Germany has published a new policy to contend with a more “assertive” China, Chancellor Olaf Scholz said, after months of fractious debate on the approach to Berlin’s top trade partner.
“Our aim is not to decouple [from Beijing]. But we want to reduce critical dependencies in future,” Scholz tweeted on Thursday after unveiling the new strategy, which he said “reacted to a China that has changed and become more assertive”.
The policy, which the government said would be embedded in the European Union’s approach to China, aimed to be “realistic but not naive”, Foreign Minister Annalena Baerbock said.
The document is the product of months of wrangling within the German government over its strategy towards China.
While Baerbock of the Greens party has pushed for a more hawkish line towards Beijing and a greater emphasis on human rights, Scholz, a Social Democrat, has backed a more trade-friendly stance.
The new China policy marks a finely calibrated balance of the two within the coalition government, calling Beijing a “partner, competitor, systemic rival”.
“China is Germany’s largest single trading partner, but whereas China’s dependencies on Europe are constantly declining, Germany’s dependencies on China have taken on greater significance in recent years,” the document said.
The government said it did not intend “to impede China’s economic progress and development”.
“At the same time, de-risking is urgently needed,” it said.
Berlin “is observing with concern how China is endeavouring to influence the international order in line with the interests of its single-party system and thus to relativise the foundations of the rules-based international order, such as the status of human rights”.
Germany in its first national security strategy unveiled last month had also accused China of acting against German interests, putting international security “under increasing pressure” and disregarding human rights.
A report by Germany’s intelligence agency also cited China as the “biggest threat in relation to economic and scientific espionage and foreign direct investments in Germany”.
The harder line has alarmed Beijing, but also sparked fears in German industry which has grown increasingly dependent on China.
Corporate giants such as Volkswagen and Siemens have in recent months outlined growth strategies that rely heavily on the Chinese market.
On Thursday, Volkswagen’s Chief Operating Officer Ralf Brandstaetter welcomed the political goal of the new China strategy “to strengthen our own position … to reduce one-sided economic dependencies, and to create incentives for more diversification”.
“We don’t look naively at the economic superpower China has become,” the German carmaker’s China chief said in a statement.
To minimise geopolitical risks, Germany must “reduce dependencies as well as strengthen our position in other regions” as well as “create autonomously controllable value chains”, he added.
Scholz has stressed that Germany “doesn’t want decoupling, we want de-risking”.
But he has underlined Berlin’s move to diversify trading partners, saying that Germany is “committed to actively broadening our economic relations with Asia and beyond”.
After the United States toughened up its economic policies against China, Beijing fears its biggest partner in the EU could be headed in the same direction and using the seemingly benign talk of “de-risking” to instead progressively detach itself from the Asian economy.
Li Qiang, visiting Germany last month on his first trip abroad since he was named China’s prime minister, also underlined the emphasis Beijing places on improving relations with the EU as criticisms from the bloc grow louder.
But he warned Berlin against “using de-risking in name to carry out decoupling” and demanded a “level playing field” for Chinese companies.