German Chancellor Scholz, on the second day of his visit to China, stated that Europe is open to Chinese automobiles but outlined three conditions: no dumping, no overproduction, and no intellectual property rights infringement. Experts believe that with high-level officials from Western economic powers visiting China one after another, it appears Beijing is orchestrating a major diplomatic performance, challenging Scholz. In reality, the global trend is towards formulating a “risk mitigation” strategy, with countering and preventing the Chinese Communist Party being an unavoidable trend.
On Monday (15th), Scholz led a delegation of German business executives to the second stop of his visit in Shanghai, which included a visit to Tongji University and a speech.
According to Reuters, at Tongji University, Scholz mentioned that at some point, Germany and Europe will also import Chinese cars, but emphasized the necessity of “fair competition,” meaning no dumping, no overproduction, and no infringement of intellectual property rights.
Sun Guoxiang, Associate Professor of International Affairs and Business at NHU in Taiwan, pointed out that one of the main focuses of Scholz’s visit to China is whether Beijing has been unfairly exporting a large quantity of so-called photovoltaic panels and electric new energy vehicles.
Sun analyzed that Germany is engaging in crucial communication with China, especially in the industry, particularly in the electric vehicle sector. Germany’s key priority is to demonstrate its core economic and security interests with both China and Europe. Through this visit, Scholz might want to convey these core interests to Xi Jinping.
In fact, there are internal divisions within Germany regarding its relationship with China. The German Foreign Minister comes from the Green Party and has a strong stance against the Chinese Communist Party, while Scholz is more focused on the economic and trade relationship between Germany and China.
Sun believes that Scholz’s views on the Chinese Communist Party may be too naive in certain circumstances, implying that he may not fully comprehend China’s current development. It is important for Scholz to understand clearly how to demonstrate that Germany’s mistrust towards Beijing is justified based on existing Chinese behavior and to ensure stability in their interactions.
He said, “Otherwise, it will be challenging to implement a comprehensive German policy towards China.”
On Tuesday (16th), Scholz is expected to meet with Chinese Premier Li Keqiang and General Secretary Xi Jinping, followed by a meeting of the Sino-German Economic Advisory Committee.
Since the end of March, top provincial officials from Shanghai, Guangdong, Liaoning, among others, have held meetings with senior management personnel from large German companies, including Continental AG, Siemens AG, and Daimler AG, paving the way for Scholz’s visit to promote Sino-German regional economic and trade cooperation.
Prior to this, US Treasury Secretary Janet Yellen visited China for four days, engaging in discussions with high-ranking Chinese officials including Li Keqiang. At the end of March, Chinese President Xi Jinping met with American CEOs and scholars, emphasizing that “opening up will never stop.”
It seems that Beijing is orchestrating a major performance, with Western leaders conducting frequent spring visits. It is anticipated that Li Keqiang will also soon visit Europe.
In recent years, the US-China tech war and some containment strategies on high-tech have influenced the global supply chain. Germany has long been a highly influential country in high-tech development.
According to an analyst from a think tank in Taiwan, Beijing is considering how to alleviate the current external pressure of being technologically blocked and hopes to find favorable solutions through developing relations with Germany to introduce more sources of technology.
Additionally, China’s domestic economy and market have been in a weakened state recently. Beijing understands the necessity of relying on foreign investment to overcome economic challenges and is also aware of international skepticism towards China.
Therefore, how Beijing can promote economic relations with other countries while addressing these concerns remains a dilemma for Xi Jinping.
Scholz’s visit to China comes after Germany’s introduction in July last year of a “risk mitigation” policy towards the Chinese Communist Party and the release of the “China Strategy” document, attracting significant attention.
It appears that Scholz’s itinerary during his visit to China is attempting to strike a balance in cooperation and competition between Germany and China. Given the current international situation, it is clear that Germany needs to play a leverage role within the Western camp, involving attitudes towards Beijing and even geopolitical dynamics, determining Germany’s strategic focus amid developments in the Eurasian continental landscape.
An article from Süddeutsche Zeitung titled “The Balancing Act in Beijing” mentioned crucial topics requiring discussion between the two countries, including the possibility of the EU imposing punitive tariffs on electric vehicles produced in China, unfair competition faced by German companies in China, Beijing’s data collection activities, and China’s dumping exports, among others.
The most critical issue in bilateral relations, as noted in the article, is how Germany can reduce its dependence on the Chinese competitive opponent and avoid being extorted while not antagonizing Beijing, allowing German companies to flourish in the world’s most important production and sales market. Finding this balance is undeniably challenging.
Since last fall, the European Commission has been investigating whether Chinese electric vehicles have received illegal subsidies. EU data shows that electric vehicles from China are typically about 20% cheaper than those manufactured in the EU.
After completing the anti-subsidy investigation, the EU may impose punitive tariffs on Chinese electric vehicles. Reports suggest that on June 5th, the EU will issue an initial notice regarding this matter.
However, just before Scholz’s visit to China, the German Association of the Automotive Industry explicitly stated their support for dialogues with China but cautioned against adopting a confrontational stance. They believe that imposing punitive tariffs on Chinese electric vehicles would have extremely negative consequences.
Sun Guoxiang pointed out that some German businesspeople seem to seek opportunities to continue promoting business in China through the “risk mitigation” dialogue with the German government. Thus, many German business representatives are accompanying the German Chancellor’s visit to China.
Balancing trade relations between Europe and China, Sun stated, “Especially, China must engage in bilateral trade in a fairer manner,” emphasizing that this should be a crucial focus for the future.
Before Scholz’s departure to China, the ifo Institute for Economic Research in Germany released a research report stating that efforts made by German companies in the furniture and automotive manufacturing sectors to reduce their dependence on China have shown significant results.
The ifo study revealed that, in the industrial and trade sectors, German companies relying on raw materials and goods from China have reduced to under 40%. Particularly notable reductions are seen in the furniture and automotive manufacturing industries, where the reliance on crucial raw materials or intermediate products from China has decreased by 29% and 17%, respectively.
However, the chemical industry in Germany has not followed the “risk mitigation” approach and has increased its reliance on China – with 46% of surveyed companies in this field stating their reliance on supplies from China, an increase of 5% since the 2022 survey. The report concluded that for many German companies, diversifying the supply chain remains a crucial strategic goal.
Süddeutsche Zeitung stated that Germany’s “risk mitigation” process has begun but is progressing slowly with various unknown challenges ahead.
Not only in Germany but globally, according to Sun Guoxiang, there are impacts and challenges in the direction of risk mitigation strategies against the Chinese Communist Party. It seems that the world is still uncertain about how to prevent risks posed by China.
He believes that addressing these issues requires some level of engagement or understanding with the Chinese Communist Party and putting forth the stance of Western countries. For instance, Scholz presenting his stance to Beijing will eventually lead to the establishment of feasible strategies through such engagements and negotiation processes.
Some politicians in Germany feel that the country should take actions to disentangle from China. Recent studies from the Kiel Institute show that a significant rupture with Beijing would cause Germany’s economy to contract by approximately 5%, comparable to the economic downturn experienced following the 2008 financial crisis or the COVID-19 pandemic. In other words, it would be harsh but not fatal. Schularick from Kiel stated, “Our country has sufficient flexibility to cope with this extreme situation.”
Regarding Scholz’s visit to China, Sun Guoxiang noted that it is not only based on national interests but also demonstrates Western countries’ concerns and recognition on issues related to China, the Taiwan Strait situation, and even the threats posed by the Chinese Communist Party. The multilateral approach established by the Biden administration has played a significant role.
“Internationally, especially from the European perspective, countering and preventing coercion from the Chinese Communist Party will increasingly become a critical issue,” he noted.
Scholz also addressed security issues during his visit, stating that “small countries should not live in fear of larger nations” and that no country should use force to change borders, without explicitly mentioning China.
He mentioned, “One of these principles is that we should not be afraid of our neighbors,” adding, “We wish for our lives to be the same way, hoping that if our neighbor is a tall, strong, muscular person, we always want to say hello and ensure they will never hurt us.”
Previously, Europe has displayed its position regarding Taiwan. In February this year, the European Parliament passed two reports emphasizing that Taiwan and China are not subordinate to each other, expressing concerns over heightened tension in the Taiwan Strait caused by the Chinese Communist Party and supporting deepening comprehensive partnerships with Taiwan.
Sun Guoxiang stated, “Germany’s navy will also participate in some activities in the Indo-Pacific region. Thus, Scholz’s fundamental stance on the East China Sea, Taiwan Strait, and South China Sea seems to be essential, and he may articulate clearly with Xi Jinping regarding Germany’s position towards Beijing.”
Furthermore, according to Reuters, Scholz is set to meet with Chinese President Xi Jinping in Beijing on Tuesday (16th) and will raise questions about China’s economic support for Moscow during the Russia-Ukraine conflict.
Sun believes that a crucial issue Scholz must address during his visit is China’s support, in any form, towards Russia, especially concerning the aggressive war by Russia against Ukraine. This is another major focal point for Scholz that pertains to Europe’s economic and security policies, maintaining a significant emphasis.
In recent years, there has been frequent interaction between the high levels of the Chinese and Russian governments. Russian President Putin is reportedly scheduled to visit China in May to meet with Xi Jinping, which has become a matter of concern for Western powers.
According to Sun, Beijing cannot support the barbaric war Russia initiated against Ukraine, making it the most critical point when Scholz meets Xi. He hopes Xi can express clearly that this is an aggressive war, and Russia’s invasion of Ukraine should be unequivocally condemned.
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