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Business

Economic Sanctions Wrong Way to Deal With China, Experts Say

Beijing's reaction to the protests in Tibet has prompted Germans to call for a boycott of the Olympics and economic sanctions. Business representatives are now asking people to consider the consequences of such a move.

Chinese people waving German flags

Will the Chinese soon think twice before waving German flags?

So far, Alexandra Voss hasn't noticed a mood change among her Chinese business partners. They're still interested in German companies for their reliability, know-how and state-of-the-art technology. On a private level, however, the executive director of the German Chamber of Commerce in the southern Chinese city of Guangzhou sees things differently.

"My Chinese acquaintances are a little irritated," she said. "They feel that the West in general fails to understand the Chinese perspective."

It's a sentiment that could soon spread and lead to lasting damage in Sino-German business ties -- and bilateral relations in general, should German calls for an Olympic boycott and economic sanctions continue, according to some of Germany's business leaders.

"Curtailing business ties would clearly hurt the German economy, and therefore all of us," Juergen Hambrecht, the head of chemical giant BASF, told German daily Handelsblatt.

Hurting the small guy

Hambrecht clearly has an interest in good relations with China. His company is already one of the biggest foreign investors in the country and just announced plans to invest billions more in the coming years. More than 3,000 German firms are currently doing business in China, and German exports to the country amounted to 54 billion euros ($85.9 billion) in 2007.

People working on a conveyor belt in a shoe factory in China

Prices for shoes made in China are hard to beat

But rather than mainly hurt German companies looking for business opportunities in the world's most populous nation, consumers looking for anything from toothbrushes to televisions would also have to bear the brunt of a boycott.

"Prices for consumer goods would rise in Germany," said Tim Glaser, the executive director of the German-Chinese Business Association. "An economic boycott wouldn't hurt China."

Promoting human rights -- but how?

Some say that people will have to be willing to pay higher prices to take a stand on human rights.

An open wallet with coins and bank notes inside

Should Germans avoid spending their money on products made in China?

"A consumer can show solidarity and say: Yes, I'm ready to do my part and pay more to put pressure on China," Thomas Mann, a European parliamentarian and member of German Chancellor Angela Merkel's Christian Democratic Union, told German daily Die Welt.

But boycotting products "made in China" is not necessarily the best way to do that, said Petra Herkert, a business professor and head of the China Institute at Furtwangen University in southwestern Germany.

"German companies in China certainly take steps, such as providing clean toilets and paying decent wages, to show that they're supporting human rights within the country," she said.

Room for improvement

While it was certainly appropriate to consider economic sanctions in cases of blatant illegal activity, such as forced labor or product piracy, a political approach would be a much better way right now, Herkert added.

"We shouldn't risk pushing China into a new isolation," she said.

Glaser of the German-Chinese Business Association also said that rather than focusing on the current problems in Tibet, the West should acknowledge China's achievements over the past 30 years and help China improve the situation.

"People should realize that China has become a victim of its own success," said Glaser, whose organization has about 350 members. "China is on the right track. Of course there is room for improvement, but public accusations will likely lead to a hardening of the Chinese position."

Keep talking

That's also a concern for Monika Staerk, the executive director of the German Asia-Pacific Business Association (OAV), a privately held organization that supports German companies doing business in Asia.

"We're in the process of gambling away a lot right now," Staerk said. "This isn't just about limiting sales losses. We're smashing trust, reputation and mutual respect in terms of a political and societal dialog."

German Chancellor Angela Merkel and Chinese Premier Wen Jiabao look at each other

German Chancellor Angela Merkel's reportedly had some frank discussions with her Chinese counterpart

Back in Guangzhou, Voss also said that Germany should continue to lobby for a peaceful solution to the situation in Tibet. But telling Chinese leaders to meet with the Dalai Lama ahead of the Olympics, as German Education Minister Annette Schavan recently did on a trip to Beijing, was not the smartest thing to do, she added.

"I don't think that's very helpful," Voss said. "One shouldn't set deadlines for the Chinese."

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