The Chinese-German
symbiosis
The background to the evolving economic relationship between
China and Germany is the structural shift in the German economy that began
under the “red-green” government of Chancellor Gerhard Schröder. As Germany
undertook difficult structural reforms to improve competitiveness after the
creation of the single currency in 1999, the German economy became more and
more dependent on exports – initially to the European periphery but
increasingly also to Asia and above all China. Two-thirds of GDP growth in
the past decade has come from exports and today nearly half of GDP comes from
exports. In the decade since the creation of the euro, Germany’s economy has
become, as Simon Tilford has put it, “structurally reliant on foreign demand
for its growth”.2
Partly as a result of this structural change in the
economy, German foreign policy is now also increasingly driven by economic
interests and, above all, by the needs of exporters.3 The Federal
Republic always used economic rather than military means to achieve its
foreign-policy goals and was thus seen as a “civilian power”. But before
reunification, German foreign policy also pursued political goals – above
all, security and rehabilitation. With the end of the Cold War, however, the
political constraints on Germany were lifted while globalisation and the
costs of German reunification have put the German economy under greater
pressure. As a result, German foreign policy has been increasingly in pursuit
of economic rather than political goals.
2
Simon Tilford, “How
to save the euro”, Centre for European Reform, September 2010, p. 3, available
at http://www.cer.org.uk/sites/default/files/publications/attachments/
pdf/2011/essay_euro_tilford_14sept10-196.pdf.
3
See Hans Kundnani,
“Germany as a geo-economic power”, Washington Quarterly, 34:3, Summer 2011,
pp. 31–45, available at http://csis.org/files/publication/
twq11summerkundnani.pdf.
This economic focus is particularly evident in German
policy towards China. Even before diplomatic relations were established
between the Federal Republic and the People’s Republic in 1972, West Germany
had become China’s most important trading partner in Europe. However, led by
companies such as BASF and Volkswagen, trade grew gradually in the 1990s and
dramatically in the 2000s. In order to deepen trade ties with China,
Chancellor Schröder made a point of visiting China at least once a year in
order to promote German businesses.4 This led to a number of big
contracts, including a $1.5 billion project involving Siemens and
ThyssenKrupp to build a high-speed magnetic levitation railway line in
Shanghai (although the project was never completed).
The economic relationship between China and Germany has
intensified even further since the economic crisis of 2008. In fact, demand
from China – itself the result of the four trillion yuan ($586 billion)
Chinese stimulus – was a major factor in the rapid recovery of the German
economy.
According to the Italian bank UniCredit, exports to China
contributed 0.5 percentage points to German growth in 2011 – the equivalent
of €13 billion.5 Exports to China currently amount to just under 7
percent of Germany’s total exports, making it the third-largest market for
German exports, behind France (10 percent of German exports) and the United
States (7 percent). But as demand has slowed in Europe, German companies are
increasingly dependent on emerging economies and above all China for growth.
At present, there is an almost perfect symbiosis between
the Chinese and German economies: China needs technology and Germany needs
markets. “We have exactly the products they need”, says one German official.
In particular, Chinese consumers want high-end German products such as cars
(China is now the biggest market for the Mercedes S-Class) and Chinese
companies want German machinery. Chinese officials say they see Germany as
having a stronger “real economy” – and therefore see it as more useful to
them – than other member states such as the United Kingdom that have largely
abandoned manufacturing. “We want to work with other Europeans too but there
is limited potential”, says one Chinese official. In particular, Germany is
involved in industries that China regards as strategically important such as
automobiles, renewables and high-technology.
4
Gerhard Schröder,
Entscheidungen. Mein Leben in der Politik (Hamburg: Hoffmann und Campe,
2006), pp. 139–40 (hereafter, Schröder, Entscheidungen).
5
UniCredit Economics
Research, UniCredit Weekly Focus, No. 12, 12 April 2012, available at
https://www.research.unicreditgroup.eu/DocsKey/economics_docs_2012_125939.ashx?KEY=C814QI31EjqIm_1zIJDBJGvd-rOCUpzh2jykB-Gfl5A%3D&EXT=pdf.
However, this overlap between the sectors of the economy
in which Germany excels and the sectors in which China wants to excel in the
future also means that there is potential for conflict as well as
co-operation between China and Germany. In particular, as its companies move
up the value chain, China will increasingly provide competition as well as a
market for German exporters, both in China itself and in third markets. In
fact, as Bert Rürup and Dirk Heilmann have recently pointed out, “Germany is
providing emerging economies with exactly the type of products that they need
in order to build up the capacity to compete with German companies around the
world”.6
Competition is likely to be particularly fierce in
business-to-business sectors. The recent collapse of the Berlin-based company
Q-Cells – just a few years ago the world’s largest manufacturer of solar
cells – illustrates the potential threat to German manufacturing from Chinese
rivals. But there is also likely to be competition in mass market
business-toconsumer sectors such as the automobile industry where brands such
as Volkswagen are strong but will in the next 10 years face increasing
competition from Chinese companies that are either state-owned or
state-supported – for example, on electric cars, where there are particularly
stringent criteria for technology transfer as a requirement for producing in
China.7 In the medium term, German companies could as a result be
pushed further into luxury niches.
The conflict over access to Chinese rare earths in 2010
may also be a sign of things to come. Germany imports between 3,000 and 5,000
tonnes of the 17 elements known as rare earths that are vital for the
production of high-tech products, mainly from China. After China reduced its
exports of the minerals in 2010, Germany complained to the European
Commission and the G20. The EU, Japan and the US are now taking the case to
the World Trade Organization. In the meantime, Germany has also taken
bilateral steps to diversify its supply. In particular, it signed bilateral
agreements with Mongolia in 2011 and Kazakhstan in 2012 to secure access to
rare earths. (Since 2010, however, demand for rare earths has fallen and
Chinese export quotas have not been fulfilled.)
However, despite this likelihood of greater competition
and the potential for conflict over access to raw materials, German companies
are surprisingly optimistic about their future in China. They think the
market is growing enough to accommodate Chinese competitors. They continue to
complain about involuntary technology transfer through enforced joint
ventures and about the lack of market access but say there have been
improvements in intellectual property rights in China and that there will be
further improvements in the future as China increasingly needs to protect its
own companies. Rürup and Heilmann argue that although Chinese companies will
be increasingly competitive, “the fear that some in Germany have of an
excessive dependence on China are exaggerated”.8
6
Bert Rürup and Dirk
Heilmann, Fette Jahre. Warum Deutschland eine glänzende Zukunft hat (Munich:
Carl Hanser Verlag, 2012), p. 98 (hereafter, Rürup and Heilmann, Fette
Jahre).
7
Goldman Sachs
Portfolio Strategy Research, “China: An opportunity and a competitive
threat”, 4 May 2011.
8
Rürup and Heilmann,
Fette Jahre, p. 101.
Germany’s approach
to China
Germany’s approach to China is influenced by Ostpolitik,
particularly among Social Democrats. Willy Brandt’s realist,
“anti-ideological” approach to the division of Germany and Europe was based
on the idea of “Wandel durch Annäherung”, or “change through rapprochement”,
that Egon Bahr had developed in 1963.9 In order to achieve German
reunification as the culmination of a long-term process of “small steps”,
Bahr sought détente with the Soviet Union through foreign trade and the
“weaving” of political, economic and cultural ties between West and East
Germany. The Ostpolitik is seen in Germany as one of the Federal Republic’s
big foreign-policy successes – a decisive and distinctively West German
contribution to the end of the Cold War. The lesson for future policy was
that, as Stephen Szabo puts it, “dialogue, diplomacy, mutual trust and
multilateralism were the best approaches for dealing with seemingly
intractable opponents”.10
At least since Schröder, Germany’s approach to China has
been based on the idea that the best way to transform it is through trade –
“Wandel durch Handel”, or “change through trade”. The hope is that, as
Schröder put it,
“economic exchange” would lead to “societal change”.11
Thus Germans, particularly Social Democrats such as Schröder and Frank-Walter
Steinmeier, tend to emphasise cooperation instead of confrontation with
China.12 Leading German China experts such as Eberhard
Sandschneider also emphasise “Einbindung”, or integration, and co-operation
instead of confrontation.13 As foreign minister, Steinmeier proposed a
Verantwortungsgemeinschaft, or “community of responsibility” – a kind of
German version of World Bank President Robert Zoellick’s idea of China as a
“responsible stakeholder”.
In the context of this approach – what one might call
Fernostpolitik – Germany also tends to take a low-key approach to human
rights. Although Germany has a bilateral human rights dialogue with China
like other
9
On Ostpolitik as an
“anti-ideological” approach, see Gordon A. Craig, “Did Ostpolitik work?”
Foreign Affairs, January/February 1994, available at http://www.
foreignaffairs.com/articles/49450/gordon-a-craig/did-ostpolitik-work.
10
Stephen F. Szabo,
“Can Berlin and Washington Agree on Russia?”, the Washington Quarterly, 32:4,
October 2009, p. 24, available at http://www.gmfus.org/wpcontent/files
11 Schröder,
Entscheidungen, p. 141.
12
See, for example,
Gerhard Schröder, “Warum wir Peking brauchen”, 27 July 2009, available at
http://www.zeit.de/2008/30/China; Frank-Walter Steinmeier, “Was wir uns von
China wünschen”, Frankfurter Allgemeine Zeitung, 28 July 2008, available at
http://www.faz.net/themenarchiv/sport/olympia-2008/sportpolitik/gastbeitragwas-wir-uns-von-china-wuenschen-1664308.html.
13
See, for example,
Eberhard Sandschneider, “Gestaltungsmacht China. Mit Kooperation statt
Konfrontation zur Ko-Evolution”, Internationale Politik, March/ April 2012
(hereafter, Sandschneider, “Gestaltungsmacht China”).
member states, the main focus of its approach is the
so-called Rechtsstaatsdialog, or “dialogue on the rule of law”, between the
German justice ministry and its Chinese counterpart, the State Council’s
Legislative Affairs Office. The dialogue began in 1999 under Schröder, who
saw it as a more “patient” approach to human rights in China based on
“persistent communication” rather than “punitive measures”.14 By
focusing on issues such as commercial law that the Chinese are more willing
to discuss because they think it is necessary for economic development, and
by skilful behind-the-scenes diplomacy, German officials think they can push
China to incrementally reform – in effect, a stealth approach to human
rights.
At the same time, however, human rights issues resonate in
Germany – especially freedom of speech, perhaps because of Germany’s own
experience of totalitarianism. The German media has an “intense focus” on
issues such as Tibet and human rights and cases such as those of Ai Weiwei
and Liu Xiaobo.15 Probably in part as a result of this, China is
viewed less favourably in Germany than in France, Spain or the UK.16
Several prominent Chinese exiles such as Liao Yiwu have also settled in
Germany and become well-known figures.17 This popular awareness
of, and interest in, human rights in China puts pressure on the German
government to raise cases with the Chinese government.
When Merkel took over from Schröder in 2005, she initially
seemed to place greater emphasis on human rights issues than he had. For
example, she received the Dalai Lama in the chancellery in 2007, which led to
a crisis in relations between Beijing and Berlin. Foreign Minister
Frank-Walter Steinmeier sought to bring the standoff with China to an end by
sending a confidential letter to his Chinese counterpart on the issue of
Tibet. It has been reported that, in the letter, Steinmeier recognised that
Tibet was “part of Chinese territory” – a more precise statement of Germany’s
“one China policy” than in the past, which the Chinese state media saw as a
diplomatic victory.18
Merkel now visits China once a year, as Schröder did, and
appears to many in both China and Germany to have toned down public criticism
on human rights. Chinese analysts and officials say that she “has
understood”, become “more careful” and now “knows where the red lines are”.19
In particular, they welcome the German focus on the rule of law rather than
human rights abuses. They believe that, in so far as Germany continues to
raise human rights issues, it is in order to satisfy journalists and public opinion.
In particular, some experts on German human rights policy criticise her for
neglecting human rights on her trip to Beijing in February.20 For
example, the Chinese government prevented her from meeting with critics of
the regime such as Mo Shaoping, a human rights lawyer who represents Liu
Xiaobo.21
14
Schröder,
Entscheidungen, p. 143.
15
See Carola Richter
and Sebastian Gebauer, “Die China-Berichterstattung in den deutschen Medien”,
Heinrich Böll Stiftung, June 2010, available at http://www.
boell.de/downloads/Endf_Studie_China-Berichterstattung.pdf. An
English-language summary of the report is available at
http://www.boell.de/downloads/ TXT_20110606_Media_Study_Summary-CR.pdf. The
report examined the coverage of China in six quality German newspapers and
news magazines in 2008.
16
“China Seen
Overtaking US as Global Superpower”, Pew Research Center, 13 July 2011,
available at
http://www.pewglobal.org/2011/07/13/china-seen-overtaking-usas-global-superpower/.
17
See Didi Kirsten
Tatlow, “Chinese Artists Drawn to Berlin, a Haven That Reveres History”, New
York Times, 10 August 2011, available at http://www.nytimes.
com/2011/08/11/world/asia/11iht-letter11.html?pagewanted=all.
18
“Chinas Regierung
lässt jubeln”, Frankfurter Allgemeine Zeitung, 26 January 2008, available at
http://www.seiten.faz-archiv.de/faz/20080126/fd2200801261546704.html.
19
Unless stated
otherwise, quotes are from interviews with the authors.
20
See, for example,
Markus Böckenförde and Julia Leininger, “Prozesse fördern, nicht nur Produkte
fordern: Demokratie und Menschenrechte in der deutschen Außenpolitik”, Aus
Politik und Zeitgeschichte, No. 10, 2012, available at http://www.
das-parlament.de/2012/10/Beilage/007.html.
21
“Peking verhindert
Treffen der Kanzlerin mit Regimekritikern”, Süddeutsche Zeitung, 3 February
2012, available at http://www.sueddeutsche.de/politik/
affront-bei-merkel-besuch-in-china-peking-verhindert-treffen-der-kanzlerin-mitregimekritikern-1.1274949.
The question is whether an approach that worked towards
the Soviet Union in the context of détente during the Cold War can work
towards China in a globalised post-Cold War world in which power is shifting
from West to East. China today is not the Soviet Union in the 1970s. During
the last 30 years, China has been remarkably successful in combining economic
liberalisation with an authoritarian political system. In this context, the
idea that further trade with China could lead to political liberalisation
could be naïve, as some in Germany such as Eckart von Klaeden have suggested.22 In fact, the idea of “Wandel durch
Handel” could be simply a way to justify doing business with China. Indeed,
it may be that rather than Germany cleverly manipulating China, China is in
fact cleverly manipulating Germany.
22
Eckart von Klaeden,
“So wird China keine lupenreine Demokratie”, Die Zeit, 28 July 2009,
available at http://www.zeit.de/2008/31/Op-ed-31.
China’s approach to
Germany
Germany is viewed remarkably positively in China, where it
is associated above all with high-quality products such as automobiles (and,
for Communist Party officials, with Karl Marx). While Germany’s history is
often seen as a burden in the West, it is actually a source of soft power
elsewhere in the world because it is not widely perceived as a former
colonial power like France and the UK are. Although Germany did acquire
territory in China in the late nineteenth century and took part in the
suppression of the Boxer Rebellion, this does not seem to form part of
Chinese perceptions of Germany. Nor does Germany’s alliance with Japan in
World War II seem to influence the way the Chinese see Germany.
Above all, however, the Chinese see Germany as the country
that can help them move to the next stage of their economic development. In
its twelfth Five-Year Plan, which was agreed last spring, China committed to
increase domestic consumption, develop strategic industries shielded from
foreign competition, and increase spending on research and development in
order to stimulate indigenous innovation. Thus China aims to become a hub for
high-tech innovation and green growth. In particular, China aims to develop
its own brands rather than producing for foreign companies so that it moves
up the value chain and retains more of the profits from production.
In this context, the Chinese see the German economy in
general and its manufacturing industry in particular as especially useful to
them. Chinese officials like to talk about a “win-win” relationship between
two countries whose economies are “complementary” and there is much talk of
even closer co-operation in the future around green technologies such as
electric cars.23 Chinese think-tanks are studying the German
social market economy (which, although it was a creation of the centre-right
Christian Democrats, some see as related to their own “socialist market
economy”) and German labour relations to see if they can learn from them.
They are also co-operating with Germany on a “vocational training alliance”,
which helps German companies that increasingly need skilled labour for
manufacturing in China.
23
See, for example,
Wen Jiabao’s speech at the Chinese-German Forum for Economic and
Technological Cooperation, 29 June 2010, available at http://www.gov.cn/
misc/2011-06/29/content_1895991.htm.
China also wants to invest in German companies as part of
the next phase of its “going-out” strategy. For example, earlier this year
Sany, a Chinese construction group, acquired Putzmeister, a medium-sized
German company that makes high-tech concrete pumps, for €360 million.24
Such acquisitions may become more common in the future. “They are buying the
backbone of German innovative capability”, says one German official. However,
while some in Europe fear such Chinese investments, which have increased
since the euro crisis began, Germany remains opposed to protectionist
measures.25 For example, it rejected a European Commission
proposal for a vetting system for foreign investments. Some in Germany,
particularly in the economics ministry, do not support reciprocity as a
guiding principle for European policy. Chinese analysts and officials say
that Germany’s export-driven economy means it will not succumb to
protectionism.
24
See Chris Bryant,
“China’s Sany to acquire Putzmeister”, Financial Times, 30 January 2012,
available at
http://www.ft.com/cms/s/0/7aecad0a-4a5e-11e1-a11e00144feabdc0.html#axzz1sCghtZFz.
25
On Chinese
investment in Europe since the euro crisis, see François Godement and Jonas
Parello-Plesner with Alice Richard, “The Scramble for Europe”, European
Council on Foreign Relations, July 2011, available at
http://www.ecfr.eu/page/-/ ECFR37_Scramble_For_Europe_AW_v4.pdf.
China’s upgrade of bilateral relations with Germany should
be seen in the context of this increased economic cooperation between the two
countries. Wen Jiabao is thought to be particularly keen to institutionalise
the government-to-government consultation before the new Chinese leadership
takes over in November.26 This intensification of the bilateral
relationship with Germany seems to be part of a longer-term shift by China
away from the supranational to the intergovernmental level in its approach to
Europe that began after the rejection of the European constitution in France
and the Netherlands in 2005.27 Since then, China has focused its
attention on member states rather than the EU institutions while paying lip
service to the new institutions created by the Lisbon Treaty.
26 On the Chinese
thinking behind the government-to-government consultation, see Wen’s speech at
the Chinese-German Forum for Economic and Technological Cooperation, 29 June
2010.
27
See Nele Noesselt,
“Strategiewechsel in der chinesischen Europapolitik: Umweg über
Deutschland?”, German Institute for Global and Area Studies, 2011, available
at http://www.giga-hamburg.de/dl/download.php?d=/content/publikationen/
pdf/gf_asien_1106.pdf (hereafter, Noesselt, “Strategiewechsel in der
chinesischen Europapolitik”).
The euro crisis seems to have led to an increased Chinese
focus on Germany in particular. Above all, it has strengthened Chinese-German
co-operation on economic issues. “It is better to have co-operation with
Germany than to pay money to other countries that have problems with their
real economies,” says one Chinese analyst. Although there were high hopes
that China might invest in southern European government bonds or the European
Financial Stability Facility (EFSF), the evidence suggests that the
risk-averse Chinese are primarily buying more secure German debt.28
This has helped drive Berlin’s borrowing costs to record lows.29
28
See Keith Bradsher,
“China Signals Reluctance to Rescue EU”, New York Times, 4 December 2011,
available at http://www.nytimes.com/2011/12/05/business/global/
china-signals-reluctance-to-rescue-eu.html.
29
See Paul Geitner,
“China, Amid Uncertainty at Home and in Europe, Looks to Germany”, New York
Times, 22 April 2012, available at http://www.nytimes.
com/2012/04/23/business/global/china-invests-in-germany-amid-uncertainty.
html?pagewanted=all.
China’s increased focus on Germany may also be a pragmatic
response to a perceived shift in the balance of power within Europe as a
result of the crisis, which some Chinese analysts say they see as a “new
start” for relations between China and Europe. Against the background of the
crisis, Chinese officials and analysts see a Germany that is increasingly
powerful, a France that is weakened, and a UK that is marginalised. They
therefore see Germany playing an increasingly decisive role in EU
decision-making and therefore feel they have little choice but to approach
Europe through Germany. “If you want something done in Brussels you go to
Berlin,” says one Chinese official.
However, China could also be increasingly focusing on
Germany in part because it sees Germany as being increasingly dependent on it
for economic growth. Chinese analysts and officials point out that the German
economy would not have bounced back after 2009 without it; according to one
influential Chinese analyst, China is now “indispensable” to Germany. Thus,
when they look at Germany, the Chinese see two long-term developments:
increased German power within the EU and increased German dependence on
China. This makes Germany a particularly attractive partner for China.
The post-crisis
alignment
The bilateral relationship between China and Germany also
appears to have been strengthened by the way that, since the beginning of the
financial crisis in 2008, the two countries have found themselves on the same
side as each other – and the opposite side to the US – in debates about the
global economy. This is in itself a result of shared economic interests based
on the somewhat analogous roles they play in the international system.
Despite the huge differences between China and Germany in terms of demography
and development, there are structural similarities between their economies.
As Martin Wolf pointed out in 2010, they are “the largest exporters of
manufactures, with China now ahead of Germany; they have massive surpluses of
saving over investment; and they have huge trade surpluses”.30
30
Martin Wolf, “China
and Germany unite to impose global deflation,” Financial Times, March 16,
2010, vailable at
http://www.ft.com/cms/s/0/cd01f69e-313411df-8e6f-00144feabdc0.html.
Based on these similarities, China and Germany have also
at times during the last few years appeared to pursue a somewhat similar
macroeconomic policy. Wolf argues that they have encouraged their customers
to keep buying but also wanted to stop irresponsible borrowing – a policy
that he regards as “incoherent”. They have both also exerted deflationary
pressure and resisted pressure to rectify economic imbalances. There is
considerable sympathy among Chinese analysts and officials for the German
economic model and for Germany’s approach to fiscal policy. Thus there seems
to have been what one might call a post-crisis alignment between China and
Germany.
China and Germany also share a desire to reform financial
markets and global economic governance. In a joint communiqué in 2010 on
their own bilateral “strategic partnership”, which was created under Schröder
and Wen in 2004, China and Germany said that their relationship had been
strengthened through the result of attempts to overcome the international
financial and economic crisis.31 They said that they shared
important interests as the third-and fourth-largest economies in the world
and as important trade and export countries, and in particular attached great
value to the “real economy”. Germany also promised to “actively support”
China’s bid for market economic status through the EU, although it has not
yet taken any specific steps to do so.
31
Deutsch-Chinesisches
Kommuniqué, 16 July 2010, available at http://www.
bundesregierung.de/Content/DE/Artikel/2010/07/2010-07-16-deutschchinesisches-kommunique.html.
The Chinese and German approach to the crisis has led in
particular to disagreements between both of them and the US. Both countries
have been critical of quantitative easing as a tool to reduce the crisis.
Conversely, at the G20 summit in Seoul in 2010, both China and Germany
opposed US plans to limit current account surpluses. Nobel Prizewinning
economist Joseph Stiglitz said in an interview in 2010 that “anybody who
believes China is a problem has to believe Germany is a problem”.32
Observers continue to see Germany as “the China of Europe” because of the way
it uses an undervalued currency to accumulate a trade surplus.33
(In a sense, Germany may now be more of a “problem” than China, whose trade
surplus fell from its peak of $300 billion in 2008 to $155 billion last year
and is expected to decline further this year.34)
32
Interview on 5
August 2010, quoted in Jana Randow and Holger Elfes, “Germany Ignores Soros
as Exports Boom at Consumers’ Expense”, Bloomberg, 18 August 2010, available
at
http://www.bloomberg.com/news/2010-08-17/germany-ignoressoros-as-exports-drive-record-growth-at-consumers-expense.html.
33
Andrew Moravcsik,
“Europe After the Crisis”, Foreign Affairs, May/June 2012, available at
http://www.foreignaffairs.com/articles/137421/andrew-moravcsik/
europe-after-the-crisis.
34
Simon Rabinovitch
and Jamil Anderlini, “IMF set to recognise shrinking Chinese surplus”,
Financial Times, 10 April 2012, available at http://www.ft.com/cms/
s/0/7e010a5a-8324-11e1-9f9a-00144feab49a.html#axzz1roFUodci.
Some Chinese analysts go even further in seeing parallels
between China and Germany – and by extension the potential for alignment
between them. They say that, just as China is a rising global power, so
Germany is a rising power within Europe. Both have in the past for different
reasons been reluctant to lead or take responsibility. But the crisis has
increased expectations of both countries with which they are uncomfortable
and has led to criticism of both – in particular by the US – for somewhat
similar reasons. Chinese analysts say that it was during this period that Wen
and Merkel became closer. “We were in a similar situation”, says one.
It is not yet clear whether this alignment between China
and Germany will last. It is in part a function of the current symbiosis
between the two economies of China and Germany described above. But as China
increasingly provides competition as well as a market for German products,
there could be increasing conflict between the two countries as Germany
continues to struggle to remain competitive in industrial production. Germany
could therefore see its economic interests as being more closely aligned with
its traditional allies again. In addition, much depends on whether China
continues to grow and whether it improves intellectual property rights and
further opens restricted sectors of its economy such as banking and public
procurement in a new phase of liberalisation.
A strategic
relationship between Chinaand Germany?
However, the increasingly close relationship between
Beijing and Berlin goes beyond economic interests – or at least it does for
China. In particular, it has to be seen in the context of global developments
and in particular the US “pivot” towards Asia. China’s foreign-policy priority
is the increasing strategic competition with the US, particularly since last
November, when President Barack Obama announced that the focus of US security
strategy would begin to shift away from Europe and the Middle East towards
Asia and the Pacific. However, this strategic competition takes place in a
context of economic interdependence between China and the US. The Chinese are
increasingly wondering where Europe fits into this complex picture.
China has for a long time wanted a multipolar world in
which US power is limited by the emergence of other power centres. Europe
plays a key role in Chinese thinking about multipolarity.35 Unlike
the US, which has military commitments to, and bases in, China’s neighbouring
countries, Europe does not aspire to be a military actor in Asia. Thus China
does not see the potential for strategic competition with Europe and sees the
relationship as being a “win-win” one. China has therefore supported European
integration in the hope that it would create a strong Europe that could be a
counterweight to American power. In short, it seeks to undermine the idea of
the West.
35 See Noesselt,
“Strategiewechsel in der chinesischen Europapolitik”, p. 4.
Europe in general and Germany in particular have economic
interests in China. But Europe also has wider strategic interests – such as
global governance, non-proliferation and regional security – which it pursues
above all through the Atlantic alliance. This means that, although Europe in
general shares China’s view that there is no real strategic competition
between them, it nevertheless often sides with the US in disputes with China,
particularly on security issues. For example, the EU did not ultimately lift
the arms embargo, notwithstanding calls to do so by Chancellor Schröder and
French President Jacques Chirac in 2004. This disappointed China, which wants
a Europe that is independent of the US and willing to challenge it on issues
such as this.
The danger for Europe is that its increasing economic
dependence on China could undermine these strategic interests and in
particular the possibility of what has been called “transatlantic globalism”.36
Whether this danger becomes a reality will depend to a large extent on
what type of multipolar order emerges in the world. Some German China experts
such as Eberhard Sandschneider argue that Europe should accept the shift to a
multipolar order and accommodate China.37 But although Europe and
China may share a desire for a “G3 world”, Europeans have in mind a world of
rule-bound global governance rather than spheres of influence.38 In that
sense, they should reject the Chinese vision of multipolarity.
36 On “transatlantic
globalism”, see Richard Youngs, Europe’s Decline and Fall. The Struggle
Against Global Irrelevance (London: Profile Books, 2010), pp. 36–7.
37 See
Sandschneider, “Gestaltungsmacht China”.
38 See Parag Khanna
and Mark Leonard, “Why China Wants a G3 World”, New York Times, 7 September
2011, available at http://www.nytimes.com/2011/09/08/ opinion/08iht-edkhanna08.html?_r=1&pagewanted=all.
In this larger strategic context, the Chinese may see
Germany as the key player in getting the kind of Europe – and the kind of
multipolarity – they want. This is partly because of the perception of
increasing German power within Europe and increasing dependence on China, but
also because of a perception that German preferences are closer to their own.
In particular, the Chinese see an overlap between Germany’s reluctance to use
military force and their own principle of non-interference. The most recent
example is Germany’s abstention on United Nations Security Council Resolution
1973 on the use of military force in Libya. China welcomed Germany’s
abstention, although Chinese analysts and officials recognise that Germany
opposed the use of military force for different reasons than China.
Although many German officials see Libya as a one-off,
Chinese analysts and officials see German preferences on the use of military
force in general as being aligned with their own. They say that, as
exporters, both China and Germany want above all to avoid conflict. “We share
a realistic view of the world”, says one Chinese official. “We have a common
interest in keeping the peace”, says an analyst. In other words, they do not
see Germany as being implicated in the “new imperialism” of France, the UK
and the US.39 Thus the Chinese may increasingly see Germany as
their most reliable partner in the West, not just on economic issues but also
on strategic issues. In that context, they may see strengthening Germany as a
way to split the West.
A crucial strategic issue from China’s point of view is
Taiwan. China supported German unification and consequently expects Germany
to support China’s desire for reunification – that is, the return of Taiwan to
the People’s Republic of China – in return. Chinese officials note that West
Germany under Chancellor Konrad Adenauer did not follow the US in
establishing diplomatic relations with Taiwan. Even with the current
rapprochement between China and Taiwan, the fundamental situation remains
unresolved and the US still maintains a legal commitment to supply Taiwan
with sufficient defensive capabilities. Like the rest of the EU, Germany
believes in a peaceful resolution of the Taiwan issue based on the “one China”
principle. China would hope that, in the unlikely event of a conflict with
the US over Taiwan, Germany would remain neutral or even support China’s
legal claims over Taiwan. The question, from the Chinese point of view, is
whether Germany can bring the rest of Europe along with it on this and other
issues. Although Chinese analysts and officials see Germany becoming more
powerful within Europe, they also realise that other big member states such
as France and, to a lesser extent, the UK remain important. For example,
while China welcomed Germany’s abstention on Resolution 1973, Germany was not
able to bring France along with it. In
that sense, Libya was a failure of the kind of German
Europe that China wants to see. Thus, while China is upgrading its bilateral
relationship, it knows it may also need other member states. For example, it
recently held a summit with Eastern European countries in Poland. 40
39 On Chinese
perception of a “new imperialism”, see David Shambaugh, “Coping with a
Conflicted China”, Washington Quarterly, 34:1, Winter 2011, p. 11, available
at https://csis.org/files/publication/twq11wintershambaugh.pdf.
40 See François
Godement, “China and New Europe”, European Council on Foreign Relations, 30
April 2012, available at http://ecfr.eu/content/entry/commentary_
china_and_new_europe
Much now depends on how Germany responds to the Chinese
perception of a strategic alignment. German officials point out that Merkel
raised issues such as Iran and Syria in recent meetings with Wen. Nevertheless,
Germany’s pursuit of economic goals in its foreign policy makes it prone to
strategic parochialism in its approach to China. There is a danger that, as
Germany focuses above all on its economic relationship with China, it could
overlook the broader strategic implications of China’s rise. Whereas China is
thinking more strategically about the emerging multipolar world, Germany
seems above all to see China as a market for German exports. “Don’t they see
the bigger picture?” asks one American official in frustration.
A real European
“strategic partnership” with China
Germany’s instincts remain European. German officials in
Beijing say they want “a strong Europe”. Some fear the consequences of
developing the bilateral relationship with China for German relations with
other member states and say it is therefore in their interest to dispel the
idea that Germany is “going it alone”. They are also conscious that although
Germany is the biggest European player in China, even it does not have
sufficient weight on its own to influence an emerging superpower with a
population of 1.35 billion. “In the end we’re 80 million and shrinking,” says
a German official. “In the long term, however successful we are, we’re
small.” In fact, as a German foreign ministry paper notes, Germany will make
up only 1 percent of the world’s population by 2025.41
41
Auswärtiges Amt,
“Europa erklären – Europa diskutieren Ein Konzept für die
Europa-Kommunikation 2012”, February 2012, p. 7, available at
http://www.auswaertiges-amt.de/cae/servlet/contentblob/610174/
publicationFile/165147/120229_Strategie_Europakommunikation.pdf;jsessionid=90
6D7EF794ED73C97E52312C20BB2F68
In fact, because of the economic importance of its
relationship with China, Germany was keener than almost
any member state to develop a European strategic approach
towards China. In the run-up to the European Council meeting in November
2010, German Foreign Minister Guido Westerwelle sent a letter to High
Representative Catherine Ashton asking her to develop a “sustainable concept”
for relations with the EU’s “strategic partners”. In particular, Germany
urged Ashton to co-ordinate a “holistic” approach to China across a range of
areas including foreign policy, economic questions, climate change, energy
and raw materials. However, although Ashton delivered an outline of a new
European approach in December 2010, there has
been little follow-up by either the EU institutions or by
member states.
What Germany wants is a comprehensive China policy that
would include more systematic co-operation between member states and the EU
institutions in order to identify and pursue key European interests and make
full use of the improved institutional scope for action provided by the
Lisbon Treaty. In particular, Germany would like to see a “top-down” approach
in which the High Representative would play a greater role in co-ordinating
relevant European Commission directorates-general such as climate change and
trade. Indeed, German officials see the “strategic partnership” with China as
a crucial test for the Lisbon foreign-policy institutions.
The perceived failure of the EU in general and Ashton in
particular to develop Europe’s “strategic partnership” with China has led to
a sense of frustration among German officials, who feel that other member
states that don’t have a big stake in the relationship, or see it through a
less multifaceted lens, are holding them back. The Germans feel that, for
them, the stakes are so high that they cannot wait for Europe to get its act
together. Thus, on issues affecting its economic interests, Germany sometimes
takes unilateral action. For example, Germany pursued its own bilateral
agreements with Kazakhstan and Mongolia to diversify its supply of rare
earths even though the EU was in the process of elaborating a strategy on raw
materials. Germany also seems to be putting more energy into developing joint
standards for electric cars with China than with its European partners.
This is a dangerous situation for both Germany and Europe
as a whole. Merkel’s visit to China in February, during which she appeared to
speak on behalf of Europe, strengthened the perception that, at least in
Beijing, Berlin may be replacing Brussels. German officials in Beijing
already seem to have much better access than other member states and are
invited to meetings and briefings more frequently than them. “The doors are
open for us”, says one German official in Beijing. The Germans would be
prepared to send the EU
delegation to some meetings and briefings instead of going
themselves, but this is opposed by other member states such as France and the
UK, which fears “competence creep”.
Germany must not give up on Europe. Nor can its commitment
to a European approach to China remain rhetorical. Rather, it should take
initiative to actively develop the EU’s strategic approach to China and
contribute to the debate about reciprocity. At the same time, however, the
rest of Europe and in particular France and the UK must now urgently find
ways to help Germany be a good European in its relationship with China. In
particular, they must fill the “strategic partnership” with content so that
it is in Germany’s interests to join a common European approach to China
rather than increasingly pursuing its own special relationship. In particular,
the EU should do three things.
Identify where
Europe can help Germany
The six large member states (France, Germany, Italy,
Spain, Poland and the UK) and several smaller member states have their own
bilateral “strategic partnerships” with China. This creates a tension with,
and in some ways duplicates, the EU’s own “strategic partnership” with China.
But it is unrealistic to think that member states, including Germany, will
now abandon their bilateral “strategic partnerships” with China. The EU therefore
needs to identify exactly where it can bring added value in relations with
China in order to develop a clearer and more effective division of labour
between the EU institutions and member states. What issues should be dealt
with at the EU level and what issues should member states deal with on their
own? In particular, the EU needs to identify where it can help Germany.
At present, member states, including Germany, focus on
business deals with China, while the EU institutions deal with many of the
difficult aspects of the relationship with China, such as human rights and
trade disputes. This makes it tempting for the Chinese not to take the EU
seriously and engage less with it. However, there are areas where a joint
approach would benefit Germany as well as Europe as a whole. This does not
necessarily mean extending Commission competence but rather improving
co-ordination among member states. In particular, the EU can bring added
weight on economic issues such as investment rules, public procurement and
access to raw materials. Similarly, if the EU had a code of conduct on Tibet,
China would be less able to impose “soft” sanctions on member states whose
leaders met with the Dalai Lama.
Strengthen the role
of the EEAS
Other member states should also respond to Germany’s
proposal for a comprehensive European approach to China. Germany is right to
ask for a “top-down” approach. The European External Action Service (EEAS)
should be empowered to co-ordinate policymaking on China, preparing issues
for EU-China summits and ensuring consistency between different European
Commission directorates-general such as climate change and trade. This would
require the combined efforts of the High Representative and the presidents of
the European Council and European Commission. In turn, they need an identical
and well-prepared platform from which to approach China. The EU-China summit
with the presidents of the Commission and Council would remain the place
where this co-ordinated effort is pulled together.
Member states must also support co-ordination of their own
approaches to China. Even large member states such as France, Germany and the
UK now need Europe in order to have any influence on China. France and the UK
should therefore give up their opposition to the EEAS, including in Beijing,
or risk being cut out of the loop as Germany’s bilateral relationship with
China displaces Europe’s embryonic “strategic partnership”. In practice, this
means that the EU delegation, rather than member states, should meet with the
Chinese wherever possible. On issues such as Iran or other UN Security
Council matters the big three could also be included in meetings. Likewise,
some of the numerous bilateral dialogues with China should also be abolished
or streamlined so they feed into a joint European approach. Member states
should also support joint reporting from Beijing by the EU delegation.
Explore new formats
However, given the failure of the European approach and
German frustration, it may now be necessary to also explore possible new
formats for developing policy towards China. In particular, the EU should
think about whether there is a need for new informal groupings that include
some but not all 27 member states. Some German officials say that attempting
to agree a policy among all 27 member states tends to lead to a lowest common
denominator policy. It may therefore be necessary to think pragmatically
about a compromise between a European approach that includes all 27 member
states and the pursuit by member states of bilateral relationships with
China. The critical question, therefore, is what the “critical mass” is. The
answer may vary from one policy area to another. The EU could therefore
experiment with new formats in narrow, tightly defined areas.
For example, in some cases, particularly Security Council
matters, it may make sense to try out an EU 3 format modeled on the approach
that the EU has successfully used in negotiations with Iran. Conversely, the
big three could also be invited to EU–China summits in order to add their
weight to a joint European approach to China. In other cases, policy
development could be driven by a caucus of the five to six member states with
the largest economic stake in the relationship with China. In either case,
the High Representative would have to play a pivotal role in including other
member states – as Ashton has on Iran. Such an ad hoc approach to China
policy would be controversial (“a different Europe”, as one German official
put it) but it may be a necessary and pragmatic compromise between an EU27
approach and bilateralism.
The EU is now at a critical juncture in its relationship
with China. Just as Europe was beginning to develop a more strategic approach
towards China, the euro crisis sharpened competition between member states
for Chinese investment. At the same time, against the background of the
crisis, China is upgrading its bilateral relationship with Germany, which it
increasingly sees as the dominant player in Europe and one whose economic
dependence on China and strategic preferences make it a preferred partner.
Germany remains committed to a more strategic European approach towards China
but is beginning to take a more bilateral approach in some areas. The rest of
Europe urgently needs to help Germany to be a good European by developing a
real “strategic partnership” with China before it is too late.
About the authors
Hans Kundnani is editorial director at the European
Council on Foreign Relations. He has written about German foreign policy for
various journals including the Washington Quarterly and Internationale
Politik. He previously worked as a journalist and continues to write for
various magazines and newspapers including the Guardian, New Statesman and
the Times Literary Supplement. He is the author of Utopia or Auschwitz.
Germany’s 1968 Generation and the Holocaust (London/New York, 2009).
Jonas Parello-Plesner is a Senior Policy Fellow at the
European Council on Foreign Relations. Previously, he was director of a
development NGO with activities in Asia and served as Denmark’s Senior
Advisor on China and North East Asia from 2005–2009. He is also on the
editorial board of RÆSON, a Danish international affairs magazine. His
publications for ECFR include The Scramble for Europe (with François Godement
and Alice Richard, 2011) and China’s Janus-faced response to the Arab
revolutions (with Raffaello Pantucci, 2011).
The European Council on Foreign Relations does not take
collective positions. This paper, like all publications of the European
Council on Foreign Relations, represents only the views of its authors.
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