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China: Berlin's difficult balancing act

Matthias von Hein
September 8, 2021

Profitable economic relations clash with competing systems. Germany is caught between the fronts. Berlin's most powerful ally and its most important trading partner are on a collision course — the US and China.

Symbolbild Deutschland und chinesisch-amerikanische Rivalität
Image: picture-alliance/C. Ohde/M. Cui

The story of Germany and China is a story of balancing values and other interests. Those interests are primarily economic — China has been Germany's most important trading partner since 2015. After seven years of negotiations, the EU signed the Comprehensive Agreement on Investment (CAI) with China in December 2020, under Germany's EU Council presidency.

The appeal of the Chinese market is likely to grow; in the next 10 years, it is estimated that the country will account for 30 percent of global economic growth.

Berlin and Beijing's relationship has evolved during the 16 years of Angela Merkel's chancellorship and has been elevated to the status of a "comprehensive strategic partnership." This is also because none of the major problems facing humanity, such as climate change and disarmament, can be solved without Beijing.

For 10 years, the two countries have held regular intergovernmental consultations. The latest took place in April of this year, virtually instead of in-person, due to the coronavirus pandemic.

The atmosphere had noticeably cooled. There is the massive persecution of the Uighur minority in Xinjiang, the oppression of the democracy movement in Hong Kong, Beijing's aggressive performance in the South China Sea,threatening gestures toward Taiwan. The conflict with China is growing. The most visible sign of this came in March, when the EU imposed sanctions on China, for the first time since the Tiananmen Square massacre of 1989, for human rights violations against the Uighurs. In return, China imposed sanctions on members of the EU's parliament, officials, and academics. The European Parliament responded to this in May by freezing the ratification of the CAI.

Successful autocracy

In its strategic outlook of March 2019, the European Commission describes China not only as a cooperation partner and competitor: China was expressly referred to as a systemic rival, also as a key global player and leading technological power.

For a long time, it was presumed in the West that only democracies and market economies were able to create prosperity for a large part of the population. In China, you can see how, even in a communist autocracy, hundreds of millions of people have been brought up out of absolute poverty and into the middle class.

"That is why China looks very attractive as a model for many countries in the world," Heinrich Kreft told DW. The diplomat heads the Center for Diplomacy at Andrassy University Budapest.

"We take note," says Kreft, "that China is now an extremely present political actor on the world stage,"  also through its global "Belt and Road" (BRI) infrastructure initiative. The diplomat concludes: "Basically, all our international relations have a China aspect."

Made in Germany - China: Partner or Rival?

Own rules

As a global player, China is no longer simply adapting to the rules made by the West, Berlin-based China expert Eberhard Sandschneider observed: "The Chinese make their own rules."

By the 100-year anniversary of the founding of the People's Republic of China in 2049, China wants to be a mature, modern socialist power with the ability to set and shape rules economically and technologically at the top of the world. With that, China wants to get back to being in the center of the world order, explains Trier-based China researcher Sebastian Heilmann in an interview with DW. "And that is, of course, in conflict with the hitherto hegemonic power, the United States."

Angela Merkel and Chinese premier Li Keqiang at digital government consultations in April 2021
Angela Merkel took part in regular government consultations with ChinaImage: MICHELE TANTUSSI/REUTERS

Conflict between major powers

Wang Jisi, president of the Institute of International and Strategic Studies at Beijing University, described this conflict in the July/August edition of the influential journal Foreign Affairs: "The United States and China are embroiled in a contest that might prove more enduring, more wide-ranging, and more intense than any other international competition in modern history, including the Cold War."

Berlin's dilemma: This competition is developing between its most powerful ally and its most important trading partner. Germany faces the threat of getting caught between the fronts, especially when it comes to technology.

"The US wants to do everything in its power to prevent China from overtaking it in key technological areas," US expert Josef Braml highlighted to DW. "Startled, the US now wants to hinder China's economic and military modernization. That is why they are counting on a strategy of economic decoupling — with no consideration about the costs for Europe."

Map showing China's new Silk Road

US or China?

With a policy that tries to serve both sides, US expert Braml expects that Berlin will not be able to keep itself removed from the issue forever: "In the struggle for techno-political spheres of influence, the US will increase the pressure on third countries and make them choose whether they do business with either America or China."

Economic interdependence and the worldwide division of labor are regarded today as a risk in the geo-economic thinking of the world powers.

As an economic power that relies heavily on exports, Germany will have to find an answer to this new situation.

This article was translated from German.

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