Olaf Scholz's dilemma started in Beijing | Latest news The Moscow Post
01 June 2023

Olaf Scholz's dilemma started in Beijing

Germany wants to decide on the Chinese orientation.

The German Chancellor became the first Western leader to visit China after the 20th Congress of the CCP. For Olaf Scholz, this was the first visit to the PRC after taking office. Berlin had to decide on the future of its half-century relations with the PRC in the new conditions dictated by the United States, complicated by Taiwan and the Ukrainian conflict, the correspondent of The Moscow Post reports.

"I am confident that the visit will strengthen mutual understanding and mutual trust between the two countries, deepen practical cooperation in various fields, and also outline plans for the further development of relations between China and Germany," said Chinese President Xi Jinping and expressed hope for continuity, the continuation of the already laid course.

Olaf Scholz agreed to work together for peace and stability. In peaceful times, everything would be inclined to such a line of further development of ties. But the West declared the enemy not only Russia, but also called China a rival.

Do you respect me?

The fact is that Washington is concerned about the rapprochement between Berlin and Beijing. Shortly before the visit, the US position was outlined by US Secretary of Defense Lloyd Austin, who said that China is a competitor with the intention and ability to change the international order. The NATO senior categorically did not recommend Germany and other European countries to sell control packages to Chinese partners in important companies, imposed restrictions on the export of chips and production equipment, and suggested doing this to the allies.

In Germany itself, a discussion unfolded on the topic of "partner-competitor-rival" to determine the line in relations with the PRC. Analena Baerbock, at a meeting in Munster with colleagues from the G7 countries, suggested discussing how, in relations with China, "to prevent a repetition of the mistakes that we made in our policy towards Russia."

The German magazine Focus analyzed the possible consequences of the conflict over Taiwan for the German economy. The left-liberal and pro-American part of the German establishment demanded the curtailment of economic ties with the PRC. American media, including The Wall Street Journal, continued to insist that Beijing is seeking to deepen relations with Moscow. Nikkei Asia noted that China wants to use Germany to drive a wedge into the Western coalition led by America.

China also found itself at a crossroads, continuing to count on Germany as a key economic partner and a source of advanced technology. During the lunch, Xi Jinping stressed that political trust is easy to destroy, but it is difficult to restore that both sides should take care of it, Xinhua reported. He also reminded the chancellor that partners should respect each other and take care of the main interests of the other side, Xinhua reported.

Welcoming Olaf Scholz to the Great Hall of the People in central Beijing, the Chinese leader called for closer cooperation on international issues. "As large and influential countries, in times of change and upheaval, China and Germany must cooperate even more to contribute more to peace and development around the world," Xi Jinping said, according to state broadcaster CCTV.

And what will the "team" say?

Even before Olaf Scholz arrived in Beijing, reproaches poured into him both in Germany itself and beyond. An article published by Le Figaro advised the chancellor to take into account the "opinion of the team" and conduct a visit together with the French president! An innovative approach to top-level diplomacy was allegedly offered by the French leader "to send a signal of EU unity." Paris was refused, was annoyed by this, although relations between the leaders of the two countries had previously left much to be desired.

We can say that the visit of the Chancellor was contrary to the policy of the European Union, or rather, anti-Chinese sentiments in Brussels. Moreover, EU leaders claim leadership in the foreign affairs of a united Europe and act within the framework of NATO's policies. Beijing for Brussels even before Scholz's visit became a "competitor and rival," which was expected in light of the latest US statements and NATO decisions on China.

Scholz, on the other hand, put German economic interests first and went to Asia, accompanied by a delegation of businessmen. This group included representatives from Adidas, Bayer, BioNTech, BASF, BMW, Merk, Siemens, Volkswagen. But the chancellor insured himself with an article in the Frankfurter Algemaine Zeitung, saying that "if China is changing, then our attitude towards it must change."

The visit came after Scholz pushed through consent for Chinese logistics company COSCO to buy a 24.9% stake in the operator of one of the four container terminals in the port of Hamburg. The authorization was given despite objections from some members of the government and disapproving feedback from Washington.

The hint is understood?

We can say that at the Beijing airport, the delegation of Olaf Scholz, going down the ramp, dragged a train of uncertainty and understatement. By that time, Germany had no longer passed the "test" for the ability to make sovereign economic decisions. This happened on the Russian "gas front." Berlin abandoned the Northern Streams projects, despite the mood in society and the needs of industry.

The President of the People's Republic of China suggested that the German leader not apply protectionist measures, said that China is ready to deepen cooperation with Germany, including the aerospace sector, green technologies, and the fight against the pandemic. At the same time, Xi Jinping did not advise the European Union "to pursue a dependent policy or be under the control of any third party."

He also said that Germany should strive for a balanced, effective and sustainable security regime in Europe and noted that in this situation it is important to ensure the stability of international trade and prevent the difficult situation in the world from negatively affecting cross-border energy and food supplies, as well as the financial sphere.

As for Berlin's policy, Olaf Scholz found himself at the intersection of the EuroNATO Union and German economic interests. China has remained the largest trading partner for Germany for the past six years.

Bilateral trade in 2021 reached almost $293 billion. Exports to China rose to a record $123.7 billion, including cars and their parts ($31.5 billion), machinery and equipment ($24.7 billion), electrical and electronic equipment ($21.1 billion). During Scholz's visit, leasing company China Aviation Supplies Holding Company signed an agreement to buy 140 Airbus aircraft.

Imports from China also rose to $169.2 billion in the wake of post-covid demand. Among the main imports are electrical and electronic equipment ($51.4 billion), machinery and equipment ($40.4 billion), furniture, light signs and prefabricated buildings ($7 billion). China accounts for up to 80% of German-imported laptops and two-thirds of mobile phones. The German automotive, chemical and electrical industries depend on the PRC.

"By overcoming dependence on Russian energy resources, Germany may fall into a new dependence on China," warned economists Melinda Fremerai and Thomas Obst from the Institute of German Economics. Germany does not want to distance itself from China, but will it be allowed to maintain ties given the signals of EU unity and changing US interests? Chinese Foreign Ministry spokesman Zhao Lijian recalled even before the visit that the United States should not attack business ties between China and Germany, and exclude interference in them.

But it's not just Washington's position. The leaders of leading companies in Europe, the United States and Japan are also reconsidering their attitude towards China. For example, the chairman of the EU Chamber of Commerce in China, Jörg Wuttke, stressed that the basis of Xi Jinping's policy is Marxist ideology, not markets and pragmatism, that the "openness of the Chinese economy" is questionable that China is "moving away and will create a model opposite to the liberal and market-oriented model of the West."

Ideology, however, has not stopped BASF (Joerg Wuttke represents its interests) from investing billions of dollars in a chemical plant in the port city of Zhanjiang.

In the first half of this year alone, direct investments by German companies in China reached 10 billion euros.

In 2018-2021 more than 85% of total amount of the direct foreign investments (DFI) to China were the share of Germany, Great Britain, France ​​ and the Netherlands. From them about a third of PII of EU countries in the People's Republic of China fell to the share of Volkswagen, BMW, Daimler and BASF. Every third German car is on sale in China, at Volkswagen concern – every second. There are plans of expansion of production, including electric vehicles.

The largest industrial companies of Germany depend on China and as on sales market and as production base. Volkswagen decided to invest in joint venture with the Chinese Horizon Robotics, one of the leading developers in the field of artificial intelligence. The producer of personal hygiene means Beiersdorf and industrial producer Siemens intend to expand business in the People's Republic of China too.

More than one million jobs in Germany depend on access to the Chinese market. Jens Hildebrandt operating the German foreign trade chamber in Beijing says that "for many German firms the Chinese market has exclusive value — as the growing sales market". China waits for support of the investment agreement with the European Union which conditions were agreed on in 2020 from Germany. The document assumes protection of interests of the Chinese companies working in Germany and other EU countries and also the interests of the European firms which located in China.

About tranquility and "bull nerves"

Until recently in the West was considered that economic progress and trade will lead to liberalization of communist regime in the People's Republic of China, but it didn't happen. The authorities of the People's Republic of China "are guided by national interests and make decisions according to tasks of socialist construction", Xi Jinping told, having at the same time assured Sholts that Beijing won't refuse policy of openness and will continue a course towards globalization and modernization.

"Still German external economic policy recognized the principle that trade and the international investments are desirable because they are favorable to all parties — the director of the Munich Institute of economic researches Clemens Fyust in the Wirtschaftswoche newspaper wrote. — According to this principle, was considered that the growing welfare of China does well to Germany and Europe because it provides export of the German products".

But the installations of the European Union coordinated with Washington are in reducing dependence on Beijing. The U.S. Secretary of State Anthony Blinken certified the line of negotiations Sholtsa, having told that "the chancellor very precisely stated the purposes of the visit to Beijing in article", published before a trip.

The visit of "the envoy of the West" left the mixed impressions, on tone he didn't resemble visits of his predecessor. The government of Germany is full of disagreements and doubts concerning the Chinese policy. It isn't surprising that Sholts's delegation appeared "between chairs" in definition of priorities in development of the relations with China.

Times when progress of visits to China was measured by scales of trade agreements, passed. A most important task today in avoiding "dependence which in crisis can make Germany object of blackmail", look for spheres of cooperation, but not to leave the relation "in a habitual look", - the Reuters agency so described Sholts's dilemma. Germany in new conditions regards China as competitors and as rival!

Sholts, or on a task, brought up questions of strategic stability, urged China to influence a situation in Ukraine, "to keep" Russia from imaginary use of nuclear weapon, to convince Moscow to keep the grain transaction. In the text of the official report the Chinese Foreign Ministry about Xi Jingping and Olaf Sholts's meeting isn't present mentions of Russia or Ukraine, the question of "peaceful settlement of the Ukrainian crisis" is only once noted.

Following the results of a visit Sholts pointed to press conferences that atomic threats "are unacceptable, irresponsible and very dangerous". To ask: "Who about it asked him who to whom threatens from where information on nuclear weapon?".

During negotiations Xi Jinping remembered about "the quote which was used by the former German Chancellor Helmut Schmidt and which he highly appreciated - that political leaders have to have tranquility to accept what they can't change, courage to change what they can change, and wisdom to distinguish these two things". The quote as it is represented, became the message of Beijing and Germany, and to the European Union. Here it is necessary to remember still expression of Joseph Stalin who said that the Soviet people's commissar has to possess "bull nerves".

Photo: Reuters

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