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Germany's new China strategy: Critical but not decoupling

July 14, 2023

The political divisions are widening between Germany and China, but Berlin does not want to put shackles on its own economic interests when it comes to dealing with its largest trading partner.

Olaf Scholz and Li Qiang putting earpieces into their ears, standing in front of their national flags
Chancellor Olaf Scholz met with Chinese Premier Li Qiang in JuneImage: TOBIAS SCHWARZ/AFP

For the first time in its history, Germany has its own "China strategy" based on Germany's comprehensive new National Security Strategy, which was presented in June. "China has changed — this and China's political decisions make it necessary to change how we address China," the strategy begins.

The German government views the increasingly aggressive conduct of China with concern. Among other things, the China strategy is an attempt to reduce Germany's economic dependence on the country without giving up contact.

Trade volumes show how important the economic relationship is for both sides: In 2022, China was Germany's most important trading partner for the seventh year in a row, and the exchange of goods amounted to about €300 billion ($320 billion). In other words, the economic stakes are high.

Scholz favors less restrictions, Baerbock takes hard line

That is why both German Chancellor Olaf Scholz, of the center-left Social Democrats (SPD), and German trade and industry associations have worked to ensure that the strategy is not too restrictive. The result is that the requirements for German companies, though these are being encouraged to diversify and invest in other Asian countries, are quite general — much to the disappointment of the Greens, another of the three parties in Germany's coalition government.

Foreign Minister Annalena Baerbock of the Greens has taken a relatively hard line toward China in her time in office, more openly mentioning human rights violations than her predecessors did. That has occasionally caused friction: During an appearance with her Chinese counterpart Qin Gang when she visited China in April, he retorted: "What China needs least are lecturers from the West."

China strategy gives only 'pointers'

During Chancellor Angela Merkel's time in office from 2005 to 2021, relations between Beijing and Berlin were marked by a spirit of optimism. Trade grew rapidly; Merkel remained reticent with her criticism and was rewarded in 2014 when the two countries declared a "comprehensive strategic partnership."

But divisions have widened in recent years — or rather, they have been taken more seriously in Berlin and talked about more often than before. With regard to matters such as China's "rock-solid friendship" with Moscow despite the latter's invasion of Ukraine, the growing tensions in the Taiwan Strait, the oppression of the Uyghur minority in China or the much-lamented outflow of technological know-how from Germany, the talk has been not so much of partnership as of rivalry. A similar dynamic has also played out in other European capitals, and especially in Washington, where the government has come under increasing pressure.

"It is gratifying that the strategy very resolutely bids farewell to the dream of a comprehensive strategic partnership with China, which Angela Merkel also pursued with President Xi," Thorsten Benner, the co-founder and director of the Global Public Policy Institute, a Berlin-based think tank, told DW. "This clear departure was urgently needed."

Commerce leader warns against 'missionizing' approach

The German business community seems ready to live with the new strategy. Siegfried Russwurm, the president of the Federation of German Industries, has welcomed it but again warned of too many restrictions. "The danger is that entrepreneurial dynamism will be restricted too much, unnecessarily hindering wealth generation and innovation," he said. 

During consultations on the strategy, Peter Adrian, president of the Association of German Chambers of Commerce and Industry, defended the concept of checkbook diplomacy that has often been espoused by Berlin over the years (known in German as Wandel durch Handel or "change through trade").

"I am more than skeptical about whether sacrificing trade will lead to more positive change or a better world. Rather the opposite," he said during an interview with the German news agency dpa. "Because if we are in communication, we can better understand others as well as convey aspects of our values and culture." Adrian warned especially against taking a "missionizing" approach: No one wants to be thought of as a know-it-all, he said.

The question now is whether the new strategy can succeed in the balancing act of diversifying trade and reducing dependency on China in critical areas, while not endangering business in the process.

German FM Baerbock on Germany's new China strategy

Thorsten Benner labeled the strategy "a refreshingly realistic document with an ambitious amount of homework that now needs to be vigorously implemented."

However, he called the strategy "somewhat naive" in the parts where it strives for closer cooperation with China on climate issues, saying Beijing's system of one-party rule makes the desired open scientific and civil society exchange impossible.

Beijing's retort: China is not an adversary

On the sidelines of the recent NATO summit in Lithuania, Scholz repeated to journalists that the strategy was not about decoupling from China but about minimizing risks. Baerbock added that the strategy was meant to send the message "that we want to live in peace and freedom together with all partners in this world, with all countries in this world — but at the same time that we're not naive."

Both statements could probably be seen as conciliatory toward China. But the Chinese Embassy in Berlin reacted very quickly and very angrily to the strategy. "China is Germany's partner in overcoming challenges, not an adversary," it said in an initial reaction published in Chinese on the embassy's website on Thursday.

The statement added that an ideological view of China exacerbated misunderstandings and damaged mutual trust. The Chinese Embassy described the passages on Taiwan and human rights as interference in internal affairs, and the planned reduction of dependency as a risk to economic revival and global stability.

This article was originally published in German

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