World news

Olaf Scholz in China, a controversial visit

Olaf Scholz’s visit to Beijing this Friday, November 4, is symbolic. It is his first as German Chancellor and the first by a European leader since the pandemic. The chancellor is also the first to meet President Xi Jinping since his re-election as head of the Chinese state at the end of October.

“German-Chinese relations and more broadly between China and the European Union have never been so bad”recognizes Markus Taube, of the University of Duisburg-Essen. “This visit will be an attempt to rebuild a beginning of dialogue. »

Many disputes

The disputes with China are indeed numerous, starting with the question of human rights and Chinese business methods deemed anti-competitive. With the pandemic, the closure of the country and the problems of supply, Berlin has become aware of the danger of a dependence on Beijing, which has become its first trading partner. In 2016, the takeover of the flagship machine tool Kuka, by Midea, had already caused an outcry. More recently, the proposed sale of 35% of the shares of one of the four terminals of the port of Hamburg to the Chinese shipowner Cosco has revived the debate. Not to mention the effects of the war in Ukraine and the scenario of a conflict between Beijing and Taiwan, the consequences of which would be incalculable on the German economy.

“The mantra of “change through trade” (Wandel durch Handel, editor’s note) is totally disavowed, observes Markus Taube. This policy has transformed neither Russia nor China. Germany must redefine its relations with Beijing. »

This is precisely what the government of Olaf Scholz wants, under pressure from its environmentalist and liberal partners. The coalition treaty provides for a new strategy with China, with more weight given to human rights and less economic dependency. “Naïveté towards China is a thing of the past”launched in September the Minister of the Economy, Robert Habeck.

“China bashing is huge”

In practice, however, this strategy divides, starting with economic circles. On the one hand, the adaptations are real. In 2019, the powerful Federation of German Industry (BDI) called China a ” partner “ but also of “systemic competitor” and recommended to its members to diversify their markets. Advice that seems to be followed, especially by the companies of the Mittelstand, the network of SMEs and SMIs. “These see China as a direct competitor and support a change in policy towards Beijing”confirms Tim Rühlig of the German Council on Foreign Policy (DGAP).

This is the case of Hawe Hydraulik, a company with 2,600 employees, which generates 25% of its turnover with China. “Our strategy consists, ideally, in this formula: ‘local for local’, that is to say produce locally for the local market. Our goal is not to sell less in China, but to expand our customer base”confirms its leader Karl Haeusgen.

In the medium term, the economist Markus Taube, of the University of Duisburg-Essen, even foresees a drop in German investments in China. “China bashing is huge, and companies are very sensitive to it”he observes.

A balancing act

On the other hand, the stakes remain enormous for the liners of the national economy that are the giants of the automobile, machine tools and chemistry. BASF, for example, which estimates that two-thirds of its future growth will come from China, has just inaugurated a new factory in the south of the country and plans to invest 10 billion euros there by 2030. car manufacturer Volkswagen, it generates 40% of its turnover there. “Those who cannot adapt to the peculiarities of the Chinese market will no longer be automotive leaders in the next five to ten years”judged this summer his former boss, Stephan Wöllenstein.

Within the government, too, this new strategy is creating tensions, particularly with the Chancellor. “Olaf Scholz seems convinced that we must maintain good relations with China, for the good of the German economy, in this period of great upheaval”, says Tim Rühlig. His visit to Beijing therefore promises to be a real balancing act.


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