The battle in Berlin over China is killing Europe -- China Boss update 11.04.22
Update
What happened.
“German Chancellor Olaf Scholz arrived in China on Friday with a team of top executives, sending a clear message: business with the world’s second-largest economy must continue,” CNN’s Michelle Toh and Anna Cooban wrote.
Toh & Cooban, CNN:
Joining Scholz for the whirlwind one-day visit is a delegation of 12 German industry titans, including the CEOs of Volkswagen (VLKAF), Deutsche Bank (DB), Siemens (SIEGY) and chemicals giant BASF (BASFY), according to a person familiar with the matter. They were expected to meet with Chinese companies behind closed doors.
The group entered China without undergoing a mandatory seven-day hotel quarantine standard for most arrivals. Images showed hazmat-clad medical workers greeting Scholz’s jet at Beijing’s Capital International Airport to test the official delegation for Covid-19 upon their arrival.
Why it matters.
Battle in Berlin over China policy
Videos of Scholz’s visit show him receiving “red carpet treatment” and smiling as he stood alongside Chinese leader Xi Jinping in the Great Hall of the People near Tiananmen Square. But not everyone back in Berlin was happy about the trip.
Scholz’s decision to take a “coalition” of German business interests just days after the CCP’s Party Congress - which saw Xi fill his top posts with loyalty promotions and double down on policies that will very likely violate international rules and norms - drew scathing criticism at home and abroad.
But China Boss thinks Scholz really stepped in der Scheiß prior to his photo-op with the Chairman - when he approved a Chinese state-owned shipping company’s acquisition of a stake in Germany’s largest port over the objections of governing coalition members. Germany’s foreign ministry “was so upset over the approval that it drew up a note on the cabinet meeting documenting its rejection,” according to Reuters.
The investment "disproportionately expands China's strategic influence on German and European transport infrastructure as well as Germany's dependence on China", the document, seen by Reuters, says. It points to "considerable risks that arise when elements of the European transport infrastructure are influenced and controlled by China - while China itself does not allow Germany to participate in Chinese ports".
In the event of a crisis, the acquisition would open up the possibility for China to politically instrumentalise part of Germany's as well as Europe's critical infrastructure, it says. The economy ministry and the four ministries led by the liberal Free Democrats joined in drawing up the note, according to the sources.
Another test for Europe after Brexit
If Berlin isn’t happy, then Brussels is confused. Communications put forward by the European Parliament take a very tough line on Beijing, especially on Taiwan, Xinjiang and Hong Kong issues, and once Xi began diplomatically supporting Putin’s war, opinions in the European Commission also seemed to harden.
“There is a little bit of shock across the continent [over the Scholz trip,” Bonnie Glazer, director of the Asia Program at the German Marshall Fund (GMF), told the Washington Post. “And this serves China’s interest in dividing Europe,” she added.
Noah Barkin, a senior visiting fellow at GMF and managing editor at Rhodium Group, said he was most worried about Scholz “flying solo” and taking the German approach to dealings with Beijing in utter disregard for Europe’s attempt to formulate “a more coherent, clear-eyed [China] policy.”
Europe’s hopes of forging a more coherent, clear-eyed policy toward China depend first and foremost on Germany. If the country with the closest economic ties to China is prepared to forego some of the benefits from its privileged partnership with Beijing, other European countries will follow. But if Germany is seen to be pursuing its own economic interests with China, others will have little incentive to make sacrifices of their own. Over the past few weeks, Germany’s Chancellor Olaf Scholz has shown which path he plans to pursue and it has not been a pretty sight. His decision to travel to Beijing with a dozen German CEOs so soon after the Chinese Communist Party Congress that confirmed many of the worst fears about President Xi Jinping’s China was bad enough. But days before his departure, Scholz chose to ram through approval of Chinese shipping giant COSCO’s bid for a stake in a Hamburg port terminal over the objections of his coalition partners, Germany’s intelligence services, the European Commission, and Berlin’s key partners, from Paris to Washington.
. . . Scholz is gifting Xi a geopolitical victory without much in return. And he is voluntarily sacrificing whatever leverage his government might have had with China. He may not realize that but members of his own government—some of whom have been working diligently for months on a new, tougher China strategy—are furious. “As long as the German chancellor doesn’t buy into his own government’s China strategy, then it is worthless,” one German official fumed. “The Chinese can see the divide in Berlin and Europe, and believe me, they will find a way to exploit it. It is absolutely fatal. And what is so stunning is that Scholz has done all of this of his own free will.”
And this is what Barkin thinks of an apparent effort made by Scholz to exclude France’s Emmanuel Macron from joining him in Beijing - the slight made French news headlines, and Paris is, reportedly, furious over it:
Noah Barkin, German Marshall Fund:
“Scholz wanted assurances that his visit would not be one of a series of visits by European leaders,” one European diplomat who was briefed on the matter told me. “On his first trip to Beijing, he wanted to be treated with the special respect that he believes a German chancellor deserves.” His trip to China was back on the agenda a week later, but only after Berlin was sure that Scholz would be the only EU leader heading to Beijing in early November. This may help explain the French fury that led Macron to abruptly cancel a Franco-German cabinet meeting that was due to be held last month in Fontainebleau and then refuse to hold a press conference with his German counterpart when the two met in Paris last week. “We have no idea what the Germans are up to on China,” a French diplomat told me. “We had hoped to send a joint message. The Germans didn’t want that.”
Choosing China
What worries me most about this incident is that Scholz appears to have been willing to lay bare Franco-German tensions over trip planning with Beijing. Chinese diplomats have been trying to play Berlin and Paris off against each other for months. And it appears that they have now succeeded, with an assist from Germany’s chancellor. When taken together with Scholz’s decision to force through the COSCO deal, the hubbub around the China trip raises questions about his strategic compass. In recent weeks, Scholz’s approach to China has been likened to that of Merkel. But, despite all her geopolitical blind spots, I am not sure she would have chosen China over France or Europe. That, by design or accident, is what Scholz appears to have done here.
Emphasis added.
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Have a great weekend.
