That German Chancellor Olaf Scholz chose to meet with Chinese President Xi Jinping (習近平) on Nov. 3, so soon after Xi secured a third term from the Chinese Communist Party, raised a few eyebrows. In 2016, China became Germany’s biggest trading partner, and critics say the European nation has become overly reliant on China. That reliance has taken on new significance since the war in Ukraine revealed the ease with which democracies could find themselves held hostage by foreign autocrats.
Xi would have been pleased to receive Scholz, as he needs an ally in the EU. Xi had originally hoped China-EU relations would offset rocky US trade ties under former US president Donald Trump, especially as the EU was itself uneasy about Trump’s “America first” policy. Under US President Joe Biden, the EU is once more aligning with Washington, and the EU-China Comprehensive Agreement on Investment was never ratified after relations between Beijing and Brussels soured last year.
The unfortunate — if somewhat deceptive — perception of Scholz’s visit was that of a vassal paying tribute to a powerful lord. The enthusiasm with which Berlin embraced trade with China began under Scholz’ predecessor, Angela Merkel. Just before she left office, she conceded that the policy was perhaps a bit naive, and yet she still considered it a mistake to unravel the relationship and decouple completely from China. Berlin, having been burned from its over-reliance on Russian oil and gas, is making a concerted effort to diversify away from China.
Since meeting with Xi, and on his way to the G20 summit in Indonesia, Scholz made two more stops in Asia: Hanoi on Sunday, where he discussed energy and trade ties with Vietnamese Prime Minister Pham Minh Chinh, and Singapore the following day, to attend the 17th Asia-Pacific Conference of German Business, accompanied by German Minister of Economics and Climate Protection Robert Habeck.
“We are, of course, interested in trade with China, but not in stupid trade with China,” Habeck said, echoing remarks he had made on Wednesday last week, when he said that Germany remained an open market economy, but “an open market economy is not a naive market economy.”
The German government is well aware of the threat posed by China, but acknowledges the pragmatic necessities of its situation: that trade links and investment between the countries are so profound and complex that a rapid withdrawal would devastate the German economy, and yet diversification is desirable.
Habeck also appears to harbor a pragmatic view on Taiwan, which produces a considerable percentage of the world’s advanced chips. He said that a Chinese attack on Taiwan would be “far more catastrophic” for the global economy even than the Ukraine war, adding: “I hope that China knows that the whole world is watching.”
Germany’s change of heart reflects wider shifts in global views precipitated by the Russian invasion of Ukraine. Beijing is insulating itself against the risk of Western sanctions should a Taiwan crisis erupt. China is far more integrated into the global trading system than Russia, making sanctions against it likely to be more effective. Economies such as the US and Germany are moving to diversify significantly from China, even if Germany is shy of using the word “decouple” for fear of offending Beijing.
Part and parcel of this process are countries taking steps to mitigate the risk of the loss of Taiwan’s semiconductor supply. Taiwan’s “silicon shield” has a sell-by date.
The world is witnessing a reshuffling and realignment in international relations to reflect an emerging order that is as yet not written in stone. How the government repositions Taiwan’s place in this emerging order, irrespective of which party is in charge, would have huge implications for the nation.
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