‘Evolution, not total overhaul’: China policy in a post-Merkel Germany

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This is the first in a two-part series on the China policies of the leading candidates to replace Chancellor Angela Merkel. Here Finbarr Bermingham looks at what is in store from the front runners.

Three weeks out from the German election and the area around Berlin’s Bundestag was astir with policy wonks trying to make sense of a political twist.

Vice-chancellor and Finance Minister Olaf Scholz had come from nowhere to be the front runner in the race for the country’s leadership. The stoic Social Democratic Party (SPD) veteran has been a fixture on the German political scene for decades and looks a shoo-in to be the first new German chancellor for 16 years.

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Yet he was described by one analyst as a “black box” on China, having avoided being grilled on foreign policy as the German media and electorate have focused on domestic issues.

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The SPD’s 15-page position paper on China from last year has been replaced by a couple of paragraphs in this year’s manifesto. On this point, the lack of communication could be an electoral asset for Scholz, observers say.

“The more you write about a topic, the more likely it is that inconsistencies will come up. Not talking much about China has maybe been the smartest way to discuss that issue,” said Pascal Abb, a China researcher at the Peace Research Institute Frankfurt.

Another China watcher keen for a shift in Germany’s China policy, is concerned that Scholz, who has channelled Merkel to be a continuity candidate, might bring no change at all.

“I’m beginning to worry he’ll be worse than the conservatives,” the analyst said, referring to a Merkel-led coalition that has nurtured close ties with Beijing over a decade and a half.

Senior officials and insiders from both the SPD and Christian Democratic Union suggest that whoever leads the next government, there is unlikely to be a radical change in China policy.

“Normally changes on foreign policy aren’t too big, they are more subtle. So from Merkel to Scholz, there’s not much change, the idea is always to have a united voice in Europe on China,” one senior member of the SPD said, asking not to be named.

“If Europe is strong enough to stand alone, it won’t be pulled into a bipolar world where it needs to pick a side.”

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SPD foreign policy spokesman Nils Schmid confirmed that there would be “an evolution rather than a total overhaul of China policy” if his party led the next coalition.

“For any future government in Germany, it will definitely not be the status quo. Any new chancellor, any new coalition will have to change course on China, because China has changed as well,” Schmid said.

“In Merkel’s China policy, there was a high amount of path dependency. We used to go to China with huge government delegations and prepare contracts for the private sector, for big companies, and I think this time is over.”

He said China’s dual circulation policies and drive for self sufficiency meant there was “less of the cake” for German companies in the future.

“The idea that another 300 million Chinese will climb up the ladder and become middle class, and consume high-quality goods from Europe is ill-fated, because they will consume more high-quality goods out of Chinese production lines,” he added.

Schmid said German businesses must become less dependent on China, and Germany and the EU should funnel their efforts into industrial policy to create competitive hi-tech sectors.

“This will be a push supported by Olaf Scholz, because he is a doer. He’s not a guy who wants to convey large visions for the future,” he said, adding the EU-China investment deal was “politically dead” and lacked the labour standards and public procurement elements of modern deals.

“The idea of the [Comprehensive Agreement on Investment] has become outdated. It would have been a great achievement five, seven years ago, but it smells like the old times.”

Asked how Germany could intervene in the dispute between Lithuania and China, Schmid suggested the creation of an EU “solidarity fund” to help countries facing economic coercion.

“As soon as China tries to bully around individual EU member states by sanctioning or restricting imports, we need some economic solidarity within the European Union,” he said.

But dialogue will still be a core approach. The SPD is proud of its 35-year relationship with the Chinese Communist Party and continues to meet regularly with the embassy in Berlin.

“It’s better to talk with someone than talk about them,” the party insider said.

While Scholz has said little about China in recent months, he has been a key figure in Merkel’s coalition cabinet and finance minister during China’s process of opening its financial sector.

“Beijing will miss Merkel very much but for them, Scholz is the dream candidate. If you study his career, he had very strong socialist leanings but in later years became very pragmatic,” said Gu Xuewu, director of the Centre for Global Studies at the University of Bonn.

“As mayor of Hamburg, he had very good ties with China, he carried out many joint projects with Shanghai in particular. His first instinct as chancellor would be to retain stability. During the election campaign, I don’t recall him making a single criticism of China.”

At a candidates’ debate in June, Scholz said he was “explicitly against any kind of decoupling fantasies”.

“Human rights, labour conditions and environmental issues need to play a role – it’s not about as much free trade as possible,” he added.

Unlike the Greens or Free Democratic Party (FDP), the SPD shows less desire to rock the boat.

“In terms of human rights, there is some very strong talk from the Greens and the FDP, but in reality we don’t have too much leverage on China. When it comes to human rights inside China it’s very difficult to influence things directly,” Schmid said, mistakenly adding that the EU had already sanctioned officials in Hong Kong.

The sanctions are on officials for alleged abuses in Xinjiang and the same misconception was apparent in Remscheid, a small city in the Ruhr Valley, during a discussion with CDU foreign affairs spokesman Juergen Hardt.

That both spokesmen should make this mistake shows how far down the priority list for German mainstream politicians Hong Kong has fallen.

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The CDU and its coalition partner the Christian Social Union are polling at their lowest level in history.

The CDU’s Armin Laschet has made his position on China clear. When the party launched its campaign in June, the Financial Times quoted Laschet questioning the logic of criticising China on human rights, saying Germany’s relationship with China was guided by strong commercial ties.

“Throughout the campaign, Laschet has reduced the debate over China policy to a simplistic choice between pursuing robust economic ties or speaking out on human rights and seeing those ties suffer. This is precisely how Beijing would like Germany and other countries to define their choice,” said Noah Barkin, senior visiting fellow at the German Marshall Fund’s Asia programme in Berlin.

“In reality, Germany faces a far more complex set of strategic choices. It has become abundantly clear in recent years that ever closer trade and investment ties with China come with risks – for national security, for economic security and for the values that Germany and Europe profess to hold dear. So far, Laschet has not demonstrated that he understands this.”

There are more hawkish elements in the party, led by former leadership candidate Norbert Roettgen.

“There is hardly any interest in China. I think that’s naive. On the other hand, I recommend realism. We should perceive what is,“ Roettgen told Frankfurter Allgemeine Zeitung in April.

Spokesman Hardt, however, comes from the party old guard and his views are more aligned with Laschet’s.

“He was made by Merkel, so he will be a Merkelist until the end,” said one party insider, who did not want to be named. “This dominant arm of the party has been unable to separate business and politics, but they do not understand that in China and other totalitarian regimes, these are not separate.”

Hardt’s view is based on the idea that China can still be changed through trade, suggesting that Berlin should follow Beijing’s lead and weaponise its market.

“China is very much depending on good export opportunities to the rest of the world, especially to the big markets, like us. Otherwise, they cannot fulfill their promise to their people [of economic development],” Hardt said.

“We always have to have in mind that the political system in China is not sustainable, and therefore maybe also not stable. I think we overestimate the stability of the political system in China.”

Like Brussels, Berlin should develop trade tools that can be used to cut off access to the German market in response to human rights abuses or economic coercion, he said.

“This strategy should have clear positions and messaging to Beijing that we want to increase economic ties with China, but also that we are able and willing to use this leverage in case China’s behaviour might become more aggressive,” Hardt said.

From this perspective, if Germany had been willing to use its market access as leverage, it could have discouraged China’s crackdown in Hong Kong, or the alleged human rights abuses in Xinjiang.

“There would be no radical changes, but we will be developing the weapons that we need to have in the arsenal in case that China acts in a more aggressive way,” he said.

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Whoever leads the government will have to do so in coalition, likely with the Greens and/or the FDP which both advocate a hard line on China over human rights and the economy.

“The Greens are more focused on human rights while the Liberals are big on Hong Kong. Both are correct, but they go about it as campaigners rather than politicians,” an SPD official said.

“I believe we will try to use the negotiations to smooth their positioning on that.”

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