Scholz’s visit to Beijing risks souring relation with Western allies

Olaf Scholz says Germany 'will manage better this winter'

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German Chancellor Olaf Scholz was in Beijing on Friday for a one-day visit that has drawn criticism over China’s tacit support for Russia, lingering controversies over economic ties and human rights issues, as well as the timing of the trip. The visit came after Xi further cemented his authoritarian rule at a major Communist Party congress last month and as China continues to refuse to criticise Russia for its invasion of Ukraine.

Mr Scholz’s visit reflects the importance of Germany’s trade ties with China, the world’s second-largest economy, particularly in the auto and manufacturing sectors. Mercedes Benz alone sold 758,863 cars in China last year, more than in any other country.

The German Chancellor is the first leader from the Group of Seven leading industrialised nations to meet with Xi since the start of the COVID-19 pandemic, which was first detected in China in 2019, and the first European leader to visit China since Russia’s invasion of Ukraine, which Germany has strongly opposed.

The diplomatically delicate trip came as Germany and the European Union are working on their strategy toward an increasingly assertive and authoritarian China.

The visit also occurred amid rising tensions over Taiwan and followed a UN report that said Chinese human rights violations against Uyghurs and other ethnic groups in its Xinjiang region may amount to crimes against humanity.

According to Associate Fellow at the Henry Jackson Society, Darren Spinck, the German Chancellor’s visit to Beijing risks “splintering the West”.

Mr Spinck also warned Berlin’s historical dependence on Moscow could now shift towards Beijing, which could risk further fallouts with western allies should tensions soar over Taiwan.

He told “Olaf Scholz’s lone-wolf trip to Beijing risks splintering the West’s solidarity on countering the dangers of continued economic interdependence with the PRC. Washington has led a large-scale policy pivot away from China, with the US rapidly decoupling targeted supply chains, while the United Kingdom and the European Union have begun to minimise their economic dependence on the PRC.

“The CCP’s continued market distortions, economic coercion, supply chain disruptions, and threats to sea and air trade routes in the Indo-Pacific have led to an overall re-think of the benefits of interdependent economic ties with China.

“While the West has strengthened its economic defences and restricted CCP acquisitions of strategic sectors, Germany has swung open its doors to Chinese investment, allowing PRC entities to purchase the Dortmund-based Elmos Semiconductor SE and a 25 percent stake in the Tollerort shipping terminal in Hamburg.”

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He continued: “Berlin’s relations with the West will certainly sour because of this deviation from the Transatlantic investment restriction policy, as securing the semiconductor supply chain and sea trade routes is a key deterrent policy toward the CCP.

“Berlin and the German business community should realise significant reforms to China’s economic policies are unlikely following the CCP’s 20th National Congress. Beijing’s ‘dual circulation’ economic strategy promoting controllable supply chains and economic self-sufficiency through the insulation of China’s domestic market from the rest of the world will not lead to mutually beneficial trade.

“As Germany’s past dependence on Russian energy demonstrated, a continued economic dependency on Chinese commercial markets could lead to future inflationary shocks should tensions with the CCP worsen over Taiwan or other geopolitical flashpoints.”

Mr Scholz was accompanied by about a dozen top German business leaders, including the CEOs of Volkswagen, BMW, BASF, Bayer and Deutsche Bank, most of which are doing thriving business in China. That has some German observers questioning whether the country is becoming overly reliant on the Chinese market, just as it did with Russia for energy supplies.

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VW’s China head, Ralf Brandstatter, said Mr Scholz’s visit was important during “politically and economically challenging times like these.”

China is Germany’s most important trading partner, with 5,000 German companies active in the country and hundreds of thousands of German jobs tied to the Chinese market. More than 14 million jobs in China depend on business with European companies, Mr Brandstatter said.

Mr Scholz also met with Premier Li Keqiang, who nominally has responsibility for China’s economy.

At home, some have criticised Mr Scholz for normalising China’s behaviour. While his nearly year-old government has signalled a departure from predecessor Angela Merkel’s firmly trade-first approach, his trip follows domestic discord over a Chinese shipping company’s major investment in a container terminal in Germany’s crucial port of Hamburg.

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