN — When Germany and China held government-level consultations a decade ago, Angela Merkel was still chancellor, and their relationship seemed like endless opportunities for trade and profit. Dialogues are a time for pomp and circumstance, trade deals and signing ceremonies, red carpets and military salutes.
But on Tuesday, the German chancellor, Olaf Scholz, and the Chinese premier, Li Qiang, will restart consultations after a three-year hiatus due to the pandemic in a very different world – one with properties New accounting of political vulnerabilities and economic interdependence.
The two countries have almost returned to the negotiating table as unfamiliar partners, their relationship strained by Russia’s war in Ukraine, Beijing’s deepening ties with Moscow and other countries’ interests. 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 often what you would do with your democratic allies. The challenge is to balance the new realism that we are facing with the old Merkel style consultations with China.”
These consultations will be the first for Mr. Scholz, as well as Mr. Lee’s first visit to Berlin as prime minister, who will be accompanied by a large delegation of ministers. Certainly 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 position, in which China remains one of its most important economic partners but also a “systemic rival”. That means Berlin will try to protect its critical technologies and encourage its business activities to diversify away from Beijing.
For China, this will be an opportunity to convince its largest trading partner in Europe to continue doing business as usual – and to create some distance between Berlin and Washington.
How to maintain the necessary economic ties with China, in the face of growing US pressure to align with them to counter Beijing, is a balancing act that Germany Still trying to master.
One German official called it Berlin’s “three-body problem”. Deeply aware that Washington was the guarantor of its security, German officials no longer had the luxury of treating their economic and political interests separately.
Relations that were once considered bilateral and distinct – Germany-China, Germany-US and US-China – now feel tangled together. Security concerns have also infiltrated economic ambitions in ways that previously did not concern Germany.
Russia Invades Ukraine forced Germany to reconsider its economic relations it has taken for granted, such as its reliance on cheap gas from Russia, which once supplied 50% of its supply. Germany has managed to pivot to other sources of supply, narrowly avoiding a serious energy crisis, though not an economic one.
By comparison, an event like China’s attack on Taiwan causing a military confrontation between the US and China would be much more painful. German officials believe they will be forced to participate, having strongly pushed pro-European Asian nations against Russia’s invasion of Ukraine as a violation of territorial sovereignty.
The economic consequences will be even more severe: More than a million German jobs directly dependent on China, and many other things indirectly. Almost half of all European investment in China is from Germany, and Almost half German manufacturing firms depend on China for part of their supply chains.
For China, this is also a difficult time.
Its post-pandemic economic recovery has been slower than expected. Some Western companies are also wary of new investment in China, as President Xi Jinping embarks on efforts to bolster national security this year — including expanding anti-espionage laws that make it difficult to Police have stepped up surveillance of Western companies in China.
The relationship with Germany is especially important: It is China’s largest European trading partner and a source of European foreign investment.
Hu Chunchun, an associate professor at Shanghai University of International Studies, said: “The fact that Germany talks about reducing risks or becoming less dependent on the Chinese market naturally worries China.
During the Berlin talks, German officials will most likely tell China what is to come in their long-awaited China strategy document, which has been delayed after months of contention. There was internal controversy within the German government about how tough the stance was. The paper is now expected to be published in July.
A leaked initial draft reflects a much tougher line on the need to diversify economic interests away from China, especially in areas such as critical infrastructure, as well as raw materials. raw materials for technologies needed for a carbon-neutral economy, such as solar modules and electric car batteries.
That tone is expected to soften somewhat under pressure from Mr Scholz, who is wary of too many shocks to an economy already in recession.
German officials will make it clear they have no intention of changing the “One China” policy, acknowledging Beijing’s goal is to reunify with Taiwan while maintaining “friendly, but unofficial” relations. ” with Taiwan.
They will also emphasize a message that Scholz has repeatedly stressed: that Germany has no plans to “decouple” from China, as US officials have urged. But instead, it will lean towards the concept of “de-risking”.
The problem, according to analysts, is determining what it really means to eliminate risk.
“Does that mean eliminating risk or reducing risk? How fast do you do it? Mr. Benner said. “Scholz is on the right track. He does ‘gentle de-risking’. He’s very interested in diversification, but he doesn’t want to discourage investing.”
In April, Chinese officials expressed concern to Germany over reports that Berlin was considering restricting the sale of chemicals used in semiconductors to Beijing. The United States is looking to enlist Europe and other allies in an effort to block Beijing’s access to key technologies such as semiconductors, an effort that has angered China.
“They need to keep the Europeans as far away from the Americans as possible,” Mikko Huotari, executive director of the Mercator Institute for China Studies, said of the Chinese delegation’s goal this week. “Germany plays a huge role in that.”
Paul Haenle, former director of China affairs on the National Security Councils of both the Bush and Obama administrations, said Beijing was still studying the fact that many European companies depend too much on people. Chinese consumers to the point where they cannot afford to separate themselves from China.
“The Chinese leadership has calculated that Europe still has a lot of games to play,” he said.
For Germany in particular, China has cards to play: Germany’s biggest and most powerful businesses – chemical maker BASF and carmakers like Volkswagen – have bucked the trend of many. Other German companies, increasingly wary, and doubled their investments in China.
Late last year, China lifted strict restrictions on the pandemic and reopened its economy, rolling out the red carpet to encourage foreign investors to pour money into China. Volkswagen CEO 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 dependence on a few large German companies, in the end, Germany will always be able to compromise or at least reach an agreement with China,” said Philippe Le Corre, member Senior Fellow of Asian Social Policy, said. The Institute’s China Analysis Center.
Indeed, Germany’s biggest challenge may not be with Beijing but with its own companies – and making it clear that going forward, it must continue to be economically dependent at its own risk. into China.
That makes the path for Germany to transform its relationship with China possible, but risky, said Huotari, an analyst. Whether it becomes painful or not, we have to see.”
Erika Salomon reports from Berlin, and Nicole Hong from Seoul. Olivia Wang Reporting contributions from Hong Kong.
