Berlin Cable

Mar 23, 2021

Under the Influence

For too long, Germany has been in awe of China’s economic might. That has let the country turn a blind eye to how the newly assertive global power is making its presence felt.

Chinese President Xi Jinping and German Chancellor Angela Merkel
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To explain its often ambiguous, if not outright soft policy on China, the German government likes to point to simple economic statistics. When Angela Merkel entered the chancellery in 2005, exports to China accounted for less than 3 percent of all German exports, and imports stood at a little over 6 percent. Sixteen years on, the share of exports has trebled and the share of imports almost doubled.

What’s more in the midst of the COVID-19 pandemic, just as in past crises like the euro crisis, it is business with China that is bailing out the German economy. New figures for 2020, published at the beginning of March by Germany’s statistics office, Destatis, showed that China, for the fifth time running, was Germany’s “most important trading partner” when it comes imports as well as imports and exports combined, while the United States remained the top export destination: goods worth €104 billion went West across the Atlantic, while those going East to China were worth €96 billion. The COVID-19 pandemic’s economic repercussions, however, meant that exports to China decreased only by 0.1 percent, whereas exports to the US contracted by a hefty 12.5 percent.

In Thrall of Easternization

A sign of the times? The Merkel government certainly thinks so. “Easternization,” the economic and consequently political power shift from West to East, has been felt nowhere more keenly than in Germany’s corridors of power. This alone seems to trump all other factors, including the Federation of German Industries (BDI) warning as early as January 2019 that China had turned into “a systemic competitor,” and demanding Berlin and Brussels take steps toward strengthening Europe’s position.

When Merkel last visited China (an annual event until COVID-19 struck) in September 2019, her entourage pointed to the fact that while Germany’s contribution to global GDP had halved since 1989, China’s had jumped from 3 to 16 percent. The dramatic conclusion? “No China business may mean no busines at all in the future,” reported Shakuntala Banerjee for German public broadcaster ZDF—from Wuhan, which, ironically enough, was the last leg of Merkel’s most likely final China tour as chancellor.

This all-or-nothing thinking seems to have been instrumental in Germany’s rush to push through the EU-China Comprehensive Agreement on Investment (CAI) at the end of 2020. It has also led to a general approach of treading very softly indeed wherever possible.

Evading Decisions

When briefing journalists ahead of Merkel’s visit back in 2019, her chief economic advisor Lars-Hendrik Röller became nervous only once—when asked about a possible ban of Chinese telecoms hardware provider Huawei in the German rollout of the 5G network. The Federal Office for Information Technology (German acronym BSI) had been asked to come up with criteria, so Röller argued, and those would solve that difficult question.

Only it did not. Accompanied by a strong parliamentary opposition led by Norbert Röttgen, an MP from Merkel’s own CDU party and the chairman of the foreign affairs committee, arguing for the exclusion of suppliers that were not “politically trustworthy,” the process of putting BSI criteria in place has been long-winded. They are currently supposed to become part of a revised telecommunications act later this year.

Ultimately, this has allowed Merkel–who at one point wanted to fix the problem with a “no-spy” agreement with Beijing, to the horror of the German intelligence service–and her government to kick that particular can down an ever-longer road. In September 2020, the government declared that it would not outright ban Huawei, but closely monitor it. In the meantime, the German 5G network is being built and has also become partly operational, with Huawei hardware. (The Biden administration, meanwhile, followed its predecessor’s line and on March 13 declared Huawei, together with four other Chinese telecommunication companies, a threat to its national security.)

Blind on Propaganda

The flip-side of being in awe of Chinese economic prowess is turning a blind eye to Beijing’s highly organized and systematically executed influence operations in Europe and Germany. In March, the Carlsen publishing house retracted a children’s book on the pandemic (Ein Corona-Regenbogen für Anne und Moritz) after Chinese diplomats took offence at the factually correct sentence, “The virus comes from China and has spread from there across the whole world.” The publisher saw merit in the claim that this would lead to anti-Chinese racism on German playgrounds.

At the same time, there’s an openness to playing ball when Beijing’s propagandists come knocking. The Thalia bookstore chain drew criticism in September 2020 when it “tested” special China sections in three of its bigger stores in Berlin, Hamburg, and Vienna in cooperation with the China National Publications Import & Export Corporation. Critical books, Thalia argued, could still be found the politics sections (but not in the sponsored section). Germany’s grand conservative daily newspaper Frankfurter Allgemeine Zeitung recently published a paid-for page, but in their usual style, singing China’s praises for having eradicated poverty.

“Germany is fast asleep when it comes to Chinese influence operations,” my colleague Didi Kirsten Tatlow, senior fellow at the DGAP’s Asia program, says. Whether it is cultural exchanges or academic contacts, there is next to no sense of how China’s Communist Party controls and instrumentalizes each and every aspect of these kinds of interactions. In Tatlow’s view, ultimately China aims at “elite capture” in Germany, cultivating prominent politicians and businessmen who routinely play down concerns over human rights and international law by pointing to “economic realities.”

Information Climate Change

The European External Action Service (EEAS) has recently woken up to the enormity of the task of countering Chinese influence and disinformation campaigns. As DER SPIEGEL reported in its print edition on March 13, a high-ranking EEAS diplomat recently warned EU representatives about Beijing using its “toolbox for manipulating global information systems” ever more “actively and robustly.” If Russian activities in this field could be described as “a storm,” China’s influence operations amounted to “climate change.”

China is also hitting back hard on the issue of human rights. After the EU’s more symbolic sanctions against four individuals because of human rights violations against Muslim Uighurs in Xinjiang province, the Chinese foreign ministry sanctioned 10 European individuals and four institutions, including four MEPs—one of them the German Reinhard Bütikofer of the Greens—and Europe’s leading Berlin-based China research institute MERICS. On the list is also the European Council’s Political and Security Committee (PSC), which supposedly means the 27 EU ambassadors in Brussels who regularly meet in this framework are now under Chinese sanctions.

So just as Germany slowly wakes up to fighting real climate change in earnest, the same needs to happen with its approach to China. Facing facts may help. As one of Germany’s leading economic research institutions, the ifo institute, reported a year ago, Germany’s often-quoted dependence is not that big. Less than 3 percent of German gross value added at domestic production, ifo said, is dependent on China. Simply agreeing with Chinese President Xi Jinping that “The East is rising, and the West is in decline” just does not constitute a China policy.

Henning Hoff is Executive Editor of INTERNATIONALE POLITIK QUARTERLY.

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