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During Premier Li Qiang's recent visit to Germany, Chinese and German leaders once again stressed the importance of close economic and trade cooperation. At present, some German media, think tanks and politicians advocate "de-risk" and reduce the risk of economic activities, but normal bilateral trade should not be exaggerated as "excessive dependence" on China, and then try to "decouple" from China, while ignoring other major risks that may pose a threat to the economy. This irresponsible "de-risking" is not desirable.
The author: Wolfgang Roehr, former Consul General of Germany in Shanghai, Distinguished Research Fellow, Center for German Studies, Tongji University
At the end of this month, the leaders of EU member states will gather in Brussels for the EU summit, and relations with China will undoubtedly be one of the topics to be discussed at the meeting. Not long ago, Chinese Premier Li Qiang paid an official visit to Germany and held the seventh round of Sino-German government consultations. This was followed by an official visit to France and attendance at the New Global Financing Compact Summit. Premier Li Qiang's first overseas visit to Germany and France underscores the importance of China-EU relations. His visit to both countries comes just days after U.S. Secretary of State Antony Blinken visited China for the first time.
German Chancellor Scholz is commendable for his pragmatic attitude in handling relations with China. At a joint press conference with Premier Li Qiang, Scholz stressed that vibrant economic relations are an important part of bilateral relations, and Germany has no intention of "decoupling" from China's economy, and both countries hope to benefit from bilateral trade and investment and maintain sustained economic growth. The consultation established a dialogue and cooperation mechanism on climate change and green transition, and the Sino-German Environment Forum and the third Sino-German High-level Finance Dialogue are scheduled for later this year. These mechanisms have laid the foundation for future close cooperation between the two sides. At the forum between Premier Li Qiang and representatives of the German business community, representatives of various enterprises reaffirmed their commitment to China.
Image source: China Daily
Scholz's clear support for Sino-German economic cooperation is reassuring, but there are still some in the German media, think tanks, and even within the coalition government who are critical of China. They see the economic consequences of the Russia-Ukraine conflict and fear a similar crisis could erupt in East Asia, jeopardizing global trade. Therefore, they propose to "de-risk" and make Germany and Europe less dependent on other countries, especially China.
It is true to reduce risk in economic activity, and any country in the world, including China, will do so, for example by seeking multiple sources of energy supply. But "de-risking" and the search for diversification should not be an excuse to hinder or even break relations with a particular country.
Premier Li Qiang made this clear, and said with a smile that it was not risky to take a German car, and it was not safe to use German equipment for examination in the hospital. He's right. Scholz turned to noting that German companies sometimes still have difficulties in entering the Chinese market and participating in fair competition, and reiterated his demand that China provide a "level playing field" for foreign companies. It is worth noting that the day after Scholz said this, the European Union Chamber of Commerce in China issued a report saying that according to a survey conducted in February-March this year, China has made some progress on this issue. Nevertheless, there is still a lot of work to be done in the future, including in the fields of medical and automotive technology.
Image source: China Daily
Those who advocate "de-risking" often exaggerate China's importance to the German economy. It is true that China has been Germany's most important trading partner for six years in a row, but isn't trade with China more important for the United States? The idea of equating trade simply with "dependence" is at least one-sided. While Germany's long-held slogan "change through trade" may not work, trade and investment do foster engagement and understanding between countries; In fact, if "change through trade" can be achieved, Germany, as one of the world's major trading nations, will probably have to worry about the undue influence of all its trading partners.
Moreover, from a country-by-country perspective, Chinese investment in Germany is not particularly high: from 2005 to 2022, China invested $102 billion in the UK, $61 billion in Switzerland, and only $54 billion in Germany. In 2022, investment from the US and the UK created more than 14,000 jobs in Germany, while investment from China created only 4,600. Therefore, the "danger" of Germany's over-dependence on China is actually very limited.
A responsible "de-risking" strategy must also take into account all major risks that could threaten the German economy. The possibility of supply chain disruptions due to a crisis in East Asia does need to be considered, but if the United States elects a new president in 2024 who is critical of Germany and the European Union, it will also pose a threat to the German economy, as Trump did before him.
Image source: Xinhua News Agency
But the bigger danger for the German economy may be a French president who distrusts Germany: in the first round of French presidential elections in 2022, far-right nationalist candidate Marine Le Pen received 23.2% of the vote, while Macron received only 27.8%. When Macron is unable to run again in the 2027 French presidential election, Germany faces a real risk of an adverse outcome – but so far few German think tanks have talked about "de-risking" from France.
Over the past year, the negative impact of the Ukraine crisis on the world economy has become increasingly apparent, especially on the three major trading partners, China, the United States and Europe. In this case, irresponsible "de-risking" can have devastating consequences. Therefore, China, Europe, and the United States should work together to increase trade and international investment, avoiding simply equating interdependence with "insecurity." In order to achieve this goal, the three parties should cooperate in accordance with the principles of respect for sovereignty, territorial integrity, non-interference in the internal affairs of other States and the return of all troops to internationally recognized borders in the Charter of the United Nations, with a view to an early end to the Ukrainian crisis.
Image source: China Daily
Responsible Editor | Song Ping Luan Ruiying
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Interns Zhuang Shuhan, Yin Kangjun, Qin Ke, and Chen Yushu also contributed
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