Scholz in China: Can Berlin Influence Beijing's Policy?

Written by: Armin Sijamić

On Sunday, German Chancellor Olaf Scholz, accompanied by a large economic and political delegation, arrived for a three-day visit to China. Berlin and Beijing are finding it increasingly difficult to find common ground in politics, but it is the economy that prevents a complete rift between the two economic giants.

Scholz's trip to China demonstrates the complexity of the West's relations with China and other countries that want to play an independent role in the world. China's case is more interesting due to the fact that the West, in its desire to distance Beijing from Moscow and in search of profit, invested money and transferred technologies, is responsible for China's growing economic, and consequently political and military, power. Last year, the European Union's trade deficit with China amounted to 291 billion euros.

China is the world's second-largest economy, ahead of Germany, which has an economy nearly four times smaller. Trends indicate that China will continue to strengthen. This is partly due to the trade exchange between the two countries, which last year amounted to 254.1 billion euros. German imports to China amount to 97.3 billion dollars.

Scholz's trip is part of an effort to reduce the trade deficit and for Beijing to provide better conditions for German companies, given that Berlin has complained about market barriers and Chinese subsidies to domestic companies. How successful Scholz will be in this will be shown by the final account at the end of this and next year, just as data for last year showed when the volume of economic exchange between the two countries fell by 15.5 percent compared to the previous year. The decline is partly caused by the change in German policy towards China, namely the adoption of a series of documents that, in practical terms, place political and economic obstacles before Beijing wherever possible.

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Berlin's decision, shaped under Foreign Minister Annalena Baerbock from the Greens - aligned with American Democrats - was a slap in the face for Beijing, which tried to prevent it. Germany's largest trading partner for eight consecutive years was labeled a "systemic rival."

To make matters worse for the German economy, the confrontation with China came at a time when, due to Russian aggression against Ukraine, Berlin was losing the Russian market and cheap natural gas. There is no doubt that German businessmen would replace the Russian market with the Chinese one, and that China is suitable for this if it wishes.

Political Differences

Chancellor Scholz presented his second trip to China, after the one in November 2022, also as a discussion about political differences, primarily regarding the war in Ukraine, as he believes China has not done enough to punish Russia. The day before arriving in China, he wrote on X about his conversation with President Volodymyr Zelenskyy, Russia's "massive" attacks on civilian energy infrastructure, and said that Berlin would "stand unwaveringly on Ukraine's side."

The post seemed like an alibi for a possible failure of economic negotiations, and if we add other positions of Scholz's government, then we can say that ties with China are maintained by big business deals and almost nothing else. Namely, Scholz's government believes that the issue of the breakaway Chinese island of Taiwan should be resolved through negotiations and supports Taipei's membership in international organizations. Berlin is also concerned about the state of human and workers' rights in China, Chinese policy in the Arctic and Antarctic, and demands that Beijing announce its military exercises. In return, Germany will expand cooperation with Indo-Pacific countries and send its warships off the coast of China.

But before Scholz met with President Xi Jinping, he visited several Chinese cities and German factories there. He also visited the industrial hub of Chongqing, which is a production base for the Chinese automotive industry. It is precisely the automotive industry, i.e., the strong development of the Chinese electric car industry, that worries German companies, which are finding it increasingly difficult to keep up with Chinese low prices. In July last year, in response to the denial of access to semiconductors from the West, China halted exports of gallium and germanium, metals important in the production of those same semiconductors, electronics, automotive, and military industries. China is the world leader in the production of these two rare metals.

Chinese Stance

Scholz's arrival in China, i.e., his reception, sparked stories about the host's (dis)respect for the guest. Chinese state television showed Scholz getting off the plane in Chongqing and leaving, but he gave no comments to the Chinese delegation, which mostly consisted of regional officials. The reception in Beijing by Xi Jinping at the Great Hall of the People improved the impression. The reserve towards the guest in Chongqing, unless the German delegation insisted on it, shows that China is also changing and that with the growth of its power, its political independence is also growing. Besides, it should be kept in mind that it was Berlin that decided to limit ties with Beijing.



Chinese media report that Xi told the guest that this year marks ten years since the establishment of the comprehensive strategic partnership between China and Germany and that during that period, despite changes in the international situation, their relations have always developed steadily. He said that Germany and China should consider and develop bilateral relations from a long-term and strategic perspective, in order to jointly bring more stability and security to the world, and that there is no fundamental conflict of interest between them and they do not pose a security threat to each other.

China-Germany cooperation is beneficial for both sides and for the world, Xi said, adding that given global turbulence, the two sides must strengthen the resilience and vitality of bilateral relations, insist on the main tone of cooperation and the general direction of the development of China-Germany relations, as well as consolidate the position of the comprehensive strategic partnership between the two countries, and that China's policy towards Germany will maintain a high degree of stability and consistency.

Finally, Xi emphasized that German and Chinese industries are highly complementary and their markets are interdependent, and that China will further insist on the policy of opening up to the world and hopes that the German side will ensure a fair business environment for Chinese companies in Germany.

Veiled Criticism and Obvious Obstacle

Chinese reserve in statements is well known. Xi Jinping's above-mentioned presentation seemed to deviate from this approach, because his speech celebrating the ties between the two countries is, in fact, a criticism of Berlin.

Mentioning the agreement from ten years ago, bearing in mind the documents Berlin adopted in July last year, is a message to the guest that he should stick to what was signed, especially because the two countries, according to Xi Jinping, are not a security threat to each other. In other words, Xi told the guest that he has agreements with China that allow him not to wage America's war against Beijing, but to look strategically at future relations. In addition, he told Berlin that Chinese interests must also be protected while the EU is preparing an economic showdown with Beijing.

Scholz said, besides generalities about cooperation between the two countries, that their relations are developing well and that they want to work with China on global challenges, such as climate change, the international order, peace in the world... But Scholz also spoke about differences, touching on Russia and Ukraine. He told the host that the Russian invasion of Ukraine is a threat to global security and that Germany's "vital interests" are affected by this war. He added that no one should threaten the use of nuclear weapons, an allusion to Russian President Vladimir Putin's statement that he is ready to use all means to protect Moscow's interests. Scholz sought China's support for a "just peace in Ukraine."

Xi was now much more reserved. He said that China supports all efforts leading to a resolution of the crisis, including the German one. In other words, he repeated what Beijing has said many times in its attempts to broker peace in Ukraine, namely publicly stating a vague Chinese position that is impossible to implement, because it simultaneously advocates for Ukraine's unity and Russia's right to achieve its goals.



Dutch Prime Minister Mark Rutte, three weeks ago in Beijing, asked the host "to put significant pressure on Russia to influence the course of events," and five days later, French Foreign Minister Stéphane Séjourné said after a meeting with his Chinese counterpart that France expects China to convey messages to Russia about Ukraine. And this week, Scholz asked for something similar: "The Chinese word carries weight in Russia. That's why I asked President Xi to lean on Russia so that Putin finally stops his insane campaign, withdraws his troops, and ends this terrible war."

So, European politicians are asking Beijing to persuade Moscow to end the war in Ukraine, and European businessmen are asking for the trade deficit with China to be reduced and for their companies to get better conditions in China. At the same time, the West is working to contain China, especially its technology companies. Although these demands seem unrealistic and difficult to achieve in these circumstances, many rely on the aforementioned economic interconnectedness. However, some claim that Beijing may not be able to deliver any of this due to its own economic problems and its inability to force Moscow to make concessions in Ukraine. After Scholz's visit, it is still not clear which of these two opinions is more accurate.