China's huge economic pact: Germany is dangerously in a tight spot

The new Asian Free Trade Pact is China's answer to "America first". Globalization is being turned off its hinges. The German export industry is facing a problem.

"America first" is having an impact. While still-US President Donald Trump is turning around, shirking international agreements and, even after losing the election, tries again and again to praise the successes of its protectionist policies, Beijing is creating facts. Faster than expected, of all things, communist China is forging a free trade pact that is unparalleled in its economic importance. The largest free trade area in the world will bundle around 30 percent of world trade in the future – this has never been done before.

The consequences are obvious: the seemingly never-ending globalization is gradually coming to an end. She splits up. Two poles are emerging – one dominated by China, the other by the USA. While Trump turned long-term economic policy partners against him, Beijing is more clever. The Chinese are expanding their position as a major economic power by pulling relevant economies from the Asia-Pacific region to their side. The fact that even Japan is joining the new agreement underscores the relevance of the new pact. So far, the Japanese had always felt they belonged to the US-dominated Western bloc. And China's economic importance is likely to grow. It has long been agreed that Beijing will also bind the countries bordering the New Silk Road more closely to itself.

The German economy, whose weal and woe depends on successful foreign trade, brings this into a conflict of interests. For them, development has lasting consequences. As a result of the global corona pandemic, German exports have already suffered badly in recent months. When the coronavirus threat subsides at some point, the next challenge is: How will you master the sandwich position? How can German companies continue to do business with China without duping their western partners, especially the USA?

Diplomatic skills are required. More than ever, it is important to bundle European interests and to inspire further trading partners, also in Southeast Asia, for closer cooperation. There is a glimmer of hope: The harsh America-First policy is likely to be history by the end of January. If Trump's successor, Joe Biden, is more cooperative, that can help. But it won't be easy.