Scholz Steers Germany Closer to China, Undermining European Unity

On Friday, German Chancellor Olaf Scholz arrived in Beijing for an 11-hour visit with General Secretary Xi Jinping and Premier Li Keqiang. He is the first G7 leader to visit Beijing since the pandemic began, and the first Western leader to meet with Xi since the Chinese leader garnered a precedent-breaking third term at the 20th Party Congress. The timing and nature of Scholz’s trip has been widely criticized by political and rights groups in Germany and Europe—minus the German business community—who viewed the visit as a pilgrimage that will reinforce German dependence on a systemic rival and fracture European unity. Finbarr Bermingham from the South China Morning Post summarized the controversy surrounding Scholz’s visit to Beijing

The trip comes amid a broad pushback against China in Europe, a trend that began during the pandemic but accelerated after Russia’s invasion of Ukraine, due to Beijing’s “no limits” partnership with Moscow.

Scholz is under extreme pressure from coalition partners who are pushing for a tougher stance on China, European allies who are concerned that the trip is undermining efforts to talk to China in a “single voice”, and the United States, which has been advocating a “single theatre” approach to dealing with Russia and China.

[…] “A visit by the German chancellor will be staged by China as an endorsement of Xi’s government, which is why the trip is controversial within the German coalition and among some European partner countries,” said Mikko Huotari, executive director of the Mercator Institute for China Studies, a German think tank. [Source]

Scholz did manage to convey important messages to the CCP leadership during his visit. He stated that any change in Taiwan’s status quo must be peaceful and consensual, and that sanctions and coercive measures against E.U. states or parliamentarians are unacceptable. Scholz also secured an agreement allowing expats in China to use Germany’s BioNTech COVID-19 vaccines, and persuaded Xi to publicly affirm that they both “oppose the use of, or threats to use, nuclear weapons.” Some analysts view this a victory, given Vladimir Putin’s threats of nuclear escalation in Ukraine and his close relationship with Xi. Some skeptics, however, argued that China should not be given too much credit for passing this low bar, especially without actions to back up these words, and noted that Xi’s statement may not necessarily have been directed against Russia

Traveling with Scholz was a posse of German business executives with deep economic ties to China. As many journalists have pointed out, German companies tend to ignore their unhealthy dependencies on China and, for the sake of continued profit, are reluctant to withdraw their investments, despite growing calls from officials and activists to diversify. Columnist Stéphane Lauer wrote this week in Le Monde, “Berlin seems to favor business as usual with the Middle Kingdom. Is this commercial cynicism, astounding naivety, assumed self-interest or a severe lack of geopolitical vision? It is difficult to answer.”

Originally, French President Emmanuel Macron had offered to conduct a joint visit at a later date to avoid association with the 20th Party Congress, but Scholz turned him down. Scholz’s solo trip was viewed by many in France as a defiant act of unilateralism that has alienated European allies. E.U. industry chief Thierry Breton took a subtle jab at Scholz, stating: “It’s very important that the behaviour of member states towards China… change in a way that’s more coordinated than individually-driven.”

Among his stated motivations for visiting Beijing, Scholz mentioned a desire to discuss human rights with Xi. While Scholz did bring up the issue of minority rights at his press conference with Li Keqiang, many observers viewed his concern as conflicting with the signals sent by bringing a business delegation, particularly at a time when the UN has documented forced labor and potential crimes against humanity in Xinjiang. Uyghur groups demanded that Scholz cancel his trip, as did 185 Chinese dissidents who penned an open letter to Scholz stating that China is “gradually developing into a new Nazi-style dictatorship.”

Adding fuel to the fire, just before his departure Scholz decided to ram through a controversial Chinese investment deal in the German port of Hamburg. Chinese state-owned shipping company COSCO was allowed to purchase a 24.9 percent stake in one of the port’s terminals, sparking an uproar across the political spectrum. Many critics drew parallels between Scholz’s port deal and former Chancellor Angela Merkel’s policy of welcoming Russian investments in German energy infrastructure, the latter of which has yielded significant geopolitical leverage to Vladimir Putin and helped sustain Russia’s war against Ukraine. But even under Merkel, the federal government blocked the sale of shares in the German electricity grid operator 50 Hertz to a Chinese state-owned company; both the power grid and port terminals are part of Germany’s critical infrastructure. Thorsten Benner, director of the Global Public Policy Institute in Berlin, described in Foreign Policy how Scholz’s COSCO deal leaves Germany open to future economic “blackmail” from China:

The even bigger mistake was to push through Cosco’s acquisition against the objections of six ministers who all recommended to block the deal. Cosco is a direct instrument of the Communist Party state. It is an extremely well-run company seeking a dominant position globally through acquisitions and integrated data and goods flows, all while taking advantage of the economies of scale of its closed-off home market. Cosco is set up to make profits while, at the same time, serving China’s global political, economic, and military ambitions. Where necessary, the company can also serve as a tool of political coercion. It has already bought stakes in ports across Europe (including with Hamburg’s main competitors Rotterdam and Antwerp) and also in the United States (where it owns stakes in Long Beach, Los Angeles, and Seattle). In Europe, Cosco skillfully plays major ports, all publicly owned, off one another. Scholz could have chosen to turn the tables on Cosco by pursuing a European port initiative that would have presented Cosco with a united European front. Rather, the chancellor gave in to Chinese blackmail. Beijing had threatened economic consequences should Germany not have given a green light to the Cosco deal. Chinese leadership will continue to seek to exploit this weakness over and over again. [Source]

This week, a leaked diplomatic cable revealed that Chinese officials threatened to reduce bilateral trade with Belgium after the Belgian foreign minister publicly cautioned about the risk of Chinese investments in Belgian port infrastructure. COSCO owns similarly-sized stakes in two of Belgium’s major ports. Making matters worse, Scholz also appears ready to approve the sale of a German chip-production factory to a subsidiary of a Chinese company. This would defy the advice of Germany’s intelligence agency, and comes just a week after the U.S. unleashed strict measures to curb China’s access to semiconductor technology. With Scholz going it alone, China has increasingly succeeded in dividing Europe.

German political figures condemned Scholz’s latest moves vis-à-vis China. Reinhard Bütikofer, a member of the Green Party in the European Parliament, accused the chancellor of playing “Merkel as usual.” CDU politicians Jens Spahn and Johann Wadephul called on Scholz to “not create new one-sided dependencies in China.” FDP Secretary-General Bijan Djir-Sarai stated, “I find the timing of this trip extremely unfortunate.” Michael Brand, the speaker for human rights in the CDU-CSU caucus, said “Scholz splits the EU by kowtowing to the Communists.” Referencing the COSCO deal and other controversial decisions in his Watching China in Europe newsletter, Noah Barkin summarized Scholz’s strategic blunders on China policy

It was a stunning move from the former Hamburg mayor that raises serious questions about the broader foreign policy rethink he promised after Russia’s full invasion of Ukraine in February. It weakens Scholz (a poll released on Monday showed that 55 percent of Germans believe he is out of his depth), deepens divisions in his government, and undermines its quest for a common European policy toward Beijing, a goal that was spelled out in black and white in the three-party coalition agreement. More worryingly, it shows that Scholz and his advisers still have a steep learning curve on China. Germany’s sway with Beijing depends on a united front in Berlin, in Europe, and across the G7. Scholz has managed to torpedo them all in the span of a few weeks. To be clear, the problem is not that Scholz is meeting with Xi. The party congress showed that Xi may be the only member of China’s leadership who is worth talking to these days. And it is normal for Scholz, who has been chancellor for nearly a year but unable to meet with Xi in person because of China’s restrictive COVID-19 rules, to want to sit down for a face-to-face with the country’s newly anointed leader for life. But the when, where, and how of this first meeting are important. And Scholz has whiffed on all three.

[…] Like Merkel, Scholz is gifting Xi a geopolitical victory without much in return. And he is voluntarily sacrificing whatever leverage his government might have had with China. He may not realize that but members of his own government—some of whom have been working diligently for months on a new, tougher China strategy—are furious. “As long as the German chancellor doesn’t buy into his own government’s China strategy, then it is worthless,” one German official fumed. “The Chinese can see the divide in Berlin and Europe, and believe me, they will find a way to exploit it. It is absolutely fatal. And what is so stunning is that Scholz has done all of this of his own free will.” [Source]

In The Diplomat, Anton Karppanen argued that in the long run, Scholz’s current approach to China is unsustainable:

First, the main points of tension in the China-EU relationship, such as China’s support for Russia, aggression toward Taiwan, and human rights violations in Xinjiang, are core issues for China and the EU alike, and neither side is likely to change course. This dynamic drives them toward a more complicated, challenging relationship.

[…] Second, Germany is in a position where it is a leader in the EU but is finding its China policy at odds with many other member states in the bloc, even though a more unified approach would benefit everyone.

[…] Third, the United States and other NATO and Western allies will likely put more pressure on countries to close ranks in issues related to trade and openness to Chinese investment in critical infrastructure.

[…] These three major currents in China and the EU’s relationship are difficult to reverse and will likely continue to define the relationship between Germany, the EU, and China. Germany’s recent lack of a coherent direction on its China strategy sends the wrong message at a time when there is increasing consensus on the need among other EU leaders for a more strongly strategic approach. [Source]

Meanwhile, Chinese commentators and analysts eagerly awaited Scholz’s visit. The Global Times predicted that his visit would provide stability in China’s relationship with Germany and allow German companies to reap rewards for their “pragmatism.” Another Global Times article claimed that the “‘noise’ that hypes so-called worries about Germany’s dependency on China would have a limited influence as long as Germany’s coalition government sticks to a pragmatic stance for its own interests.” In his Sinification newsletter, Thomas des Garets Geddes shared excerpts from Chinese analysts hopeful that Scholz’s visit would improve bilateral relations

Wu Huiping (伍慧萍) – Deputy director of the Centre for German Studies at Tongji University

  • “[COSCO’s acquisition] underlines that German Chancellor Scholz is still relatively steady and pragmatic vis-à-vis developing relations with China. The fact that he withstood pressure to push through this acquisition shows that he wants the pragmatic and cooperative relationship between China and Germany to continue. This also helps inject stability into Sino-German relations.”

[…] Tian Dewen (田德文) – Researcher at the Institute of Russian, East European and Central Asian Studies, Chinese Academy of Social Sciences (CASS)

  • “Scholz’s forthcoming visit to China is a sign of Berlin’s strong desire to encourage the further development of Sino-German cooperation at an important point in time, that is, right after the 20th Party Congress and just as Chinese-style modernisation is embarking on a new journey.”

[…] Cui Hongjian (崔洪建) – Director of the Department of European Studies at the China Institute of International Studies (CIIS)

  • “The fact that Scholz has decided to visit China despite internal and external pressures [not to] shows his political courage and political competence as well as his willingness to exert a positive influence on German domestic public opinion vis-à-vis China.”
  • “With Scholz’s visit, I believe that more European leaders will be willing to come to China and cooperate with China.” [Source]


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