Scholz Visit to China Draws Trepidation Over Germany’s Economic Dependence, European Disunity

This week, German Chancellor Olaf Scholz completed a three-day visit to China. It was his second trip since becoming chancellor and his first since the German government produced its China strategy last July. His previous trip to China in November 2022, only weeks after Xi’s coronation at the 20th Party Congress, was heavily criticized for undermining European unity and prioritizing business deals over human rights. This recent trip proceeded in a similar fashion, leaving many critics worried that Scholz is trading long-term sustainability for short-term gain in an attempt to sustain Germany’s prized economic relationship with China. Alexandra Stevenson and Melissa Eddy from The New York Times summarized the current dynamics underpinning Germany’s relationship with China, which complicated Scholz’s position:

Mr. Scholz’s trip was an example of the difficult dance that Germany is trying to do: maintaining economic ties with China while managing U.S. pressure to align itself more closely with Washington against Beijing.

In his meetings, Mr. Scholz highlighted Germany’s commitment to doing business with China, but he also warned that Beijing had to curb the flood of Chinese goods into Europe. At the same time, he expressed reservations about the European Union’s investigations into China’s use of subsidies for green technology industries, saying that any discussion about trade must be based on fairness.

[…] China’s manufacturing push in green sectors like electric cars and solar panels has touched off trade disputes with Europe and the United States, where such industries have also received government support. But with 5,000 German companies active in the Chinese market, Germany stands to lose more than many of its European partners would if Beijing were to retaliate against the European Union.

“If the E.U. goes too hard against China, we could expect countermeasures and this would be a catastrophe for us,” said Maximilian Butek, the executive director of the German Chamber of Commerce in China.

“For us it’s extremely important that the Chinese market remains open,” he said. [Source]

In Germany, the reaction to Scholz’s trip was mixed, with many commentators criticizing his approach and lack of deliverables. One Der Spiegel article read, “Germany is too easily dazzled by China,” and argued Germany is not succeeding in obtaining enough concessions from China. MERICS Politics and Society Program Director Katja Drinhausen stated, “Although Scholz did raise key points of concern for Germany and the EU, the visit highlighted China’s success in steering the conversation and limiting it to issues China can deflect or push back on.” One op-ed in Germany’s business-friendly Handelsblatt was titled, “Scholz repeats Merkel’s mistakes in Beijing,” and argued that he “hardly achieved anything on his trip” and “makes it too easy” for Xi Jinping. One analyst interviewed in Die Zeit suggested that in order to improve its bilateral negotiations, Germany must cultivate greater China expertise.

Many critics underlined Scholz’s refusal to take a European rather than German approach. Abigaël Vasselier, head of foreign relations at MERICS, said: “I have to say it’s a disaster … there was no European dimension, either in the preparation or in the outcome of the visit. It shows how nationally Scholz played this and how non-European he has been,” adding, “It’s almost like if what’s happening in Brussels is a completely different universe.” Cora Jungbluth and Anika Laudien, China analysts from the Europe’s Future Program at Bertelsmann Stiftung, argued that “the chancellor’s trip is a missed opportunity to establish the EU as an independent geopolitical player acting out of a position of strength. […] Chancellor Scholz could have sent a clear signal if he had traveled to China not alone, but together with other high-ranking EU politicians or heads of government from other member states.” Describing Scholz’s trip, an editorial from France’s Le Monde complained about “The dangers of going it alone”:

In pleading for ‘open and fair’ competition during his China trip, the German Chancellor seems to be unaware that Beijing is only concerned with power politics. Europeans run the risk of becoming weakened if they do not work together.

[…] When Xi visited Paris in March 2019, he was received at the Elysée not only by Emmanuel Macron, but also by Merkel and Jean-Claude Juncker, then European Commission president. In April 2024, the German chancellor was visiting China three weeks before a state visit to France by the Chinese president. It looks as though every country will go it alone, with Xi likely to be the only winner. [Source]

Chinese state media were happy to amplify Scholz’s distance from the E.U.’s “de-risking” agenda:

Highlighting another critique, Wenzel Michalski, Director for Germany at Human Rights Watch, wrote that the “German Chancellor’s Trip to China [was] a Wasted Opportunity” to address human rights issues:

Germany’s economy is very dependent on China, so expectations were low that Chancellor Olaf Scholz would place human rights concerns prominently on the agenda of his April 13-16 trip to China. But his apparent unwillingness to publicly say the words “human rights” was deeply disappointing.

[…S]adly, the German China Strategy proved to be nothing but hollow words. Germany’s experience with Vladimir Putin’s Russia should have made it clear that abusive governments make unreliable trade partners. Instead of steering Sino-German relations on a new course consistent with its own strategy by publicly promoting respect for human rights, Scholz defaulted to the well-worn path that will not further Germany’s long-term interests nor the basic human rights of the people in China. [Source]

Many commentators worried about how Scholz’s China strategy will affect Germany’s economic future. His 12-member business delegation comprised corporate representatives and three ministers eager to make new deals. Volkswagen, whose CEO was initially scheduled to participate, announced on the eve of the trip that it will invest $2.7 billion USD to expand its operations in China. But a Der Spiegel article on Friday described Volkswagen’s ongoing engagement in China as increasingly risky, calling it a “China trap.” For The Financial Times, Martin Sandbu expanded this analysis to Scholz’s broader economic approach in an article titled “Germany’s doomed China strategy”:

“Much of the debate in Germany, and other countries’ debate about Germany’s China strategy, tends to start from the premise that the interests of German industry dominate the political strategy — and this leads to a strong bias to keep bilateral trade and investment flowing even at the cost of greater dependence.

[…] But that is no longer true, if there is, for example, a trade-off between promoting exports to China and encouraging investment into local production there or if production in China cannibalises export markets for domestic German production.

For now, German big business is still able to convince politicians that what is good for them is good for other segments of the German economy. But soon enough, the corporatist spell will surely break under the pressure of conflicting claims from labour and smaller businesses. That will shake the foundations of German politics, for Scholz’s own Social Democrats more than anyone. [Source]

While Scholz seeks to maintain China’s status as one of Germany’s privileged partners, the tide may be shifting. Finbarr Bermingham from the South China Morning Post reported on Germany’s looming “China shock” and its “waning economic honeymoon” with China:

A growing number of economists believe the prolonged Sino-German honeymoon period is over. Tales like [German automobile supplier] Webasto’s struggle with Chinese competition will become the rule rather than the exception in the relationship as the complementary nature that enriched both sides over the past quarter of a century wanes.

[…] As China has moved up the value chain and its manufacturers have become more sophisticated, suppliers and customers of German industry have become fierce competitors. The German automotive industry’s sluggish embrace of new electric vehicles, along with China’s stunning rise in this sector, presents a whole new raft of challenges.

[…] A report by research house Rhodium Group found big German companies were cutting jobs in their home market to expand investment in China, and noted a backlash from trade unions.

[…] At the same time, German exports to China have been plunging. In 2023, they fell 4.2 per cent from the previous year. The trend worsened into 2024, Chinese customs statistics show, with a 16.6 per cent slump over the first quarter. [Source]

One notable talking point for Scholz was his attempt to confront Xi about China’s support to Russia in its war against Ukraine. Scholz told reporters that he believes “a building block has been put in place” that will contribute to a peaceful resolution of the war. But German media were not impressed. Headlines on that topic from Der Spiegel read, “Meat and apples instead of a promise of peace,” and from Handelsblatt, “Where Scholz wanted peace and only got apples,” referencing minor agreements to open the Chinese market to certain farm products. AFP described Scholz’s attempts and setbacks in his negotiations around Ukraine

“I have therefore asked President Xi to influence Russia so that Putin finally calls off his senseless campaign, withdraw his troops and ends this terrible war,” he said on social media platform X.

Scholz said Xi had agreed to back a peace conference in Switzerland, which is due to take place in June without Russia in attendance.

[…] Xi, however, appeared to dismiss the meeting in Switzerland, saying efforts towards a peaceful resolution should be recognised by both sides and include equal participation by all parties.

Russia has dismissed any such meeting as meaningless without Moscow’s participation. [Source]

Highlighting Scholz’s tepid engagement with Xi on security matters, Judy Dempsey argued in Carnegie Europe that “Scholz’s Visit to China Confirms Germany’s Political Weakness”:

[F]undamentally, Scholz’s bickering coalition has failed to grasp how it could be a pivotal player that gives Europe the strategic and political depth it lacks. Scholz’s visit to China confirms a persistent reluctance of Europe’s biggest economy to play a central role in the EU, in NATO, and other multilateral organizations.

With the global order no longer stable but rather lurching from crisis to crisis, Europe’s own stability and security is in question. For Germany, its economy depends on stability and predictability. Since neither is a given, Berlin has to change its mindset about making the leap from a reactive, hapless foreign policy to a proactive, strategic one.

[…] But speaking out matters. Even better if it is followed by action. For now, Germany is a reluctant, if not irresponsible bystander. It benefits from trade with China, security from the United States, and a European Union that gives it immense economic influence. Strategic input, to the detriment of its allies, is absent. [Source]


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