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Germany - China Policy

German Chancellor Olaf Scholz arrived 15 April 2024 on a three-day visit to China. The head of the German state was met on Chinese soil not by his equal in rank and not even by an official representative of the Foreign Ministry, but by a third-rate official. This was not only a clear violation of diplomatic protocol, but also an outright mockery of the German Chancellor by China. The German side was shown that the Chinese are in charge in economic matters, at least in the process of these negotiations. China skillfully built a scheme in which Scholz was immediately clearly demonstrated his role as a subordinate party and a supplicant. This is how the Chinese emperor met foreign ambassadors in the Middle Ages - they gradually passed through different, from lower to higher, levels of Chinese power.

Chancellor Olaf Scholz's three-day visit to China was both his longest and most important foreign trip since he assumed office in 2021. "Derisking" has emerged as a core theme of Germany and the EU's economic policy towards China in light of Russia's war in Ukraine, which exposed both the country and the bloc's energy dependence on Moscow. President Xi Jinping had emphasized that the "industrial and supply chains of China and Germany are deeply embedded in each other."

The German chancellor said that the issue of selling "dual-use goods" to Russia had been discussed with Xi, without elaborating on the results of these talks. Chancellor Scholz said he asked Chinese President Xi Jinping to exert influence over Russia to end the "senseless" war in Ukraine, adding that both leaders rejected attacks on nuclear facilities. "I have therefore asked President Xi to influence Russia so that Putin finally calls off his senseless campaign, withdraws his troops and ends this terrible war," he said, adding that Xi had agreed to back a peace conference on the war in Switzerland.

The Chinese leader also warned against economic protectionism and said both economies, and the rest of the world, could only benefit from their cooperation. "As China and Germany are respectively the second and third-largest economies in the world, the consolidation and development of their relations carries significance that goes beyond the bilateral scope and has a major impact on the Eurasian continent and the entire world." Scholz must maneuver between the interests of German industrialists and the general line of the European Union to minimize “dependence on China.”

Scholz had been traveling with top executives from Germany as he sought to strike a balance in relations with China. German companies have been pressing for what they characterise as fairer access to the Chinese market. Europe has been worried about a glut of Chinese goods flooding the European market. Scholz's visit comes after Berlin drew up a China strategy last yearthat aims to reduce economic exposure to the Asian powerhouse. The strategy has been vague on specific measures or binding targets, but Scholz has already raised the issue of fair competition.

Germany adopted first-ever China strategy, released by the German Foreign Office on 13 July 2023. The strategy labeled China a “strategic rival” and called for trade with the country to be cut back. The 64-page document accuses Beijing of trying to make other nations “more dependent on China.” It notes that Germany relies on China in several areas, including metals and rare-earth elements, medical technology, and pharmaceuticals, as well as information technology and products used to produce semiconductors.

With bilateral trade soaring to a record €300 billion ($337 billion) in 2022, China is currently Germany’s largest trading partner. Commenting on the strategy, German Chancellor Olaf Scholz said the goal was not to “disconnect” from the Chinese economy, but merely to “avoid critical dependencies in the future.” He added that his administration must respond to Beijing’s “more offensive stance” in recent years, calling for a “new framework” for relations.

Despite stressing its concerns about China, Germany’s new strategy also includes plans to boost engagement with Beijing, saying it continues to be an “indispensable partner” on issues ranging from climate change, food security, mitigation, and resolving international economic crises. China criticized Germany’s new strategy on relations with the People’s Republic, labelling it “counterproductive,” after Berlin declared that it would reduce its reliance on the Chinese economy. Asked about the strategy document at a press briefing on 14 July 2023, Chinese Foreign Ministry spokesman Wang Wenbin suggested the new policy would only harm bilateral ties, saying Beijing prefers to see Berlin as a partner rather than a rival. “We believe that it is counterproductive to compete and practice protectionism in the name of ‘de-risking’ and ‘reducing dependence,’ and to overstretch the concept of security and politicize normal cooperation. Such moves will only generate risks,” he said, adding that Germany’s approach will “exacerbate the division of the world.” The Chinese Foreign Ministry spokesman went on to state that cooperation with Berlin “far outweighs competition” and voiced hopes that Germany would “adopt a rational and practical China policy.”

Critics said Germany had been too complacent about the emergence of new global threats, with authoritarian states such as China and Russia proving to be increasingly assertive. Foreign Minister Annalena Baerbock said China had increasingly become a strategic rival in recent years. The country has experienced unprecedented economic growth, but it has also doubled down on authoritarianism — notably in its western Xinjiang province and in Hong Kong — and become increasingly assertive on a regional level.

"China has changed and therefore our policy towards China must change," said the foreign minister. "We are not decoupling from China, we merely want to derisk — that is minimize this risk," she said, noting the mistake that Germany had made in relying too heavily on Russian fossil fuels. "We neither want to hamper China's economic development nor our own," Baerbock added, but said Germany needed to diversify its economic ties. "Companies that make themselves particularly dependent on the Chinese market will increasingly have to bear the financial burden of this risk and part of economic security is that companies ensure need to ensure that in their supply chains that they are aware of human rights and ensure that they are not being violated," said the minister.

Baerbock said this was important not purely for the sake of human rights, but to also protect Germany's own interests — including economic ones. The foreign minister also said it might sometimes be necessary to counter coercion by China — as was the case with economic pressure imposed on Lithuania over that country's Taiwan policy — at a European level. Baerbock also said Germany would be pushing for China to forfeit its World Trade Organization designation as a developing nation, given that it is the world's second-largest economy.

In its 64-page strategy, the government said it wanted to ensure that economic cooperation with China "becomes fairer, more sustainable and more reciprocal." The Strategy presents the Federal Government’s views on the status of and prospects for relations with China. It enables the Federal Government to assert our values and interests more effectively in this complex relationship. It presents means and instruments by which cooperation with China can be continued in face of the competition and systemic rivalry with it, without endangering our free democratic way of life, sovereignty, prosperity, partnerships with others or security. It is to provide the framework within which individual federal ministries can give coherence to their policies on China. And it is to form the basis for enhanced coordination on China in Germany, Europe and beyond.

"China is Germany’s largest single trading partner, but whereas China's dependencies on Europe are constantly declining, Germany's dependencies on China have taken on greater significance in recent years," it said. The German government plans to adjust export control lists as part of a Europe-wide initiative to protect new key technologies. China itself has recently imposed export controls on some metals used in semiconductors. The document remarked that Chinese espionage against Germany a growing problem, "particularly in cyberspace."

"We resolutely oppose any analog and digital espionage and sabotage activities by Chinese services and state-controlled groups in and against Germany." The paper said it would ensure that German sovereignty was not violated by repression against Chinese citizens living in Germany. It also clarified that Germany would not be deterred from doing business with Taiwan. Beijing considers the self-governing island as part of its territory. "Germany has close and good relations with Taiwan in many areas and wants to expand them," it said.

A national security strategy unveiled in June 2923 already described China as a partner, competitor and rival, but the Foreign Ministry-fronted China strategy was expected to spell out what that means in more concrete terms. The national strategy noted the dangers of relying too heavily on China. "We see that the elements of rivalry and competition have increased in recent years," that document said.

There are disagreements inside the three-party governing coalition in Berlin over the approach toward China. The three parties agreed in their 2021 coalition contract that a strategy was necessary in order "to be able to realize our values and interests in the systemic rivalry with China." Bearbock's Green Party advocates a tougher course toward Beijing than Chancellor Olaf Scholz's Social Democrats. The discord was most recently on display after Scholz pushed through the sale of a partial stake in a container terminal at the port of Hamburg to a Chinese state-owned company, despite objections from the Greens.

Germany has the most open and enthusiastic policy towards China in Europe, or at least it did. Strengthening ties with Beijing was a critical focus for the government of Angela Merkel, who saw China as its biggest and most lucrative export market for automobile and engineering products. The EU's China policy will continue to be a struggle and tug-of-war concerning multiple agendas. Germany may be the most powerful state, but is even wrestling with itself in respect to its China policy. Concerns about China came to the fore in October 2022 as Berlin allowed Chinese shipping giant Cosco to buy a stake in a Hamburg shipping terminal. Center-left Social Democrat Scholz defied calls from six ministries — citing security concerns — to veto the sale, instead allowing Cosco to purchase a reduced stake. Both the Green Party and the neoliberal Free Democrats, junior coalition members, had expressed opposition to the sale in its original form. German Foreign Minister Annalena Baerbock called 01 November 2022 for changes to Berlin's China policy. Her intervention came just before Chancellor Olaf Scholz made his inaugural trip to Beijing with a trade delegation. Baerbock said "The Chinese political system has changed massively in recent years and thus our China policy must also change". She added that Germany needed to communicate its position on "the question of fair competition, the question of human rights and the question of the recognition of international law," which she called "our foundation of international cooperation." aerbock said Germany needed to learn from its experience with Russia to never again be dependent on a country that did not share Berlin's values. Heiko Maas, the foreign minister in Chancellor Angela Merkel's government, on 01 September 2020 stood up for Milos Vystrcil, the president of the Czech Senate, who had infuriated China by becoming one of the few senior European Union politicians to visit Taiwan. Maas told his Chinese counterpart, Wang Yi, that "threats have no place here" and that Europeans stood together "shoulder to shoulder." Maas said "We treat our international partners with respect and expect them to do precisely the same in return". Speaking after his meeting with Wang, Maas said Europe would not back down and allow itself to "become a political football in the great-power rivalry between the US, Russia, and China.... At the moment I am trying to make it clear to everyone I talk to ... that they must brace themselves for Europe to represent its interests more confidently".

In a sign of Germany's hardening position toward China, Maas used his meeting with Wang to urge Beijing to remove the draconian national law it recently imposed on Hong Kong and allow United Nations officials to observe the treatment of detained Uighur people in China.

The Federal Republic of Germany and the People’s Republic of China established diplomatic relations in 1972. Like all other EU partners, Germany adheres to a One-China policy and does not maintain relations with Taiwan, which China claims as part of its territory. Since 1972, German-Chinese relations have become very close-knit and multi-faceted while acquiring ever greater political substance.

Over the past few years, the significance of the People's Republic of China as a global political player has increased a great deal. Whatever challenges of global significance there may be, whether environmental and climate protection, the stability of the international economic and financial system, or the future development of the countries of Africa – today, none of them can be met without China's involvement.

China was once again Germany’s most important trading partner in 2018, with a volume of trade of almost 200 billion euros. In the face of growing uncertainties, international crises and global challenges, great importance is attached to cooperation and coordination under the comprehensive strategic partnership between the Germany and China. China views Germany both economically and politically as its key partner in Europe. The regular high-level coordination of policy in some 80 dialogue mechanisms, dynamic trade relations, investment, environmental cooperation and cooperation in the cultural and scientific sectors are key elements in bilateral relations.

Although bilateral relations are developing positively overall, fundamental differences remain. This is true in particular with regard to human rights, above all individual freedoms. Germany remains keen to see China continue to make economic progress, develop rule of law structures and social security systems, increase political and economic participation, and peacefully resolve minority issues. An important cooperation instrument for promoting the rule of law in China is the rule of law dialogue. Equally important is the annual bilateral human rights dialogue.

China's role in the sphere of development cooperation, too, has changed – from a recipient of Western aid to an important donor country and driver of innovation for nations in Africa, Asia and Latin America. In the view of the Federal Ministry for Economic Cooperation and Development (BMZ), China's new role offers great opportunities and potential for global development, provided that China takes account of sustainability issues and partner countries' debt sustainability in its international activities, for example in Africa. China can make a key contribution to the achievement of the goals of the 2030 Agenda for Sustainable Development, and it can open up new opportunities in this regard. In that context, it will be important to engage even more with China so as to include it in the resolution of global development challenges and in international systems of responsibility.

In view of this, the BMZ entered into a strategic partnership for development cooperation with the Chinese Ministry of Commerce as early as in 2010. In 2016, China and Germany agreed to establish a Sino-German Center for Sustainable Development (CSD), which was officially opened in Beijing in May 2017 by Minister Gerd Müller and Chinese Commerce Minister Zhong Shan. Its purpose is to foster dialogue on development policy, especially with a view to implementing the 2030 Agenda; to help improve mutual understanding; and to develop answers to fundamental questions in the field of development policy.

With regard to Sino-German relations, Berlin has long adhered to the principle of "change through trade" ("Wandel durch Handel" in German), hoping that increased business ties may lead to more democratic structures in China. Comments made by Joe Kaeser, the chief of German industrial giant Siemens, following Merkel's trip to China in September 2019 underlined Germany's longtime loyalty to its "Wandel durch Handel" (change through trade) policy. In warning Germany against taking too critical a stance towards Beijing, Kaeser also advocated being "thoughtful and respectful" towards China. "If jobs in Germany depend on how we deal with controversial topics, then we shouldn't add to indignation, but rather carefully consider all positions and actions," Kaeser told German daily Die Welt.

Foreign Minister Heiko Maas, Interview by with Redaktionsnetzwerk Deutschland, stated 12 Jul 2020 "Above all, we have made it clear that the principle of one country, two systems must not be undermined. This is the yardstick against which we will judge Beijing’s actions.... The main issue now is whether China complies with its international obligations. We will now take a very close look at the tangible impact of the security law. It’s clear that we will be guided by the extent to which the human rights situation and fundamental freedoms in Hong Kong are affected, which are guaranteed in the Basic Law.... It goes without saying that we want to have good relations with China, also economically, as China is an important partner for us. But it is also a competitor and systemic rival. Europe has a clear moral compass to guide us.... First and foremost, Europe must be careful not to get caught up in the great power rivalry between the US and China. And we can only succeed here by elaborating a common European position."

By mid-2020 criticism was growing over Berlin's reluctance to take a tougher stance towards Beijing. Much of Germany's hesitation stems from its desire to maintain harmonious relations, built largely on economic ties. With trade volume between Germany and China hitting €206 billion ($233 billion) in 2019, China is easily Germany's biggest trade partner. At the same time, the European Union as a whole is China's second largest trade partner after the United States. But when it comes to human rights abuses, Berlin has often been slow off the mark — whether on the mass internment of Muslim Uighurs in Xinjiang or China's new national security law, imposed on Hong Kong since July 1.

Economy and Energy Minister Peter Altmaier defended Germany's continuing trade relationship with China, following the passing of a controversial new security bill in Hong Kong. "It has always been the policy of the Western international community, including the EU, that international trade relations cannot be based solely on how democratic a country is," Altmaier told national newspaper Frankfurter Allgemeine Zeitung 15 July 2020. "We have never done that," he stressed, adding this was not even official policy in the times of Willy Brandt or Joschka Fischer – Germany's former Social Democratic chancellor and Green party foreign minister respectively.

Many people in Germany believe the United States losing its grip on world supremacy, and that China will be the country to take its place as dominant power in the coming decades, according to a survey published on 14 July 2020 by the UK-based YouGov polling institute. Some 42% of Germans believed that the United States was likely to slip from its position as leading world power in the next few decades, with China moving up to replace it. Just 14% of those surveyed believed that the US would retain its supremacy. Some 23% were undecided and 22% gave no response to the survey question, "Which country, the US or China, will be more powerful in the course of the next 50 years, in your opinion?" Opinions on the issue varied depending on which party respondents voted for. Supporters of the Left Party tended in the majority to predict China's future dominance over the US (54%), as did supporters of the business-friendly Free Democrats and the environmentalist Greens (52%). Voters who support the far-right Alternative for Germany party were the most likely to say that the US would remain as dominant world power but even here, only 17% responded in that vein. The survey was carried out from July 10-12, with 4,054 people aged 18 and over taking part.