Germany Has Shifted China Strategy Amid Beijing’s Changing Behavior: German Diplomat

‘It’s quite clear that the emphasis has shifted from a focus on partnership and cooperation to more competition and even more rivalry,’ diplomat says.
Germany Has Shifted China Strategy Amid Beijing’s Changing Behavior: German Diplomat
German Chancellor Olaf Scholz speaks during a press conference in Beijing on April 16, 2024. (Andres Martinez Casares/Pool/AFP via Getty Images)
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The Chinese regime’s changing behavior toward the international community has forced Germany to revisit its China policy, according to a top German diplomat.

Speaking during a foreign policy event at the Hudson Institute on June 28, Director-General for Foreign Affairs Thomas Bagger, the state secretary of the German Foreign Ministry, stated that Germany’s position on China, based on its tripartite approach—as a partner, competitor, and systemic rival—has shifted to rival.

“It’s quite clear that the emphasis has shifted from a focus on partnership and cooperation to more competition and even more rivalry,” Mr. Bagger said.

Mr. Bagger noted that Germany is now changing its approach to China, focusing on de-risking and reducing dependence on Beijing, particularly after the COVID-19 pandemic. This includes reducing reliance on China for medical equipment, basic medical supplies, and raw materials for technology. He acknowledged that decoupling China “would hurt [Germany’s] economy tremendously.”

Mr. Bagger said Germany is being open with Beijing about its changing behavior.

“China’s approach to us, to its neighbors, to the international arena has changed in a way that forces us to revisit our own China policy. This is a reaction to your behavior,” he said.

Last year, Germany unveiled its first-ever Strategy on China, marking its strategic shift to reduce economic dependence on China. The strategy provides a framework to enhance fair cooperation with China in line with German values and interests.

During the event, Mr. Bagger noted that unlike the United States, which considers China a geopolitical challenge, Germany has its own approach to China.

“We’re not America’s poodle. We may agree with the Americans on many of these issues, especially on [the] South China Sea—Chinese behavior that needs to respect international law—but not on everything,” he said.

Mr. Bagger also warned that the Chinese regime’s support for Russia’s military efforts in its war with Ukraine, hurts German and European core interests, and could damage Beijing’s reputation.

“If and when China continues to violate Europe’s core interest in security on the European continent, this will have an increasing cost on China,” he said.

“If you continue to support Russia’s war effort against Ukraine, that will have consequences also for our bilateral and European-Chinese relationship.”

Complicated Trading Partner

China has been Germany’s top trading partner since 2015. However, in the first quarter of this year, the United States replaced China in the top position. Germany’s trade with the United States—exports and imports combined—totaled 63 billion euros ($68 billion) from January to March, while the figure for China was just less than 60 billion euros, the data showed.

In 2023, China was Germany’s top trading partner for the eighth year in a row, with volumes reaching 253 billion euros ($270 billion), although that was only a few hundred million ahead of the United States.

On June 12, the European Union announced it will impose 38.1 percent tariffs on imported Chinese electric vehicles (EVs) starting July after an eight-month investigation. The bloc accused Beijing of unfair subsidization. This move follows Washington’s decision last month to increase tariffs on Chinese EVs from 25 percent to 100 percent.

However, Germany opposed the EU tariff boost, as its major automakers, like BMW, Mercedes-Benz, and Volkswagen, fear they could be hit by China’s retaliatory tariffs. These companies have massive automobile production plants in the country that benefit from tax incentives and Beijing’s subsidy policies.

Meanwhile, business confidence among European companies in China has declined since last year, according to a recent survey by the European Union Chamber of Commerce in China in its report “European Business in China Business Confidence Survey 2024.” A record 68 percent of companies reported that business has become more challenging in the world’s second-largest economy.

The survey found that European companies in China are experiencing uncertainties instead of enjoying robust recovery as expected. The report states that China’s structural issues—such as slowing demand, increasing overcapacity, and an ongoing downturn in the property sector—as well as market access and regulatory barriers, keep hitting European companies.

The strategies that companies use to adapt to China’s business environment could create a negative cycle for China, worsening the country’s economic difficulties, the survey noted.

Reuters contributed to this report.
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