The Chinese Catalyst
Angela Merkel’s visit to China last week is her sixth and largest foray into the Middle Kingdom, and it serves as a reminder to many of how decisive the weight of China on the world stage is becoming. Accompanied by several of her Cabinet members and the CEOs of Germany’s largest companies, the chancellor wants to do business with what will eventually be the largest trading nation in the world − a nation that is also investing increasingly in her own domestic economy. The export-import numbers reflecting German-Chinese trade are still smaller than those within Europe or with the U.S. But the direct investments are also telling, as Germany’s role as China’s largest trading partner in Europe reveals. The presence of over five thousand German companies doing business in China is testimony to the trend, as is the €25 billion flowing from Germany to China last year alone.
With a new generation of leadership about to take over in Beijing, there is every reason to be paying attention to the next step in China’s effort to balance its global economic power with its growing domestic uncertainty. The challenge for the new Chinese leadership will be in addressing the rising needs of its own population and figuring out new ways to distribute wealth to hundreds of millions of Chinese consumers. This will also require overcoming a political problem reflected in the rising wave of social unrest among those impatient with social injustice and government corruption.
Germany sees an economic opportunity in China as a super exporter. Currently, Germany enjoys a trade surplus with China given the enormous demand for German products there. This would help explain the delegation consisting of the heads of Germany’s big league companies including SAP, Thyssen Krupp, BASF, and Siemens. German exports to China have exploded during the past few years, as has the interest China has taken in the stability of the markets in Europe. Chancellor Merkel spent some of her time with Chinese Premier Wen Jiabao trying to sooth his concerns about the ongoing euro crisis. Given the Chinese focus on Merkel and Berlin as the most important player in solving the debt and euro crisis, Merkel can have a strong impact on the readiness of the Chinese to invest more in Europe.
The danger of an economic slowdown in China and in Europe is a shared concern for both Beijing and Berlin. Yet the economic interests are not the only agenda issue Merkel has to discuss with the Chinese premier. There remain angry protests from German companies about constraints on them doing business in China, as well as frictions over copyright and patent issues. Journalists complain about censures and restrictions on their work in China. The continuing clash over human rights violations in China also remains a topic, even if the chancellor chose to discuss it more behind closed doors. The references made by Berlin to a “special relationship” with China generated criticism in the media just as journalists complained to Merkel during her visit about Chinese government intimidation and threats directed at them.
There is not much Germany can do to influence the domestic course of China under the new leadership about to assume control in Beijing. It is, however, increasingly clear that China can expect rough waters if the other two economic power centers − Europe and the U.S. − get into deeper trouble. China is vulnerable when it comes to not only the economic challenges at home, but also those in the United States, Japan, and Europe. China’s clout may be growing on the world stage, but it is going to have to be very aware of the frictions and tensions it can generate at home and abroad if it does not understand itself as a partner in the global commonweal of the challenges on this century.
In the meantime, the pursuit of common interests between Berlin and Beijing carries some concerns. If the future of Europe continues to be an uncertain path without achieving a coherent political and economic consensus, individual countries − like Germany − can revert to pursuing their own interests rather than those of a shared European Union policy. Beijing may choose to pick up the phone and dial Berlin rather than Brussels when it comes to dealing with problems, including those it has with the United States. That could seem unsettling to others back on the European continent and in Washington.
Relations with China offer an opportunity − but also a risk − for Germany, the EU, as well as for the U.S. If the fragmentation of Europe continues, there could be a break out over arguments and tensions among the EU members in dealing with a range of issues involving China, be it flash points like Syria or longer ranged issues like human rights or global warming. Without a common platform, the temptation to seek national advantages can grow. With so much uncertainty ahead, there can be catalysts for cooperation, competition, and collisions in the pursuit of resources and influences over them.
That also can also open up vulnerabilities across the Atlantic. Given the choice facing the American voters in November, changing perceptions of China will be caught up in the increasing efforts to get control of the rising American deficits, in which China has a starring role as the largest foreign U.S. creditor. Added to that are tensions over geopolitical flash points and the tendency in both China and the U.S. to portray each other as military rivals in the coming decades. U.S. Secretary of State Hillary Clinton’s visit this week with Chinese officials over a dispute in the South China Sea signals America’s increased attention to China’s movements. The U.S. will need to maintain a delicate balancing act between tensions with China and China’s rise on the global stage. However, should there be increased levels of confrontation between the U.S. and China due to their global power plays, there could also be some movement in Beijing toward putting their enormous foreign exchange reserves in a more “diversified” portfolio. The ripples of these developments can have a serious impact on transatlantic relations in a fragmenting framework of interests and perceptions of threats.
In a world in which the international community is looking at a new and changing equation of power and influence in this century − which will not look much like the last one − China is a catalyst for new thinking on both sides of the Atlantic. This new approach will involve not only greatly considering China, but also focusing on ourselves and about the future course of the West.
Want to know more on Germany-China relations?
Germany-China: A new special relationship, by Stephan Richter, Gulf News