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Germany-China talks: Chancellor Olaf Scholz's juggling act

Yuchen Li in Taipei
April 13, 2024

The German chancellor is set for tricky talks with Chinese leader Xi Jinping, as Berlin weighs economic interests against geopolitical concerns.

German Chancellor Olaf Scholz visits a Chinese research project
German Chancellor Olaf Scholz is keen to boost economic ties with ChinaImage: Michael Kappeler/dpa/picture alliance

German Chancellor Olaf Scholz is in  China for a three-day diplomatic visit that includes meetings with Chinese leader Xi Jinping.

Accompanied by a high-level business delegation, the German leader is expected to address grievances over the trade deficit between the EU common market and the world's second-largest economy.

Scholz is also expected to question China's ties with Russia amid the Ukraine war and Beijing's aggressiveness toward Taiwan — a self-ruled island China claims as its own.

Scholz is scheduled to meet Xi and Chinese Premier Li Qiang in Beijing on Tuesday, the last day of his trip. This is Scholz's second trip to China as chancellor — he completed his first visit in November 2022.

What's on the agenda as Scholz returns to China?

Much has changed since Scholz's last visit to Beijing. Last year, Berlin unveiled its first ever "Strategy on China" aimed at reducing dependence on the Chinese market in critical areas and bringing Germany into line with the EU's push for "de-risking" from the Asian superpower.

And yet, Scholz is traveling with a group of industrial executives, signaling Berlin's intention to maintain business ties.

Zsuzsa Anna Ferenczy, a former political adviser in the European Parliament and an assistant professor at Taiwan's National Dong Hwa University, said the change in Germany's language on China "doesn't seem to materialize in reality."

"The question is, why is Scholz going to [Beijing] now?" Ferenczy told DW, describing the trip as an element of Germany "figuring out how to live up to its own commitments."

US-China trade war: Which side is Germany on?

Philippe Le Corre, an expert on China-Europe relations at the Asia Society Policy Institute's Center for China Analysis, said that perception is divided within Germany on how to continue doing business with China.

The split exists not only within the government coalition, but also among different industries, he said. There are at least two types of business groups, including "those who want to invest more in China" and "those who feel China is becoming too much of a competitor."

How will Scholz address Ukraine and Taiwan?

In addition to this dilemma, Scholz faces pressure from Brussels on geopolitical issues. When meeting Xi, he would need to address China's support for Russia's war machine amid the ongoing invasion of Ukraine.

Also, China's growing military presence in the South China Sea and Taiwan Strait has raised concerns in the West.

"In Europe, the interest on the Taiwan issue has never been stronger, even for Germany, which tends to be more business-minded than France or the UK," said Le Corre, who expects Scholz to bring up the Taiwan issue during his time in China.

In June 2023, Scholz met with Premier Li in Berlin. According to Scholz's comments in the German parliament, the chancellor had warned Beijing against using force to achieve territorial changes, particularly against Taiwan — even though his comments to lawmakers were reportedly stronger then the ones he made during Li's visit.

MEP Reinhard Bütikofer on the German-Chinese talks

During the trip "we can expect Berlin to perhaps stay on the same line with what they had said before, that the use of force is not acceptable," Ferenczy told DW. "But it's a question of how they will balance raising security concerns and economic interests."

Le Corre has a similar view.

"They're not here to talk geopolitics," he said, "so the credibility for your language on politics or diplomacy is kind of hampered."

Beijing 'unhappy' with EU probe into its electric cars

China has its own issues with the EU — most notably the investigation launched by the European Commission into Chinese electric vehicles (EV) and state subsidies.

The probe was announced in September. It could allow European authorities to impose punitive tariffs on cheaper Chinese EV imports in a bid to protect EU manufacturers.

China's ambassador to the EU has described the investigation as "unfair" and said Beijing was cooperating "because we do want to avoid a situation that the two sides will have to resort to trade measures against each other."

Le Corre told DW that Scholz will have to comment on this issue during his trip, as Germany is China's largest trade partner in the EU. And the German leader would likely face pushback from Beijing, with Chinese leaders asking: "If you want to do business with us, then why launch this investigation against Chinese EVs?"

'Playing different cards' to different EU members

China's diplomatic efforts go far beyond Germany. In May, China's Xi is set to visit Europe and meet French President Emmanuel Macron.

Analyst Le Corre told DW that Xi will likely play different cards since China is "the champion of dividing European countries."

Decouple from China? Not quite yet

Noah Barkin, a senior adviser with Rhodium Group's China practice, said the EU has spent the past year building up its economic leverage with China through the use of trade tools and the launch of its economic security agenda.

But he pointed out "that leverage can be undermined very quickly if the leader of Europe's biggest economy sends different signals to Beijing."

Against this backdrop, Ferenczy said she would expect Berlin to represent the message sent by the EU that "trade with China needs to be rebalanced." Otherwise, "I think this trip that Scholz is undertaking serves only German interests."

Edited by: Darko Janjevic

China: Germany's rival and partner

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