Angela Merkel Needs China Reality Check
German Chancellor Angela Merkel has often called the German-China relationship a win-win for both countries. During a recent visit to Beijing last month – Merkel’s ninth – German ministers and CEOs publicly signed €2.7 billion worth of agreements. But business rewards are no longer sufficient to justify a German approach to China that has become dangerously out of step with economic and political realities.
The German-Chinese trading relationship has grown spectacularly over the past decade. China has become Germany’s fourth biggest export market and contributed substantially to its economic success. What Merkel calls their “comprehensive strategic partnership” is supposed to provide the political framework for deepening business and trade ties, but rests on a number of faulty assumptions: that Germany and China are complementary economic partners; that China will undergo a process of gradual domestic liberalization and insert itself into the international economy as a “responsible stakeholder”; and that Germany’s close bilateral ties with China are beneficial to the rest of Europe and to the EU-China relationship as a whole.
None of these assumptions hold true any longer. It is impossible to build a “win-win” partnership with an increasingly assertive power that relies on a blend of authoritarianism and expansive state capitalism. Economically, the era when Germany exported advanced industrial goods and China served as a low cost production site has given way to a more complex and less complementary one. China is now competing with Western companies, and critics complain that Chinese state-backed companies enjoy unfair advantages both domestically and abroad.
In recent years, China has doubled down on authoritarian rule and started to export its domestic model by challenging universal notions of human rights, and defending censorship and state control of the internet. These political decisions make it a very poor “strategic partner” for a liberal democracy like Germany.
China has become much more assertive about throwing its weight around and expanding its sphere of influence in Asia. It has created Sino-centric institutions such as BRICS or the Asian Infrastructure Investment Bank to provide alternatives to existing international organizations. It is pursuing massive economic initiatives such as “One Belt, One Road,” a new trade route whose influence will reach across Eurasia into the European heartland and make it a competitor not just to Russia, but the European Union.
Of course, China has a right to promote its interests, and not all of these initiatives are harmful to Europe outright. But Chinese interests will, more often than not, be at odds with those of European liberal democracies. More than ever, we will need a unified European response.
“Never face China alone” should be the key principle for all EU countries, as Berlin-based China think tank MERICS has pointed out. But Merkel’s decision to focus on its bilateral relationship undercuts the prospect of European unity when we need it most. Berlin is not the worst offender, but certainly the most successful. As a result, other EU countries find themselves scrambling to catch up with Germany and secure a larger piece of the European-Chinese pie.
In the UK, for example, David Cameron and George Osborne have been intent on ingratiating themselves with China, and have contributed to a fracturing of Western strategy toward institutions such as the Asian Infrastructure Investment Bank. The pressure countries such as Hungary have felt to build close bilateral ties with China offer the Asian superpower easy influence and bargaining chips in the world of EU politics. As a result, we are still far removed from any kind of unified European strategy.
With Chinese leaders feasting on the prospect of exploiting increasing fissures in Europe post-Brexit, it is Germany’s responsibility to turn the tables and invest in a common European approach – at the expense of its close bilateral ties if necessary. But Berlin should not harbor any illusions that there will be quick successes. If Germany cedes bilateral ground in favor of a unified EU approach, other players such as France will be tempted to step in and intensify their own bilateral dealings. And China will try to encourage exactly that trend through a divide and rule approach.
Still, as the EU’s most resourceful player, Germany must try to galvanize a united approach that allows Europe to deal with China with economic and geopolitical savvy. EU leaders – and their US counterparts – need to sit down regularly and hammer out a comprehensive strategy that can continue to evolve and change.
There is a lot to discuss: how to level the playing field for European companies in China and for Chinese companies seeking to invest in Europe; how to pursue a smarter policy in Central Asia; how to counter the advances of the Chinese and Russian-led authoritarian coalitions fighting civil liberties in global institutions; or how to address the geopolitical tensions in the East and South China Seas.
With the UK set to leave the EU, it will be critical to devise ways for EU and UK leaders to continue to cooperate closely on China policy. Transatlantic coordination will also be essential. That is why the importance of the G7 as a forum for Western China policy is set to increase. The G7’s May statement on the maritime disputes in the South China Sea was a good start. Europe does not always have to be in lockstep with the US approach. But it is high time for Germany and the whole of Europe to start seeing China and Asia in political and strategic, not only commercial, terms.
Of course, Germany should continue to use its close diplomatic ties to forge European agreements with China wherever possible. There are many areas where China’s cooperation is essential, from Afghanistan to climate change. Germany and Europe should pursue agreements with China but without any illusions that they constitute a deal between like-minded partners. This applies, in particular, to politically sensitive issues – take the German concern about the new Chinese NGO law that may make it harder for German political foundations to operate in China. The Chinese-German declaration on Monday found a compromise formula: “Both sides support the lawful work of foreign NGOs in the respective country and will guarantee and support it.” The key qualifier here is “lawful.” In a one-party state without independent rule of law this adjective gives little assurance to the work of NGOs committed to the rights of citizens vis-à-vis all-powerful authorities. They may find themselves targeted for “unlawful” behavior in the same way that journalists have increasingly been harassed for reporting independently on abuse of state power.
Contrary to Chinese premier Li’s claim that disagreements account for only a “miniscule share” of the relationship, the gulf between Germany and China is increasing on a number of key issues, making the case for robust diplomacy and investment in people-to-people ties stronger than ever.
The G20 meeting in Hangzhou in early September will mark Merkel’s 10th trip to China. It is high time for the chancellor to abandon her illusions that China can be a like-minded partner and use the coming months to double down on a united European approach. Post-Brexit, this is a timely signal to China. Germany and Europe will be better for it.
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A version of this commentary was originally published by Politico Europe on July 1, 2016.