Olaf Scholz will leave for China tomorrow as a sovereign leader, but rather as the representative of a country that currently finds itself in severe economic straits. In their analysis, Felix Lee and Malte Kreutzfeldt provide an overview of how great Germany’s dependencies truly are – and how strongly this forces Olaf Scholz, as the head of government of an economic nation, to remain beholden to China.
The Chancellor’s Office, in turn, justifies the trip on political grounds. Only in personal talks can Xi Jinping be persuaded to take action regarding Ukraine. And only in direct exchange can German and European interests be coordinated with China in the run-up to the G20 summit. According to the Chancellery, the fact that the meeting is taking place so soon after the Party Congress is no more than a coincidence. For Xi, however, the German’s visit just after his big show is domestic political gold.
However, Xi is also China’s number one foreign politician. Since taking office, however, Xi’s tone toward other countries has become harsher and, in some cases, downright unfriendly, analyzes Christiane Kuehl. Xi sees himself as the force behind global political changes, in whose wake the West will lose its supremacy. But those who believe to be on a historic quest are not going to take it slow. Visitors like Scholz sense this, too. As far as his Foreign Minister Annalena Baerbock is concerned, we also give an estimate of whom she will have to deal with in Beijing in the future. Are they more like the next generation of Wolf Warriors or are they more like the dignified diplomats of the old days?
One lesson from Putin’s war of aggression on Ukraine should be: Just not to be dependent on authoritarian states anymore. The problem is that Germany’s economy is far more dependent on China than it is on Russia.
The public criticism of the Chancellor’s upcoming trip probably also stings so much because it goes back to a dilemma that cannot be resolved. German identity is defined in large part by a strong economy, but its prosperity has recently largely depended on cheap Russian gas and business with China. Now, one is left out, and Chancellor Olaf Scholz does the logical thing: He wants to strengthen the second pillar. After all, Germany already stands to lose a great deal of its prosperity. It cannot afford a second front of problems, quite literally.
For seven years now, China has been Germany’s most important trading partner. In 2021 alone, the volume of imports and exports amounted to €245 billion. The export nation of Germany conducts around 10 percent of its foreign trade with the People’s Republic. That alone would not be terrible if it had not developed an asymmetry here: While China has been buying less and less machinery and goods from Germany over the years, the opposite is not the case. Most recently, the Federal Republic regularly bought more than it exported to China.
The trend is also reflected in the trading numbers for September:
“The imbalance in trade with China is thus increasing more and more,” says IW economist Juergen Matthes. In some areas, such as network and information technology, as much as around 40 percent of all imports come from the People’s Republic. Even in strategically important products such as EV batteries or raw materials such as rare earth elements, which Germany currently needs above all for its energy transition, “there is a strong dependence on imports,” says Jens Hildebrandt, Executive Board Member of the German Chamber of Commerce (AHK) in Beijing.
Entanglements also “moved in the wrong direction at a tremendous pace” in the first half of 2022, Matthes wrote in a new study. “German direct investment flows to China have never been so high.” His interpretation: “The Chinese market is apparently to be served more and more by local production instead of exports.” So China is deliberately making itself more independent and pushing its own decoupling in return. The leadership under Xi Jinping explicitly set the goal for China to become internally technologically and economically independent. At the same time, however, the rest of the world is to become even more dependent on China.
As head of government of an economic nation, Scholz cannot ignore all this in the short term, even if there were good political reasons for giving China the cold shoulder. Some 5,000 German companies are active in China today, and 1.1 million jobs in Germany depend on business with China, according to the Chamber of Commerce. “What tends to be overlooked is China’s role as an innovation driver,” the AHK manager also points out. “German companies develop and test the latest technologies in China for the global market.”
But dependence on the autocracy in the Far East is not a natural disaster that we have to accept helplessly. It is precisely here where the Chancellor needs to show the way. Because until a disruption occurs, like the Russian aggression in Ukraine, the companies do what comes naturally and maximize profits. “There is much to suggest that without government intervention, the profit motive of German companies will continue to lead to more China in direct investment and imports, not less,” Matthes writes. “The German economy’s dependence on China as a sales market and supplier thus continues to grow.”
However, reaching independence step by step can also be profitable in the long term, as the current gas problem shows. In any case, the Ifo Institute expects Germany to suffer massive damage in the event of a geopolitical conflict with China. The biggest loser would be the German automotive industry. Here, the loss of value added would be around €8.3 billion, which corresponds to a minus of around 8.5 percent. The mechanical engineering industry would lose more than €5 billion.
However, automotive market expert Ferdinand Dudenhoeffer, Director of the Center of Automobile Research, (CAR) sees a considerable catch in all scenarios about greater independence. He is certain that the German automotive industry will not be able to do without China at all. It would be possible to look for new sites, for example in the USA. But the USA is not a growth market. If the German auto industry were to lose the Chinese market, VW would lose its competitiveness in one blow. They would no longer be able to keep up with other carmakers. Dudenhoeffer even fears the end of the German automotive industry, should this come to pass.
According to the Ifo study, relocating production back from China to Germany, i.e. nationalizing supply chains, is not a solution either: it would mean even greater losses of wealth. The reason: Production in Germany would be significantly more expensive. It would mean subsidizing unproductive sectors in Germany. The bottom line is that demand for these goods would fall. The economy as a whole would shrink.
Therefore, hardly anyone, even among the Greens and the liberal FDP, favors a complete suspension of trade and cutting all ties with China. China is a far too important player when it comes to global problems such as climate change, lack of raw materials and supply chain bottlenecks. The FDP and the Greens call for more diversification. German companies should shift their focus on other markets, for example in Southeast Asia.
The problem, as the Ifo economists also point out, is that a departure from the Chinese market would not be up to Germany at all, but instead would depend on the disputes between the major power blocs. The United States is already urging the Europeans to pick a side: China or the US
But that is an impossible decision at the moment, and that is why Scholz will now pay his late inaugural visit to Beijing. Actually, the meeting with Xi not only meets the needs of a large part of the business community, but also the wishes of numerous China observers, who found the breakdown of communication at the highest level to be highly problematic. As a result, most recent criticism has centered on the timing of the trip. Directly after the 20th Party Congress, the visit to Xi seemed more like an audience with the new Chinese emperor.
On Wednesday, one day before departure, the communications apparatus of the Chancellor’s Office then commented on the accumulated criticism. It accepted the economic arguments, but did not want to put them in the spotlight. This was probably due to the harsh criticism of Cosco’s investment in Hamburg, which earned Scholz a reputation of placing corporate profits above geopolitics and human rights.
Scholz’s spokespersons argued that there were many good political reasons for a meeting at the current time: For example, a bilateral meeting with China would also be important in light of the upcoming G20 summit, which will be held in Indonesia in mid-November. The hope is that China will exert its influence on Russia after all. Given the looming escalation of the Ukraine conflict, a meeting with China “should not be put on the back burner,” it was said. The Chancellor’s Office rejected calls from other European capitals to cancel the trip.
The Chancellor’s Office refused to accept the criticism that the trip to China immediately after the Party Congress, at which Xi celebrated his total control of the Party and the state, would send a wrong signal. The close timeframe between the trip and the Party Congress was “not a convincing reason” to postpone the trip, government sources said. The Chancellor’s Office argues that the Party’s resolutions will be no less problematic in a few weeks or months.
The Chancellor’s Office, however, vowed good intentions. Scholz intends to clearly oppose the intensified threats against Taiwan at Friday’s meeting. He stressed that there was great concern and that he would make it clear that any change to the current situation could only be brought about “peacefully and with the agreement of all parties involved.” Felix Lee/Malte Kreutzfeldt
When German Chancellor Olaf Scholz lands in China on Friday, he will find a country where diplomacy is defined by competition, struggle and pithy words. Leading Chinese foreign policy officials at the recently concluded Communist Party Congress sparked a fearless “fighting spirit” in the country’s diplomacy. (China.Table reported).
The days are over when China and the West cooperated rather quietly on substantive issues despite differing political systems and ideological views. The West considers the concept of “change through trade” a failure in the face of the increasingly authoritarian government under President Xi Jinping. On the other hand, for Xi, at least since the Covid pandemic with its many deaths in Europe and the US, one thing is clear: “The West is declining, the East is rising.”
And Xi will probably continue to pursue this policy during his third term in office. The strategy: Using China’s economic weight to wrestle for political influence in the world with the West, giving China its proper place in the world order. The time has come for China to lead the “reform of world governance” and “move closer to the center stage,” Xi is quoted as saying.
That would be challenging enough for the West if China were a democracy with palpable interest politics, like the United States. But China is a one-party socialist state that transformed itself into a one-man dictatorship at a tremendous pace. Xi sees foreign policy – of course – as his job and largely shapes it accordingly.
China’s foreign policy has been in a “much more activist phase” since 2013/2014 than before, said former Australian Prime Minister and current President of Asia Society Kevin Rudd recently at the presentation of his book The Avoidable War on the US-China conflict. “Xi is not a status quo politician, he wants to change the status quo,” Rudd said. Xi does not pay much mind to Deng Xiaoping’s old premise of “hide your strength, bide your time, and never aspire to leadership.”
Beijing’s aspiration for a multipolar world where national interests play a role rather than universal values is not new. What is new is the harsher tone and the clarity with which Xi’s China insists on its vision of things and its role in the world. In the Ukraine war, China stands by Russia – according to most experts, mainly due to their common rejection of the United States and its global dominance. Both hope the war will weaken the West. Germany is still looking for the right response to this.
The German Foreign Ministry is developing a China strategy for the first time on behalf of the German government. According to the coalition treaty, the goal is “to be able to realize our values and interests in the systemic rivalry with China“. There is consensus “that we must drastically reduce our vulnerability,” Foreign Minister Annalena Baerbock said recently. The lesson to be drawn from the mistakes of Germany’s Russia policy is that “we must no longer make ourselves existentially dependent on any country that does not share our values.
Nevertheless, Scholz recently forced through the scaled-down participation of the Chinese state shipping company Cosco in a container terminal at the Port of Hamburg. Officially, both Germany and the EU consider China to be a partner, competitor and rival.
Meanwhile, the US expects competition and rivalry to be the main factors, with the aspect of cooperation moving more and more into the background. In his new security strategy, US President Joe Biden emphasized that China poses a greater challenge to the international order than Russia. A few days later, Washington restricted the sale of chips and components to China. In the Taiwan Strait, the US and China accuse each other of undermining the status quo (China.Table reported).
China and the US could approach a new Cold War, fears Jia Qingguo, Professor Emeritus of International Studies at Peking University. “I feel that national security issues are overemphasized in both countries,” Jia said in an interview published by the US think tank Carter Center. “Whether the other side develops armaments, or develops hi-tech, it will be considered a serious threat to national security.”
Well-connected academics in Beijing and Shanghai accused America and its allies of “imposing an obsession with human rights on an order whose original, modest mission was to help states coexist and trade peacefully,” writes the British Economist in an analysis of China’s foreign policy.
At the same time, China’s diplomacy often appears downright obsessed with Washington. The “greatest threat to world order” is to form small circles, draw ideological lines, foment confrontation by forming blocs, and “bully” others, Vice Foreign Minister Ma Zhaoxu said at the Party Congress. It is the typical choice of words when speaking about the USA.
From the perspective of the Chinese Communist Party, Xi Jinping’s foreign policy certainly boasts some solid accomplishments, Mikko Huotari, Director of the Merics Institute for China Studies, analyzed immediately after the Party Congress: “The ‘escalation’ of foreign policy from an ambitious regional power to a superpower with global leadership aspirations clearly bears his signature.”
The New Silk Road created by Xi in 2013 was only a first field test. With his new global initiatives for “security,” “data security” and “development,” Xi is now “drawing the contours of a new China-centric world order,” Huotari said. In domestic policy, Xi warned about the risks of exacerbating the long-term systemic and structural conflict with the United States, and “prepared China for this fight.” Xi has already accomplished one of his goals, Huotari said: “Negotiations with China today can only be done on an equal international footing and, ultimately, on China’s terms.”
This is already unavoidable in itself because China is one of the five veto powers in the UN Security Council. Beijing strictly rejects any previously proposed reforms of the body – such as limiting the veto to extreme situations. On the contrary, China demands respect for the Big Five. UN Ambassador Zhang Jun recently called the Security Council “the most authoritative and legitimate body of the multilateral security system.” In other UN bodies, China increasingly manages to sway large groups of countries to its side during votes, most recently in the UN Human Rights Council (China.Table reported)
Xi must find a new foreign minister before the National People’s Congress in March. Incumbent Wang Yi, despite being 69 years of age, has moved up to the Politburo and is likely to succeed Yang Jiechi as Executive Director of the CP’s Foreign Affairs Commission and thus Xi’s “foreign policy czar.” This post holds more power than that of China’s foreign minister.
Wang will thus set the future parameters of China’s diplomacy. Experts credit him with a high level of competence. “Wang, nicknamed the “silver fox” by Chinese media for his suave good looks, is a Japan expert with a superior command of the language and experience as Chinese ambassador to Tokyo in the mid-2000s,” wrote experts Richard McGregor and Neil Thomas in the run-up to the Party Congress. He has consistently shown flexibility in dealing with Japan, they said. “Wang has unparalleled diplomatic experience and contacts around the world.” But while Wang is a loyal servant, he is not particularly close to Xi. Wang thus probably benefits from the tradition that a foreign policy expert always sits on the Politburo and that no one else has stepped forward to succeed Yang.
Probably the best-known foreign minister candidate in the West is Qin Gang, ambassador to the US since July (China.Table reported). At 56, he is one of four foreign policy experts who have moved up to the Central Committee, according to Yun Sun of US think tank Stimson Center. “Most speculation in China favors Qin Gang,” Sun said.
Wang and Qin represent continuity and, despite brash remarks, a fundamentally diplomatic approach. But the notorious “Wolf Warrior” faction of China’s diplomats will likely continue to make loud appearances. In any case, the time for fair-weather politics with China is over. Scholz will experience this firsthand in Beijing.
The open letter to Olaf Scholz, signed by numerous Chinese dissidents and published by China.Table was widely received by German media and political circles on Wednesday. Large German media outlets such as Deutschlandfunk, Spiegel Online, Zeit.de, Stuttgarter Nachrichen and numerous other channels and sites reported on the dissidents’ call to cancel the trip.
The letter was also noted very clearly in the Chancellor’s Office. Government spokesman Steffen Hebestreit initially responded with the government’s standard phrase on open letters on Wednesday: No comment. But what he added was more important: The Chancellor “takes note and takes in” what is “said and written.” This also included the letter. Scholz is “preparing very thoroughly and extensively for this visit” and is in contact with many of those affected.
The Chancellor’s Office also said that the signatories of the letter were voices that were taken very seriously. “We have respect for the views of these personalities.” Unlike the dissidents, however, the German government does not believe it would be better to refrain from dialogue in the current situation. Instead, it would rely on promoting the German position in talks and “also clearly address difficult issues.” mkr
The Netherlands reacts to reports (including by China.Table) about the operation of Chinese interrogation stations on European soil. Foreign Minister Wopke Hoekstra ordered the closure of police offices operating without authorization with immediate effect.
Hoekstra also informed the Chinese ambassador of this, reports the ANP news agency. He announced an investigation into the nature of the activities that took place in the overseas police stations (OPS) and called their existence “unacceptable”. fin
The United States is concerned about China’s unwillingness to talk about steps to reduce the nuclear threat. The governments in Washington and Beijing still have not initiated dialogue on the issue despite US efforts, Deputy Assistant Secretary in the Bureau of Arms Control, Verification, and Compliance, Alexandra Bell, said at a forum hosted by the Atlantic Council think tank.
China’s President Xi Jinping and US President Joe Biden agreed last year to advance discussions on strategic stability. But Xi recently signaled at the 20th Party Congress that his country would further strengthen its nuclear deterrent. According to the Pentagon, China is greatly expanding its nuclear forces and aims to hold 1,000 nuclear warheads by 2030. The government in Beijing argues that the United States already owns a much larger arsenal. rtr
For the first time in four years, a domestic takeover deal in the USA has failed due to resistance from China. On Tuesday, US chemical company DuPont called off its $5.2 billion acquisition of Rogers, also a US company, due to regulatory hurdles in China. Rogers Corporation manufactures materials for the electrical industry. It failed to obtain all the necessary regulatory approvals in time, DuPont announced. As a result, DuPont and Rogers agreed to cancel the deal.
In September, the Group still declared it had obtained all the necessary approvals for the takeover announced in November 2021 except for China’s. The Chinese Ministry of Commerce and the State Administration for Market Regulation were initially unavailable for comment. DuPont wanted to buy Rogers, also based in the US, as part of its realignment to gain access to fast-growing markets such as electric vehicles, 5G and clean energy. The company must now pay Rogers $162.5 million in compensation. For DuPont, it would have been the largest acquisition since it spun off DowDuPont in 2019.
The deal is the most high-profile one to fall through in the past four years because of China’s opposition. In 2018, US semiconductor maker Qualcomm abandoned its $44 billion acquisition of Dutch rival NXP Semiconductors after Chinese regulators had not given the green light for the acquisition because of the China-US trade dispute. rtr
So far, there were only reports of Covid cases and lockdowns at the Foxconn plant in Zhengzhou. Now, the city government has imposed a lockdown on the entire industrial park in the city of Zhengzhou. It is to remain in effect until November 9.
According to Foxconn, the plant continues to operate in pandemic mode. Accordingly, employees are living isolated from the outside world on the site. In recent days, however, there have been increasing reports of fleeing workers (China.Table reported) after they took to social media to protest their treatment and care. Foxconn then quadrupled bonus payments to appease employees. Apple is already facing production cutbacks as a result, as Foxconn manufactures 70 percent of all iPhones worldwide – most of which are made in Zhengzhou.
But the Apple supplier is not the only company affected by lockdowns. EV manufacturer NIO also has to suspend production at its plants in Hefei. Reports of restrictions have also recently come from Guangzhou, Ningbo, Xining, Nanjing and Inner Mongolia. Restaurant chain Yum, operator of KFC and Pizza Hut, reported Wednesday that 1,400 of its roughly 12,400 branches across the country were temporarily closed or could only offer limited services in October. Officials reported 2,755 new infections nationwide on Wednesday, despite China’s strict zero-Covid policy. That is more than three times as many cases as ten days ago. rtr/flee
The timing of the Chancellor’s visit to China could not be worse, German conservative politician Friedrich Merz stresses loudly and yet in a hushed voice. He accuses the Chancellor of utter disrespect. But Merz, who himself sits comfortably in a glass house, throws stones disrespectfully. He neither has any political responsibility, nor does he have to prove himself in political transcultural communication. The latter is not only necessary, especially at the present time of intensifying polarization, but a rare art. An art that is observed vigilantly and often in wise silence, especially in China.
One could argue that Scholz could not have found a better time to visit China. After all, he is the first Western head of government to visit China in a long time: after Covid, after the start of the Ukraine war, after skyrocketing inflation, after the Party Congress, after Xi Jinping’s re-election, and shortly before the upcoming meeting of the G20 countries.
This gives the Chancellor’s visit a certain pioneering or pathfinder function. It creates, one might suppose, a prolonged new geopolitical first impression. Such an impression is less affected by the details of the political substance or positions – discussed or kept hidden. These are negotiated behind closed doors anyway. Such a first impression lives primarily from the psychosocial induction of emotionality.
The chancellor’s visit thus seems to have a certain pioneering or trailblazing function. It creates, one might suggest, a prolonged new geopolitical first impression. Such an impression is less affected by the details of the factual political content or positions discussed or concealed. These are negotiated behind closed doors anyway. Such a first impression lives primarily from the psychosocial induction of emotionality. One either finds the behavior of the participants in such a moment “good” or “bad”. You either like the way Scholz and Xi will greet each other or you feel emotional discomfort.
This emotional process shapes the chemistry of the relationship of the parties involved. In this case, between Olaf Scholz and Xi Jinping. The same applies between the media and political actors. The media coverage then shapes the relationship chemistry between politics and society. And in the best case, the chemistry that develops between the cultures of China and Germany.
The geopolitical situation calls for a reconsideration of Germany’s China strategy. This is certainly on the minds of many, be it in the Chancellor’s Office or the ministries. But such a strategy also depends on how it is communicated and executed. Therefore, the Chancellor’s visit to China has, among other things, the function of a communicative door opener. It remains to be seen how successful Scholz will be in communicating in such a way that Xi opens his ears and his cultural senses. After all, this is the necessary communicative prerequisite for the imminent transcultural tightrope act.
There is a lot of talk in this context about the differences between political systems, or even about competition or rivalry between systems. That makes sense. But it is also about the difference between cultures, about the practiced communicative respect for the other, the stranger, despite all differences and discrepancies.
Some speak of intercultural aspects, others of multicultural differences. On the other hand, there is not enough talk about transcultural communication. But the latter is what it is about. Let me make a simple comparison. Imagine you are learning a new language. You need vocabulary. You familiarize yourself with the grammar and idiomatic rules of the language. Then the linguistic adventure begins. You take the plunge into the cold water of lived communication and experience yourself and your counterpart as emotional communicators as well.
I compare the acquisition of vocabulary with intercultural communication, the acquisition of grammar with the multicultural perspective and the communication on the ground as transcultural, practiced communication.
So Scholz would do well to familiarize himself with all three perspectives. What are the relevant basic cultural prerequisites in the sense of cultural vocabulary that are important right now? What are the relevant cultural communication patterns and rules that need to be respected? (Merz still appears to have to demonstrate his ability to learn in this regard). And will Scholz successfully, that is, compatibly, be able to move like a fish in the communicative (wild) water?
How will he be able to stay true to his political and personal nature and at the same time appear emotionally, relationally compatible? He might be a concrete door-opener in China. He might be able to initiate a narrative for the G-20 meeting and at the same time embody a new geopolitical role model.
Being transcultural successful in China could therefore also mean for Scholz:
Then, political strategy is not only a good strategy, but also proves to be a good enough strategy in the given situation.
Ulrich Sollmann is a psychotherapist, political consultant and visiting professor at Shanghai University of Political Science. He is the author of the book: “Begegnungen im Reich der Mitte” (Psychosozial Verlag, 2018).
Hou Xiaodi has been summarily dismissed as CEO at TuSimple, a US autonomous driving startup. He allegedly worked on the side for Chinese competitor Hydron, which is in the self-driving truck business, in exchange for fees. The FBI is investigating.
Matthew Yao will be responsible for renminbi (yuan) capital raising within China at LaSalle Investment Management. He will work with the Shanghai and Hong Kong teams to do so. Yao joins from Prudential.
Is something changing in your organization? Why not let us know at heads@table.media!
Anyone who knows Beijing knows that autumn is the most beautiful season in the capital city, with bright blue skies and reddish leaves. Unfortunately, it is very short. Often only a few weeks pass between tropical nights and frosty days. All the more numerous Beijingers flock to the green spaces these days, like here in the picture in Beihai Park, and enjoy the transitional period.
Olaf Scholz will leave for China tomorrow as a sovereign leader, but rather as the representative of a country that currently finds itself in severe economic straits. In their analysis, Felix Lee and Malte Kreutzfeldt provide an overview of how great Germany’s dependencies truly are – and how strongly this forces Olaf Scholz, as the head of government of an economic nation, to remain beholden to China.
The Chancellor’s Office, in turn, justifies the trip on political grounds. Only in personal talks can Xi Jinping be persuaded to take action regarding Ukraine. And only in direct exchange can German and European interests be coordinated with China in the run-up to the G20 summit. According to the Chancellery, the fact that the meeting is taking place so soon after the Party Congress is no more than a coincidence. For Xi, however, the German’s visit just after his big show is domestic political gold.
However, Xi is also China’s number one foreign politician. Since taking office, however, Xi’s tone toward other countries has become harsher and, in some cases, downright unfriendly, analyzes Christiane Kuehl. Xi sees himself as the force behind global political changes, in whose wake the West will lose its supremacy. But those who believe to be on a historic quest are not going to take it slow. Visitors like Scholz sense this, too. As far as his Foreign Minister Annalena Baerbock is concerned, we also give an estimate of whom she will have to deal with in Beijing in the future. Are they more like the next generation of Wolf Warriors or are they more like the dignified diplomats of the old days?
One lesson from Putin’s war of aggression on Ukraine should be: Just not to be dependent on authoritarian states anymore. The problem is that Germany’s economy is far more dependent on China than it is on Russia.
The public criticism of the Chancellor’s upcoming trip probably also stings so much because it goes back to a dilemma that cannot be resolved. German identity is defined in large part by a strong economy, but its prosperity has recently largely depended on cheap Russian gas and business with China. Now, one is left out, and Chancellor Olaf Scholz does the logical thing: He wants to strengthen the second pillar. After all, Germany already stands to lose a great deal of its prosperity. It cannot afford a second front of problems, quite literally.
For seven years now, China has been Germany’s most important trading partner. In 2021 alone, the volume of imports and exports amounted to €245 billion. The export nation of Germany conducts around 10 percent of its foreign trade with the People’s Republic. That alone would not be terrible if it had not developed an asymmetry here: While China has been buying less and less machinery and goods from Germany over the years, the opposite is not the case. Most recently, the Federal Republic regularly bought more than it exported to China.
The trend is also reflected in the trading numbers for September:
“The imbalance in trade with China is thus increasing more and more,” says IW economist Juergen Matthes. In some areas, such as network and information technology, as much as around 40 percent of all imports come from the People’s Republic. Even in strategically important products such as EV batteries or raw materials such as rare earth elements, which Germany currently needs above all for its energy transition, “there is a strong dependence on imports,” says Jens Hildebrandt, Executive Board Member of the German Chamber of Commerce (AHK) in Beijing.
Entanglements also “moved in the wrong direction at a tremendous pace” in the first half of 2022, Matthes wrote in a new study. “German direct investment flows to China have never been so high.” His interpretation: “The Chinese market is apparently to be served more and more by local production instead of exports.” So China is deliberately making itself more independent and pushing its own decoupling in return. The leadership under Xi Jinping explicitly set the goal for China to become internally technologically and economically independent. At the same time, however, the rest of the world is to become even more dependent on China.
As head of government of an economic nation, Scholz cannot ignore all this in the short term, even if there were good political reasons for giving China the cold shoulder. Some 5,000 German companies are active in China today, and 1.1 million jobs in Germany depend on business with China, according to the Chamber of Commerce. “What tends to be overlooked is China’s role as an innovation driver,” the AHK manager also points out. “German companies develop and test the latest technologies in China for the global market.”
But dependence on the autocracy in the Far East is not a natural disaster that we have to accept helplessly. It is precisely here where the Chancellor needs to show the way. Because until a disruption occurs, like the Russian aggression in Ukraine, the companies do what comes naturally and maximize profits. “There is much to suggest that without government intervention, the profit motive of German companies will continue to lead to more China in direct investment and imports, not less,” Matthes writes. “The German economy’s dependence on China as a sales market and supplier thus continues to grow.”
However, reaching independence step by step can also be profitable in the long term, as the current gas problem shows. In any case, the Ifo Institute expects Germany to suffer massive damage in the event of a geopolitical conflict with China. The biggest loser would be the German automotive industry. Here, the loss of value added would be around €8.3 billion, which corresponds to a minus of around 8.5 percent. The mechanical engineering industry would lose more than €5 billion.
However, automotive market expert Ferdinand Dudenhoeffer, Director of the Center of Automobile Research, (CAR) sees a considerable catch in all scenarios about greater independence. He is certain that the German automotive industry will not be able to do without China at all. It would be possible to look for new sites, for example in the USA. But the USA is not a growth market. If the German auto industry were to lose the Chinese market, VW would lose its competitiveness in one blow. They would no longer be able to keep up with other carmakers. Dudenhoeffer even fears the end of the German automotive industry, should this come to pass.
According to the Ifo study, relocating production back from China to Germany, i.e. nationalizing supply chains, is not a solution either: it would mean even greater losses of wealth. The reason: Production in Germany would be significantly more expensive. It would mean subsidizing unproductive sectors in Germany. The bottom line is that demand for these goods would fall. The economy as a whole would shrink.
Therefore, hardly anyone, even among the Greens and the liberal FDP, favors a complete suspension of trade and cutting all ties with China. China is a far too important player when it comes to global problems such as climate change, lack of raw materials and supply chain bottlenecks. The FDP and the Greens call for more diversification. German companies should shift their focus on other markets, for example in Southeast Asia.
The problem, as the Ifo economists also point out, is that a departure from the Chinese market would not be up to Germany at all, but instead would depend on the disputes between the major power blocs. The United States is already urging the Europeans to pick a side: China or the US
But that is an impossible decision at the moment, and that is why Scholz will now pay his late inaugural visit to Beijing. Actually, the meeting with Xi not only meets the needs of a large part of the business community, but also the wishes of numerous China observers, who found the breakdown of communication at the highest level to be highly problematic. As a result, most recent criticism has centered on the timing of the trip. Directly after the 20th Party Congress, the visit to Xi seemed more like an audience with the new Chinese emperor.
On Wednesday, one day before departure, the communications apparatus of the Chancellor’s Office then commented on the accumulated criticism. It accepted the economic arguments, but did not want to put them in the spotlight. This was probably due to the harsh criticism of Cosco’s investment in Hamburg, which earned Scholz a reputation of placing corporate profits above geopolitics and human rights.
Scholz’s spokespersons argued that there were many good political reasons for a meeting at the current time: For example, a bilateral meeting with China would also be important in light of the upcoming G20 summit, which will be held in Indonesia in mid-November. The hope is that China will exert its influence on Russia after all. Given the looming escalation of the Ukraine conflict, a meeting with China “should not be put on the back burner,” it was said. The Chancellor’s Office rejected calls from other European capitals to cancel the trip.
The Chancellor’s Office refused to accept the criticism that the trip to China immediately after the Party Congress, at which Xi celebrated his total control of the Party and the state, would send a wrong signal. The close timeframe between the trip and the Party Congress was “not a convincing reason” to postpone the trip, government sources said. The Chancellor’s Office argues that the Party’s resolutions will be no less problematic in a few weeks or months.
The Chancellor’s Office, however, vowed good intentions. Scholz intends to clearly oppose the intensified threats against Taiwan at Friday’s meeting. He stressed that there was great concern and that he would make it clear that any change to the current situation could only be brought about “peacefully and with the agreement of all parties involved.” Felix Lee/Malte Kreutzfeldt
When German Chancellor Olaf Scholz lands in China on Friday, he will find a country where diplomacy is defined by competition, struggle and pithy words. Leading Chinese foreign policy officials at the recently concluded Communist Party Congress sparked a fearless “fighting spirit” in the country’s diplomacy. (China.Table reported).
The days are over when China and the West cooperated rather quietly on substantive issues despite differing political systems and ideological views. The West considers the concept of “change through trade” a failure in the face of the increasingly authoritarian government under President Xi Jinping. On the other hand, for Xi, at least since the Covid pandemic with its many deaths in Europe and the US, one thing is clear: “The West is declining, the East is rising.”
And Xi will probably continue to pursue this policy during his third term in office. The strategy: Using China’s economic weight to wrestle for political influence in the world with the West, giving China its proper place in the world order. The time has come for China to lead the “reform of world governance” and “move closer to the center stage,” Xi is quoted as saying.
That would be challenging enough for the West if China were a democracy with palpable interest politics, like the United States. But China is a one-party socialist state that transformed itself into a one-man dictatorship at a tremendous pace. Xi sees foreign policy – of course – as his job and largely shapes it accordingly.
China’s foreign policy has been in a “much more activist phase” since 2013/2014 than before, said former Australian Prime Minister and current President of Asia Society Kevin Rudd recently at the presentation of his book The Avoidable War on the US-China conflict. “Xi is not a status quo politician, he wants to change the status quo,” Rudd said. Xi does not pay much mind to Deng Xiaoping’s old premise of “hide your strength, bide your time, and never aspire to leadership.”
Beijing’s aspiration for a multipolar world where national interests play a role rather than universal values is not new. What is new is the harsher tone and the clarity with which Xi’s China insists on its vision of things and its role in the world. In the Ukraine war, China stands by Russia – according to most experts, mainly due to their common rejection of the United States and its global dominance. Both hope the war will weaken the West. Germany is still looking for the right response to this.
The German Foreign Ministry is developing a China strategy for the first time on behalf of the German government. According to the coalition treaty, the goal is “to be able to realize our values and interests in the systemic rivalry with China“. There is consensus “that we must drastically reduce our vulnerability,” Foreign Minister Annalena Baerbock said recently. The lesson to be drawn from the mistakes of Germany’s Russia policy is that “we must no longer make ourselves existentially dependent on any country that does not share our values.
Nevertheless, Scholz recently forced through the scaled-down participation of the Chinese state shipping company Cosco in a container terminal at the Port of Hamburg. Officially, both Germany and the EU consider China to be a partner, competitor and rival.
Meanwhile, the US expects competition and rivalry to be the main factors, with the aspect of cooperation moving more and more into the background. In his new security strategy, US President Joe Biden emphasized that China poses a greater challenge to the international order than Russia. A few days later, Washington restricted the sale of chips and components to China. In the Taiwan Strait, the US and China accuse each other of undermining the status quo (China.Table reported).
China and the US could approach a new Cold War, fears Jia Qingguo, Professor Emeritus of International Studies at Peking University. “I feel that national security issues are overemphasized in both countries,” Jia said in an interview published by the US think tank Carter Center. “Whether the other side develops armaments, or develops hi-tech, it will be considered a serious threat to national security.”
Well-connected academics in Beijing and Shanghai accused America and its allies of “imposing an obsession with human rights on an order whose original, modest mission was to help states coexist and trade peacefully,” writes the British Economist in an analysis of China’s foreign policy.
At the same time, China’s diplomacy often appears downright obsessed with Washington. The “greatest threat to world order” is to form small circles, draw ideological lines, foment confrontation by forming blocs, and “bully” others, Vice Foreign Minister Ma Zhaoxu said at the Party Congress. It is the typical choice of words when speaking about the USA.
From the perspective of the Chinese Communist Party, Xi Jinping’s foreign policy certainly boasts some solid accomplishments, Mikko Huotari, Director of the Merics Institute for China Studies, analyzed immediately after the Party Congress: “The ‘escalation’ of foreign policy from an ambitious regional power to a superpower with global leadership aspirations clearly bears his signature.”
The New Silk Road created by Xi in 2013 was only a first field test. With his new global initiatives for “security,” “data security” and “development,” Xi is now “drawing the contours of a new China-centric world order,” Huotari said. In domestic policy, Xi warned about the risks of exacerbating the long-term systemic and structural conflict with the United States, and “prepared China for this fight.” Xi has already accomplished one of his goals, Huotari said: “Negotiations with China today can only be done on an equal international footing and, ultimately, on China’s terms.”
This is already unavoidable in itself because China is one of the five veto powers in the UN Security Council. Beijing strictly rejects any previously proposed reforms of the body – such as limiting the veto to extreme situations. On the contrary, China demands respect for the Big Five. UN Ambassador Zhang Jun recently called the Security Council “the most authoritative and legitimate body of the multilateral security system.” In other UN bodies, China increasingly manages to sway large groups of countries to its side during votes, most recently in the UN Human Rights Council (China.Table reported)
Xi must find a new foreign minister before the National People’s Congress in March. Incumbent Wang Yi, despite being 69 years of age, has moved up to the Politburo and is likely to succeed Yang Jiechi as Executive Director of the CP’s Foreign Affairs Commission and thus Xi’s “foreign policy czar.” This post holds more power than that of China’s foreign minister.
Wang will thus set the future parameters of China’s diplomacy. Experts credit him with a high level of competence. “Wang, nicknamed the “silver fox” by Chinese media for his suave good looks, is a Japan expert with a superior command of the language and experience as Chinese ambassador to Tokyo in the mid-2000s,” wrote experts Richard McGregor and Neil Thomas in the run-up to the Party Congress. He has consistently shown flexibility in dealing with Japan, they said. “Wang has unparalleled diplomatic experience and contacts around the world.” But while Wang is a loyal servant, he is not particularly close to Xi. Wang thus probably benefits from the tradition that a foreign policy expert always sits on the Politburo and that no one else has stepped forward to succeed Yang.
Probably the best-known foreign minister candidate in the West is Qin Gang, ambassador to the US since July (China.Table reported). At 56, he is one of four foreign policy experts who have moved up to the Central Committee, according to Yun Sun of US think tank Stimson Center. “Most speculation in China favors Qin Gang,” Sun said.
Wang and Qin represent continuity and, despite brash remarks, a fundamentally diplomatic approach. But the notorious “Wolf Warrior” faction of China’s diplomats will likely continue to make loud appearances. In any case, the time for fair-weather politics with China is over. Scholz will experience this firsthand in Beijing.
The open letter to Olaf Scholz, signed by numerous Chinese dissidents and published by China.Table was widely received by German media and political circles on Wednesday. Large German media outlets such as Deutschlandfunk, Spiegel Online, Zeit.de, Stuttgarter Nachrichen and numerous other channels and sites reported on the dissidents’ call to cancel the trip.
The letter was also noted very clearly in the Chancellor’s Office. Government spokesman Steffen Hebestreit initially responded with the government’s standard phrase on open letters on Wednesday: No comment. But what he added was more important: The Chancellor “takes note and takes in” what is “said and written.” This also included the letter. Scholz is “preparing very thoroughly and extensively for this visit” and is in contact with many of those affected.
The Chancellor’s Office also said that the signatories of the letter were voices that were taken very seriously. “We have respect for the views of these personalities.” Unlike the dissidents, however, the German government does not believe it would be better to refrain from dialogue in the current situation. Instead, it would rely on promoting the German position in talks and “also clearly address difficult issues.” mkr
The Netherlands reacts to reports (including by China.Table) about the operation of Chinese interrogation stations on European soil. Foreign Minister Wopke Hoekstra ordered the closure of police offices operating without authorization with immediate effect.
Hoekstra also informed the Chinese ambassador of this, reports the ANP news agency. He announced an investigation into the nature of the activities that took place in the overseas police stations (OPS) and called their existence “unacceptable”. fin
The United States is concerned about China’s unwillingness to talk about steps to reduce the nuclear threat. The governments in Washington and Beijing still have not initiated dialogue on the issue despite US efforts, Deputy Assistant Secretary in the Bureau of Arms Control, Verification, and Compliance, Alexandra Bell, said at a forum hosted by the Atlantic Council think tank.
China’s President Xi Jinping and US President Joe Biden agreed last year to advance discussions on strategic stability. But Xi recently signaled at the 20th Party Congress that his country would further strengthen its nuclear deterrent. According to the Pentagon, China is greatly expanding its nuclear forces and aims to hold 1,000 nuclear warheads by 2030. The government in Beijing argues that the United States already owns a much larger arsenal. rtr
For the first time in four years, a domestic takeover deal in the USA has failed due to resistance from China. On Tuesday, US chemical company DuPont called off its $5.2 billion acquisition of Rogers, also a US company, due to regulatory hurdles in China. Rogers Corporation manufactures materials for the electrical industry. It failed to obtain all the necessary regulatory approvals in time, DuPont announced. As a result, DuPont and Rogers agreed to cancel the deal.
In September, the Group still declared it had obtained all the necessary approvals for the takeover announced in November 2021 except for China’s. The Chinese Ministry of Commerce and the State Administration for Market Regulation were initially unavailable for comment. DuPont wanted to buy Rogers, also based in the US, as part of its realignment to gain access to fast-growing markets such as electric vehicles, 5G and clean energy. The company must now pay Rogers $162.5 million in compensation. For DuPont, it would have been the largest acquisition since it spun off DowDuPont in 2019.
The deal is the most high-profile one to fall through in the past four years because of China’s opposition. In 2018, US semiconductor maker Qualcomm abandoned its $44 billion acquisition of Dutch rival NXP Semiconductors after Chinese regulators had not given the green light for the acquisition because of the China-US trade dispute. rtr
So far, there were only reports of Covid cases and lockdowns at the Foxconn plant in Zhengzhou. Now, the city government has imposed a lockdown on the entire industrial park in the city of Zhengzhou. It is to remain in effect until November 9.
According to Foxconn, the plant continues to operate in pandemic mode. Accordingly, employees are living isolated from the outside world on the site. In recent days, however, there have been increasing reports of fleeing workers (China.Table reported) after they took to social media to protest their treatment and care. Foxconn then quadrupled bonus payments to appease employees. Apple is already facing production cutbacks as a result, as Foxconn manufactures 70 percent of all iPhones worldwide – most of which are made in Zhengzhou.
But the Apple supplier is not the only company affected by lockdowns. EV manufacturer NIO also has to suspend production at its plants in Hefei. Reports of restrictions have also recently come from Guangzhou, Ningbo, Xining, Nanjing and Inner Mongolia. Restaurant chain Yum, operator of KFC and Pizza Hut, reported Wednesday that 1,400 of its roughly 12,400 branches across the country were temporarily closed or could only offer limited services in October. Officials reported 2,755 new infections nationwide on Wednesday, despite China’s strict zero-Covid policy. That is more than three times as many cases as ten days ago. rtr/flee
The timing of the Chancellor’s visit to China could not be worse, German conservative politician Friedrich Merz stresses loudly and yet in a hushed voice. He accuses the Chancellor of utter disrespect. But Merz, who himself sits comfortably in a glass house, throws stones disrespectfully. He neither has any political responsibility, nor does he have to prove himself in political transcultural communication. The latter is not only necessary, especially at the present time of intensifying polarization, but a rare art. An art that is observed vigilantly and often in wise silence, especially in China.
One could argue that Scholz could not have found a better time to visit China. After all, he is the first Western head of government to visit China in a long time: after Covid, after the start of the Ukraine war, after skyrocketing inflation, after the Party Congress, after Xi Jinping’s re-election, and shortly before the upcoming meeting of the G20 countries.
This gives the Chancellor’s visit a certain pioneering or pathfinder function. It creates, one might suppose, a prolonged new geopolitical first impression. Such an impression is less affected by the details of the political substance or positions – discussed or kept hidden. These are negotiated behind closed doors anyway. Such a first impression lives primarily from the psychosocial induction of emotionality.
The chancellor’s visit thus seems to have a certain pioneering or trailblazing function. It creates, one might suggest, a prolonged new geopolitical first impression. Such an impression is less affected by the details of the factual political content or positions discussed or concealed. These are negotiated behind closed doors anyway. Such a first impression lives primarily from the psychosocial induction of emotionality. One either finds the behavior of the participants in such a moment “good” or “bad”. You either like the way Scholz and Xi will greet each other or you feel emotional discomfort.
This emotional process shapes the chemistry of the relationship of the parties involved. In this case, between Olaf Scholz and Xi Jinping. The same applies between the media and political actors. The media coverage then shapes the relationship chemistry between politics and society. And in the best case, the chemistry that develops between the cultures of China and Germany.
The geopolitical situation calls for a reconsideration of Germany’s China strategy. This is certainly on the minds of many, be it in the Chancellor’s Office or the ministries. But such a strategy also depends on how it is communicated and executed. Therefore, the Chancellor’s visit to China has, among other things, the function of a communicative door opener. It remains to be seen how successful Scholz will be in communicating in such a way that Xi opens his ears and his cultural senses. After all, this is the necessary communicative prerequisite for the imminent transcultural tightrope act.
There is a lot of talk in this context about the differences between political systems, or even about competition or rivalry between systems. That makes sense. But it is also about the difference between cultures, about the practiced communicative respect for the other, the stranger, despite all differences and discrepancies.
Some speak of intercultural aspects, others of multicultural differences. On the other hand, there is not enough talk about transcultural communication. But the latter is what it is about. Let me make a simple comparison. Imagine you are learning a new language. You need vocabulary. You familiarize yourself with the grammar and idiomatic rules of the language. Then the linguistic adventure begins. You take the plunge into the cold water of lived communication and experience yourself and your counterpart as emotional communicators as well.
I compare the acquisition of vocabulary with intercultural communication, the acquisition of grammar with the multicultural perspective and the communication on the ground as transcultural, practiced communication.
So Scholz would do well to familiarize himself with all three perspectives. What are the relevant basic cultural prerequisites in the sense of cultural vocabulary that are important right now? What are the relevant cultural communication patterns and rules that need to be respected? (Merz still appears to have to demonstrate his ability to learn in this regard). And will Scholz successfully, that is, compatibly, be able to move like a fish in the communicative (wild) water?
How will he be able to stay true to his political and personal nature and at the same time appear emotionally, relationally compatible? He might be a concrete door-opener in China. He might be able to initiate a narrative for the G-20 meeting and at the same time embody a new geopolitical role model.
Being transcultural successful in China could therefore also mean for Scholz:
Then, political strategy is not only a good strategy, but also proves to be a good enough strategy in the given situation.
Ulrich Sollmann is a psychotherapist, political consultant and visiting professor at Shanghai University of Political Science. He is the author of the book: “Begegnungen im Reich der Mitte” (Psychosozial Verlag, 2018).
Hou Xiaodi has been summarily dismissed as CEO at TuSimple, a US autonomous driving startup. He allegedly worked on the side for Chinese competitor Hydron, which is in the self-driving truck business, in exchange for fees. The FBI is investigating.
Matthew Yao will be responsible for renminbi (yuan) capital raising within China at LaSalle Investment Management. He will work with the Shanghai and Hong Kong teams to do so. Yao joins from Prudential.
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Anyone who knows Beijing knows that autumn is the most beautiful season in the capital city, with bright blue skies and reddish leaves. Unfortunately, it is very short. Often only a few weeks pass between tropical nights and frosty days. All the more numerous Beijingers flock to the green spaces these days, like here in the picture in Beihai Park, and enjoy the transitional period.