Germany and China: The New Special Relationship

What is motivating Germany and China to pursue their new “strategic dialogue?”

By Stephan Richter, August 30, 2012

Credit: vlad_star/Shutterstock.com

Takeaways



  • Both countries share a strong belief in the need for fiscal consolidation, a desire for balanced growth and strong doubts about the primacy of the financial economy.
  • China and Germany have a common belief that we are living in a world where all are sinners — and all need to strive for self-improvement.
  • Germany's engineering excellence resonates strongly with the band of engineers that makes up the Chinese leadership.




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Now that the German Chancellor is once again visiting China, accompanied by scores of her top ministers and an outsized contingent of CEOs, the world is beginning to take note.

The Chinese are extremely meticulous when it comes to symbolic moves and announcements. Every step they take, especially regarding expressing favor or disfavor, is calculated to the nth degree. Such is the hallmark of a highly refined, court-centered political culture that reaches back thousands of years.

Thus, when the two countries announced two years ago — in July 2010, during Angela Merkel’s fourth visit to China as German Chancellor — that that they would start a strategic dialogue, it was a significant event.

At the time, most of the world did not notice that the Chinese leadership had just anointed a nation other than the United States the privileged status of conducting a “strategic dialogue.”

Such announcements can easily be meaningless. Moreover, the Chinese favor arranging world affairs in such a manner. They like to maintain a multitude of different relationships simultaneously. The size of the country’s population naturally puts China at the center of the various overlapping country pairings.

The Chinese-German dialogue is certainly based on a warm personal rapport. That became readily apparent at its launch two years ago. Prime Minister Wen Jiabao, who had just met with his German counterpart in Beijing, accompanied her on a trip to Xian, China’s ancient imperial capital.

Better yet, Wen, ever the perfect host, welcomed Mrs. Merkel that day — which happened to be her 56th birthday — at her hotel for breakfast with a traditional Chinese birthday cake. And now that Wen is leaving his post as prime minister, Mrs. Merkel is coming to visit to pay her personal respect to him before the leadership change.

The personal dimension aside, what should the world make of the Chinese-German relationship?

Is it a crafty Chinese charm offensive to which the gullible Germans are succumbing?

A strategic summit of two mega-mercantilists?

The natural consequence of the economic confusion in present-day Europe?

Or no big deal whatsoever?

To be sure, the Chinese, for the time being, are tired of the constant European hoopla. Since China’s national interest is completely tied to stability of the world economy, they understandably want to talk to the key person on handling the euro crisis. Mrs. Merkel is just that.
But the French, British and the Americans would delude themselves if they believed it was just that one factor that attracts the Chinese to the Germans.

What unites the Chinese and the Germans is also far more than potential solidarity between two major countries that are criticized (unfairly) for pursuing mercantilist trade policies.

Both countries know that they have their problems and drawbacks — as virtually all nations do. But they also know that, rather than letting problems fester, they are consistently working on remedying them, whether by strengthening domestic demand or letting the renminbi appreciate.

And they know that playing unilateral blame games, as is frequently the case in the Untied States, is often just a highly transparent effort to deflect attention from one’s homegrown problems.

Beyond their common belief that we are living in a world where all are sinners and all need to strive for self-improvement, the Chinese and Germans share:

a strong belief in the need for fiscal consolidation,

a desire to achieve balanced growth in socioeconomic terms,

strong doubts about the primacy of the financial economy, and

a shared reliance on the manufacturing sector as a vital tool for economic growth.

In addition, the fact that the German economy has delivered engineering excellence for a century and a half resonates strongly with the band of engineers — not lawyers — that makes up the Chinese leadership. They see that as worth striving for.

That Mrs. Merkel trained as a scientist only adds further to the (mutual) respect. So does the fact that she — along with many of her country’s leading manufacturers — is focused on being on the cutting edge of green growth.

China’s interest is further tickled by the fact that Germany — having badly failed in that endeavor before — carries no big stick and rather seeks to convince more by the power of its example and performance than by grandiloquent speeches or the military.

Counterbalancing the U.S.

Another reason for the Chinese to raise Germany to an elevated partner status relates to counterbalancing the United States, which is a natural Chinese interest.

The two countries’ leaderships share a genuine concern that the political situation inside the United States is so disjointed that there are very real doubts about the continued ability of the United States to manage world affairs.

Even more worrisome is the question of whether the United States is actually able at this point to pursue a rational course on key domestic policy initiatives, such as fiscal policy.

But the Chinese are realists. Their ambition is not to unhinge the Germans from their alliance with the United States. Rather, it is about the hope that, by partnering with Germany, Chinese arguments regarding the future stability-oriented path of the global economy will have more weight in the G20 and other international forums.

Finally, the German-Chinese relationship also has a direct bearing on the current regional tensions between Tokyo and Beijing. The positive example of the Chinese relationship with Germany must be especially stinging to the Japanese.

That could also be precisely how the Chinese intend for it to come across. They know that Japan and Germany are both keen on overcoming a difficult legacy stemming from World War II.

Yet it is far too early to assess what the real, long-term impact of the strategic dialogue between Germany and China will be. But what is certain is that China’s motives span across a wide range of interpretations, reasons and interests.



China and Germany: a new special relationship?

The increase in trade between China and Germany during the last decade – and, in particular, in German exports to China – has exceeded all expectations. Germany is China’s number-one trade partner in the EU and China is the top foreign investment destination for German companies.

Based on this emerging economic symbiosis between China and Germany, a “special relationship” is now developing. But is this trade-based relationship damaging wider European strategic interests in areas such as foreign policy, energy and raw materials, climate change and human rights?

In a new ECFR policy brief, Hans Kundnani and Jonas Parello-Plesner argue that a special relationship between Germany and China is emerging:


  • China needs technology and Germany needs markets. Structural similarities and shared economic interests are key for this emerging special relationship which has further intensified since the economic crisis in 2008. But Chinese companies will provide greater competition in the future and trade conflicts are likely to intensify.
  • Germany’s approach to Chinais mostly driven by economic interests and the needs of its exporters. Germany’s foreign policy is based on the idea that economic exchange would lead to political and societal change in China.
  • China sees Germanyas the most useful country for its economic development. Germany is an attractive partner because of its prominent role in the EU, a similar strategic outlook - but also because of increased German dependence on China.

"The Chinese are thinking about whether a 'German Europe' is emerging from the euro crisis just as we are. They increasingly see Berlin as the place to go to get things done.” - Jonas Parello-Plesner

“Europe’s future relationship with China will be determined by Germany’s rapidly evolving bilateral relationship with China. The danger of this new special relationship is that it could undermine European strategic and economic interests” - Hans Kundnani
The authors argue that the emerging special relationship also matters for Europe and should be developed into a ‘real’ European strategic partnership with China:


  • The EU should identify where Europe can help Germany. For example, the EU can bring added value in developing better investment and public procurement rules and it should use its leverage in negotiating access to raw materials.




  • A joint EU approach towards China requires better coordination among member states and the involvement of EU institutions. The EU should also explore new formats for dealing with China.




  • EU member states should empower the European External Action Service (EEAS) to develop a new “top-down” approach to China. The High Representative should co-ordinate Europe’s China policy in areas such as trade and climate change.


Contact details:




Click here to download a copy of the ECFR policy brief: China and Germany: Why the Emerging Special Relationship matters for Europe

Key facts:

  • The strength of ties between the two was demonstrated in June 2011, when Wen Jiabao’s visited Berlin, along with 13 ministers, and held a joint cabinet meeting.
  • Nearly half of all EU exports to China come from Germany.
  • Nearly a quarter of EU imports from China go to Germany.
  • During 2010 Germany’s trade with China grew by 34% to $181 billion. China is now the second largest market for German exports outside the EU.
  • Chinese demand is especially high for German machinery and cars (eg China is the biggest market for the Mercedes ‘S’ Class large saloon cars, and Chinese officials are driven around Beijing in Audis).
  • Germany has tried to develop a strategic European approach to China, but its efforts have failed to bear fruit.


This paper, like all ECFR publications, represents the views of its author, not the collective position of ECFR or its Council Members.




Why China Prefers Europe to the United States




In a recent article, Professor Lanxin Xiang analyses current relations between China, the United States and Europe.



Not too long ago, members of the Chinese policy elite were still debating whether China’s ties with the United States would constitute their most important bilateral relationship. There was a consensus that China could become mostly trouble-free in its rapid rising to global power, as long as the U.S.-China relationship was stable. The idea that China should start pursuing a westward geopolitical strategy across the Eurasian continent toward Europe, and downgrade its heavy reliance on the geopolitical structures of the Asia-Pacific, was viewed in Beijing with much skepticism only a decade ago. But not anymore.
"Relations between China and the United States are today at a crossroads."




Relations between China and the United States are today at a crossroads. China is now the second-largest economy in the world and is projected to surpass the United States in the near future. China has also increased its political and military clout commensurate with its economic power. From the U.S. perspective — which is deeply rooted in the Westphalian conception of a world order based on balance of power and sovereignty — this relationship is a “Thucydidean trap,” which arises whenever a rising power challenges an established one. Thus the greatest problem is finding a realpolitik or power-backed framework in which both nations can work to avoid strategic miscalculations.

Naturally the U.S. approach has involved an emphasis on the military balance, while China’s leaders have proposed that China and the United States seek a new type of great power relationship. But nothing has come out of this idea, for there is hardly any meeting of the minds between the two leaderships. China is perceived in Washington as having a strategy for achieving one long-term goal: forcing the United States to cede its role as the dominant power in the Asia-Pacific. Beijing seems to calculate that its time has not yet arrived. To escape this inevitable trap, which usually leads to war, Beijing is seen to be biding its time while actively preparing for inevitable conflict.

"Despite the Euro crisis, mainstream European politicians and policy elites do not use China as a scapegoat..."






Europeans, however, rarely think this way. The European Union and China have no geopolitical conflicts at all, and neither side perceives the other as a long-term military rival. Instead, talk of cooperation, dialogue, and multipolarity in the new world order prevail over the Eurasian mainland. Despite the euro crisis, mainstream European politicians and policy elites do not use China as a scapegoat, and are hardly persuaded by the Thucydidean trap argument. The relative decline of U.S. influence in world affairs has provided conditions that are more conducive than ever to producing genuine understanding between China and the EU.

On his recent visit to Europe, Chinese President Xi Jinping intended to imply that his country rejects the traditional Eurocentric view of human history and has found intellectual allies in Europe. Additionally, China wishes to work with the EU to undermine the power theory of international relations, which is deeply embedded in the current system dominated by the United States. International rules and institutions are becoming critical to China’s foreign policy decisions, just as multipolarity and multiculturalism have taken root. The EU is the first multinational political entity to have successfully moved beyond the age-old system of national sovereignty.

Last but not least, Europe, unlike the United States, has become a genuinely secular but humane society, whose governing principle is close to Chinese traditional principle that stresses the promotion of familial and social harmony and justice. European democracy works far better than the U.S. model, as developments in Washington demonstrate. European social democracy tends to produce a more harmonious society than a laissez-faire United States could.

During his 11-day European tour, Xi dramatically elevated China’s all-dimensional strategic partnership with Germany, reiterated Beijing’s special ties with Paris, and strengthened the strategic partnership with the EU based on an important agreement signed in Beijing last November, the EU-China 2020 Strategic Agenda for Cooperation. It is not well understood in the West that the new leadership in Beijing considers genuine cultural dialogue as a top priority, similar to that between the Jesuits and the Chinese elite in the 17th century, interrupted by European Enlightenment. Xi made this point deliberately by paying an unprecedented presidential visit to UNESCO in Paris. His speech there emphasized the need for civilizational dialogues. “Civilizations are like water, moistening everything silently,” he said. “We need to encourage different civilizations to respect one another and live together in harmony while promoting exchange of mutual learning as a bridge of friendship among people, a driving force behind human progress and a strong bond to human peace.” For Xi, the EU has become an ideal partner with which China can engage in such dialogues.

Lanxin Xiang is a fellow at the Transatlantic Academy, an initiative of the German Marshall Fund of the United States in Washington, DC, and a professor of international history and politics at the Graduate Institute.