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The German government has formulated a new strategy on China, publishing a review of the countries’ relationship acknowledging that economic ties with China have been overemphasized. The challenge is whether Germany will be able to actually reduce its economic dependence on China, including in the activities of German companies.
This is the first time that Germany has analyzed a specific country from the perspectives of politics, the economy and security, among other fields, and compiled a strategy on the country as a comprehensive policy document.
In response to China’s hegemonic moves over the past few years, Germany has been forced to rethink its conciliatory policy toward China, which lasted through the previous administration. It is significant that a major European power has faced up to the threat posed by China and has stepped forward to revise its policy.
Germany’s “Strategy on China” notes that the administration of Chinese President Xi Jinping “is attempting in various ways to reshape the existing rules-based international order.” And it clearly states that China’s relationship with Russia “is an immediate security concern for Germany.”
Russia’s invasion of Ukraine has fundamentally shaken the European security regime. The proximity of China and Russia has heightened concerns that Russia, with China’s support, could expand its aggression into Eastern Europe and elsewhere.
Europe has so far tended to be less aware of threats posed by geographically distant China. However, through China’s intimidation of Taiwan and the situation in Ukraine, it appears to have moved closer to the positions of Japan and the United States.
In its “Strategy on China,” from the perspective of emphasizing economic security, Germany has indicated its policy of preventing the outflow to China of advanced technologies that can be used for military purposes, and of “de-risking” so as not to be overly dependent on China for the procurement of critical raw materials.
Germany relies on imports from China for two-thirds of its supply of rare earths, which are essential for solar battery panels and electric vehicles. Berlin will be tested as to whether the nation will be able to diversify its supply chains by expanding its import sources to Australia, Brazil and other countries.
On the other hand, it will not be easy to change the structure in which German firms derive enormous profits from the huge Chinese market. More than 5,000 German companies have entered the Chinese market, and China accounts for 30% to 40% of the sales volume of German automakers.
The strategy includes no in-depth description of how to deal with this problem.
It is a common challenge faced by the governments of Japan, the United States and European countries to pressure China to comply with international rules while also minimizing the negative impact on their own companies and economy.
How Germany will build relations with China based on its strategy will have an impact on other European countries such as Britain and France. The hope is that Germany will promote initiatives that will serve as a model for them.
