After Merkel: Germany, the European Union and China

The German federal election on September 26 resulted in a humiliating defeat for Chancellor Angela Merkel’s party, the Christian Democratic Union (CDU). For the first time since 2002, the Social Democratic Party (SPD), previously junior partner in Merkel’s two-party “grand coalition”, received a plurality of votes, relegating the Christian Democrats to second place.

The incoming three-party coalition, led by the Social Democrats’ chancellor candidate Olaf Scholz, will not involve the Christian Democrats but will include two smaller parties – the Greens (Bündnis 90/Die Grünen) and the liberal Free Democratic Party (FDP). While a coalition agreement providing an official governmental position has not yet been signed, this analysis is based on the parties’ positions from this and last year regarding trade and economic issues, global and European Union (EU) security, the Covid-19 pandemic, environmental concerns, and educational exchanges.

During her 16 years in office, Merkel decided against grooming a successor (and therefore, any potential rival). Following her loss of popularity during the last legislative session (2017–2021) and her announcement in late 2018 that she would not run in the 2021 federal election, Armin Laschet, who was chosen early this year as the CDU’s chancellor candidate, scored low popularity scores in opinion polls.

The political strategy of ignoring problems for as long as possible was characteristic of Merkel’s governing style. Coined during her chancellorship, the popular neologism “merkeln” (to sit something out, hoping that it goes away on its own) hints at the political changes and challenges now on the horizon for Germany, the EU and East Asia.

According to individual (Social Democrats) and joint declarations (Liberals and Greens on “taming China”), none of the three parties forming Germany’s new coalition supports Merkel’s approach of overlooking China’s worsening human-rights record, industrial espionage, and violations of international norms in an attempt to forestall Chinese retaliation in the field of trade.

In East Asia, Japan and South Korea have been seen as reliable trade partners with a positive cultural image, ranging from K-Pop and Korean dramas to Japanese manga and anime. The Chinese Communist Party (CCP), on the other hand, is a force that needs to be involved in international decision-making but has a very serious image problem in the EU.

The list of sources of contempt has grown since the Social Democrats released their most recent position paper on China in June 2020. For them and the two junior coalition partners, relations with China will be defined along the three dimensions of partnership, competition and system rivalry that have guided the EU’s policy since 2019. Particular attention, however, will be paid to the last point, which defines the limits of partnership: the ideological rivalry of democratic systems governed by the rule of law with free and social market economies versus authoritarian state capitalism. A shifting German governmental stance would therefore also shift the EU further in that direction. An explicit Social Democratic goal is to create such a common EU policy toward China, centered on Western values, human rights, European sovereignty, and transparency.

In addition to criticizing Chinese violations of freedom of speech, press freedom, freedom of association, freedom of religion, and freedom of movement, the Social Democrats explicitly called out China for not ratifying the International Labour Organization (ILO) conventions on forced labor and the prevention of forced labor, freedom of association and the protection of the right to organize, and the right to collective bargaining. Greens and Liberals also emphasized their condemnation of abundant human rights abuses and arbitrary measures taken against clothing companies such as Adidas and H&M – the Liberals in particular strongly encouraged individual sanctions against Chinese politicians, with neither party wanting to see Chinese forced labor cotton enter EU markets.

While such value clashes represent the ideological aspects of the tricky relationship, legal and illegal forms of competition are another likely source of conflict. The Social Democrats advocate the reform of international organizations such as the World Trade Organization (WTO) to accommodate China’s economic rise, but at the same time emphasize the need to enforce Chinese adherence to legally binding regulations and standards. This concern also illustrates the mounting distrust of China’s flagship foreign economic policy, the Belt and Road Initiative (BRI). The BRI is of substantial interest to the German economy, among other reasons since its continental freight railroad (Chongqing-Xinjiang-Europe Railway) connects Chongqing to Duisburg, Germany’s (and Europe's) largest inland port. For the Social Democrats, the BRI in recent years has become an instrument to support China’s economic and political aims instead of the development of partner countries and fails adequately to observe the rule of law, monitor corruption, and ensure debt sustainability.

The non-ratification of ILO conventions further adds to the problem of China promoting economic standards incompatible with broadly accepted international standards. For the Social Democrats, Chinese investments in the Western Balkans therefore have to be answered with stronger EU investments to integrate further this region, located on the EU’s doorstep, and prevent the governments there from turning away from the bloc.

The joint statement by the Greens and Liberals also explicitly condemned Chinese intentions with regard to the Western Balkans and Africa to create economic dependencies, increase its geopolitical influence, and support autocratic regimes to gain their votes in international organizations. These party goals can be called ambitious, considering that the economic problems in various parts of the EU – among them the silent continuation of the European debt crisis, the Covid-19 pandemic, and Germany having one of the highest tax and social welfare burdens in the world – are responsible for creating a certain willingness to accept Chinese investments or to sell companies to Chinese firms, resulting in strenuous debate over knowledge transfer to China. Such problems aside, the absence of Chinese – but also Japanese, South Korean and Taiwan – tourists in Europe is contributing to the serious problems facing the tourism industries of many EU member countries.

Linking trade to security concerns, the Social Democrats see no justification for revoking the EU’s arms embargo on China, put into place following the violent 1989 Tiananmen Square military crackdown on student protesters in 1989. Similarly, they consider the exclusion of Chinese companies in critical infrastructure projects, such as 5G mobile phone networks and superfast internet, as essential. In their view, large-scale Chinese governmental and non-governmental economic espionage defines an obviously illegal form of economic competition and necessitates an EU discussion about security and the protection of strategic industries in particular. In that sense, their considerations are not much different from those in the US and other China-critical countries – or the warnings issued by the German intelligence services and the Federal Ministry of the Interior.

Broadening the focus to other East Asian countries, Taiwan constitutes Germany’s fifth most important Asian trade partner. Potential crisis regions in East Asia are not high on the priority list of any German party, whose main focus remains on Eastern Europe, Israel and the Middle East. The Social Democrats nevertheless stated that they cannot allow any unilateral change of the status quo of Taiwan by China or the unfolding of violent conflict in the Taiwan Strait. Germany and the EU have limited military means at hand to prevent or shape the outcome of such an event. But in contrast to The Left (Die Linke), which before failing to meet the threshold to enter the federal parliament was discussed as a possible coalition partner, none of the three coalition parties question Germany’s NATO membership or the US alliance.

Another challenge for the Social Democrats is Chinese control over a substantial share of rare earth mining, required for mobile telephones, electric vehicles, and military hardware, among other products. While they believe that trade of such raw materials should be pursued, unilateral dependence needs to be reduced and EU sovereignty increased by a stronger focus on a circular economy. On the other hand, the Social Democrat ambition to revise and expand international policies on the oceans, outer space and cyberspace is again predicated on international collaboration. Such goals are not unexpected, since both the oceans and outer space are potential sources of raw materials including rare earth metals, and technological advances are opening up new layers for exploitation or at least stirring up discussions about seabed mining, asteroid mining and other projects. Cyberspace, strongly affected by the pandemic’s promotion of digitization, enables trade but also continues to create security threats, such as espionage, surveillance abuse and sabotage.

The Social Democrats’ security concerns also involve the Chinese armament process and the government’s role in settling international conflicts, which in their view have to be resolved according to international norms set by the United Nations and other commonly recognized organizations. For the Social Democrats, however, Chinese claims in the East and South China Sea, strongly contributing to conflicts over maritime boundaries, are a violation of international law. They also see a need to integrate China into a multilateral disarmament and arms control architecture.

The Social Democrats therefore advocate the continuation of negotiations with Beijing in international organizations, since China is highly relevant to implementing the Iranian nuclear agreement and, in East Asia, finding a peaceful solution to the Korean conflict. In UN peacekeeping missions, EU-China cooperation, such as in anti-piracy campaigns off Africa, is appreciated. However, any other form of military collaboration between China and Germany outside UN peacekeeping missions should be critically evaluated. Since actual military collaboration is already very limited, however, the real impact of the coalition’s approach to re-evaluating cooperation with China would be more relevant to educational exchanges.

Collaboration with China in international organizations also matters for all three parties in terms of planetary-scale environmental problems, in particular climate change. While ambitious Chinese targets for carbon neutrality by 2060 are widely appreciated among leading members of the three parties, Chinese support for coal power plants under the BRI received very critical attention, especially from the Greens, at least until the recent Chinese decision to no longer support such projects.

Even though not explicitly discussed, climate change also contributes to economic competition in related industries such as electric vehicles and solar panels. After all, the early rooftop solar panel research and installation boom began in Japan during the mid-1990s, and German governmental subventions for rooftop installations during the early 2000s created a consumer boom that, during the early 2010s, culminated in the large-scale breakdown of the German solar panel industry due to heavily state-subsidized competitors from China. That said, Germany’s Energy Transition (Energiewende) toward renewables also resulted in 2020 in the highest electricity costs in the world, which may not be appealing to East Asian countries.

Finally, educational exchanges define another field of possible collaboration and ideological contention. About 43,000 Chinese citizens are studying or working at German universities. For the Social Democrats, educational exchanges provide Chinese students an understanding of democracy and Western values. This goal is hardly new but is overshadowed by the fact that for most Chinese students, German and EU universities are not especially attractive compared with English-language institutions in North America, the UK or the Asia-Pacific region.

A more recent danger in the view of the Social Democrats is the potential knowledge transfer from EU higher education institutions to Chinese civil institutions that are closely collaborating with the Chinese military. While not mentioned explicitly, Chinese cultural institutions, such as the Confucius Institutes, are also widely seen in Germany, particularly by the Federal Ministry of the Interior, as tools for projecting a highly biased image of China aimed at collaborators and supporting espionage.

The Social Democrats’ position paper was published when the party was still the junior partner in Merkel’s coalition, which meant that it was in the comfortable position of having influence on decision-making while being able to blame the senior partner for not being able to implement fully its East Asia policy. In a similar way, the Greens and Liberals were arguing as members of the opposition, not carrying responsibility for decisions that would draw strong Chinese backlash.

Human rights, social market economies, labor rights, good governance, rule of law, climate change, and European sovereignty are deeply rooted in the parties’ programs and go far beyond mere “China bashing” to gain votes from a limited number of concerned stakeholders. East Asia was not a major topic in the federal election campaign so implementation of a new policy that focuses more on confronting China as a competitor and rival ideological system will mean that the three parties have to find ways to communicate the likely outcomes to the German population. Stronger security collaboration with the US would not be unexpected news, even though it means a scenario in which Germany and the EU become more closely involved in US-China power struggles. After all, until last year, the EU had not deployed any new sanctions against China since 1989.

The use of sanctions and economic retaliation, however, would likely reach the importance that such practices have in EU-Russia interactions, especially since the annexation of the Crimean Peninsula in 2014. In assessing Beijing’s actions and policies, the SDP attributes China’s patriarchal power structure to baby girl infanticides unintentionally supported in some segments of the population by the now-abandoned one-child policy. It has also strongly criticized the Chinese government for keeping secret the number of death sentences issued by its legal institutions. The FDP’s human rights spokesperson in the federal parliament warned of the consequences should China pursue a violent Tiananmen Square-like solution in Hong Kong. All these examples amply illustrate that the new German coalition’s expectations regarding democratic reform, the rule of law, and good governance in China are extremely low.

Without question, a three-party coalition, the first in the Federal Republic’s history, will make many compromises and no really surprising moves. Serving as additional checks and balances, both junior partners have the option to bring down the government. They have, however, also expressed a stronger willingness than the Social Democrats to seek confrontation with China. In spring and summer 2020, Liberals and Greens, in contrast to the Social Democrats, called for the cancellation of the EU-China Leaders’ Meeting that eventually took place virtually in September of that year. Their stance may be an indication that these checks and balances will operate in a setting in which stronger confrontation than during the Merkel era could be the new norm.