Just 10 days after visiting Beijing, Olaf Scholz was back in Asia on a whistle-stop tour through Vietnam and Singapore before the G20 talks in Bali.
His message was clear: Germany is anxious to broaden its Asian trade relations beyond China. No one mentioned German dependency on Russian energy, but no one needed to.
As Russia’s invasion of Ukraine rewrites old certainties in Berlin foreign policy, a new strategy paper is looming on how to approach China as a trade partner, competitor and systemic rival. In Singapore, Scholz flagged Germany’s new approach on trade as “acting more broadly, spreading risks ... and becoming more robust and thus also more free to act politically”.
It was a clear signal to Beijing, to G20 leaders and to an interested audience back in Europe. Things are shifting in Berlin. Immediately after taking office, Scholz sent his officials into Germany’s engine room to identify and retool old Merkel-era dependencies. Berlin has reworked state in vestment and export guarantees to favour companies that spread their engagement – and risk – rather than put their eggs in one, Chinese, basket.
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Scholz triggered critical headlines ahead of his Beijing visit for allowing a Chinese company take a minority stake in a Hamburg harbour management business. No less significant, though, is this week’s news of Berlin’s veto on Chinese investment in two German computer chip companies.
Citing security concerns, federal economics minister Robert Habeck said Germany is open to investment, “but we are not naive either”.Critics of Germany’s Russia policy might beg to differ. Scholz knows to expect pushback, too, from Germany’s car industry. It pays one in every five euro into the exchequer, is used to being heard and is notoriously set in its ways. Volkswagen alone does 40 per cent of its business in China.
To convince wary EU partners that times have indeed changed, Germany’s new China strategy must demonstrate that German businesses, and their pursuit of short-term profit, are not the tail that wags the dog.