CATHRIN SCHAER: Is Berlin behind the curve on Beijing?

The problem was that the advice, pictured next to a Mercedes Benz parked on a beach, was attributed to Tibetan spiritual leader, the Dalai Lama.

After complaints from Chinese users, who threatened to boycott the brand because the Dalai Lama regularly advocates autonomy for the Himalayan territory, Daimler apologised. The Germans even sent a letter to the Chinese ambassador declaring they had never intended to question Beijing’s sovereignty over Tibet or to unintentionally support the Dalai Lama. The luxury car company’s grovelling apology – one local newspaper headlined their story ‘Daimler gives in to Chinese propaganda’ and a local politician said that the Mercedes managers deserved ‘a prize for spinelessness’ – might have happened more than two years ago but recently it’s become a hot topic in Germany again.

The reason: it’s just one of the more embarrassing examples of what is seen as German hypocrisy when it comes to the country’s relationship with China.

There are plenty of other instances. Some of the most recent include chancellor Angela Merkel’s unwillingness to publicly congratulate Taiwan’s president on re-election in January, even as her counterparts in France and Britain sent greetings. And this month, the Ministry of Foreign Affairs’ controversial decision not to feature the Taiwanese flag on their website of bilateral relations also made headlines.

China sees Taiwan as its own territory even as many Taiwanese want independence. The Germans explained that they’ve never featured the flag because they adhere to the ‘one China’ policy.

This week, Germany continues to dither about whether to ban Chinese tech giant, Huawei, from telecommunications infrastructure, even as the UK forges ahead.

‘On China, it seems that Britain is turning into the champion of the liberal cause,’ German foreign policy analyst, Ulrich Speck, wrote on Twitter this week. Germany, meanwhile, is lagging behind.

For the past few years, Germany’s motto on China has always been ‘Wandel durch Handel’, or ‘change through trade’. Germans tend not to have much appetite for sending in the troops. They prefer to spend big on humanitarian causes and trade, in the hope that, by including everyone in the liberal, global order, positive change can be affected.

And as a nation, Germany has good reasons for continuing to kow-tow to China.

Firstly, current uncertainties around the trans-Atlantic relationship and even Nato require a geopolitical balancing act. ‘Germany – and Merkel in particular – doesn’t want to pick a fight with another great power while things are not going well with the US,’ explains Lucrezia Poggetti, an analyst at the Mercator Institute for China Studies, or MERICS, based in Berlin. ‘Everybody is waiting for the US elections, to see if we can work better with the next American administration.’

Trans-Atlantic issues also tie into Germany’s trade relationship with China. As Noah Barkin pointed out in a March article for the Carnegie Endowment for International Peace, ‘during the global financial crisis and the eurozone unrest that followed, Germany’s close links with China’s growing economy helped it weather the storm.’

With the German economy expected to contract around 6% this year as a result of the pandemic, that consideration continues to play a big role, Poggetti adds. The EU is China’s biggest trading partner, with transactions amounting to 560 billion euros’ worth, or around 1.5 billion euros a day, in 2019. And inside the EU, Germany is the most significant player: imports and exports between the two added up to around 206 billion euros last year.

The UK’s trade with China only comes in at under half of that, around 80 billion euros in 2019. So in many ways, it’s easy to argue that, of all European nations, Germany has the most to lose when it comes to antagonising China.

But this is also where the argument starts to fray a little.

German language press coverage of the issue certainly gives the ‘distinct impression that Germany is helpless and incapable of action,’ researcher Zhu Yi, at the University of Heidelberg’s Institute of Chinese Studies, pointed out recently in a study called ‘How Dependent is Germany on China?’

After evaluating more than 650 articles published on the topic between 2017 and March 2020, she noted there was much discussion about Germany being ‘trapped between two superpowers’ as well as frequent use of words like ‘dilemma’, ‘trap’ and ‘quandary’.

But in fact, the situation isn’t that dramatic. ‘Generally there’s been a tendency to put economic interests before values-based considerations and lots of discussion about how Germany is the country most dependent on China,’ MERICS’ Poggetti agreed. ‘But at the same time, it’s important to look more closely at trade data.’ Preliminary figures for 2019 suggest that of 1.32 trillion euros worth of German exports, 7% went to China. But more – about 9.5% of all German exports – went to the US. And by far the biggest market for German goods was the EU itself, with the country shipping more than 58% of total exports – around 777 million euros worth – to other member states last year.

‘Overall, the export dependency on China appears limited,’ experts at the Cologne Institute for Economic Research wrote in a special study on German dependence on China. It is just ‘the high sales shares of some large German companies in China that distort the picture,’ they concluded. German trade associations estimate that for around a tenth of the approximately 8,000 German companies present in China, the Asian nation is their most important customer. That includes some of the country’s biggest and most politically-influential firms, the likes of VW, Daimler and Siemens.

‘So the question is this,’ Thorsten Benner, director of the Berlin-based think tank, Global Public Policy Institute, or GPPi, suggests: ‘At what point will the German government say that there’s no more political cover for those companies disproportionately dependent on the Chinese market? At what point do they decide not to self-censor because of those companies?’ A new phase in Germany’s China relationship is on the way, MERICS director, Mikko Huotari confirmed to local media in July. ‘China has become a domestic political issue too.’

Inside Germany, there’s been a growing chorus of criticism, as important business groups, such as the Federation of German Industries, record disillusionment about lack of market reform in China, opposition politicians point out the Merkel administration’s cynicism and toothlessness on China human rights issues and experts complain about Germany’s outdated and possibly still a little naive view of the Middle Kingdom. Outside of Germany, other EU member states tend to view Germany’s cosy bilateral friendship with China as self-serving.

Current events have accelerated this negative trend. The Covid-19 pandemic has Germans asking why their supply chains, and in particular, supply chains for important medical goods, are so dependent on the Chinese. Anger at the brutal detention of Muslim minorities in the Xinjiang region and the suppression of demonstrations in Hong Kong, plus the ongoing debate raging around cybersecurity and Huawei’s future in EU telecommunications networks, have all led to more of a spirited debate on the subject.

Voter attitudes also seem to be changing. Although polls show that close to half of Germans believe that China is important for their country’s future, a recent survey, Transatlantic Trends 2020 led by the German Marshall Fund of the United States, found that more than half – 61% – now have negative views of ‘China’s rising influence’. Before the pandemic started, only 51% felt that way.

Close to 60% of the around 1,000 Germans surveyed also said they wanted their country to get tougher on China in the following areas: human rights, climate change and cybersecurity. Interestingly, when it came to trade, 37% were happy with the status quo, although it’s not clear how more combativeness on the former issues won’t cancel the latter out.

In many ways, the current attitude to China can be seen as typical of Germany’s long-standing soft-power foreign policy as well as trade policies based – logically – on the national interest, as well as Angela Merkel’s bet-hedging, non-confrontational leadership style. As a nation, all of that makes sense.

However in the face of Chinese transgressions and broken promises, both political and economic, it’s also becoming clear that any one country will find it difficult to stand against the Asian behemoth. Opposition must come from Europe as a bloc, experts say.

‘It is hard for Europe to envisage a neutral bilateral relationship with Beijing anymore,’ researchers at the Carnegie Endowment for International Peace wrote this month. Despite ongoing hopes for an EU-China trade deal, brokered during Germany’s EU presidency, by the end of the year, ‘Europe is tailoring a much more defensive and assertive approach,’ they confirmed, one driven by the feeling that China ‘is backsliding toward becoming more authoritarian at home and more assertive abroad’.

And in that, ‘Germany has an incredibly important role to play,’ Benner says.

‘Everyone is aware that nobody is going to be able to change China anytime soon,’ Poggetti of MERICS says. ‘China is here to stay. So it’s not about disengagement. It’s about smarter engagement.’

‘We hold a lot of high level dialogues with China on values-related issues, but China doesn’t really follow through on any of its rhetoric,’ Poggetti says, noting that China needs Europe as much as Europe needs China. ‘We need to hold China more accountable for that and put some sticks on the negotiating table, as well as carrots.’ She also points to the fact that Germany has been behind important EU initiatives like legislation on direct investment screening and an European industrial policy, both of which could eventually limit Chinese firms’ ability to operate as freely in the single market.

For Benner, the whole argument comes down to what you believe the future holds. ‘It very much depends on where you see Europe’s place in this century,’ he said. ‘If you see it [Europe] as a tributary to Beijing in a Chinese century, then OK, that requires pre-emptive obedience. We better play ball and not provoke Beijing.

‘But if you think that open societies can stand together and pursue their own path in this century, and assert their independence, then we don’t need to do that,’ he concludes. ‘It really depends on your ambitions.’