Merkel looks east as ties break between Germany and the United States

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While China has been criticized in much of the Western world, especially the United States and the United Kingdom, for not being more transparent about the origins of the coronavirus epidemic and, more recently , for its suspension of democratic standards in Hong Kong, the German government was more careful in its response.

When asked at a press conference last week if she would support the type of sanctions against China being considered in the United States, Merkel sidestepped the question.

“Ties with China are important,” said Merkel, adding “that they are of strategic importance.”

In fact, it is difficult to overstate the importance of China as an export market for German products, especially cars and machinery. Since Merkel took office as chancellor in 2005, German exports to China have increased fivefold to just under 100 billion euros last year. While some economists argue that China’s demand for German capital goods declines as its economy matures, the country remains a pillar of Berlin’s economic strategy and a key engine of growth.

When U.S. demand collapsed following the 2008 and 2009 financial crisis, Germany relied on China, which was largely spared the turbulence, to fuel its own rebound – a expansion which continued practically without interruption until the pandemic.

There is no doubt that Merkel has this story in mind as she seeks to protect the German economy in the current crisis, which, according to the European Commission, will lead to a 6.3% drop in production in the country this year. .

While China is also facing the economic fallout from the pandemic, German exporters are seeing early signs of hope. In June, for example, car sales in China rose 11%, the third consecutive monthly increase, after months of decline.

While the United States, still Germany’s largest export market as a whole, continues to struggle to contain the coronavirus epidemic, China is gradually resuming its activities.

Merkel’s reluctance to call China to crackdown on Hong Kong may seem at odds with her popular image as a leader guided first and foremost by her moral compass, a reputation she gained with its decision to accept more than a million refugees fleeing Syria. and other countries after the 2015 crisis.

In fact, the Chancellor’s current course is consistent with the way she has managed China over the past 15 years: expressions of concern about human rights and promises to continue “dialogue”, coupled with deepening trade relations.

Whether it’s oppression in Tibet, the detention of Uighurs, or the ubiquitous surveillance of Chinese leaders over its own citizens, Merkel has always put business first.

And business is going well. This is especially true for the largest companies (and employers) in Germany, from Volkswagen and Mercedes to the engineering giant Siemens.

Berlin’s priorities vis-à-vis China have also had a profound impact on the EU’s own approach. Even though Ursula von der Leyen has not hesitated to criticize China since becoming president of the Commission, she has taken care not to stray too far from the Berlin line.

“It is not possible to shape the world of tomorrow without a solid relationship between the EU and China,” she said last month after a videoconference with Chinese leaders.

Germany accounts for about a third of China’s trade with the EU, but China has also made significant breakthroughs in other economies, from France to Italy. The recent wave of bad press that Beijing has received about Hong Kong and the coronavirus should not hamper China’s push into the EU, even if rhetoric outside Brussels becomes more critical.

“China’s practical objective now seems to be to ensure that there are enough people in important positions in Brussels and in national capitals who are ready to compromise European values, such as fundamental freedoms, and to take into account China’s positions in order to maintain relations with China, ”said Michito Tsuruoka, associate professor at Keio University of Japan, in a recent analysis.

If Germany is an indication, it won’t be difficult. As some prominent German politicians, including Norbert Röttgen, a conservative who hopes to succeed Merkel as chancellor, oppose his course over China, the country’s business establishment is behind it. In the German electorate as a whole, Chinese politics have not been a problem.

A big headache regarding China for Merkel – and Germany – is Washington.

While many in Berlin are waiting for November (and begging President Donald Trump to lose), U.S. policy in China is unlikely to change much. Even many Democrats reluctantly approved of Trump’s uncompromising approach to China in trade and human rights.

There is also a bipartite unit on the issue of allowing the Chinese Huawei to install 5G networks. The Trump administration has threatened to limit intelligence sharing with Germany and other allies who allow the Chinese network provider to enter. So far, Merkel has stalled, arguing that while there should be higher security standards for the companies involved in 5G, the companies should not be shut down. downright.

In the meantime, Merkel’s main priority with China is to get back on track with a planned trade agreement with Europe. The objective of the proposed “investment agreement” is to improve conditions for European companies in China, a potential boon for German companies, which have been complaining for years about anti-competitive practices and theft of intellectual property in the country.

The coronavirus forced Merkel to postpone an EU-China summit scheduled for the German presidency of the Council of the EU in September, when she hoped to reach an agreement. However, she made it clear that she wanted to reschedule it as soon as possible.

“In the meantime, we will continue dialogue with China on all fronts,” Merkel said last week, citing everything from trade to human rights. “It is in the interest of Europe to work closely together.”

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