German Chancellor Olaf Scholz met Chinese President Xi Jinping on Friday, making him the first G7 leader to visit Beijing since the covid-19 pandemic.
But his trip has sparked controversy in Germany and concern in other parts of Europe.
At the meeting, Xi urged strengthening economic cooperation with Germany, saying the countries should work together in “times of change and upheaval.”
For his part, Scholz pointed out that these economic ties should be “of equals, with reciprocity.”
“We will seek cooperation where it is in our mutual interest, but we will not ignore controversies… When I travel to Beijing as chancellor, I also travel as a European,” Scholz told the German daily Frankfurter Allgemeine Zeitung.
The visit comes just days after the Communist Party of China National Congress, an event Xi used to tighten his grip on power, filling his leadership team with loyal allies.
An extraordinary and bitter dispute recently erupted at the top of the German government, when news broke that a Chinese company was about to acquire a significant stake in a part of the port of Hamburg.
No less than six government ministers reacted furiously. They argued that such an operation would give China significant leverage over critical German infrastructure. Germany’s security services also urged caution.
But the German chancellor appeared to insist the deal should go ahead, reportedly pushing for a deal, though limiting the size and influence of the 24.9% stake.
No one is sure why he seemed so determined. Scholz was mayor of Hamburg and remains close to city authorities, who argued that the deal represented a vital investment.
But many other commentators suspect an ulterior motive: that Olaf Scholz did not want to show up in Beijing without a “gift” for Xi Jinping.
That has caused surprise and concern.
Like the chancellor’s decision to bring with him a delegation of executives from German companies, a common practice of his predecessor, Angela Merkel, who followed a policy of “change through trade”, believing that economic ties could influence relations policies with countries like China and Russia.
A new dependency?
“The signal being sent is that we want to extend and intensify our economic cooperation. That must be questioned,” says Felix Banazsak, a politician from the Green Party, a partner in Scholz’s coalition government.
The Greens have long sought a harder line with China. Just a few days ago, the party’s foreign minister, Annalena Baerbock, sternly and publicly reminded him that her government came to power promising to readjust its China strategy.
The German company Daimler is expanding its investments in China.
Banazsak says his country must learn from its former dependence on Russian energy: “We must make ourselves as independent as possible from individual states, particularly if these are states that do not share our values.”
But Olaf Scholz will be painfully aware of the complexity and depth of his country’s ties to China, which remains Germany’s biggest trading partner, even though Germany imports more than it exports.
Over a million German jobs depend on that relationship. Take the automobile giant Daimler, for example, which sells more than a third of its vehicles in China.
In the first half of this year, German companies invested in China more than ever before. The chemical company BASF has just opened a new plant in southern China and expects to invest US$9.9 billion in the site by the end of this decade.
On the eve of the visit, the head of the German Association of the Automotive Industry highlighted Germany’s dependence on raw materials from China and warned that “decoupling” would be an economic and geostrategic mistake.
His counterpart at the Association of Small and Medium Businesses also advised against a sudden change of course, saying “the only advice can be not to break any china now.”
Chancellor Scholz will spend less than 12 hours in Beijing and his goal, he said before his trip, is to find out how much cooperation is still possible, because “the world needs China” in the fight against the global pandemic and climate change.
“If China is changing, then our approach to China must change,” he said.
Many in Berlin and beyond will be looking for proof that Scholz’s response to a changing China may yet become the ultimate test of his chancellorship.
Scholz’s trip causes unrest in Europe
Analysis by Katya Adler, Europe editor
Germany is the most powerful economy in the European Union and arguably the most influential member, so what you say and do matters.
I once suggested that former Chancellor Angela Merkel could sometimes be seen as a European Donald Trump because of the way she tended to put Germany first.
The broader concerns of the EU were brushed aside in favor of Germany’s lucrative energy and trade contracts with Russia and China. She called for EU austerity measures for Mediterranean member states during the eurozone crisis to protect German taxpayers from incurring shared debt.
Scholz and Macron appear to be looking in different directions.
Olaf Scholz is Merkel’s successor in much more than just office, in the minds of many EU leaders.
His huge aid package for German companies in the face of high energy prices is seen as giving them an unfair competitive advantage in the single European market.
And his trip to China, announced but not coordinated with others in the EU, has caused outrage across Europe. French President Emmanuel Macron recently warned Scholz that he risked being isolated.
As Europe, and first of all Germany, wean themselves from their reliance on Russian gas, the question is: Is Berlin, blinded by the prospect of trade deals, getting too tied up with China?
Macron has been pushing for years for the EU to scale back its engagement with Beijing, with critics accusing him of protectionism.
But after the failures in the global supply chain during the covid-19 pandemic, the weaponization of energy imports/exports after the Russian invasion of Ukraine and the presidency of Donald Trump, it became clear that Europe no longer it should be as dependent on the US in terms of security.
With Macron’s insistence that the continent become more cohesive and self-sufficient, diversifying its trading partners began to make sense to Brussels. Olaf Scholz is seen as worryingly out of step.
