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After earlier this summer, the federal government of Germany presented its new security strategy, Olaf Scholz’s Cabinet has now released a national strategy on China, which marks a new first for Berlin.
China’s contrasting stances: partner, competitor, systemic rival
The first suggestion regarding the future direction of Chinese-German relations was provided by the National Security Strategy of Germany, proposed by the government this year. The document (also discussed by Veridica) shows that, although China remains a partner without which “many of the current crises and conflicts would remain unsolved”, Beijing is described as constantly acting “against our interests and values”. In a nutshell, it is what the Strategy on China sets out to clarify two months later. To Germany, China is both a partner and a rival, positions which Berlin must carefully navigate through.
More specifically, Germany’s Strategy on China says Beijing exerts a huge amount of influence on the current world order, providing a few examples from the field of climate change. China is the world’s largest carbon gas polluter, and is also critically accountable for the conservation of biodiversity. At the same time, China is also the largest producer of renewable energy at global level. For this reason, China can only be a partner to Germany in its efforts to solve global issues.
With nearly 300 million EUR in annual trade balance, China is Germany’s largest business partner. In economic terms, Berlin regards China as a legitimate competitor, yet only when the competition “is based on fair rules”. “It is not our intention to impede China’s economic progress and development. At the same time, de-risking is urgently needed”, Berlin’s Strategy shows.
China’s approach to the principles of governing differs from Germany’s. Whereas Berlin vouches to be a keen observer of the rule of law and social market economy, Beijing seeks “to influence the international order in line with the interests of its single-party system and thus to relativize the foundations of the rules-based international order, such as the status of human rights”, the sixty-page document reads. Therefore, Germany regards China as a systemic rival.
De-risking: abstract term, clear-cut actions
With its new strategy, Germany appears to have taken the bull by the horns with respect to China. A closer look, however, reveals that all Berlin did was to draft an official document providing an orderly account of what many European governments and Brussels in particular have been discussing for a long time – since the launch of the large-scale military aggression against Ukraine in February 2022, to be precise. For a short time, some European governments believed at the time that China could step in to mediate a peaceful resolution to the conflict. It soon became clear that Beijing was far from playing the role of an arbitrator. Or, to quote the Strategy, “China is not credibly defending the sovereignty and territorial integrity of Ukraine, while at the same time it does support Russian narratives that are directed against NATO”. The document refers to the intervention of certain Chinese officials who claimed that, through its indirect involvement siding with Ukraine, NATO is prolonging the conflict in Europe. As a result, ever since the first half of 2023, European Commission president Ursula von der Leyen suggested a de-risking approach to China.
De-risking is a term borrowed from crisis management theories, encompassing defensive economic measures designed to serve as a political deterrent for Beijing. For instance, the introduction of a regulation dictating that technologies should be verified before being granted access to the market – a measure that discourages the cyber-theft of trade secrets. Another de-risking measure is the monitoring and even suspension of investments meant to rebuild various sectors of the Chinese economy, which could subsequently put China in a position of dominance in the global supply chain for vital raw materials. Additionally, to prevent Beijing from developing modern weapons with the help of Western technology, the USA, Japan and the Netherlands have restricted the export of state-of-the-art semiconductors and related equipment to China. Both Germany’s Strategy on China as well as the European Commission’s resolutions immediately state that “however, we are not pursuing a decoupling of our economies” shortly after outlining de-risking measures with respect to China.
Xi Jinping advocates for a Chinese model
It is noteworthy that the first explicit strategy regarding China was elaborated by a country that had a partial experience of communism. The present-day Federal Germany is also the successor of the German Democratic Republic, a state that systematically experimented with the single-party system for many decades. The difference is that in 1989, the communist regimes in Eastern Europe did not have the flexibility needed to enable a minimum liberalization which would have given their economies a chance to survive. For its part, after the Tiananmen Square protests, the Chinese leadership adopted economic reforms that extended the lifespan of the single-party system. Thirty years on, the unchallenged leader of China, president Xi Jining, is trying to turn China’s decision of 1989 into an elaborate theory on the viability of the Chinese model.
The first step came in March this year, when Xi Jinping launched the so-called Global Civilization Initiative, an ideological and political platform that promotes the single-party system as an alternative to the rule of law. According to this theory, the world in general and the economy in particular can work in the single-party system. China’s model is particularly viable, and the West is wrong when wanting to impose its own model on China, Xi Jinping claims. In other words, modernization is not necessarily equal to Westernization, the Chinese say, pointing to their economic progress in the last decades as evidence. To add more weight to his theory, Xi Jinping highlights China’s advanced civilization, thus trying to further capitalize on Chinese cultural traditions condemned by his predecessors, who would rather cherish the doctrine of the Western founders of communism, Marx and Engels.
In this respect, Germany’s Strategy comes in response to the new Chinese ideological drive. At a closer look, the Strategy does not criticize the Chinese model directly, but rather takes every opportunity to take a step back, warning against China’s global expansion. We have discussed a few de-risking examples, but there are many others. For instance, when it comes to the repression of the Uyghur population, the Strategy shows that products made by forced labor cannot be accepted on the German market, a clear reference targeting the imports of solar panels produced in these Chinese “economic facilities”.
Viktor Orban, China’s friend in the EU
Another effect – albeit involuntary – of Germany’s Strategy on China is mobilization at European level. On several points, the Strategy refers to Germany’s unity of action at European Union level. In this respect, Berlin will coordinate with Brussels, the Strategy promises. However, there are certain cracks in Europe’s concerted actions. For instance, earlier this year president Macron made a statement referring to the developments in Taiwan, saying that “Europe refuses to let itself entangled in conflicts that don’t concern it”, adding that for the sake of “strategic autonomy”, Europeans should not necessarily emulate Americans when dealing with crises such as the one in Taiwan. Similarly, the statements of certain Polish and Hungarian officials observed the same divergent tone over the course of several years. Admittedly, Warsaw in the meantime has revised its attitude after the Russian invasion of Ukraine, noting China’s lenient response. Budapest, on the other hand, preserved its position.
“Cooperation between Hungary and China presents more opportunities than risks”, the Hungarian Foreign Minister Péter Szijjártó said on the sidelines of a meeting with his Chinese counterpart, Wang Yi, in May in Beijing. At the time, Ursula von der Leyen was speaking about de-risking approaches to relations with China. In turn, Wang Yi said that Chinese-Hungarian relations “have entered their best phase in history”. There are, indeed, circumstantial reasons that justify such a claim. For instance, Budapest authorities share Beijing’s narrative according to which Western support for Ukraine prolongs the conflict at Europe’s expense. In turn, Beijing has reason to further develop relations with Hungary, hoping to thus neutralize the EU’s position in the “final” Chinese-American confrontation. This is what prompted The Economist to call Hungary China’s trojan horse in the EU, although there are other older affinities to consider here. Hungary’s iron-fisted leader, Viktor Orban, has repeatedly explained (the last time in November 2021, at the Fidesz congress ahead of the April 2023 general election) that the “center of gravity of world economy has shifted from West to East”, and that it is his duty as leader of Hungary to pursue the development of economic partnerships with “the future economic leaders in the East”, Russia and China.
A document for a Bipolar World
However, the eastward transition Viktor Orban was mentioning is no longer taken for granted by many economic pundits. Indeed, for many decades now, China has been reporting a staggering economic growth of 9% per year, which has now made it the target of future-looking strategies like the one we’re discussing here. But that is no longer the case. Chinese economic growth is slowing down. China’s economy is now entering a maturing phase. According to recent economic analyses, this will not result in a “Sinification” of global economy, which a decade ago was expected to take place in the mid-21st century, but rather in an economic parity with the United States. In this case, Germany’s Strategy on China also serves as the first document ushering in the bipolar world of future generations.
