“When China rises…”

(c) Dahrendorf Symposium / Steffen Weifelt

Beijing and Berlin are strengthening their cooperation mechanisms to institutionalize partnership in a wide range of sectors. Reinhard Bütikhofer, Member of the European Parliament (Greens/EFA) and Vice-Chair of the European Parliament’s Delegation for Relations with the People’s Republic of China, notices a growing willingness to deal in a much more systematic way with developments in China and in both Sino-German and Sino-European relations.

In June 2016, Angela Merkel visited China for the ninth time since becoming Germany’s Chancellor. She conducted intensive talks in Beijing and also paid a visit to the city of Shenyang in the northeast of the country. She was accompanied by more than half of her cabinet thus demonstrating the extraordinarily close relationship which has developed between China and Germany.

However there is now a new dimension to this relationship. During her visit, Ms. Merkel spoke of increasing competition between Germany and China, a perception that China experts are also confirming. Yet, the fact that Merkel publicly addressed this issue whilst in China highlights that Sino-German relations are truly entering a new period and require to be re-reflected.

China and Germany: Embracing a different kind of partnership

Gone are the days when human rights questions or perhaps a Dalai Lama visit to Berlin would here and there result in minor political problems for Sino-German relations. Still back in 2014, when both governments agreed to establish a Sino-German innovation partnership listing countless chapters for future cooperation, the horizon still seemed largely clear. At that time Volkswagen was making 50 percent of its profits in China, and overall the majority of German investors in China was well satisfied.

Briefly before Merkel had personally intervened on a dispute over China’s export dumping in the solar energy sector and more or less settled the issue in favour of the Chinese side – against the position of then European Commissioner for Trade Karel De Gucht. Similar problems in other fields were not to be seen. China had also begun to increase its foreign direct investment in Germany. When the Chinese Sany Group acquired the German company Putzmeister in 2012, neither economic nor political elites reacted concerned. The increasing Chinese interest in Germany’s ‘Industry 4.0’-Strategy was interpreted – proudly – as a confirmation that Germany was on the right course. When – on Chinese initiative – the Asian Infrastructure Investment Bank (AIIB) was founded, Germany became one of the leading founding members – unimpressed by US pressure not to do so.

When it comes to specific parts of China’s policy on Europe that tried adopting a ‘divide and conquer’ strategy against the 28 EU countries, Berlin was not particularly annoyed about China, seeing that ultimately Germany’s prospects would remain positive. Berlin also largely stayed out of intra-Asian political quarrels for example the Sino-Japanese dispute over the Senkaku / Diaoyu islands, China’s lacklustre efforts to bring North Korea to reason, or even the growing tensions in the South China Sea.

Just to be clear: the period of cooperation is not over. But this cooperation is increasingly accompanied by the realisation that it is necessary to clearly address the growing differences, clashes of interest and, to some extent, open conflicts, thereby standing in for our own interests in a clear and profound manner.

Here a few key points on what that could mean:

Is China a market economy?

Growing Chinese industrial over-capacity – and the resulting exports to Europe at dumping prices – cannot leave European or German industrial policy unaffected. Publicly, this is being debated under the headline ‘Is China a market economy?’ In practice, it is about ensuring that we can effectively counter dumping in a way that is in line with WTO regulations.

Chinese direct investment in Europe

In 2015, Chinese direct investment in Europe exceeded European investment in China by more than 100 percent. Chinese corporations are on a shopping tour with Kuka currently being the most prominent example. Can German industrial policy really remain indifferent in view of Chinese corporations – state-owned or in any case under direct party-influence – buy up German innovation champions, particularly companies of strategic value, only to transfer the technology to China?

Railway industry

Through the fusion of state-owned companies, China has just created a railway industry giant – more than double the size of the Western rail companies Siemens, Bombardier and Alstom combined. Now this company is pushing to enter European markets, while on the other hand European railway companies’ access to infrastructure investment in China has been continually pushed back over the last years. Should this not have consequences for our competition policy?

China’s strategy ‘Made in China 2025’

China’s strategy ‘Made in China 2025’ not only sets the ambition of turning the country into a world leading hi-tech-superpower over the next 15-25 years (why should China not show any ambitions?) but it also states point-blank – even through numerically-defined targets – that this strategy aims at increasingly driving international corporations and joint-ventures with international participation out of Chinese markets.

Differences are clearly growing in the political sphere too. This became apparent, for example, in Chinese legislation towards foreign NGOs that was deliberately phrased in a way to potentially justify all types of police-state-like humiliation and oppression. Many European voices – Ms. Merkel, the European Parliament, the European foreign policy establishment and numerous actors from academia, civil society and business – have attempted to influence and contribute to the phrasing of a more precise legal terminology that would subject executive action to legal scrutiny – but their efforts have so far been in vain. The Chinese leadership’s aim seems less to be restricting or fighting individual NGOs whose activities they might dislike – it is rather about combatting the principle and in practice of any form of independent, self-organized civil society.

Xi Jinping’s vision for China strives for a modern, technology-based authoritarianism in which no zones of autonomy are tolerated. “Preaching human rights” will not help to counter this development. We have yet to find the right approach to address these developments but it is obvious that necessarily tensions will emerge between this authoritarian approach and our liberal orientation.

Such heightened tensions also characterise the situation in the South China Sea, for instance. Security policy-wise the EU and Germany are certainly not relevant actors in this region and Franco-British dreams to the contrary seem to me more like imperial nostalgia. Yet, we do have an interest in political and economic stability. Moreover, we have an interest in preventing China from undermining the foundations of multilateral international rule of law under the cloak of the concept of “multipolarity” it has long been seeking. However, this is exactly what happens when China, despite having ratified the UN Convention on the Law of the Sea (UNCLOS), simply contests its validity whenever these rules conflict with Chinese’s policy claims. For Germany, the multilaterally approved international rule of law is a fundamental pillar of its foreign policy. It is difficult to imagine that these two principles would not clash.

Finally, I wish to highlight three conclusions that, in my opinion, must be drawn from the changes in Sino-German relations as described above:

  • First, it would be wrong to throw the baby out with the bathwater. Where cooperation is possible, we must seek it. This is in our own interest. But we must not shy away from necessary conflict solely in order to preserve this cooperation.
  • Second, Germany must integrate its China policy much more closely into that of the EU. In the long run, Germany alone does not have a spoon long enough to share the same bowl with China. This is why it is such a positive step that the European Commission published a European China Strategy in June. Germany should participate very actively in the debate around it.
  • Third, this is a debate that has to be led very publicly, including a broad field of societal groups, not just amongst political or economic elites. And, in the debate, we also have to reach an understanding on how to address certain specific developments. Should academic institutions, for example, object to the exclusion of individual researchers from conferences purely because they are personae non gratae in China? Should the German parliament publish a periodic report on Sino-German relations to facilitate a society-wide debate?

From among my peers, I have noticed a growing willingness to deal in a much more systematic way with developments in China and in both Sino-German and Sino-European relations. As far as I can see, this approach is absolutely necessary.

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About the author:

Reinhard Bütikofer is a Member of the European Parliament (Greens/EFA) and the Co-Chair of the European Green Party (EGP). He sits on the Committee of Industry, Research and Energy (ITRE) and is a substitute member of the Committee on Foreign Affairs (AFET) as well as the Sub-Committees on Security and Defence (SEDE) and Human Rights (DROI).He is Vice-Chair of the European Parliament’s Delegation for Relations with the People’s Republic of China and a Member of the Delegation to the United States. 

The opinions expressed in this blog contribution are entirely those of the author and do not represent the positions of the Dahrendorf Forum or its hosts Hertie School of Governance and London School of Economics and Political Science or its funder Stiftung Mercator.

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