Germany and China: Whats Next?
After Angela Merkel announced her retirement from the world of politics, Germany was left with a challenging task- the task of electing a rightful leader capable of filling Merkel’s shoes and making decisions best aligned with Germany's domestic and international interests. However, since the election of Olaf Scholz, a social democrat, as chancellor, the tone within Germany has changed. People have begun to realize that the current leader is not entirely living up to the expectations of Germany’s citizens but also predecessors such as Mrs. Merkel.
Within the article “Germany struggles with its dependency on China,” published in the Financial Times on November 1st, 2022, written by Guy Chazan & Yuan Yang, the two authors explore the implications of Scholz’s most recent miss-step which reignited discussion surrounding the topic of political economy.
Upon being voted into office, Olaf Scholz promised German citizens to rethink the country’s approach to China and highlighted that Germany wouldn’t be subject to China's power plays and demonstrations. However, fast forward to the present, Scholz eroded the trust of many Germans by announcing the sale of a 25 percent stake in Hamburg’s port to the Chinese shipping company Cosco. While the deal surprised many, those who had done their research quickly learned that the deal had been on Scholz’s agenda back from when he was mayor of Hamburg.
Currently, as this controversial deal is being pushed through, just days before Scholz visit to China, another factor looms brightly. As it stands, Scholz looks to be the first G7 leader the People’s Republic of China leader, Xi Jinping, is welcoming since the beginning of China’s harsh and still ongoing Covid-19 pandemic measures. Therefore, the world is carefully watching the meeting. Especially since China’s recent adoption of pointed rhetoric toward Taiwan, its continuous ties to Russia despite the ongoing war, and the most recent efforts to further isolate itself from western economies or exploit points of pressure, the selling of a critical infrastructure by Germany lends itself to even harsher criticism.
While the deal is of great value, Germany is giving up parts of its autonomy and enabling China to potentially use the port of Hamburg as leverage in future negotiations. This strategic influence over supply chains can backfire on Scholz’s administration and the German people. As seen in the most recent example with Russian gas, enabling great world powers who are not following western agendas’ superiority over the German economy can cripple the entire nation plus greater Europe.
This interconnectivity has shown significant flaws within the thought and decision-making process of political leaders. It is, therefore, no surprise why Scholz is being tremendously criticized. Germany’s economy is already largely dependent on semiconductors, which are paramount for German automakers (e.g., VW-group, Mercedes Benz, BMW, etc.). Therefore, ensuring that China won’t engage in acts of war against Taiwan or other western allies is to be critically assessed. Without peace, possible implications for Germany, Europe, and the greater world could be catastrophic. Economies have become interconnected. While globalization has enabled great economic opportunities for Germany, times and events like the present one highlights its downsides if not carefully evaluated. Additionally, Germany must pay attention to its position within the world. Otherwise, political allies and economic positions can quickly be misaligned. This can lead to the country undergoing pressure (political and economic) from two alleys, the west (mainly European allies & the U.S. ) and the east (primarily Russia & China). The consequences might be unthinkable for the German population if situations further escalate.
Germany is walking a very fine line on a double-edged sword regarding its political and economic interests. While the political orientation tilts towards western values, its economic position and events such as the selling of a stake in the port of Hamburg continue to highlight a puzzling alignment with maintaining strong ties and future interest in doing business with potentially dangerous countries such as China. It is for the upcoming meeting between Olaf Scholz and Xi Jinping to show how a future relationship between Germany and China will look and how far the two countries are collaborating regarding their respective political economy. With growing pressures due to the ongoing war and the lasting effects on German citizens from the shrinking domestic economic activity on top of inflationary trends, its chancellor, Olaf Scholz, is forced to rethink the nation’s approach to doing business but also conducting its foreign affairs. Every decision involves tradeoffs. This is especially true for multidimensional decisions such as those regarding the political economy. Therefore, only through careful evaluation of all possible options can Germany’s citizens and economy benefit from the most significant gain.
Yang, Y., & Chazan, G. (2022, November 1). Germany struggles with its dependency on China. Subscribe to read | Financial Times. Retrieved November 4, 2022, from https://www.ft.com/content/be082c77-1f9c-409f-86e8-eeb2bd9d1418
Photo: FT Montage/Getty/Reuters | Xi Jinping and Olaf Scholz