Against the Grain:

After German Chancellor Olaf Scholz visited Beijing on 4 November 2022, questions began to arise regarding why Germany was pursuing a unilateral policy at odds with that of the EU as a whole. Although there have been various recent signs of Chinese-German rapprochement, the chancellor’s trip stepped up the special relationship between the two countries. Other European nations that have important trade relations with China, such as France and Greece, have not been open about their evolving ties given the policy of containment towards China and Russia that the West has adopted since the outbreak of the Russian-Ukrainian war. Scholz’s trip marked the first visit to Beijing by a top Western official since the beginning of the Ukraine crisis.

Scholz and China

Amidst Western criticism and US efforts to "encircle" expanding Chinese influence, Olaf Scholz has led Germany towards strengthening ties with China for the following reasons:

1. Building the German economy: The German chancellor’s recent visit to China came at a time during which the German economy was faltering as a result of the high costs of energy production with winter approaching. Germany is also at the brink of a recession due to inflation rising while production has fallen since the beginning of the COVID-19 pandemic. These factors have made China an important lifeline for key German manufacturers. China is Germany’s largest trading partner and makes up 12.4% of German imports and 7.4% of its exports. One recent indication of Berlin’s growing economic dependence on Beijing was that Scholz allowed COSCO Shipping Holdings Co., a state-owned Chinese shipping company, to buy a 24.9% stake in the Hamburg container port, the largest port in Germany. This went ahead despite concerns within Germany that the deal would increase China’s control over critical German infrastructure. Germany is also pushing to sign a huge deal with China to provide the latter with German-produced BioNTech COVID-19 vaccines, which have not yet been approved in China.

2. Expanding Germany’s political role during global crises: Since World War II, successive German governments have kept out of international political crises. This was meant to demonstrate Germany’s good intentions in not getting mixed up in political crises or coalitions, which made sense given US hegemony in regional and global crises. However, it seems that the existential threat that Russia currently poses could cause German leaders to rethink their isolationist tack. This approach has made it difficult for Germany to serve as a mediator or to form alliances. Rethinking this strategy is especially important since the US has demonstrated that it does not always succeed in preventing war, even when it is largely able to set the red lines for these conflicts.

Scholz contends that the Western world needs German rapprochement with China in light of reduced diplomatic activity between Washington and Beijing following Nancy Pelosi’s visit to Taiwan. According to Scholz, it will be necessary to have a mediator whom both China and the US trust in order to prevent escalation. This is the approach that Germany adopted with Russia to keep channels of communication open with the Kremlin.

3. Bolstering Germany’s image as a human rights defender: China has been reluctant for some time to meet with high-level Western officials and Germany is aiming to pursue rapprochement to paint itself as a key human rights defender. Germany is trying to raise various controversial human rights issues with Xi Jinping, including Xinjiang, Tibet, and others. This could bolster Germany’s standing with both the EU and the US. During his recent visit to Beijing, the German chancellor took the opportunity to draw Western media attention to how Scholz had broached these human rights issues with the Chinese president. Human rights are of importance to progressive currents whose influence is growing in the West, and Scholz’s approach to China is unusually direct. He avoids making indirect critiques of Chinese policy via the media, which is how most European leaders currently deal with China.

4. Ripple effects for German companies: The German chancellor’s actions towards China should be understood in the context of the interests of German companies operating there. These companies could pose an obstacle to any attempt to curtail relations with Beijing. There are many German companies with extensive interests in the Chinese market. These include Volkswagen, which makes 40 % of its sales in China; BASF, a German multinational chemical company that recently announced a 10-billion-euro investment project in Zhanjiang, in China’s Guangdong province; and Audi and BMW, which both have major investments in China.

5. China is important for Germany’s energy transition: China has been an important actor shaping Germany’s energy transition policies. For example, most solar panels in Germany are imported from China and more than 80% of global solar panel production occurs in China. During the past decade, China has invested around 49 billion euros in photovoltaic energy, which is more than ten times European investments in the same field. These huge Chinese investments have helped lower the cost of solar energy around the world by 80%. Beijing also controls the raw materials necessary for green energy production, such as lithium. It also holds around 90% of the global processing capacity for rare-earth elements and 60% of processing capacity for lithium.

Potential Repercussions

The German chancellor’s insistence on pursuing relations with China could have various potential repercussions, including the following:

1. Growing domestic challenges for Scholz: The German chancellor and his Social Democratic Party have cast this rapprochement as a necessary tactical maneuver that does not stem from a general desire to develop closer ties with China. Nevertheless, domestic criticism of this policy is expected to escalate during the coming period, especially from the Christian Democratic Union (CDU). The CDU is one of the most prominent opposition parties and most staunchly anti-Russian groups in Germany.

It is unlikely that this policy could threaten Scholz’s ability to stay in office, i.e., Germany will not be a repeat of the UK scenario. However, domestic pressure against closer ties with China will intensify if Scholz’s intensive rapprochement policy does not reap its expected rewards. At that point, the German chancellor could find himself in a politically perilous situation in which some of his party could join forces with the opposition bloc. That could lead to a gradual loss of legitimacy even if Scholz technically remained in office. In any case, this will depend upon the extent to which the Germany economy responds to the rapprochement and whether Social Democratic Party forces rally behind Scholz.

2. Increasing criticism from Europe: The recent German moves in China have also been sharply criticized by the European Commission. The Commission sees this issue through the lens of the current crisis with Russia. The EU has encouraged most European countries to rethink their major reliance on Russian natural gas exports. However, Berlin does not seem to have learned its lesson regarding the consequences of European dependence on a single country in critical sectors. This is of particular concern when the country in question has its own hostile agenda. Meanwhile, the UK and France have bolstered their presence in the Pacific Islands and Indo-Pacific region in order to encircle China. These efforts would be impeded by unilateral German actions.

3. Escalating pressure from the US: Chinese-German rapprochement is also expected to result in the US ramping up pressure on Berlin. This is due to international competition between Washington and Beijing as well as various earlier incidents that Washington sees as part of an unwanted shift in German and European policy. During a meeting between Olaf Scholz and Emmanuel Macron in October, the two leaders indicated that Europe was less than happy with the protectionist policies that US and the China were pursuing. Prior to the meeting, the US had passed the Inflation Reduction Act, which introduced an aid package for domestic production in order to help US markets curb inflation. Leading European economies such as Germany and France see these measures as harmful to European exports. Chinese-German rapprochement could also be understood within this context as trying to provoke Washington’s ire and as resulting from increasing pressure on Scholz.

In conclusion, the primary objective of Chinese-German rapprochement is to support the recovery of the struggling German economy. However, the German chancellor might seize the opportunity to achieve other important political aims at the same time. German ambitions could run into various global, regional, and domestics pressures that could make it difficult to achieve these aims. Despite various external pressures and obstacles, the potential payoff of rapprochement for the German economy—or potential domestic upheaval if the policy should fail—are the most crucial factors for the chancellor’s political future. Even if the policy should fail, Scholz is unlikely to be removed from office before the end of his term, as was the case in the UK.