Germany presents long-awaited strategy on China, stresses economic security

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German Chancellor Olaf Scholz attends the cabinet meeting of the German government at the chancellery in Berlin, Germany, Thursday, July 13, 2023. (AP Photo/Markus Schreiber)

BERLIN – The German government on Thursday presented a long-awaited strategy for relations with China that points to a “systemic rivalry” with the Asian power and a need to reduce risks of economic dependency, but highlights Berlin's desire to work with Beijing on challenges such as climate change and maintain trade ties.

The 64-page document approved by Chancellor OIaf Scholz's Cabinet builds on Germany's first national security strategy, issued a month ago. Scholz's three-party coalition had pledged when it took office in late 2021 to draw up a “comprehensive China strategy.”

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Germany has Europe's biggest economy and is the 27-nation European Union's most populous member. Its strategy is a balancing act; it is keen to maintain good ties with China, its biggest single trading partner in recent years, despite wariness over Beijing’s growing assertiveness and refusal to criticize the Russian invasion of Ukraine.

Foreign Minister Annalena Baerbock said that “for Germany, China remains a partner, competitor and systemic rival, but the aspect of systemic rivalry has in recent years increasingly come to the fore.”

“Anyone who listens to China knows with what self-confidence it will decisively influence the development of our world — more repressive at home and more offensive abroad,” Baerbock said. “China has changed and so our China policy must change too.”

In its strategy, the government said it is committed to ensuring that economic cooperation with China “becomes fairer, more sustainable and more reciprocal.” It noted that “whereas China’s dependencies on Europe are constantly declining, Germany’s dependencies on China have taken on greater significance in recent years.”

“It is not our intention to impede China’s economic progress and development," it said. "At the same time, de-risking is urgently needed. However, we are not pursuing a decoupling of our economies.” The message echoes that delivered in May by the Group of Seven leading industrial powers, including Germany.

The government said it expects companies “to keep a close eye on relevant China-related developments, data and risks.” It added that “we will hold confidential discussions with companies that are particularly exposed to China regarding their China-related risk analyses with a view to identifying concentration risks in good time."

Baerbock said that Germany must focus more strongly on its economic security. “Companies that make themselves dependent to a large extent on the Chinese market will in the future have to carry the financial risk more heavily themselves,” she said.

Germany is keen not to repeat mistakes it made before the invasion of Ukraine with Russia, on which it used to depend for more than half of its natural gas supplies. Berlin raced last year to end that dependency, while Russia eventually shut off supplies.

“We simply can't afford to do a second time what we had to do as a result of the Russian war of aggression, namely spending over 200 billion euros ($222 billion) across the whole of society to free ourselves from a dependency,” Baerbock said.

The new strategy made clear that Germany won't be deterred from doing business with self-governed Taiwan, which Beijing considers a breakaway province. “Germany has close and good relations with Taiwan in many areas and wants to expand them,” it said.

“The status quo of the Taiwan Strait may only be changed by peaceful means and mutual consent,” it said. "Military escalation would also affect German and European interests."

It also said that “we take decisive action to counter all analog and digital espionage and sabotage activities by Chinese intelligence services and state-controlled groups, whether these activities be in or directed against Germany.”

The strategy was released a few weeks after Scholz and about half of his Cabinet hosted a delegation led by new Chinese Premier Li Qiang, whose visit to Berlin was his first foreign trip since becoming China’s No. 2 official in March.

At that meeting, Scholz pressed China to lean harder on Russia over its war in Ukraine, while the two countries pledged to work together to combat climate change as two of the world’s biggest carbon dioxide emitters.

“It will not be possible to overcome the climate crisis without China,” the government's strategy said. “Its actions are decisive for the preservation of biological diversity and the environment.”

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