Is China’s ‘One Road’ an Autobahn?

Encouraged by the “Go Out” and “One Belt, One Road” policies and a chronic cash surplus, Chinese overseas economic activity in the last decade has not only increased but shifted “upstream in the value chain,” to quote Albert Ng, Managing Partner of Greater China. This has proven a boon to recession-prone EU countries. As recently as 2004, EU-China trade accounted for less than € 200 billion and Chinese investment in Europe was almost nonexistent. Now China is the EU’s second largest trading partner, just behind the United States, and its leading supplier of imports. The EU is also China’s largest trading partner and, though trade is significantly unbalanced, EU exports to China support more than 3 million jobs in Europe. In a trend likely to become more marked after Brexit, Germany has become China’s preferred partner within Europe. While the German-Chinese relationship has had varied—and not always positive—dimensions, under the current Merkel administration, economic and “strategic” ties have soared. Germany accounts for 50% of EU exports to China and Chinese investment in Germany in 2016 is nearly ten times what it was in 2015 and roughly 30% more than the previous high year of 2014.

This raises potentially complex and sensitive issues for what might be called the U.S.-EU-Germany-China rectangle (a term adapted from what David Shambaugh called “the strategic triangle”). The U.S. approach to the “rise of China” is more circumspect than that of Europe or Germany. Particularly in the strategic dimension, Washington has followed a more confrontational approach than that of Berlin; on human rights, a more public one, and on economic engagement, more skeptical (e.g. on the Asian Infrastructure Investment bank). This project is exploring the implications of German-Chinese ties for the role of the EU as a mostly soft power wielding global actor and for the often stressed transatlantic relationship between the United States and the EU and the United States and Germany. In September, 2013, the Guardian asked, “When it comes to China, which side is Germany on?” While somewhat overheated, it is worth exploring the nuances and impact of a rapidly changing German-Chinese engagement.

Ronald H. Linden is a DAAD/AICGS Research Fellow for September and October 2016. He is Professor of Political Science at the University of Pittsburgh and has just completed five years (2011-16) as Director of the European Studies Center, a federally funded National Resource Center and a Jean Monnet EU Center of Excellence. He was Director of Pitt’s Center for Russian and East European Studies at Pitt from 1984-89 and 1991-98, and served from 1989 to 1991 as Director of Research for Radio Free Europe in Munich, Germany. He is engaged in a yearlong project focusing on the global implications of the changing relationship between the EU and China. Dimensions include investment and trade relations, the impact on EU as a normative and foreign policy actor, and transatlantic ties.

October 27, 2016