Scholz in China | Franco-German tandem | Supply chains
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Scholz in China | Franco-German tandem | Supply chains
Dear All,
This week’s edition of Sinification looks at the following topics:
Germany-China: Chinese analysts assess the impact of Scholz’s visit to Beijing.
EU-China: Scholars discuss the importance and dynamics of the Franco-German tandem.
Supply chains: CASS researcher Xu Qiyuan on “who is really challenging China's position as the world's factory?”
Germany-China: Chinese analysts assess the impact of Scholz’s visit to Beijing.
Chinese scholars had recently been describing German politics as undergoing profound structural changes that were making German foreign policy increasingly values-driven, assertive and antagonistic towards China. Many of these scholars had had serious doubts about Olaf Scholz’s ability to impose his so-called “pragmatism” towards Beijing on his more China-sceptic coalition partners, so much so that some appeared to be gradually turning their attention towards another “pragmatic” European leader – Emmanuel Macron. But Scholz’s visit to Beijing last week, coupled with his recent backing of COSCO’s deal in Hamburg, have led to a renewed sense of optimism among a number of these analysts, though some remain more sceptical. The following is a selection of excerpts from Chinese opinion pieces assessing the apparent signals released by Scholz in recent weeks and what these may imply for the future of Sino-German and EU-China relations:
Zheng Chunrong (郑春荣) – Director of the Centre for German Studies at Tongji University:
“In April this year, Scholz travelled to Japan on his first trip to Asia [as German Chancellor] and did not come to China. This was, to some extent, to cater to [Germany’s] domestic public opinion. However, Scholz has always been quite prudent in his attitude towards China and has generally continued the Merkelian policy of emphasising pragmatic cooperation with the PRC. He is clearly opposed to decoupling from China and hopes to strengthen Sino-German economic cooperation. [All of] this is reflected in his push to visit China.”
“Scholz's visit to China was met with some opposition from within Germany and the EU. Even the US put pressure on him. However, his insistence on making this trip to China is in fact evidence of his strong desire to strengthen Sino-German and EU-China cooperation. From the perspective of Germany's domestic politics, Scholz's visit to China also shows his desire to demonstrate his ability to lead as Chancellor … which is why he has recently made a number of moves, such as facilitating COSCO's investment in the German port of Hamburg.”
“Furthermore, Germany is currently working on a new strategy towards China. This is mainly being conducted by the Foreign Ministry, which is run by the Green party. Scholz hopes that the visit will send a signal to his country: that economic relations between Germany and China are extremely important; and that, just as Germany’s China strategy is being put together, Germany should neither decouple from China nor ‘securitise’ its economic relations [with the PRC].”
“The fact that Scholz is the first EU leader to visit China in the past three years shows that Scholz wants to set the tone with regard to the EU's China policy and bring into play Germany's leadership role in the EU's strategy towards China. This was evident from the timing of his announced visit to China. Scholz's announcement was made at the end of the EU summit on 21 October, where the issue of China was specifically discussed and where there were calls to adopt a tougher stance towards China, to decouple from China, to get rid of [Europe’s] dependence on China etc. Scholz is opposed to this and has repeatedly said that there should be no decoupling and that cooperation with China should be strengthened.”
“Currently, Sino-German relations actually have two facets. On the one hand, the Sino-German relationship is reasonably resilient. This ensures that it will not deteriorate too much … Trade continues to play the role of ballast in the Sino-German relationship and pragmatic cooperation continues to be one of its key underlying principles. On the other hand, Sino-German relations do face more challenges … [There is] a decline in political mutual trust between China and Germany … For Scholz, this is undoubtedly a huge challenge. If he fails to take the helm and keep the development of Sino-German relations on a steady course, and if Germany’s Foreign Ministry and Ministry for Economic Affairs are allowed to ‘take the lead’ [‘带节奏’] , Germany may well tighten its economic policies towards China further and adopt more protectionist measures thereby affecting the long-term development of Sino-German relations.”
“An important prerequisite for Sino-German relations to move forward and play a major role in the context of EU-China relations as well as [other] global issues is that China and Germany refrain from drawing ideological lines and engaging in systemic confrontation.”
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Yang Jiepu (杨解朴) – Director of the Centre for Sino-German Cooperation at the Chinese Academy of Social Sciences (CASS)
“China's excellent business environment, relatively low energy prices, reasonably well developed supply chain system and huge market size are undoubtedly attractive to German industry. Therefore, Scholz's visit to China with his delegation of top business executives is a positive signal for the strengthening of economic cooperation between Germany and China. On the one hand, he is seeking to push bilateral relations onto a track of practical cooperation with economic [cooperation] at its core. On the other, he is aiming to use this visit to strengthen cooperation between German and Chinese companies, to provide more opportunities for German foreign investment and to find more growth points for an economy that is in the doldrums.”
“It will also demonstrate to the outside world that Germany wishes to enhance this positive momentum in the development of Sino-German relations with economic [cooperation] at its core.”
“Previously, some German politicians were hyping up the idea of reducing [Germany’s] overdependence on China and were even calling for [Germany] to decouple from China. But Scholz has repeatedly made it clear that it is neither realistic nor possible to decouple Germany’s economy from China … [thus] making it clear that Germany's China policy will develop in a pragmatic way.”
“Both the meeting between the Chinese and German leaders and the exchanges between Chinese and German companies will most certainly transmit this positive signal to other EU countries. This will have a very positive impact on the development of bilateral relations between China and other EU member states and even between China and the EU.”
“The [COSCO] deal involving the investment of Chinese capital in the Port of Hamburg is … also evidence of our assessment of the future direction of Sino-German relations.”
“True, the Russo-Ukrainian conflict has deepened Europe's military dependence on the US. True, the US and Europe are closer than in the past. However, Scholz once said that he ‘does not want Germany to put all its eggs in one basket’. I believe that Germany under his leadership will not follow the US blindly, but will endeavour to take into account Europe’s [overall] strategy and Germany’s autonomy.”
“Despite ‘warnings’ by some US officials, Germany’s being able to maintain its principled stance, emphasising the importance of freedom and openness in global trade, is an extremely positive signal for the strengthening of the international trade and investment order as a whole.”
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Ding Chun (丁纯) interviewed by Tianmu News. Ding Chun is the director of the Centre for European Studies at Fudan University:
Ding Chun: “Scholz, as head of Europe's largest economy, took the lead in visiting China in the wake of the COVID-19 [pandemic], thereby expressing Germany's desire to maintain good relations with China.”
Tianmu News: “Some people believe that this is [a sign of] the German government’s breaking away from its recent ‘cold politics, hot economics’ stance towards China. Ding Chun believes that it is too early to view Scholz's visit as a change in the German government's attitude towards China and that he probably made this decision in order to preserve [Germany’s] diplomatic and economic relations with China.”
Ding Chun: “Scholz himself has also said such things as [Germany] needing to ‘free itself from its over-dependence on China’. Although this is still very different from what the Greens and the FDP have been saying about [the need to] decouple from China, [the need to] be on one’s guard against China etc., one cannot say that Scholz has fully embraced China.”
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Sheng Songcheng (盛松成) Professor at China Europe International Business School (CEIBS) and former head of the Financial Survey and Statistics Department at the People’s Bank of China:
“Given that Scholz is the first G7 leader to have visited China since the outbreak of COVID-19, his arrival, together with that of a German business delegation, is of great symbolic and substantive significance, both for Sino-German and for EU-China relations … Scholz's visit signals Germany's firm belief that the EU needs to continue to cooperate with China in a number of areas in the future.”
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Jiang Feng (姜锋) – Researcher at Shanghai International Studies University
“German Chancellor Scholz is visiting China today. History is likely to give this visit high marks in the midst of all the controversy … The key to politics is to lead … and to make decisions that can stand the test of time.”
“This [visit] is a wise choice by the leader of a country who wishes to play a greater role in European and world politics.”
“Scholz made it clear that Germany has no intention of taking the old path of ‘alliances’ [德国无意走“结盟”老路] and that China cannot be isolated. This shows that the lessons of history and real-world rationality are at work. Such political wisdom is praiseworthy.”
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Ding Gang (丁刚) – Senior journalist at the People's Daily and a senior researcher at the Chongyang Institute for Financial Studies, Renmin University of China.
“Scholz would not have taken this step [visiting China] without a certain level of public support. The problem is that the vast majority of this public support is [currently] ‘silent’.”
“Politicians who advocate adopting a tougher line towards Beijing are increasingly unable to articulate what practical benefits this would bring to Europe, other than showing that they are following the US.”
“The Netherland’s ASML produces lithography machines and cannot find another buyer in the world that is as big as China. Not sold to China, sold to the US? How can the US pull together an alliance to contain China if it cannot replace China and cannot offer considerable compensation [for this]? Seen this way, the US’s strategy to contain China simply looks like a big gamble. I believe that more and more European countries and companies will realise this and will stop playing around with the US [in its attempts] to decouple from China.”
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Chen Tao (陈弢) – Associate Researcher at Tongji University’s Centre for German Studies:
“Scholz's visit to China took place almost at the same time as German Foreign Minister Baerbock’s visits to Kazakhstan and Uzbekistan in Central Asia, and President Steinmeier's visits to Japan and South Korea in East Asia. Moreover, Steinmeier’s and Baerbock’s visits all lasted longer than Scholz’s. Furthermore, Scholz's first visit to the Indo-Pacific region after taking office was to Japan. These are all signs that Germany is seeking to rebalance its Asia-Pacific strategy away from placing too much importance on China, as was the case under Merkel.”
“Of course, the fact that Scholz was able to visit China under [such] pressure also shows the particular and continued importance of China in his policy towards Asia.”
“Scholz's visit to China immediately after the 20th Party Congress reflects his pragmatic and flexible approach to diplomacy. Gone is Germany’s traditional China strategy of promoting change through closeness. Judging from Scholz’s recent statements and those of key members of his government as well as from the drafting of Germany’s forthcoming China strategy, the German government will not change its foreign policy positioning of recent years [simply] as a result of Scholz's visit to China.”
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Jian Junbo – Deputy director of the Centre for China-Europe Relations at Fudan University:
“Germany’s Ministry of Economic Affairs and Foreign Ministry, both dominated by the Greens, are speeding up the drafting of [Germany’s] China policy. However, whether in the economic or strategic spheres, Germany's China policy will be largely restricted to the framework [already] provided by the EU on China.”
“Due to the huge differences in relations between different EU member states and China, Germany's particular policy towards China does not serve as a model for other EU member states.”
“In future, ‘clashes amidst cooperation and cooperation amidst clashes’ will be the [new] norm of EU-China relations. For China, Europe remains a partner to be fought for. We should do our best to reduce the risk of clashes and look for various possibilities of cooperation.”
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Ma Bin (马斌) – Associate Researcher at Fudan University’s Centre for Russian and Central Asian Studies:
“This visit will have a limited impact on the shaping of the EU’s policy towards China.”
“Against the backdrop of geopolitical tensions in Europe and the growing adjustment of the EU's foreign policy strategy, even if Scholz's lightening visit to China [快闪式访华] were to have a positive impact on the development of Sino-German and EU-China relations in the short term, it will hardly change the increasingly obvious restructuring of EU-China relations of recent years and will hardly remove the greater uncertainties brought about by strategic rivalries, regional conflicts etc.”
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For more reactions to Scholz’z decision to visit Beijing and to his allowing the COSCO deal to go through, see last week’s edition:
EU-China: Scholars discuss the importance and dynamics of the Franco-German tandem
The following excerpts are from a roundtable discussion entitled “Recent tensions between Germany and France continue. Can the 'axis' of European integration still function?”, which was held before Scholz’s visit to China. Its transcript was published last week by The Paper and was moderated by the always interesting deputy director of Fudan University’s Centre for China-Europe Relations, Jian Junbo. Recent friction between Berlin and Paris has garnered quite a bit of attention in China and is sometimes perceived as a source of concern. Some Chinese scholars such as Jian seem genuinely to hope for a stronger, more integrated and more autonomous Europe which they believe would benefit China’s own interests. As Jian puts it in this discussion, “a harmonious Franco-German relationship would help drive European integration and boost the emergence of a multipolar world”. The following opinions form a nice contrast with some of the glowing portrayals of Scholz recently published in China and provide some insights into how the the Franco-German tandem is currently perceived by at least some political analysts in China:
Xin Hua (忻华) – Director of the Centre for EU Studies, Shanghai International Studies University (SISU):
“At present, the German Chancellor Scholz is a weak leader with a weak popular base and many constraints at home. In France, Macron's government is in a relatively stronger position. Macron's approach to the overall functioning of the EU, the broad direction of European integration and the general conduct of Europe's external relations is more complex and strategically thought-out than Scholz's. Thus, France will probably be more active than Germany in Europe’s regional affairs and Europe’s external relations for the foreseeable future.”
“In terms of foreign relations, France has always favoured European-made solutions [偏向欧洲本位主义] over strategic dependence on the US … and does not shy away from confronting the US [when necessary]. Although Germany has had its ‘Neue Ostpolitik’, it has always been more inclined towards strategic dependence on the US and focused on maintaining stability in US-EU relations.”
“[However,] French and German policies towards China are not fundamentally different and are sometimes coordinated.”
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Zhang Ji (张骥) – Deputy Director of the School of International Relations and Public Affairs at Fudan University:
“Under Merkel, and particularly after the outbreak of the European debt crisis, Germany's superior position within the Franco-German axis became evident. However, recent political developments in the EU are shifting the German-French axis to a Franco-German axis … firstly, Scholz is leading a three-party coalition government, which is hampered by policy coordination and is not on a firm footing. Secondly, in comparison with Merkel, Scholz is a relatively weak leader who lacks political courage … As a result, the recent balance in EU politics has been gradually tilting towards France.”
“Regarding the EU’s governance issues, Germany is much less able than before to provide strong political leadership for the EU. Against this backdrop, Macron has had to look for alternative sources of leadership.”
“The political leadership of the Franco-German axis has been declining … The future development of EU politics depends, on the one hand, on whether or not the Franco-German axis can be restarted and, on the other, on whether France can find a third pole within the EU to provide political leadership in addition to Germany.”
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Yan Shaohua (严少华) – Young Associate Researcher at the Centre for China-Europe Relations, Fudan University:
“On the issue of the German-French axis … it does not matter whether or not the German-French relationship becomes a Franco-German relationship. What matters is that neither France nor Germany can guide the EU’s development without the other.”
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Zhang Yaning (张亚宁) – Young Associate Researcher of the School of International Relations and Public Affairs at Fudan University:
“The leader of the EU’s economy and growth model holds the key to EU power. In this respect, there is no doubt that Germany remains at the centre of EU politics. This trend has been increasing in the wake of the European debt crisis.”
“However, the overall importance of the Franco-German axis in EU politics is declining. Particularly after the Ukraine crisis [broke out], the Eastern European and Baltic states have seen their influence on EU foreign and security policies increase dramatically.”
Supply chains: CASS researcher Xu Qiyuan on “who is really challenging China's position as the world's factory?”
The risks posed by the West’s reordering of its supply chains continue to be widely discussed by Chinese academics and think-tank analysts. The following is from an article entitled “Vietnam, India, Mexico, who is really challenging China's place as the world's factory?”. It has gained quite a bit of attention in the past couple of weeks and has been cross-posted by several Chinese think tanks and media outlets. Its author, Xu Qiyuan (徐奇渊), is a researcher at the important Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences (CASS). Most of his article is not particularly remarkable except for Xu’s main underlying argument that the US’s attempt to sideline China is set to fail and that China’s position as the world’s factory is here to last:
“The US strategy to reshape global supply chains has undergone three stages: industrial reshoring, near-shore outsourcing and friend-shoring. These practices may not only have an impact on China's position as the world's factory, but could also gradually isolate China in the global supply chain network.”
“Against this backdrop, [the risk of manufacturing] moving to Southeast Asia, South Asia and Latin America, particularly Mexico, as part of the US’s near-shore outsourcing strategy as well as to Vietnam and India in the context of the US’s friend-shoring strategy, is putting China under quite a lot of pressure.”
“Will these countries pose a real challenge to China’s position as the world’s factory?”
“Mexico is still [caught] in the middle-income trap and poses the smallest challenge to China … Mexico's business environment is not welcoming enough to foreign investment. In terms of infrastructure, its electricity supply and transport capacity suffer from severe deficiencies. In particular, high levels of corruption are also a big impediment to its economic development … It will therefore be difficult for Mexico to experience an economic miracle in the context of the US-China rivalry.”
“Vietnam's advantages are obvious, but the long-term challenge [to China] is limited … Vietnam’s biggest constraint is the small size of its population and economy … Vietnam's relatively small economic heartland limits its space for development within the global manufacturing network … When it comes to Sino-Vietnamese competition, China is in an overwhelmingly dominant position and need not be overly concerned about competitive pressure coming from Vietnam … China's large exports to Vietnam and huge [trade] surplus in themselves indicate that Vietnam is more of an important buffer zone between China and the US than a [potential] alternative to China as the world's factory.”
“India is currently faced with many difficulties, but its potential for development in the long term is high. India is the only country that can match China in terms of population size. India's greatest strength lies in the sheer size of its economy … Its huge population and market size have [already] supported [the development of] India's world-class companies and relatively strong capacity for R&D … Moreover, India's high level of economic self-sufficiency and low dependence on China for the supply of intermediate goods put it in a better position to form a supply chain that is isolated from China. But India also has evident limitations. India’s biggest problems derive from religious and cultural factors. Religious beliefs emphasising people’s withdrawal from worldly affairs have made Indian citizens relatively quiet and contented. Their desire to develop the economy is not strong. Moreover, India’s caste system has [also] created a barrier to its economic development … At the same time, India's administrative machinery is inefficient and its infrastructure is severely underdeveloped. To change these [pre]conditions for development will not be easy … if India is to really rise, there will need to be a radical revolution in its religions and culture followed by a highly disruptive round of reform and opening up.”
“China needs to continue its [process of] reform and opening up. Doing its own thing remains the most important focus [for China] … The ability of any country to maintain its position at the heart of global supply chains is not achieved primarily by suppressing its competitors, but by doing its own thing and strengthening the competitiveness of its industries.”