The IfW has simulated the "Cold War 2.0" scenario. If trade between Germany and China were to come to a standstill, an economic shock would ensue. However, it could be weathered within a few years.
By Felix Lee
The President of the Federation of German Industries (BDI), Siegfried Russwurm, does not believe in decoupling from China. In an interview by Stefan Braun, he nevertheless urges companies to take a closer look at the risks.
By Redaktion Table
Germany wants to become less dependent on China. In truth, however, German consumers and companies are moving in the opposite direction: Germany is buying more and more goods from China. Disentanglement seems illusory for the moment.
By Frank Sieren
The partial sale of the Hamburg port terminal marked a tipping point in the perception of China by the German public. Concerns about growing dependence now reached segments of the population for whom Beijing's industrial policy previously meant nothing more than boring news in the business section. Olaf Scholz also takes this baggage with him on his first trip to China as German Chancellor.
By Marcel Grzanna
There has never been so little direct interaction between China and the world in recent decades. The former SPD chairman and German Minister of Defense warns that Russia's attack on Ukraine will exacerbate this estrangement. He believes, however, that German and Chinese economies and societies are dependent on each other. And the question of peace, as a global challenge, cannot be resolved without China.
By Experts Table.Briefings
Officially, the Chinese government's position is to open itself to the world. In reality, however, it has launched a decoupling from the West on numerous levels, which is distancing the People's Republic further and further from the rest of the world economically, culturally and socially. A deliberate side effect is the continuously growing nationalism.
By Marcel Grzanna
Decoupling means the unbundling of the American and Chinese economies. In addition to separate economic cycles, this also results in different technical standards. The Table.Media editorial team has all the news on decoupling.
Decoupling China refers to the unbundling of the American and Chinese economies. The term is applicable on two levels. Politically and economically, decoupling means breaking off collaborations and establishing new partnerships with other countries. On a technical level, decoupling means the emergence of different technical standards. For example, in cloud computing, 5G or artificial intelligence. In the USA, former President Donald Trump in particular coined the term decoupling. He used it to justify import stops and negative lists with Chinese companies with which American companies are not allowed to enter into business relationships. China reacted to the new foreign policy course of the USA, among other things, with the concept of dual circulation. This is intended to strengthen the domestic economy in order to make the People's Republic of China less dependent on exports. The goals of dual circulation are laid down in the current five-year plan of the Chinese Communist Party.
With the outbreak of the coronavirus crisis in late 2019, tensions between the United States and the People's Republic of China have once again intensified. While China sought to deflect attention from its own transgressions with an increasingly aggressive foreign policy, Donald Trump zeroed in on the People's Republic as a scapegoat. He coined the term "China virus" and spoke in this context of an "attack" comparable to the terrorist attack of September 11, 2001 or the bombing of Pearl Harbor. In the U.S., the election campaign between Donald Trump and current U.S. President Joe Biden ensued shortly thereafter. Both made the People's Republic of China a central campaign issue and voiced sometimes sharp criticism of the economic and foreign policies of the Chinese Communist Party. Voters in the U.S.A. also took a distinctly negative view of China in the course of the election campaign.
Since the election campaign between former President Donald Trump and the new incumbent Joe Biden, at the latest, the opinion has prevailed across party lines in the USA that economic exchange with China would primarily help the People's Republic and harm the USA. From the U.S. perspective, decoupling is intended to prevent China from overtaking the U.S. in key technological industries. Until now, countries have tried to use economic interdependence and division of labor to promote shared prosperity and guarantee peace for all. Supporters of decoupling assume that this approach leads to imbalances and dependencies. Value chains and trade relations are weaponizable, as the Federal Office of Civic Education explains. They could be used, like weapons, as objects of geostrategic ambitions.
The People's Republic of China is responding to U.S. decoupling with an aggressive foreign policy. The Belt and Road Initiative, also called the New Silk Road, is intended to reorganize world trade on China's terms. Then there is the Regional Comprehensive Economic Partnership (RCEP). This is an economic partnership with ten countries from Southeast Asia plus Australia, Japan, New Zealand and South Korea. Many of these are actually allies of the USA. The third program with which China is driving decoupling itself is the Dual Circulation policy. The Regional Comprehensive Economic Partnership (RCEP) is a partnership among Brunei, Indonesia, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Australia, Japan, New Zealand, and South Korea. Collectively, these countries in the Asia-Pacific region account for one-third of the world's economic output. The RCEP sets tariff reductions and trade rules.
The People's Republic of China's Regional Comprehensive Economic Partnership (RCEP) was a direct foreign policy response to the termination of the Trans-Pacific Partnership (TPP) by then-U.S. President Donald Trump in 2017. The TPP was a pillar of U.S. foreign policy during the Obama administration. Themed "Pivot to Asia," the TPP was supposed to form a group that would have been responsible for 40 percent of global economic output. In addition to the United States, members of the Trans-Pacific Partnership (TPP) included Australia, Brunei, Canada, China, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The agreement would have allowed the countries to "take a leadership role in setting the rules in a crucial, changing region," said Michael Froman, the U.S. Trade Representative at the time.
The fact that U.S. former President Donald Trump ended the leadership role in the Trans-Pacific Partnership (TPP) and even a simple participation is assessed by experts as one of the most serious mistakes of the Trump administration. Accordingly, they expect the new U.S. President Joe Biden and his Vice President Kamala Harris to correct precisely this mistake. Thus, the U.S. is likely to seek a new partnership with TPP countries in the context of decoupling. However, this new turn toward Asia ("pivot to Asia") is likely to cause the Transatlantic Trade and Investment Partnership (TTIP) to fall behind once again. This is a point of criticism from the Europeans that Trump predecessor Barack Obama already had to put up with.
For the past seven years, China and Europe have been negotiating an investment partnership. The agreement is intended to make Chinese investment in Europe and European investment in China easier and fairer. Experts believe Beijing representatives agreed to the investment partnership because of U.S. decoupling. Details have not yet been negotiated. In principle, Europe is rather critical of the People's Republic of China. In a strategy paper of the EU Commission, the country is even described as a "system rival. The country is attempting to establish an autocratic system of rule worldwide. As a political and economic counter-design to European democracies. High-ranking diplomats commented on the agreement on the investment partnership that Europe "had lost its naivety".
Germany and Europe are caught between the fronts when it comes to decoupling. The effects of this policy are not yet foreseeable. The Federal Office for Political Education predicts that the government in Washington will put pressure on Europe. Business could then only be done with the USA or with China. From the point of view of the U.S. and Chinese governments, it is actually the uninvolved third countries that would decide future economic leadership in the world. Technological development also hinges on this fundamental economic and political decision. Two different standards could emerge for important future technologies such as artificial intelligence, cloud computing, the semiconductor industry or 5G. More research effort and new dependencies could be the result
In the discussion around decoupling China, Germany is a so-called "dual-options" country. Germany can easily do business with companies from the People's Republic of China as well as with companies from the United States. But Germany is one of the most internationally interconnected countries in the world and relies heavily on exports. Decoupling can therefore hit the economy of the Federal Republic hard. Germany's security policy is very much geared toward cooperation with the USA. On the other hand, the Federal Republic maintains considerable economic relations with China. This is especially true in Germany's key industries. Decoupling will therefore have to lead to a cost-intensive dual strategy in Germany.
Close integration of large economies minimizes the risk of differing technological standards. Especially when it comes to the U.S. and the People's Republic of China, which both aim for global technology leadership in different key industries, decoupling could lead to different standards and regulations for future technologies such as 5G, cloud usage, artificial intelligence or processors and semiconductors. The global adoption of two standards for different key and future technologies leads to an increased research and development effort. To this end, the use of certain technologies could be used as political leverage. This makes global supply chains more error-prone and vulnerable. One lesson learned from the coronavirus crisis was that precisely these areas need to be made much more resilient.
One of the biggest points of contention in decoupling is the 5G telecommunications standard. Shenzhen-based telecommunications equipment and hardware manufacturer Huawei is one of the world's most important suppliers of this technology. However, it is precisely this company that the U.S. wants to exclude from the award of corresponding licenses. The government in Washington is also putting pressure on third countries to adapt their laws accordingly. The UK, for example, has banned Huawei technology from being used in the construction of a 5G network. The background to this is that the American government is accusing the Chinese company of data theft. The concern is that the Chinese government could use Huawei's 5G technology for espionage or sabotage purposes. The U.S. is threatening to withhold intelligence information from partner countries in the future if countries use Huawei technology.
When it comes to decoupling technological standards, Germany is caught between the fronts because of the 5G telecommunications standard. The Federal Republic does not want to be prohibited from cooperating with Huawei and has therefore chosen a diplomatic intermediate route. Thus, in the future, tenders would be adapted to the new security policy requirements. These would then apply to all suppliers wishing to do business with the German government. The security requirements stipulate that components for central infrastructure projects should only come from trusted suppliers. However, the German government has so far left open exactly what constitutes a trustworthy supplier and how this requirement is to be verified.
