China trip highlights Germany's uneasy dependence on Beijing

Accompanied by a business delegation, German Chancellor Olaf Scholz traveled to Beijing on Thursday, about three years after China embarked on a course of self-isolation when the COVID-19 coronavirus was first identified. German companies have invested heavily in China, the country's biggest trading partner.

In September, German chemicals giant BASF opened a major production center in the southern city of Zhanjiang. The company intends to pump €10 billion ($9.7 billion) into the factory by 2030. Its goal is that two-thirds of business growth will by driven by its Chinese operations by the end of the decade.

German carmakers are also massively investing in China. Today, 40% of all VW cars are sold in China. When the UN this summer reported human rights abuses and instances of forced labor in the western province of Xinjiang, VW refused to shut down its operations in the region.

In October, the Reuters news agency reported that VW plans to launch a joint software venture with the Chinese technology firm Horizon Robotics. The German carmaker reportedly plans to spend about $2 billion on the project.

In other news in October, the Chinese state-owned shipping company Cosco made headlines when it announced that it intends to acquire a stake in a container facility at Hamburg port's, which is considered critical German infrastructure. Scholz, who was mayor of Hamburg from 2011 to 2018, pushed the deal through, despite concerns from observers and within his own Cabinet.

Taiwan conflict simmers

Is Germany making the same mistake with China that it made with Russia? Is it again growing economically dependent on a state that shows a blatant disregard for international law — as Russia did in its attack on Ukraine — or threatens the use of military force to assert its territorial claims?

After all, at the recently concluded 20th National Congress of the Chinese Communist Party, party head and state leader Xi Jinping reiterated that "reunification [with Taiwan] must and will be achieved." His statement was met with roaring applause by the 2,300 delegates in attendance. For Taiwan, reunification is becoming less and less appealing, particularly with the Chinese Communist Party in power. Yet Xi does not care. "Taiwan is China's Taiwan," he said at the event. "Solving the Taiwan issue is up to the Chinese," he added, with no room for interference by "outside forces."

Analysts with Berlin's Mercator Institute for China Studies (MERICS) do not expect that war will break out over Taiwan in the coming years so long as all parties avoid unexpected confrontations and strive to prevent smaller disagreements from spiraling into major conflicts. "If it does come to war, this means the world's biggest powers, the US and China, face off in a region that is even more important to the global economy than Eastern Europe," said Bernhard Bartsch, the director of external relations for MERICS.

Such conflict would seriously affect many sectors of the Germany economy. China maintains a monopoly over precious earths and metals — 19 out of 30 "critically" important earths and metals are imported from China to the European Union. They are needed to make smartphones, LED lamps, electric motors, solar cells and computer chips. Germany's transition to renewable energies therefore depends on Chinese imports.

Germany: 'Painfully dependent'

Germany is deepening its economic ties with China, despite the geopolitical risks involved and Beijing's dismal human rights record. However, the Greens, a partner in Germany's government, and other parties are urging a reduced reliance on China in order to avoid being extorted, as Russia was able to do with energy. The head of the foreign intelligence service, the BND, recently warned that the country has become "painfully dependent" on a power "that no longer seems well disposed" toward Germany.

There is criticism from the opposition, as well. "Step-by-step we need to free ourselves from this self-chosen dependence, otherwise we risk gradually lose our independence," said Michael Brand, a Christian Democrat who sits on the Bundestag's Committee on Human Rights and Humanitarian Aid. Last week, Brand visited Taiwan. He said China had a "totalitarian attitude" that it displays "globally and with determination."

The United States is already acting to become less reliant on China and has imposed stricter rules for exporting computer chips there. Apple plans to manufacture more of its products in India and Vietnam.

Germany's shifting stance

The government has announced a new China strategy beginning in 2023, one that will be more standoffish than that of Angela Merkel's era.

Foreign Minister Annalena Baerbock is leading this transition. Since taking office, she has called China a "systemic rival" and openly criticized the country's human rights violations.

Indeed, the coalition agreement worked out among the Greens, Scholz's Social Democrats and the neoliberal Free Democrats addresses human rights abuses in Xinjiang, democracy protests in Hong Kong, the Taiwan conflict and the importance of a free Indo-Pacific region. None of these are issues that Beijing is particularly eager to discuss.

But it is also clear that, while economic relations continue to flourish, President Xi will not be too concerned if Germany takes a more critical stance.

This article was translated from German.