A German anti-China policy? Don’t hold your breath

German Foreign Minister Annalena Baerbock may be taking a hard line on China, but Chancellor Olaf Scholz will have the final say
Scholz is aware that the economic reality simply does not allow him to meet Baerbock and her party’s demands on China

Thomas O. Falk

Published: 3:30am, 21 Apr 2023

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Those who followed German Foreign Minister Annalena Baerbock’s visit to China might believe that Sino-German relations are deteriorating. However, Baerbock’s stance on China by no means represents the entire German government. Chancellor Olaf Scholz will have the final say on China, and he has already indicated that a paradigm shift in this regard is unlikely.

Partner, competitor or systemic rival? Since taking office in December 2021, Baerbock has emphasised that she seeks to shape a value-based foreign policy and therefore remains highly critical of China.

During her visit last week, Baerbock said China seeks to define its own international rules while criticising Beijing’s nebulous attitude towards Russia’s illegal war, military escalation in the Taiwan Strait and the human rights situation in the country.

Of course, the human rights situation, and especially China’s reluctance to use its influence on Russia to end the war, warrant criticism. But geopolitics is not shaped by idealism, and Germany, as the de facto leader of the European Union, has an overriding interest in remaining economically strong – an undertaking that simply will not work without China.

Its economic success over the past two decades has been primarily based on affordable energy from Russia, security guarantees from Washington and a vast export market in China, in addition to the positive characteristics of the German people.

However, the war in Ukraine, former US president Donald Trump’s policies and now what Berlin perceives as Beijing’s increasingly totalitarian stance have laid bare the geopolitical contradictions of these arrangements. Germany has learned its lesson in relation to Russia, but it has not become more independent regarding security.

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In Beijing, German FM warns escalation on Taiwan could be ‘worst-case scenario’ for global economy

Meanwhile, domestically, the question now being asked – especially concerning a potential conflict with Taiwan – is how dependent Germany wants to be on China.

Today the second-largest economy in the world, China has also become the most critical geopolitical actor alongside the US. With these new roles comes new self-belief. China is no longer just a welcome trading partner but a geoeconomic quantity that knows what it wants. The honeymoon of the Merkel era is essentially over.

Brussels has already reacted to these changes. In the European Union’s 2019 China strategy, the country was cast as a competitor.

Germany’s foreign ministry has also been developing its own China strategy, which Baerbock and her Green Party are convinced must no longer be based solely on the idea of joint cooperation but increasingly on the assumption of systemic rivalry. They call for de-risking vis-à-vis Beijing, albeit not decoupling.

However, the strategy’s publication is not expected before early summer, primarily because there is a dispute within the governing coalition about how to approach China.

Parts of the chancellor’s party, the Social Democrats, have a different understanding. The most influential wing of the party in the Bundestag, the Seeheimer Kreis, has called for pragmatism towards China and warned against an “anti-China” strategy. The grouping also sharply criticised Baerbock for “domestic symbolism” instead of “foresighted politics”, urging the foreign ministry not to take an overly confrontational stance and instead to strive for “economic policy on an equal footing”.

Chinese President Xi Jinping (right) welcomes German Chancellor Olaf Scholz at the Great Hall of the People in Beijing on November 4, 2022. Photo: AFP

And then there is Chancellor Olaf Scholz himself. First, his government gave the go-ahead for Chinese shipping giant Cosco to purchase of a large stake in a container terminal in Hamburg’s port, ignoring the objections of six ministers, who recommended blocking the deal, which is now being reassessed.

Then, he went ahead with a visit to China, despite the criticism of his junior partners and many others in Germany, becoming the first Western head of state to meet Chinese President Xi Jinping since the pandemic began.

He was joined by the CEOs of BASF, Volkswagen and Siemens, among others, indicating that he is putting economic interests ahead of the Greens’ concerns and that a continuation of former German chancellor Angela Merkel’s China pragmatism is more likely than a paradigm shift towards Beijing.

Workers on the assembly line of the north China base of FAW-Volkswagen in Tianjin on January 11. Photo: Xinhua

Scholz is aware that the economic reality simply does not allow him to meet the Greens’ demands on China. After all, Russia has caused post-war record inflation of 7.9 per cent in Germany, and exorbitant energy prices haunt ordinary Germans as much as businesses.

Moreover, US President Joe Biden has borrowed at least two pages from Trump’s “America first” playbook when he introduced generous subsidies via his Inflation Reduction Act. US trade and monetary policies are putting significant pressure on European competitiveness as many companies no longer see any economic sense in investing in the continent.

The US Federal Reserve has also aggressively raised interest rates to counter inflation, strengthening the dollar while causing the euro to depreciate, thereby only exacerbating European inflation.

Counting on ‘shared values’ won’t get US very far in a multipolar world

In the face of such challenges, Germany needs more than ever to maintain relations with Beijing, its largest trading partner for the past six years.

Moreover, a foreign policy strategy focused on one country, which could contain guidelines for and possible restrictions on businesses, sounds highly cynical when that it is precisely what China has been accused of – significant government influence and protectionist interventions in private-sector decisions and processes.

In light of these realities, Scholz, who possesses richtlinienkompetenz – the final say in all policy matters – will ensure that the upcoming China strategy might be curt in its tone but will not be an “anti-China strategy” – Baerbock’s ideas notwithstanding.

Thomas O. Falk is a UK-based independent journalist and political analyst