Germany treads carefully in its relations with China, a country it sees as a “partner, competitor and systemic rival” – as it points out in its national security strategy, a document presented by the Government almost a year ago –, a country to which its industry is fatally chained, and that, geopolitically, maintains dealings with Russia despite the war in Ukraine.
On a three-day trip to China, the German Chancellor, Olaf Scholz, has tried to combine commercial interests and geopolitical crises, and thus called on the Chinese president, Xi Jinping, to pressure the Russian Vladimir Putin to stop the aggression against Ukraine. Economically, Scholz has tried to square the circle, squeezing and temporizing at the same time: he asked the Asian giant for fair economic competition and admitted that Germany needs the Chinese market for its products.
This Tuesday in Beijing, Xi Jinping replied that we must “be careful with the increase in protectionism,” in reference to European and American complaints about Chinese industrial power that floods global markets.
On Monday, Scholz had enunciated the mixed message of his visit at a meeting in Shanghai with students from Tongji University – founded by German doctors in 1907 – in which he stated that the EU should not act out of protectionist self-interest, but called for a fair competition between China and Germany.
“At some point there will also be Chinese cars in Germany and Europe; The only thing that must always be clear is that competition must be fair, that is, that there is no dumping, that there is no overproduction, that copyright is not infringed,” said Chancellor Scholz.
His trip took place amidst the EU's concern over the threat posed to European companies by the arrival of lower-priced Chinese products into their markets, especially electric cars and other green technologies. The president of the European Commission, Ursula von der Leyen, regretted Chinese overproduction and criticized the fact that it is based on large state subsidies, something that the Chinese authorities deny. Brussels is investigating the issue of the Chinese electric vehicle and even raises the possibility of implementing tariffs, against which Scholz speaks out.
Also at the beginning of April, Janet Yellen, Secretary of the United States Treasury, called on China to reduce its industrial production, arguing that it is overwhelming the world market, and reproached Beijing for “unfair treatment” of American companies.
Xi Jinping counterattacked this Tuesday before the West by ensuring that Chinese production benefits the entire world, because, he maintained, "Chinese exports of electric vehicles, lithium batteries or photovoltaic products have not only enriched supply and alleviated inflationary pressure" and help to combat the climate crisis.
Although the social democrat Scholz has been cautious in this his second visit to China as chancellor – the first was on November 4, 2022, and he was only eleven hours due to China's zero covid policy at that time – he has been more assertive about German concerns on world affairs than her predecessor, the Christian Democrat Angela Merkel, who always prioritized commercial interests, especially the automobile industry.
Still, Scholz's tempered tone contrasts with his government's national security strategy document, which singles out China as a partner and rival that increasingly acts "against our values and interests." The document calls for “reducing risks” to avoid excessive dependence on Chinese suppliers, a situation in which some German companies already find themselves, added to disadvantages in accessing the local market.
According to a survey by the German Chamber of Commerce in China (AHK), two out of three German companies operating in China say they face unfair competition. China remains Germany's largest trading partner - with a volume of more than 250 billion euros last year - despite increasingly difficult business conditions. It is a crucial market for Germany, especially in the automotive and chemical sectors. On his trip, Scholz visited two German companies: a Bosch sustainable hydrogen propellant plant in Chongqing and another from polymer manufacturer Covestro in Shanghai.
