Europe’s China weak spot: Germany – POLITICO

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This text is a part of the sequence Facing China.

Neglect China’s Belt and Street initiative. With regards to influencing European politics, Beijing’s actual leverage doesn’t come from high-profile investments in small international locations like Greece or Hungary. It comes from European investments in China — particularly Germany’s need to not upset its profitable financial relationship with one of many world’s largest export markets.

That’s the view of EU commerce officers from half a dozen international locations, in addition to senior diplomats and specialists contacted by POLITICO as Germany prepares to guide essential negotiations on the EU’s future relationship with China amid rising unease about Beijing’s human rights violations.

“Europe’s weak level is Germany, and in Germany it is the automotive business, and within the automotive business it is Volkswagen,” mentioned Max Zenglein, chief economist on the Mercator Institute for China Research (MERICS), a suppose tank.

German exports to China have grown yearly since 2008 besides in 2015. In 2018, Germany offered some $106 billion of products and companies in China, based on the World Financial institution — greater than the mixed exports of France ($32 billion), Italy ($21 billion), the Netherlands ($12 billion), Eire ($11 billion) Sweden ($9 billion) and Spain ($9 billion).

“Do we would like an funding deal or can we need to be more durable on the human rights points?” — A senior EU diplomat

Volkswagen offered greater than 4.2 million vehicles in China in 2018, in contrast with some 350,000 within the U.S., and has come beneath scrutiny for its manufacturing facility in Xinjiang, a area the place about 1 million Uighurs have reportedly been held in internment camps.

As European leaders put together for a digital summit with Beijing on Monday, the highlight has fallen on German Chancellor Angela Merkel, who should steadiness rising considerations about human rights together with her need to ship an funding take care of Beijing by yr’s finish.

“It’s positively a dilemma,” mentioned a senior EU diplomat concerned within the EU’s response to the Hong Kong crackdown. “Do we would like an funding deal or can we need to be more durable on the human rights points?”

Financial penalties

EU diplomats say Germany’s relationship with China has had an outsized weight in figuring out the bloc’s technique towards the nation. EU international coverage could also be determined by unanimity, however it’s nonetheless troublesome for smaller international locations to push again in opposition to Berlin’s efforts at engagement.

“It’s troublesome to get EU international locations in the identical place in the case of China,” mentioned the senior EU diplomat. “Germany is the one pushing for [close cooperation] with China.”

EU officers mentioned one cause Germany — and certainly the EU — had been notably reluctant to talk out when Beijing imposed its nationwide safety legislation on Hong Kong in June this yr was as a result of leaders nonetheless hoped to safe an funding take care of China by yr’s finish.

Merkel’s authorities and Brussels have additionally taken a gentle stance in the case of the remedy of Uighurs, regardless of repeated calls for action from the European Parliament, together with for targeted sanctions.” Brussels has additionally not moved to prevent the sale in the EU of products made with forced labor, in contrast to the United States.  

“China is at present very profitable in attaining a level of self-censorship in Germany as a result of Berlin fears financial penalties,” Zenglein mentioned.

Germany’s financial system minister, Peter Altmaier, defended his nation’s strategy in an interview with POLITICO in July.

“We now have commerce relations with many areas throughout the globe, together with in lots of instances international locations which have a distinct understanding of civil rights than now we have in Germany,” he mentioned. “That was the case with the previous Soviet Union, in addition to with many international locations within the Center East, Africa and Asia. I’ve all the time been satisfied and I nonetheless imagine that change may be achieved via commerce.” 

Germany has been reluctant to ban the Chinese language telecoms vendor Huawei | Alexander Koerner/Getty Photos

A commerce official from a smaller EU nation pointed to Germany’s reluctance to ban the Chinese language telecoms vendor Huawei from involvement in its cell networks as proof that Berlin’s relationship with Beijing goes additional than its engagement with the Soviet Union.

“Germany would by no means have let the Soviet Union construct its communication community,” the commerce official mentioned.

Deal dilemma

Zenglein argues that Germany has failed to cost within the political dangers arising from its financial engagement in China.

Berlin is barely now enjoying catch-up with different Western powers resembling Japan, the U.S. or France in formulating a China technique that balances longer-term international coverage and safety pursuits in opposition to entry to the nation’s rising market, he mentioned.

This month, Germany for the primary time printed a method on the “Indo-Pacific,” which it mentioned would information its international, safety and financial insurance policies towards area. In it, Berlin mentioned it might search to construct stronger ties with international locations resembling Vietnam and the Philippines in an effort to “keep away from unilateral dependencies by diversifying partnerships.”

For the second, nonetheless, Germany remains to be pushing for an funding deal that will strengthen the EU’s financial ties with China, reasonably than diversify them.

“Germany wants an settlement so as to preserve parity to the U.S. opponents that may obtain preferential entry beneath a U.S.-China deal,” mentioned Hosuk Lee-Makiyama, director of the European Centre for Worldwide Political Financial system (ECIPE).

Germany had hoped to strike such a take care of Chinese language President Xi Jinping on the September summit, which was presupposed to be held in Leipzig. It is wanting more and more unclear whether or not that will likely be doable.

Due to coronavirus restrictions, the summit will now be a video convention between Merkel, Xi, European Fee President Ursula von der Leyen and European Council President Charles Michel.

In the meantime, EU officers have been downplaying expectations. Sabine Weyand, the EU’s chief commerce civil servant, informed diplomats in spring that China was refusing to decide to a level-playing-field clause as a part of the deal. Michael Clauss, Germany’s ambassador to the EU and a former ambassador to China, admitted in Might that talks had been caught over market entry rights for European firms.

Commerce diplomats mentioned if the deal isn’t signed beneath the German presidency of the Council of the EU, which involves an in depth on the finish of the yr, it’s unlikely to be revisited anytime quickly.

Double commonplace

Whilst talks stall with China, criticism is rising a few perceived double commonplace: Whereas Germany has halted the ratification of a commerce settlement with the South American Mercosur bloc, citing Brazilian President Jair Bolsonaro’s deforestation insurance policies, Berlin has sought to protect the take care of China, insisting commerce ought to be saved separate from human rights.

Jordi Cañas, an MEP from the liberal Renew Europe group who leads the file on the Mercosur deal, has overtly complained concerning the discrepancy and mentioned it got here all the way down to the truth that residents appeared to care extra about Brazil’s rainforest than about individuals affected by human rights violations in Hong Kong or Xinjiang.

“In brief, a take care of China has no political price, whereas Mercosur does,” he mentioned.

“Germany should face a really uncomfortable query … whether or not rights of bushes are extra essential than rights for individuals” — Hosuk Lee-Makiyama, director of the European Centre for Worldwide Political Financial system

For Merkel, the stakes are excessive. Having put human rights on the again burner, she might not have incurred political prices at residence, however she has risked alienating democratic companions in Asia and the U.S.

Failure to strike a deal would depart little when it comes to financial achieve in alternate. “Germany should face a really uncomfortable query,” mentioned Lee-Makiyama, “whether or not rights of bushes are extra essential than rights for individuals — and why German compassion extends to forests however to not [people in Asia].” 

Barbara Moens contributed reporting.

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