Germany’s China-friendly approach is continuing under Olaf Scholz

As Angela Merkel prepares to write her autobiography, 'explaining her key decisions in her own words', her successor has his hands full dealing with the decisions she did not make. Germany’s new chancellor Olaf Scholz has taken captaincy of a ship on a course to nowhere in particular. He is beginning to find out just how difficult it is to steer his predecessor’s middle course between China and the West. Sooner rather than later, some difficult decisions will have to be made as their political world drifts too far apart to be navigated in tandem from Berlin.

Admittedly, this dilemma is not of Scholz’s making. Over the course of Merkel’s chancellorship, trade ties between Germany and China have become so close that they are now very difficult to untangle. Imports from China doubled and exports to it nearly tripled over the last 12 years. At a trade volume of €213 billion (£180 billion) last year, China was Germany’s biggest trading partner for the fifth year in succession.

Unsurprisingly, Beijing is keen to keep business as usual with Germany’s new government. Chinese president Xi Jinping was one of the first world leaders to congratulate Scholz following his inauguration, calling for a continuation of the 'win-win cooperation' their two countries had achieved with Merkel at the helm. China's prime minister Li Keqiang went even further, calling Sino-German ties 'one of the most important bilateral relationships in the world.'

Despite China’s appalling human rights record and its expansionist policy towards Hong Kong and Taiwan, Germany’s new chancellor is happy to continue Merkel's work in cosying up to China. In his first telephone conversation with Xi, Scholz failed to press him on any problematic issues; instead he assured him that 'Germany wanted to continue to work with China in a spirit of mutual respect and trust.' Diplomatic insiders claim that Scholz reassured Xi of a continuation of Merkelian policy even before he officially took over as chancellor. He is said to have promised to work towards lifting the suspension of the EU-China deal as well as keeping his contentious coalition partners at bay. He then met with Merkel to discuss how best to preserve her foreign policy and sent his negotiator into coalition talks with the brief to 'avoid the worst case scenario' regarding China.

It isn't only political considerations that have shaped Scholz's China-friendly approach. Germany's automobile and machinery industries combined account for well over half of Germany’s exports to China; this surely explains why many German business leaders in these areas have nothing but praise for China. Siemens boss Roland Busch has recently called for a 'respectful exchange' with the People’s Republic which 'has every right to be confident. In the last 20 years it pulled one billion people out of poverty and established a veritable middle class.' Politicians who represent regions with strong economic ties to Beijing, like the Liberal Hans-Ulrich Rülke in Baden-Württemberg, agree that the new government 'must not forget what an important economic and trading partner the People’s Republic of China is.'

But while Germany’s new chancellor and the country’s business representatives may not have sleepless nights at the thought of deepening ties with a country that is accused of committing genocide on its own soil, Scholz’s Green coalition partners do. Having only very narrowly won the election, Scholz had to compromise to get the Greens and Liberals to join him instead of making a deal with his rivals of Merkel’s CDU/CSU. The result is a coalition agreement that obligates Scholz to 'clearly address China’s human rights violations, especially in Xinjiang.'

It's no surprise then that the newly appointed Green foreign minister Annalena Baerbock has been making distinctly hawkish noises. While Scholz himself has still not confirmed whether or not he will travel to next month's Winter Olympics in Beijing, Baerbock has said that: 'Despite being a huge sports fan, I will definitely not travel to the Olympics this time.' She has consistently advocated for a harder stance towards China and even directly criticised Merkel’s course of non-confrontation. In an interview with the German newspaper, Taz she said: 

'Eloquent silence is not a durable form of diplomacy, even if some may have seen it as such over the last few years.' 

Baerbock has demanded an import ban of goods made with forced labour and a continued suspension of the controversial EU-China Investment Agreement. Will she get her way? Scholz’s solution to the conflict with his coalition partner is to dress up deepening ties with China as a Green Deal. He wants to work with China and the G7, of which Germany holds the presidency for 2022, to promote Green growth. Business leaders have joined in the chorus and even suggested that an end to Germany’s efforts to go carbon neutral was nigh if the country lost its imports of solar panels from China. Given that China is responsible for nearly a third of global emissions and has tied limits to environmental commitments directly to economic growth, this explanation won’t wash with the Greens.

Pressure on Scholz is also coming from his Western allies, particularly the United States. The coalition treaty places high value on the importance of Germany’s transatlantic ties and the US remains Germany’s biggest export destination. Amidst existing tensions over the controversial Nord Stream 2 gas pipeline and insufficient military expenditure under Nato guidelines, relations between the two states are already strained. While Germany has shown some international commitment by sending its first warship in almost two decades into the South China Sea to help curb Chinese territorial ambitions, US president Joe Biden is likely to demand more than small-gesture politics from Merkel’s successor. European nations like Lithuania are also set to look for German support when bullied by China going forward.

Scholz may be happy to continue walking a difficult diplomatic tightrope when it comes to China, but it is very likely that the US, Europe, Britain and domestic coalition partners will not afford him the same patience that Merkel was able to exploit for so long. The interests of China and the West are diverging at rapid pace, knocking down the lucrative fence Germany is sitting on. Scholz will have to make some difficult decisions when the status quo is no longer an option.