Business Comes First – Chancellor Scholz’s Visit To Beijing Shows Germany Needs China More Than Ever

Business Comes First – Chancellor Scholz’s Visit To Beijing Shows Germany Needs China More Than Ever



German Chancellor Olaf Scholz’s official visit to Beijing on Friday (Nov 4) marked the first time a leader of the Group of Seven (G7) nations rubbed shoulders with Chinese President Xi Jinping after the 20th National Congress of the Communist Party. His arrival was also the first by a leader of the G7 since the start of the Covid-19 pandemic in 2019.



Xi Jinping was re-elected for a third, 5-year term at the Chinese Communist Party Congress on October 22, inviting criticism from the Western nations, particularly the United States. Washington has accused Beijing – under the leadership of Xi – of trying to undermine U.S. alliances, global security and economic rules. Activists, meanwhile, were accusing Xi government of abusing human rights.



Essentially, Scholz’s visit was not only a recognition of Xi’s legitimacy and authority, but also demonstrated that Germany did not really bother about human rights. The German Chancellor’s visit has come under extreme scrutiny in the West, with many in Europe saying that it sends the wrong signal – a lack of a unified voice within the bloc on how to deal with Beijing.



Before his visit to China, to pacify the West, Scholz said during an interview that “we will not ignore controversies”, including respect for civil liberties and human rights in the Xinjiang region. But Beijing similarly has warned before the chancellor’s visit that China is against using human rights discussions as a pretext to interfere in China’s internal affairs or smear and discredit China.



In fact, ahead of the visit, Chinese dissidents and the World Uighur Congress had called on Scholz to cancel his trip. However, as Germany slides towards recession, all those human rights rhetorics have to take a back seat. Scholz’s trip, accompanied by a batallion of top executives, was sending a clear message that business with the world’s second-largest economy is more important.



Not only Chancellor Scholz met with both Xi Jinping and Premier Li Keqiang, his delegation included 12 German industry titans, including the CEOs of Siemens, Volkswagen, Deutsche Bank and chemicals giant BASF. China is a major market for German goods, from machinery to vehicles made by Volkswagen, BMW and Mercedes-Benz.



It was only last month when the boss of Germany’s BASF warned against “China bashing” and said the chemicals giant would push on with major investments there. Despite concerns about growing economic dependence on China, the same way Germany relied on Russian oil, CEO Martin Brudermueller insisted BASF’s expansion plans in the country will proceed, where it is building a €10 billion (US$10 billion) chemical complex.



In September, BASF inaugurated the first plant of its new Zhanjiang Verbund site in the province Guangdong. The plant – the third largest Verbund site of BASF globally – will provide a capacity of 60,000 metric tons of engineering plastics compounds per year in China for customers, particularly in the automotive and electronics industries.



German technology group Siemens, meanwhile, intends to further increase investments in China, in particular in the digital industries division, in a plan called “Marco Polo”. CEO Roland Busch said the goal is to bring Siemens “on par with Chinese competition” because the measures planned so far are not enough to beat the local champions.



The high-level business delegation was given special privileges, where they entered China without undergoing a mandatory 7-day hotel quarantine SOP (standard operating procedure) for most arrivals – suggesting that Beijing too wanted to maintain a close economic relationship with Germany, the largest economy in the European Union.



As the U.S. tries to decouple from China, it has been pressuring allies in the E.U. bloc to also do the same with the Chinese. During his meeting with Xi, however, Scholz said China is an important trading partner for Germany and for Europe as a whole. The chancellor said Germany firmly supports trade liberalization, supports economic globalization, and opposes decoupling.



Crucially, Scholz said – “A multi-polar world is needed in which the role and influence of emerging countries can be taken seriously. Germany opposes bloc confrontation, for which politicians should be held responsible. Germany will play its role in furthering Europe-China relations”. That statement is a slap in the face of the U.S. because it means Germany welcomes more than one dominant force.




But the German leader isn’t only under pressure from Washington to quit China. Some in Scholz’s coalition government aren’t very happy about Germany’s ties with China. There has been a fierce debate in Germany, partly due to warnings and the instigation of the U.S., over a bid by Chinese state shipping giant Cosco to buy a 35% stake in the Hamburg port terminal.



Beijing, of course, was not impressed with Washington, saying the U.S. interference is symptomatic of its practice of coercive diplomacy. It says America has “no right” to interfere in Chinese cooperation with Germany. Scholz ultimately defied calls from six ministries to veto the sale over security concerns. Instead Germany reduced to stake to 24.9%, and approved the sale of the terminal to Cosco.



By reducing the stake under 25%, the deal no longer requires Cabinet approval. In truth, the fragile German government is at risk of collapse – the Green Party and Liberals adopt the harsh rhetoric on China and its human rights, while Scholz prioritizes economy. If the E.U. and Germany were to decouple from China as the U.S. wanted to, it would lead to a “huge GDP losses” for the German economy.



After severing ties with Russia (its former main supplier of natural gas), Germany is not only desperate for the commodity, which it could import from China (who actually resells the Russian natural gas), but also desperate to increase its export market. Last year, China was Germany’s biggest trading partner for the sixth consecutive year – a combined €245 billion (US$242 billion).



It isn’t easy to decouple from the Chinese market, which was responsible for 80% of imported laptops and 70% of mobile phones. Germany automobile, chemical and electrical industries are also depend on Chinese trade. For example, China made up 40% of Volkswagen’s worldwide deliveries in the first three quarters of this year alone.



Even with the stringent “zero Covid” restrictions, China remains unrivaled in terms of market size and market growth opportunities for many German companies. While some have argued that Scholz’s solo visit to China could weaken his hand in talks with China’s leaders, or that the German chancellor could be played by the Chinese, the fact is Germany had already been played by the U.S.



It has been exposed that America sidekick – Britain – was involved in the attack of not only the Russian Black Sea fleet in Crimea using Ukrainian drones, but the same “British specialists” were also responsible for blowing up the Nord Stream 1 and 2 pipelines on September 26. While both Washington and London have denied the terror attacks, the proof showed otherwise.



On Oct 30, it was revealed that former British Prime Minister Liz Truss had sent a text message saying – “it’s done” – to none other than the U.S. Secretary of State Antony Blinken, just 1-minute after the Nord Stream attack. Kim Dotcom, a self-proclaimed “Internet Freedom Fighter”, said the text message is the reason Russia believes the U.S. was involved.



Almost immediately after the Nord Stream 1 and 2 were blown up, a former Polish Defense Minister, Radek Sikorski, has set tongue wagging. A fierce critic of Putin, Sikorski, who was Minister of National Defense from 2005 – 2007 and served as Deputy Minister of National Defense and Deputy Minister of Foreign Affairs, blasted a tweet, saying – “Thank you, USA”.



Indeed, after the Nord Stream pipeline sabotage, France and Germany, have accused the U.S. of overcharging for liquefied natural gas (LNG) and using the war in Ukraine and the energy crisis to turn a profit and make Europe dependent on its gas. The European countries are paying 4-5 times more from the U.S. and other so-called “friendly” gas suppliers.



Like it or not, China has become too powerful for Germany to blindly follow the United States. Not only Beijing plays an important role in climate change and food security, but also in key industries from shipbuilding to electric vehicles, not to mention its influence on Russia. Scholz needs China’s cooperation more than his predecessor Angela Merkel ever did.