Originally, the German government’s China strategy should have been worked out behind closed doors. Officials from all ministries are currently fine-tuning it to reflect their department’s interests.
However, an indiscretion has taken the peace out of this process. The draft of the paper from the Foreign Ministry was leaked to the German news website “Der Spiegel”. Finn Mayer-Kuckuk reports on what became known about the China strategy as a result – and how the leak and the content of the document should be classified. Green Party Foreign Minister Annalena Baerbock makes respect for human rights and supply chain security the basis of policy.
Our article on Volkswagen’s China business also deals with a Green politician. Christian Domke Seidel writes about Julia Willie Hamburg. Her main job is Minister of Education in Lower Saxony. But she also sits on the supervisory board of VW. Her appointment as a controller of the car company is causing mixed feelings in business circles. Unjustifiably so, as our Feature shows.
The German government’s China strategy is to make foreign policy clearer and more effective, according to announcements from the traffic light coalition. Whereas ideas on how to deal with the new superpower were previously scattered across various strategy papers in different departments, there are supposed to be clear instructions for action in the future. The strategy is intended to offer a way out of the major dilemma of dependence on the partner and rival without immediately burning all bridges.
A draft of the strategy from the Foreign Office was leaked to the public on Wednesday, long before the paper was formally finalized. The German news website “Der Spiegel” quotes extensively from the document, which was leaked to it. This version is clearly shaped by Green Foreign Minister Annalena Baerbock. However, this rough version will change considerably on the way to final adoption by the government.
An important part of the draft strategy is devoted to the dependencies of the German economy. It is to be read as a lesson from the events since February, when authoritarian-ruled Russia began to blackmail Western Europeans with gas supplies. Germany should hoard important raw materials in large quantities in the future, Der Spiegel quotes China’s strategy. That could also target rare earths and other indispensable starting materials for the electronics and automotive industries.
In general, supply chains should not depend on individual countries that also do not share the company’s own political values. Important goods should come from different supplier countries.
Diversification could quickly take on an ominous significance if the strategy is implemented in exactly the saIt. For it also envisages no longer sourcing products from areas where human rights are violated. However, many raw materials come from the Xinjiang region, where China operates forced labor camps.
However, significant portions of what Der Spiegel publishes about the draft strategy are known or are measures and policy goals already in the works elsewhere.
Nevertheless, the strategy is quite ambitious. Germany should not “leave any strategic gaps.” It recognizes that China is acting purposefully. Beijing is integrating other emerging countries into its own trading system and deliberately creating dependencies. Such clearly critical-confrontational statements about China would hardly have been published by previous governments about China as a partner; in the Merkel era, it was more the stuff of media commentary.
There are also concrete recommendations on how to deal with China. The Western Balkans should clearly remain the EU’s sphere of influence, and the EU should become involved there accordingly and make accession offers. The EU should also become more present in Africa. In addition, Europe should sell its investments more effectively to the public.
In political Berlin, critical voices can also be heard about the paper and its creation. There is concern about whether the Scholz government will back up its fine-sounding words with the necessary budget. The settlement of chip and electronics manufacturers, government support for research and development, subsidies for unprofitable industries at home, generous gifts to Africa and Latin America – all this would cost a lot of money. After all, China itself mobilizes considerable resources for subsidies, its trade initiative and, not least, the military. Anyone who wants to counter this will have to spend more than before.
Other voices find the paper too confrontational. Admittedly, it contains a declaration of intent not to seek to form blocs. But these sections are overshadowed by statements that focus on the rivalry aspect. Such a paper could exacerbate the very antagonism it seeks to counter.
On the other hand, the paper apparently remains unclear at crucial points – precisely where concrete instructions for action would be required. What if China launches an attack on Taiwan? According to Der Spiegel quotes from the document, “bilateral dialogues” are planned on the subject of Taiwan in order to “persuade” China to comply with treaties. So just talks. According to the document, there is no mention of a harsh consequence in the event of an incursion. Here, the diplomats and their minister did not dare to be a bit of a cold warrior.
Another topic of discussion is the length of the document, which is not exactly short, even in draft form, at just under sixty pages. For a basic strategy, brevity is the spice. Execution and implementation are then a matter for the responsible authorities, which in turn can derive smaller-scale plans. The length indicates that compromises have already been made. If, however, restrictions or even contrary statements are already laid out for each point, this takes away the strength of the document.
Der Spiegel’s disclosure of the paper, however, concerns only a snapshot in the process by which the government arrives at a compromise it can live with. All ministries, other authorities (such as possibly the Federal Intelligence Service) and possibly also interest groups have a say in this matter.
The government also consists of three parties. While the FDP has similar thoughts about China as the Greens and is even more radical in some respects, the nominally dominant SPD is noticeably more cautious. This is clearly evident from recent events. SPD Chancellor Olaf Scholz meets Xi Jinping with a business delegation, while Annalena Baerbock pointed out human rights and dependencies from the sidelines.
If possible, the strategy should be ready this year, but in any case, as soon as possible. It is also announced in the coalition agreement. The war in Ukraine has increased the sense of urgency. Added to this is the growing uncertainty in German society. At the beginning of the pandemic, masks were in short supply because they come from China. Antibiotics also come from there. Disruptions in the supply chain, which started in China’s ports, brought assembly lines to a standstill in Germany. Xi Jinping is threatening Taiwan more and more openly and controlling its population more and more tightly. There is a feeling in the government that the time for hesitation and discussion is running out. A directive on how to deal with China is overdue.
That is why the authorities and the business community are eagerly awaiting the strategy for which the House of Baerbock is spearheading. But the strategy will probably disappoint in its effect. No PDF document from a top authority can resolve in one fell swoop the dilemma into which Germany has imperceptibly fallen.
On the one hand, the Chinese growth market had an irresistible effect on industry, which invested there – economically correct. On the other hand, China has undergone a frightening transformation in just ten years. An economic disengagement currently seems as costly and illusory as the idea of the divided EU seriously confronting the power-conscious, rich and highly armed China.
The state of Lower Saxony owns twenty percent of Volkswagen. And thus voting rights in the Group. That is why the government sends two representatives to the 20-member supervisory board. Until now, they have been Minister President Stephan Weil (SPD) and Economy Minister Bernd Althusman (CDU). But in the recent Lower Saxony elections, voters elected a red-green government to office, which is why Julia Willie Hamburg (Green Party), the state’s Minister of Education and Vice President, now joins the VW Supervisory Board.
This has led to some unobjective and even simply false criticism. It is true that Hamburg is extremely critical of the company’s involvement in China. In the middle of the year, she declared, then still in her role as an opposition politician, that the VW plant in Xinjiang served the Communist Party to trivialize the violence against the Uyghurs. “A German corporation should not encourage this,” Der Spiegel quotes her as saying. The truth, however, also includes the fact that all parties except Die Linke and the AfD have adopted the statement of the Committee on Human Rights and Humanitarian Aid on human rights violations in the Xinjiang region. Hamburg has merely communicated this opinion clearly.
In addition, the Mercator Institute for China Studies (Merics) recently warned of the risks to which German automakers are exposed in the People’s Republic. These included, among other things, the political imponderables. Even Herbert Diess, the former CEO of Volkswagen, commented on the Xinjiang plant in an FAZ podcast. “According to all discretion that I have on this, it has been visited more frequently by German employees from headquarters, but also by expats. There, they will certainly do everything they can.” So the issue of human rights is at least on Volkswagen’s agenda. And thus probably also on the supervisory board.
Ulrich Hocker, President of the Deutsche Schutzvereinigung für Wertpapierbesitz, sharply criticized Hamburg’s appointment to the Supervisory Board. He said she was an “obvious miscast.” And further: “After all, we know that Ms. Hamburg and her program say that you have to get out of the combustion engine much sooner.” Again, part of the completeness here is that the German government – i.e., the SPD, Greens and FDP – have agreed on a 2035 phase-out of internal combustion vehicles. Volkswagen itself would like to implement this in Europe as early as 2033.
On this point, in particular, there is a great deal of agreement at Volkswagen. Even among employee representatives. Even before the state elections, IG Metall had assurances that €50 billion would be made available over the next ten years to “shape the transformation of industry in the state.” “Volkswagen itself, as well as the automotive industry as a whole, are facing major upheavals. Transport and energy are core areas of the transformation to a climate-neutral economy. At the same time, millions of people are employed in the affected industries. The mobility and energy transformation are therefore key projects that will determine whether the transformation really succeeds in social, ecological and democratic terms,” a union spokesperson told Table Media.
Following the filling of the supervisory board position at VW with Hamburg, a tabloid newspaper also reported that the post was endowed with €100,000. Remuneration for committees and attendance fees would be on top of that. That is correct in principle, stresses a spokeswoman of the state chancellery opposite table Media, however, both Stephan Weil and Julia Willie Hamburg would have to transfer the money to the country Lower Saxony. Both would be allowed to keep (and pay tax on) only €6,200 each. This is stipulated in section five, paragraph three, of the Ministers Act. The tabloid later added a corresponding paragraph.
Also regulated by law is the secrecy to which both Hamburg and Weil are bound when it comes to their work on the Supervisory Board. As other topics are currently on the agenda due to the formation of a new government, neither Hamburg nor Weil were willing to be interviewed.
IG Metall, which will have to negotiate more with Hamburg in the future, however, expressed nothing but praise for the Green Party politician to Table Media. “Ms. Hamburg, then still in her role as leader of the opposition parliamentary group, also showed herself to be a reliable politician who does not lose focus of the interests of the workforce.” And further: “The partially tendentious reporting on Ms. Hamburg’s future work in the VW Supervisory Board is very disconcerting.”
Shortly before completing his studies in economics, Max Zenglein was asked by his professor if he wanted to teach economics at a university in Chengdu. This came rather unexpectedly for Zenglein. Until then, his relationship with China had been limited to vacations, during which he was fascinated by the “generally noticeable atmosphere of departure” at the turn of the millennium. But the offer was more than convenient for him. The next logical step seemed to be to get to grips with China on a professional level.
However, he did not stay at the university for long. Although he completed a doctorate in political economy, he was already working in parallel for the AHK Greater China, whose Shenzhen office he opened and built up in 2008. In addition to his managerial activities, he introduced the “Labor Market and Salary Report” for Shenzhen, among other things, which is now carried out on a national level.
In 2016, Zenglein moved to Merics in Berlin, where he is still chief economist. His expertise ranges from macroeconomic development and industrial policy to financial markets, international trade and investment. His claim at Merics is to “understand China from the inside out” – purged of his own wishful thinking as much as possible. This is particularly important when studying China’s economic system, as many still haven’t completely abandoned the idea that China can or should evolve into a social-market economy: “China goes its own way, and you have to adjust to that China.”
Zenglein considers the option of bridging the growing gap between the different systems through even more intensive economic relations to be increasingly difficult to implement. One could try to maintain the mutual dependencies as long as the emphasis is on ‘mutual’. But every step toward self-sufficiency works toward breaking down these close ties.
At the same time, Zenglein urges caution. Because of security concerns, he says, this should not be exaggerated – after all, “there’s a difference between talking about semiconductors and talking about baby carriages”. In addition, he says, one must keep an eye on China’s push for globalization, especially in the Southeast Asian region, where there will be increasing competition with European players.
The decisive factor is also the role that the Chinese middle class will play in the current reform path. Many middle-class companies are under immense pressure for the first time in decades as a result of Zero Covid and the tech crackdown. Youth unemployment is 20 percent, and university graduates find themselves in precarious jobs after graduation – social explosives that Zenglein also deals with. Julius Schwarzwälder
Skills shortages and demographic change – China’s answer to this is, among other things, robot technology. This example could replace baristas in the future. It was on display at the 24th China Hi-Tech Fair in Shenzhen. Apparently, however, the inventor does not yet trust the robot barista enough to let him handle porcelain filters or ceramic coffee cups. But it’s good enough for the to-go paper cup.
Originally, the German government’s China strategy should have been worked out behind closed doors. Officials from all ministries are currently fine-tuning it to reflect their department’s interests.
However, an indiscretion has taken the peace out of this process. The draft of the paper from the Foreign Ministry was leaked to the German news website “Der Spiegel”. Finn Mayer-Kuckuk reports on what became known about the China strategy as a result – and how the leak and the content of the document should be classified. Green Party Foreign Minister Annalena Baerbock makes respect for human rights and supply chain security the basis of policy.
Our article on Volkswagen’s China business also deals with a Green politician. Christian Domke Seidel writes about Julia Willie Hamburg. Her main job is Minister of Education in Lower Saxony. But she also sits on the supervisory board of VW. Her appointment as a controller of the car company is causing mixed feelings in business circles. Unjustifiably so, as our Feature shows.
The German government’s China strategy is to make foreign policy clearer and more effective, according to announcements from the traffic light coalition. Whereas ideas on how to deal with the new superpower were previously scattered across various strategy papers in different departments, there are supposed to be clear instructions for action in the future. The strategy is intended to offer a way out of the major dilemma of dependence on the partner and rival without immediately burning all bridges.
A draft of the strategy from the Foreign Office was leaked to the public on Wednesday, long before the paper was formally finalized. The German news website “Der Spiegel” quotes extensively from the document, which was leaked to it. This version is clearly shaped by Green Foreign Minister Annalena Baerbock. However, this rough version will change considerably on the way to final adoption by the government.
An important part of the draft strategy is devoted to the dependencies of the German economy. It is to be read as a lesson from the events since February, when authoritarian-ruled Russia began to blackmail Western Europeans with gas supplies. Germany should hoard important raw materials in large quantities in the future, Der Spiegel quotes China’s strategy. That could also target rare earths and other indispensable starting materials for the electronics and automotive industries.
In general, supply chains should not depend on individual countries that also do not share the company’s own political values. Important goods should come from different supplier countries.
Diversification could quickly take on an ominous significance if the strategy is implemented in exactly the saIt. For it also envisages no longer sourcing products from areas where human rights are violated. However, many raw materials come from the Xinjiang region, where China operates forced labor camps.
However, significant portions of what Der Spiegel publishes about the draft strategy are known or are measures and policy goals already in the works elsewhere.
Nevertheless, the strategy is quite ambitious. Germany should not “leave any strategic gaps.” It recognizes that China is acting purposefully. Beijing is integrating other emerging countries into its own trading system and deliberately creating dependencies. Such clearly critical-confrontational statements about China would hardly have been published by previous governments about China as a partner; in the Merkel era, it was more the stuff of media commentary.
There are also concrete recommendations on how to deal with China. The Western Balkans should clearly remain the EU’s sphere of influence, and the EU should become involved there accordingly and make accession offers. The EU should also become more present in Africa. In addition, Europe should sell its investments more effectively to the public.
In political Berlin, critical voices can also be heard about the paper and its creation. There is concern about whether the Scholz government will back up its fine-sounding words with the necessary budget. The settlement of chip and electronics manufacturers, government support for research and development, subsidies for unprofitable industries at home, generous gifts to Africa and Latin America – all this would cost a lot of money. After all, China itself mobilizes considerable resources for subsidies, its trade initiative and, not least, the military. Anyone who wants to counter this will have to spend more than before.
Other voices find the paper too confrontational. Admittedly, it contains a declaration of intent not to seek to form blocs. But these sections are overshadowed by statements that focus on the rivalry aspect. Such a paper could exacerbate the very antagonism it seeks to counter.
On the other hand, the paper apparently remains unclear at crucial points – precisely where concrete instructions for action would be required. What if China launches an attack on Taiwan? According to Der Spiegel quotes from the document, “bilateral dialogues” are planned on the subject of Taiwan in order to “persuade” China to comply with treaties. So just talks. According to the document, there is no mention of a harsh consequence in the event of an incursion. Here, the diplomats and their minister did not dare to be a bit of a cold warrior.
Another topic of discussion is the length of the document, which is not exactly short, even in draft form, at just under sixty pages. For a basic strategy, brevity is the spice. Execution and implementation are then a matter for the responsible authorities, which in turn can derive smaller-scale plans. The length indicates that compromises have already been made. If, however, restrictions or even contrary statements are already laid out for each point, this takes away the strength of the document.
Der Spiegel’s disclosure of the paper, however, concerns only a snapshot in the process by which the government arrives at a compromise it can live with. All ministries, other authorities (such as possibly the Federal Intelligence Service) and possibly also interest groups have a say in this matter.
The government also consists of three parties. While the FDP has similar thoughts about China as the Greens and is even more radical in some respects, the nominally dominant SPD is noticeably more cautious. This is clearly evident from recent events. SPD Chancellor Olaf Scholz meets Xi Jinping with a business delegation, while Annalena Baerbock pointed out human rights and dependencies from the sidelines.
If possible, the strategy should be ready this year, but in any case, as soon as possible. It is also announced in the coalition agreement. The war in Ukraine has increased the sense of urgency. Added to this is the growing uncertainty in German society. At the beginning of the pandemic, masks were in short supply because they come from China. Antibiotics also come from there. Disruptions in the supply chain, which started in China’s ports, brought assembly lines to a standstill in Germany. Xi Jinping is threatening Taiwan more and more openly and controlling its population more and more tightly. There is a feeling in the government that the time for hesitation and discussion is running out. A directive on how to deal with China is overdue.
That is why the authorities and the business community are eagerly awaiting the strategy for which the House of Baerbock is spearheading. But the strategy will probably disappoint in its effect. No PDF document from a top authority can resolve in one fell swoop the dilemma into which Germany has imperceptibly fallen.
On the one hand, the Chinese growth market had an irresistible effect on industry, which invested there – economically correct. On the other hand, China has undergone a frightening transformation in just ten years. An economic disengagement currently seems as costly and illusory as the idea of the divided EU seriously confronting the power-conscious, rich and highly armed China.
The state of Lower Saxony owns twenty percent of Volkswagen. And thus voting rights in the Group. That is why the government sends two representatives to the 20-member supervisory board. Until now, they have been Minister President Stephan Weil (SPD) and Economy Minister Bernd Althusman (CDU). But in the recent Lower Saxony elections, voters elected a red-green government to office, which is why Julia Willie Hamburg (Green Party), the state’s Minister of Education and Vice President, now joins the VW Supervisory Board.
This has led to some unobjective and even simply false criticism. It is true that Hamburg is extremely critical of the company’s involvement in China. In the middle of the year, she declared, then still in her role as an opposition politician, that the VW plant in Xinjiang served the Communist Party to trivialize the violence against the Uyghurs. “A German corporation should not encourage this,” Der Spiegel quotes her as saying. The truth, however, also includes the fact that all parties except Die Linke and the AfD have adopted the statement of the Committee on Human Rights and Humanitarian Aid on human rights violations in the Xinjiang region. Hamburg has merely communicated this opinion clearly.
In addition, the Mercator Institute for China Studies (Merics) recently warned of the risks to which German automakers are exposed in the People’s Republic. These included, among other things, the political imponderables. Even Herbert Diess, the former CEO of Volkswagen, commented on the Xinjiang plant in an FAZ podcast. “According to all discretion that I have on this, it has been visited more frequently by German employees from headquarters, but also by expats. There, they will certainly do everything they can.” So the issue of human rights is at least on Volkswagen’s agenda. And thus probably also on the supervisory board.
Ulrich Hocker, President of the Deutsche Schutzvereinigung für Wertpapierbesitz, sharply criticized Hamburg’s appointment to the Supervisory Board. He said she was an “obvious miscast.” And further: “After all, we know that Ms. Hamburg and her program say that you have to get out of the combustion engine much sooner.” Again, part of the completeness here is that the German government – i.e., the SPD, Greens and FDP – have agreed on a 2035 phase-out of internal combustion vehicles. Volkswagen itself would like to implement this in Europe as early as 2033.
On this point, in particular, there is a great deal of agreement at Volkswagen. Even among employee representatives. Even before the state elections, IG Metall had assurances that €50 billion would be made available over the next ten years to “shape the transformation of industry in the state.” “Volkswagen itself, as well as the automotive industry as a whole, are facing major upheavals. Transport and energy are core areas of the transformation to a climate-neutral economy. At the same time, millions of people are employed in the affected industries. The mobility and energy transformation are therefore key projects that will determine whether the transformation really succeeds in social, ecological and democratic terms,” a union spokesperson told Table Media.
Following the filling of the supervisory board position at VW with Hamburg, a tabloid newspaper also reported that the post was endowed with €100,000. Remuneration for committees and attendance fees would be on top of that. That is correct in principle, stresses a spokeswoman of the state chancellery opposite table Media, however, both Stephan Weil and Julia Willie Hamburg would have to transfer the money to the country Lower Saxony. Both would be allowed to keep (and pay tax on) only €6,200 each. This is stipulated in section five, paragraph three, of the Ministers Act. The tabloid later added a corresponding paragraph.
Also regulated by law is the secrecy to which both Hamburg and Weil are bound when it comes to their work on the Supervisory Board. As other topics are currently on the agenda due to the formation of a new government, neither Hamburg nor Weil were willing to be interviewed.
IG Metall, which will have to negotiate more with Hamburg in the future, however, expressed nothing but praise for the Green Party politician to Table Media. “Ms. Hamburg, then still in her role as leader of the opposition parliamentary group, also showed herself to be a reliable politician who does not lose focus of the interests of the workforce.” And further: “The partially tendentious reporting on Ms. Hamburg’s future work in the VW Supervisory Board is very disconcerting.”
Shortly before completing his studies in economics, Max Zenglein was asked by his professor if he wanted to teach economics at a university in Chengdu. This came rather unexpectedly for Zenglein. Until then, his relationship with China had been limited to vacations, during which he was fascinated by the “generally noticeable atmosphere of departure” at the turn of the millennium. But the offer was more than convenient for him. The next logical step seemed to be to get to grips with China on a professional level.
However, he did not stay at the university for long. Although he completed a doctorate in political economy, he was already working in parallel for the AHK Greater China, whose Shenzhen office he opened and built up in 2008. In addition to his managerial activities, he introduced the “Labor Market and Salary Report” for Shenzhen, among other things, which is now carried out on a national level.
In 2016, Zenglein moved to Merics in Berlin, where he is still chief economist. His expertise ranges from macroeconomic development and industrial policy to financial markets, international trade and investment. His claim at Merics is to “understand China from the inside out” – purged of his own wishful thinking as much as possible. This is particularly important when studying China’s economic system, as many still haven’t completely abandoned the idea that China can or should evolve into a social-market economy: “China goes its own way, and you have to adjust to that China.”
Zenglein considers the option of bridging the growing gap between the different systems through even more intensive economic relations to be increasingly difficult to implement. One could try to maintain the mutual dependencies as long as the emphasis is on ‘mutual’. But every step toward self-sufficiency works toward breaking down these close ties.
At the same time, Zenglein urges caution. Because of security concerns, he says, this should not be exaggerated – after all, “there’s a difference between talking about semiconductors and talking about baby carriages”. In addition, he says, one must keep an eye on China’s push for globalization, especially in the Southeast Asian region, where there will be increasing competition with European players.
The decisive factor is also the role that the Chinese middle class will play in the current reform path. Many middle-class companies are under immense pressure for the first time in decades as a result of Zero Covid and the tech crackdown. Youth unemployment is 20 percent, and university graduates find themselves in precarious jobs after graduation – social explosives that Zenglein also deals with. Julius Schwarzwälder
Skills shortages and demographic change – China’s answer to this is, among other things, robot technology. This example could replace baristas in the future. It was on display at the 24th China Hi-Tech Fair in Shenzhen. Apparently, however, the inventor does not yet trust the robot barista enough to let him handle porcelain filters or ceramic coffee cups. But it’s good enough for the to-go paper cup.
