Is Beijing’s ‘German Strategy’ Working?

September 24, 2019 Updated: September 30, 2019

News Commentary

There was quite a bustle among Chinese propaganda about the visit of German Chancellor Angela Merkel against the backdrop of the Sino-U.S. trade war and Hong Kong’s pro-democracy movement. 

It looks to me that Beijing is playing a German card to fight the United States by roping in its European ally.

One the one hand, Beijing had a surprisingly mild response to Merkel’s urging to respect the “one country, two systems” policy in Hong Kong. Instead of the old playbook of angry retaliation and calling it China’s “domestic affair,” this time Beijing just let it go.

On the other hand, Chinese propaganda has been bragging about its trade relations with Germany with detailed listing of high-volume deals and the tempting benefits China provides. Chinese media also contained veiled criticism against the U.S. According to a Sept. 6 report from state media Xinhua, Chinese Communist Party (CCP) regime leader Xi Jinping expressed the two arguments in his speech.

Xi said that “unilateralism and protectionism pose a serious threat to world peace and stability.” Xi urged that “as two responsible major countries, China and Germany need to strengthen strategic communication, coordination and cooperation to address the common challenges facing mankind more than ever.” He also called on the two countries “to demonstrate responsibility, jointly maintain international fairness and justice, safeguard free trade and multilateralism, and strengthen cooperation on climate change and cooperation with Africa.”

Such rhetoric is obviously implying that the Trump administration is threatening world peace, and that the United States did not respect “China’s way of development” or care for “China’s core interests.”

Beijing promised Germany a bigger piece of cake domestically. Xi mentioned the “many economic and trade cooperation results” during Merkel’s visit. He said China and Germany should “strengthened cooperation in emerging fields such as autonomous driving, new energy vehicles, intelligent manufacturing, artificial intelligence, digitalization, and 5G.” He also promised that “China is accelerating the opening of its financial and service sectors, and welcomes the German side’s investment in these sectors.”

No doubt, if Germany wants to receive the promised bigger cake, it will have to agree with the first point above and acknowledge that the United States is threatening the world, and to respect “China’s way of development” and distance itself from the U.S. in some international issues.

Merkel’s administration of course understands such expectations, so their statements were largely diplomatic rhetoric. Merkel said that “German-China dialogue and cooperation are extensive and China is Germany’s largest trading partner. Cooperation between the two countries is developing in a better direction.” 

Her response to Beijing’s accusation about unilateralism and protectionism was simply “unilateralism and protectionism also have a negative impact on Germany,” and did not mention who is threatening world peace or stability.

The reality is this: the entire free world, including Germany, knows that the real threat to world peace and stability is the CCP regime which has been aggressively infiltrating the West through Huawei, the “One Belt, One Road” project, the Confucius Institute, and other espionage tactics. In my opinion, Merkel refrained from a more candid statement only to protect bilateral financial ties.

China replaced the United States as Germany’s number one trading partner in 2016 and 2017, with a $168 billion trade volume in 2017, 100 times that of 1978. Chinese business accounts for 7 percent of German enterprise sector’ total income and 15 percent of DAX 30 index companies. Today, over 5,000 German companies are investing in over 8,000 projects in China, while over 2,000 Chinese companies are investing in Germany.

What this collaboration means for the German economy is a considerable level of reliance on China. It also gives the CCP some confidence in using its German connection to sow some discord between the United States and Europe. But is it working?

Let’s first look at the commentary from German media regarding Merkel’s visit.

Mannheim Morning News said Berlin must protest Beijing’s failure to keep its promise to maintain Hong Kong’s autonomous status and to open the Chinese market further to Germany.

Frankfurter Allgemeine Zeitung (FAZ) warned Merkel that she should not overestimate her role in Hong Kong government’s reversal on the China extradition law. FAZ pointed out that it’s a tactic of the CCP to cool down the situation to prepare for the Oct. 1 CCP anniversary, and that Beijing may reintroduce the extradition bill any time.

Hamburger Abendblatt believes that Merkel is unable to have any concrete influence on China because of the huge gap between the two countries’ global stature.

Stuttgarter Zeitung worries that Germany will find it more and more difficult to balance its China policy between ethical values and financial benefits.

DIE ZEIT said in an online article that while Merkel’s mentioning of Hong Kong issue in the joint press conference was commendable, she should have been much more vocal with her criticism in public occasions given the rising ideological conflicts and China’s recent crisis, instead of the silent diplomacy behind closed doors. 

“It’s time to openly criticize China’s system with clear language that everyone understands… In China, firm stance receives respect and timidity is sneered at. Political over-caution will be interpreted as weakness.”

From the media reports, we can see that Germans feel both upset about Merkel’s reluctance to publicly criticize China, and a sense of helplessness about Germany’s reliance on the Chinese market. Such dilemma is probably a reason why the CCP thinks the “bigger cake” strategy would work.

In my opinion, the effectiveness of China’s German card is very limited. First, while Sino-German trade has been growing, the $168 billion amount is not comparable to the $5 trillion deficit between China and the US. The United States remains the biggest consumer market in the world, and the limited trade with Germany can’t compensate the loss of the U.S. market.

More importantly, the CCP’s theft of technology and forced technology transfer has been exposed to the world. German enterprises also suffered from such tactics from state-backed Chinese companies. How many of them will be willing to invest in China or receive investment from China in high-tech industries? Do they still believe that China will truly open the financial market and allow foreign companies to compete in a fair environment?

Secondly, German is aligning its China policy with that of the European Union, which means China has failed to divide the European countries. In its March joint communication, the European Commission referred to China as “an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance,” and set out ten concrete actions towards China. The first action states that “the EU will strengthen cooperation with China to meet common responsibilities across all three pillars of the United Nations: Human Rights, Peace and Security, and Development.” The Commission also called on China to fulfill its commitments regarding eliminating industrial subsidies and forced technology transfers. The proposed actions also included establishing a common 5G security approach, and detecting and raising awareness of security risks posed by foreign investment in critical assets, technologies, and infrastructure.

The March joint communication is the EU’s first united effort to adjust its China policy. As a key member of the EU, Germany is in favor of the communication. A senior German diplomat commented that this strategic vision clearly reflects the challenges the EU is facing in its relationship with China, and provides a critical motivation for EU members to align on their approach.

The EU’s attitude towards China is more in line with that of the United States, and this is not something that can be easily changed with a “bigger cake slice.” Germany simply won’t deviate from the EU’s path.

Third, China can’t effectively estrange Germany and the United States. Though Germany does not fully agree with all the political measures taken by the Trump administration, European countries have seen clearly that Trump’s efforts to nudge Beijing towards structural reform will also benefit European companies. The natural ideological alignment between the United States and Europe is also one of many factors that will compel Germany to stand with the U.S. on critical China issues.

Many German enterprises operating in China are also avoiding putting all of their eggs in one basket. A 2017 survey of the German Commerce Associate showed that over half of its members were not considering investing in additional locations in China. Nearly 13 percent of German companies in China said that they were likely to leave China in the next two years. The perspectives of the business community will influence the German government.

No doubt, Beijing’s effort to reel in Germany reveals China’s lack of conviction in reaching a U.S.-China trade agreement. It also reflects Beijing’s true intention of refusing to make structural reforms.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Zhou Xiaohui
Zhou Xiaohui
Zhou Xiaohui is a former college professor. He has been contributing commentaries to The Epoch Times on Chinese politics, history, and culture since 2009.