Germany: Olaf Scholz and the investment in Chinese …normality

The coronavirus pandemic has revealed many uncomfortable truths. One of them was the extreme dependence of Europe on China for critical health materials, such as protective masks, gloves, disinfection items.

“Never again” Berlin vowed, simultaneously announcing bold plans to repatriate European pharmaceutical industries.

Two years later, Mr Vladimir Putin he cynically punishes the Europeans – first of all the Germans – who considered him a reliable partner for the supply of (cheap) energy.

Today, the chancellor Olaf Solz, as if nothing is happening, invests in … normality with Beijing. Naivety; Adventurous? Nonsense; And in this case, unfortunately, History will give the answer.

Next Friday, Olaf Scholz, accompanied by an “army” of German businessmen, the size of Volkswagenher BMWher BASFher Merck, her Deutsche Bank and her Bayerwill become the first Western leader to visit Xi Jinping since his ceremonial renewal as head of the Chinese Communist Party.

The chancellor has even already sent his …credentials, approving in time, last Wednesday, the participation of the state-owned Chinese Cosco in the container management company of the port of Hamburgdespite the reactions everywhere.

“The chancellor’s China policy is naive,” wrote Der Spiegel magazine, pointing out that the 65 million euros the Chinese will invest in Hamburg is financially indifferent, “but politically it is a godsend for the Chinese leadership.”

He described Mr. Soltz’s decision – especially at this juncture – to open the door of his country’s infrastructure to Beijing as a “serious mistake”. China, emphasizes the German magazine, after the absolute dominance of Xi and the displacement of the reformers, “is preparing to rewrite the international rules”.

The Chinese leader’s vision is a nationalist China, which is not dependent on the West. Even the German leader’s visit to China is therefore interpreted by many as a gesture of submission.

In his decision to sell 24.9% of the port of Hamburg, where he was governor/mayor for many years, Olaf Solz had everyone against him.

“If Russia is the storm, China is climate change. The storm will pass, but climate change will remain,” warned the head of Germany’s intelligence service, Thomas Haddenwag, speaking to the Bundestag. In the same vein, the Foreign Ministry, in a memorandum to the cabinet, questioned the investment, stressing that it “disproportionately increases the strategic influence on German and European transport infrastructure as well as Germany’s dependence on China.”

With the memorandum, which referred to, among other things, the fact that China itself does not allow similar investments to Europeans, Robert Habeck’s Ministry of Economy and all the ministries led by the Liberal Party (FDP) agreed. Even more clearly, in a letter to the chancellery, the Ministry of Finance speaks of a “fatal economic and geopolitical message”.

Olaf Solz’s only line of defense in all this criticism is the argument of an “insignificant” proportion of Chinese in the Hamburg Port Authority’s Tollerort container terminal operator. Cosco was asking for 35% and in the end can only buy 24.9%, which does not guarantee it strategic influence, the government spokesman kept repeating.

Only a few hours later, the financial newspaper Handelsblatt, citing government sources, revealed that the takeover by Chinese interests of the microchip manufacturing company ELMOS, in Dortmund, is also ready to be approved. And in this case, German intelligence asked the government not to consent, citing the risk of dependence on China in the semiconductor market.

“The chancellor does not want to anger the emperor,” writes the Frankfurter Allgemeine Zeitung. German companies, however, with an eye on their production facilities, but also on the huge market, warn of the dangers of “China bashing” and are apparently not ready to give up the favorable conditions that brought them to China in the first place. “It is important that there is communication between the countries, that we listen to the ideas and opinions of both sides,” said VW CEO Oliver Blume, who will accompany Olaf Solz on his trip.

Indicatively, his company is the first car manufacturer in sales in China. Four out of ten cars sold in the country come from the VW Group, which employs more than 100,000 workers locally. “A Chinese company based in Wolfsburg”: this is how Spiegel satirically describes the historic car industry.

The pharmaceutical company Merck, with 4,600 employees in China, is also included in the chancellor’s mission and emphasized that it “is aware of the current geopolitical challenges, but also of the need for direct and constructive dialogue.” And BASF announced staff cuts and a reduction in production in Europe and strengthening its investment in China, with cost as the main criterion. Just as German industry in previous decades based its development on cheap Russian energy…

In any case, the visit to China, which will take place on the same day – supposedly due to the country’s strict pandemic containment measures – is for the federal government an extremely dangerous balancing act – inside and outside Germany. On the one hand, Olaf Solz seeks to strengthen business ties with the Chinese, while at the same time proclaiming the need for greater autonomy for his country and Europe.

As if this were not enough, while Berlin is seeking rapprochement with Beijing, the US is deepening its adversarial relationship with China, while the European Union is unable to decide what its best interests are. “It is clear that we do not want to be naive, but neither do we want to enter into the logic of a systematic confrontation with China,” said the president of the European Council Charles Michel, maintaining the ambiguity.

In addition, Berlin and Paris seem determined to “respond” to unfair competition measures, with which Washington seeks to persuade companies to leave Europe and settle in the US.

The French president described the situation succinctly: “We have China protecting its industry, we have the US protecting its industry and we also have Europe which is a bare vine.” Emmanuel Macron at least seems to realize that the other superpowers are also preparing for the end of globalization, the model on which the economic development of Europe and especially Germany has been based for so many years.

The question now is self-sufficiency, not synergy, and the US is probably ahead in this race, as it has oil, natural gas and the international reserve currency. Bonus: almost all the big digital tech companies are on US soil. Accordingly, China buys oil and natural gas from Russia and Iran, and has long since renounced Twitter, Facebook and Google. Its shortcomings are in mechanical engineering and chemicals – sectors in which the Germans excel, and therefore Beijing has every interest in linking their interests with it.

Former German ambassador to Beijing Michael Klaus, now Berlin’s permanent representative to the EU, said last week that “much depends on China’s next steps, especially with regard to Russia and Taiwan.” In other words, will Beijing continue to even tacitly support Russian aggression in Ukraine? Will he escalate his threats to Taiwan militarily? In such a case, how will the Europeans respond and how will the Chinese presence in Europe work?

In the German media, anger at the attitude of Olaf Scholz is overflowing: “A frivolous agreement would be naive and dangerous”, reports German Radio in its commentary. “Germany maintains Taiwan taboo and bows to Xi,” writes Welt. “Olaf Solz is not leaving China. Will Europe ever learn?” asks Politico.

Even German Federal President Frank-Walter Steinmeier, who has previously apologized for his mistakes in Berlin’s policy towards Russia, expressed himself in the same spirit. “Conclusions must be drawn from the mistakes of German policy towards Russia. We must no longer trust that trade will bring about the changes we desire.

“Economic relations do not automatically result in political rapprochement,” Mr. Steinmeier admitted, and called on the government to limit unilateral dependencies – and vis-à-vis China.

However, the chancellor will definitely remember to raise the issue of human rights violations in Beijing. Even so, however, no one is worried about spoiling the nice atmosphere…

RES-EMP

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