The recent visit of German Chancellor to China reveals the dilemma confronting the geopolitical order, a choice as to what should be prioritized, post-Covid economic recovery or unitedly isolating the authoritarian regimes for bringing them back to democracy and compel them to honour international laws and conventions. It appears that as the Russia-Ukraine War continues unabated without any sign of end or a negotiated settlement, the scepter of recession looming large due to saturating energy crisis and unprecedented inflationary spiral and rising cost of living, the compulsive choice is obviously doing all what it takes to resustitate the plummating economies.
As it is being increasingly clear that the isolationist or hegemonistic policies of the yesteryears would not be efficient or expedient to realize the goal of either peace or prosperity, accepting, adjusting and accommodating with the fact of multipolarity is the only pragmatic choice. The visit of German Chancellor to China could be seen in this light. Expecting Germany, or for that matter any country to stand in favour of a coalition against authoritarian regimes even while their own economies are floundering, is unrealistic. Germany is hardly in a position to rock the boat with Beijing as it grapples with the challenge of reviving its struggling economy. Its consumers and companies have borne the brunt of Europe’s energy crisis, and a deep recession is looming. If the European Union and Germany were to decouple from China, it would lead to “large GDP losses” for the German economy.
The Kiel Institute for the World Economy estimates that a major reduction in trade between the European Union and China would shave 1% off of Germany’s GDP. China is Germany’s most important trading partner, with 5,000 German companies active in the country and hundreds of thousands of German jobs tied to the Chinese market. The visit of German Chancellor Olaf Scholz to China on November 04 is the first visit of G-7 to China after the 20th National Congress of the Communist Party of China (CPC). The agenda of the visit, as expected, was with to enhance the mutual understanding and trust between the two sides and deepen cooperation in various fields, obviously economic cooperation remaining at the top.
Germany like many other European economies finds it hard to endure the fallout of Russia’s aggression against Ukraine, Berlin is compelled by the need for diversification in its economic supply chains apart from energy crisis. Its dependence on China – bilateral trade and imports have only grown since the pandemic. Last year, China was Germany’s biggest trading partner for the sixth year in a row, with the value of trade up over 15% from 2020, according to official statistics Chinese trade with Germany was worth a combined 245 billion ($242 billion) in 2021. From Scholz visit it is clear that despite several irritants like lack of access to markets, human rights violation of Uyghur and Tibetan minorities and throttling democratic aspirations of Hong Kong and Tibet, Germany stands ready for closer trade and economic cooperation with China. It supports more mutual investment between Chinese and German businesses. However Scholz referred to issues of divergence with China and many compelling global problems like hunger, climate change and rising debt burden on developing countries which require cooperation for resolution.
However, Germany-China ties are not seen with great trust even domestically in Germany. Some in Scholz’s coalition government are already growing nervous about Germany’s increasing ties with China. The tension was highlighted recently by a fierce debate over a bid by Chinese state shipping giant Cosco to buy a 35% stake in the operator of one of the four terminals at the port of Hamburg. Under pressure from some members of the government, the size of the investment was limited to 24.9%. The potential deal has raised concerns in Germany that closer ties with China will leave critical infrastructure exposed to political pressure from Beijing, and disproportionately benefit Chinese companies. Scholz and Xi agreed that the issue, where the two countries differ, would be solved through exchange of views and better understanding. But the Uyghur Congress, based in Berlin is not convinced. Before the visit, a coalition of 70 civil rights group had urged Scholz to “rethink” his trip to Beijing saying “the invitation of a German trade delegation to join your visit will be viewed as an indication that Germany is ready to deepen trade and economic links, at the cost of human rights and international law.”
Germany is the greatest powerhouse in the European Union. In the wake of the US-China trade war and the conflict in Ukraine, the global order seemed to have moved backwards on multipolarity. But economic compulsions have made multipolarity a more practical proposition. Isolation of China is not possible due to practical reasons. It is because several years of globalization have created intricate and deep inter-dependencies between large economies and cannot be overturned overnight. The timing of this visit is seen as highly questionable by many in Europe – including members of Scholz’s own government, who worry that his presence will serve to burnish the domestic reputation of an increasingly authoritarian Mr. Xi.
China’s one-up manship and unilateralism is still a matter of concern. China’s recent treatment of Lithuania has also deepened concerns that Beijing “does not hesitate to simply break trade rules”. The small, Eastern European nation claimed last year that Beijing had erected trade barriers in retaliation for its support for Taiwan. This year, after a Lithuanian official visited Taiwan, Beijing also announced sanctions against her and vowed to “suspend all forms of exchange” with her ministry. China as it appears is keen to avoid a united front between the United States and Europe. Chinese leaders hope to keep Europe neutral, an alternative “pole” in the multipolar order Beijing wants to craft. Not incidentally, keeping Europe neutral would also ensure China’s access to European research and goods that can help advances Xi’s new focus on cutting-edge tech.
