Long journey, many topics
Chancellor Scholz hopes for Xi’s help with Putin
By Heike Boese
April 13, 2024, 9:05 a.m
On the longest foreign trip of his term in office, Chancellor Scholz has a large business delegation with him. In China it’s about barriers to cooperation and product piracy, but also about the war in Ukraine – and a possible alternative connection to Vladimir Putin.
For someone from Potsdam, Rüdesheim or Hanover, Berlin may seem like a big city. Even some people who live in Berlin believe this. But the term big city, like everything in life, is relative. When the Chancellor lands in Chongqing on Sunday morning to start his trip to China, he will be visiting a city that, with an official population of 32 million, is home to more than eight times as many people as the German capital.
Chongqing, a rapidly growing economic metropolis in southwest China, is roughly the size of Austria. It is currently the largest city in the world, which would be among the 50 largest economies in terms of gross domestic product if it were an independent country. The dimensions of this one city alone give an idea of the global importance of the huge empire – economically as well as geopolitically. Some say that when China sprains its ankle, the rest of the world walks with a cane.
Takes time for China: Chancellor Olaf Scholz.
(Photo: REUTERS)
Olaf Scholz is coming to China for the second time as Chancellor. When he traveled to Beijing in November 2022, he only stayed a few hours. The corona pandemic dictated the rules. Accompanying a large business delegation or visiting German companies was unthinkable at the time. Things should be different this time. Scholz, who, like his predecessors, is always the top sales representative for products and services “Made in Germany”, stays in China for a full three days. He has never taken so much time for a single country before. Scholz meets President Xi Jinping, takes part in a meeting of the German-Chinese Economic Committee with Prime Minister Li Qiang and visits several German companies.
Huge market, big risks
Geopolitically, Germany hopes that the Chinese will put more pressure on Russian President Vladimir Putin to find a solution to the war over Ukraine. President Xi Jinping is one of the few who still gets through to Putin. Scholz would also like to address the tense situation between China and the USA and the Taiwan issue. If China forcibly annexes Taiwan, which it sees as a breakaway province, this could trigger a global policy of sanctions against Beijing. Many companies, including German ones, would be directly affected and have already begun to adapt their risk management. Production is becoming more and more localized so that in the event of export and import restrictions, companies could serve the Chinese market with locally produced goods.
Even without geopolitical dangers, economic relations with China are tough. 1.4 billion people – that’s a huge market with many opportunities, but almost as many risks. If the Chinese economy gets a harmless cold, a perfectly healthy medium-sized company could die from it. Literally. Hardly the other way around. However, the European and therefore the German market is also important for China and the Chinese cannot afford to neglect it. Not yet, it has to be said.
As long as the so-called Global South is unable to balance trade relations with Europe, the Chinese need European markets. That may change at some point. But it’s not that far yet. Both sides still depend on each other. However, relations between China and Germany were better, at least on an economic level. Alexander Butek, the managing director of the China Chamber of Foreign Trade, complains that the talks have become somewhat dormant over the past four years and hopes that the visit from Germany will revive them.
Relationship problems in business
The German economy is represented by big names in Olaf Scholz’s government plane. The bosses of Siemens, Bayer, Mercedes, BMW, Merck, DHL and Thyssenkrupp are on board. They all hope that the Chancellor will address their concerns emphatically in the talks with the Chinese leadership. “The fact that the Chancellor is coming to China for so long and traveling to three cities is a strong sign of the normalization of relations,” summarizes Maximilian Butek, and continues: “We hope that Chancellor Scholz will make it clear to the Chinese leadership that the economy has problems, which, if not solved, will not lead to any further development of the German-Chinese success story.”
The list of complaints from German companies is long: increasing restrictions on the Chinese market, lack of legal certainty, unfair competitive conditions due to Chinese subsidies in their own economy and “buy Chinese” requests to public authorities, problems with the slow pace of product approval, the old issue of product piracy. All of this makes life difficult for the economy.
But not everything is always black or white; sometimes there are conflicting interests in Europe and Germany, for example when it comes to solar energy. “On the one hand, we want to reduce dependence on oil and gas and expand renewable energy. So we – like consumers – benefit from the cheap excess capacity in the solar sector from China, at least in the short term,” explains Alexander Butek. At the same time, cheap imports destroyed the European solar industry. The German car companies, on the other hand, are against EU procedures for electric cars because they still hope for good business in China.
The Chancellor will be received in the Middle Kingdom with a lot of silverware: a meeting with President Xi Jinping, military honors in the Great Hall of the People and the “Who’s Who” of the German economy in the government plane – the expectations of Olaf Scholz could hardly be much higher .