German Chancellor Olaf Scholz, accompanied by 12 top executives, on Friday visited China, hoping to deepen economic ties to reinvigorate the German economy, which is on the brink of a recession. However, the 11-hour trip shows the excessive reliance that Europe’s leading economy has on trade with China, and has raised criticism that Berlin is loosening its dependence on one authoritarian power (Russia) only to deepen its reliance on another (China).
Abandoning the “great international circulation” economic strategy articulated by former Chinese leader Deng Xiaoping (鄧小平), Chinese President Xi Jinping (習近平) has, since 2020, revised policy to promote a “dual circulation” economy, with the domestic market (internal circulation) serving as the mainstay and foreign trade (international circulation) acting as a supplement to boost national development.
At last month’s Chinese Communist Party (CCP) 20th National Congress, Xi mentioned “national security” 91 times in his report, the first time it exceeded mentions of the economy in his speeches on China’s major policies. Xi also announced his goal of making China “a great modern socialist country that leads the world in terms of composite national strength and international influence.”
On Saturday, the government announced that it was sticking to its “zero COVID” policy, despite mounting public frustration and economic damage. A lockdown of Hon Hai’s Zhengzhou factory, the world’s largest producer of Apple’s iPhones, not only led to an exodus of workers, but is estimated to reduce iPhone production by 30 percent, causing Apple’s stock to tank.
China’s virus curbs, which show no regard for human rights, have eroded business confidence. A survey released by the EU Chamber of Commerce in China in July showed that 60 percent of European companies found doing business in China “more difficult” now, with increasing numbers of EU businesses putting China investments on hold. A US-China Business Council survey in August said that 24 percent of companies had moved parts of their supply chains out of China in the past year. Another report from the American Chamber of Commerce in Shanghai showed that optimism among US businesses in China had dropped to a 23-year low.
Last month, US Secretary of the Treasury Janet Yellen warned of China’s “weaponization of trade” as a tool of geopolitical coercion. Taiwan has long been a target of China’s economic coercion, with politically motivated bans imposed on all types of Taiwanese products. In Europe, China’s blocking of Lithuanian exports and pressuring international companies to stop doing business with the Baltic nation showed that Beijing would never hesitate to break international trade rules for political purposes.
Right before Scholz’s trip, Germany approved Chinese shipper Cosco’s purchase of a stake in Tollerort terminals in Hamburg. China’s expanding strategic influence in Europe and over global transportation infrastructure has raised concerns in some Western countries over risks ranging from economic coercion to military expansion. Including Hamburg case, Chinese firms reportedly would hold stakes in 96 ports around the world. Studies have also shown that one-third of ports that include Chinese holdings have hosted ships of the Chinese People’s Liberation Army Navy. Not surprisingly, China has never returned the favor to Germany or other countries.
Before and after his trip, Scholz issued statements about having “candid” exchanges with Xi, in an attempt to separate Germany’s deep economic ties with China from political disputes. However, during his visit, Deutsche Welle released a survey showing that a mere 9 percent of Germans consider China a trustworthy partner, worse than Russia’s 10 percent, while 90 percent of respondents urged the government to make the country less dependent on non-democratic countries. More voices in government and parliament are asking for a change in the nation’s China policy. The German chancellor’s China trip has raised more doubts, and that could be a lesson for the world.
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