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China touts Germany business ties despite unsolved tensions

William Yang in Taipei
June 22, 2023

Beijing is portraying Chinese Premier Li Qiang's business-oriented visit to Germany as a diplomatic success, but experts say its impact on reducing long-running tensions will be limited.

Men in suits stand near a robot
Li Qiang visited the Siemens headquarters in Bavaria on TuesdayImage: Ding Haitao/Xinhua News Agency/picture alliance

Chinese Premier Li Qiang spent his visit to Germany earlier this week lobbying business and government leaders on the importance of better bilateral cooperation, even as Germany continues to reevaluate its relationship with its largest trading partner amid geopolitical tensions.

Following talks with Li on Tuesday, German Chancellor Olaf Scholz reiterated his position of "de-risking" rather than "decoupling" economic ties with China.

Li told the CEOs of Germany's industrial giants on Monday, ahead of Tuesday's intergovernmental talks, that "lack of cooperation is the biggest risk, and lack of development is the biggest insecurity," China's state-run Xinhua news agency reported.

China's European charm offensive

The China-Germany government consultations were the first since the COVID pandemic, and Li's Europe tour reflects Beijing's efforts to de-escalate tension between China and European countries.

Over the past 3 years, Sino-European relations have deteriorated over China's "no limits partnership" with Russia, the growing geopolitical tension across the Taiwan Strait, the ongoing crackdown on the Uyghur minority in Xinjiang and increased control over Hong Kong as well as China's civil society.

China's aggressive military expansion in the Indo-Pacific region and growing international ambition have pushed lawmakers and experts in countries across Europe to urge a re-examination of ties with China.

A look back at recent German-Chinese relations

Prior to Li's visit, Germany released a sweeping national security strategy, in which it characterized Beijing as a "partner, competitor, and systemic rival."

And a report released by the German intelligence agency described China as "the biggest threat" in terms of economic and scientific espionage as well as foreign direct investments in Germany.

Li headed to France on Thursday to attend a summit for a "new global financing pact," being held at the initiative of French President Emmanuel Macron.

"Beijing wants to make sure that it doesn't lose Europe and that they can somehow rebuild ties," said Zsuzsa Anna Ferenczy, assistant professor at the National Dong Hwa University in Taiwan and a former political adviser in the European Parliament.

She told DW that Beijing was trying to navigate the growing skepticism from European countries by engaging with EU member states through bilateral formats. Germany, which has a high level of economic dependence on China, seems to be one of the prime targets of Beijing's diplomatic outreach in Europe.

"There is no other country more important and more convenient for China to reach out to than Germany, because Beijing knows that for Germany, China remains an important market," she said.

Business comes first

Chinese Foreign Ministry spokesperson Mao Ning said during a daily press conference on Wednesday that Li and Scholz underscored the need to deepen cooperation "at a higher level, higher standards, and higher quality" while joining forces to maintain the stability of global production and supply chains.

At the 11th China-Germany Economic and Technical Cooperation Forum in Berlin on Tuesday, Li said strengthening cooperation between China and Germany could ensure "mutual benefit and win-win results" and is the "right thing."

 Li Qiang stands at a podium
The Chinese premier touted deeper cooperation at an economic conference during his visit Image: Ding Haitao/Xinhua News Agency/picture alliance

"If we strengthen cooperation in science, industry, and business, we will contribute to the stability of the world economy," he said, adding that Berlin and Beijing should seek common ground and "work hand in hand to help each other succeed."

According to the Chinese Foreign Ministry, Li and Chancellor Scholz signed a series of cooperation agreements tailored for several key sectors including climate change, green transition, economy and trade, as well as automobile manufacturing.

Germany's critical trade ties with China

According to German government statistics, Germany and China traded nearly €300 billion worth of goods in 2022, and China was Germany's most important trading partner for the seventh consecutive year.

More than 5,000 German companies maintain 1.1 million employees in China. In particular, German auto giants like Volkswagen and BMW remain heavily reliant on China's cheap labor force and growing car market.

On Wednesday, BMW CEO Oliver Zipse said the carmaker's strong ties with China were a "win-win" for the auto industry's pivot towards manufacturing green vehicles.

Wu Qiang, an independent academic and political commentator in China, told DW that Li's trip to Germany was a form of "economic diplomacy" that's aimed at creating a buffer for the intensifying competition between China and the US.

"Li's visit to Germany mainly focused on economic issues, and his diplomatic activities were meetings with huge German businesses and chief executives from these companies," said Wu.

At the same time, Germany is taking steps to reduce economic dependence on China, with companies trying to diversify sales and procurement from the Chinese market, said Siegfried Russwurm, president of the Federation of German Industries.

The strategic shift was prompted by the global supply chain disruption caused by the COVID-19 pandemic and Germany's dependence on Russian energy.

Li's trip to Germany has been touted as a big diplomatic score for Beijing in China's state-run media, with the English-language tabloid Global Times saying that Li was able to defy the "de-risking noise in Europe."

However, independent Chinese scholar Wu thinks that the long-term effect of Li's European tour and Beijing's overall diplomatic charm offensive against Europe will be limited.

"Li's economic outreach may be effective for certain companies in Germany, but it can't change the German government's or European Union's attitude toward China," he said.

China's global ambitions: Can the West keep up?

Edited by: Wesley Rahn