Germany calls for coordinated response to competition from China
The German government and leading representatives of the German business community have called on the EU to strengthen its unity and act more assertively to counter growing competition from China.
In a policy paper published on January 10, the Federation of German Industries BDI described growing challenges posed by the state-dominated Chinese economy. China had entered into “systemic competition“ with liberal market economies such as Germany, the BDI said in a clear departure from previous more China-friendly positions. The group also warned German companies against relying too heavily on the Chinese market. As Germany’s main business lobby group, the BDI’s views carry weight and feed into government policy decisions.
Meanwhile the German government attempts to strengthen European unity vis-à-vis China. Media reports say Chancellor Merkel plans an EU-China summit with leaders from all EU member states in the second half of 2020, when Germany is due to hold the rotating six-months EU presidency. Previous EU-China summits have tended to involve only the EU’s own leaders, i.e. EU Commission president and EU Council president, and Chinese representatives.
China was the EU’s largest trading partner after the United States according to 2017 figures. By holding the summit, Berlin aims to counter what it sees as Beijing’s divide-and-rule approach to dealing with the bloc, especially through the 16+1 format.
Additionally, individual members of Merkel’s cabinet have openly voiced criticism of China in recent months. Development minister Gerd Müller, traveling in Zambia last week, warned emerging economies against becoming too dependent on loans from China. Foreign minister Heiko Maas had expressed concerns over the situation in Xinjiang late last year.
However, the various public expressions of misgivings about China do not amount to a new China policy yet. The BDI policy paper was heavily criticized by some within the business community. The Association of German Chambers of Industry and Commerce (DIHK) emphasized the positive sides of trade with China. About 900,000 jobs in Germany depend on exports to China, said DIHK economist Volker Treier. The BDI paper “brings another tone” into the debate, he added. “But we always have to keep in mind that China is our most important trading partner. So, every word should be weighed carefully.”
Germany’s economic relations with China will also partly depend on how the Asia-Pacific Committee of German Business (APA) is going to position itself. Its new leader, Siemens CEO Joe Kaeser, is due to take over at APA at the end of February. Kaeser is known for his China-friendly stance, however, he recently strongly criticized the takeover of robotics-manufacturer Kuka by Chinese investor Midea.
Finally, there is the question of Huawei, the controversial Chinese telecoms company, which faces allegations of spying. The United States and New Zealand have banned Huawei from building new 5G networks in their respective countries. In Germany, the discussion about Huawei is ongoing. Telecoms companies have until Friday (January 25) to file applications to participate in a 5G-frequency auction due to take place in spring.