Containerterminal Tollerort in the port of Hamburg
Economic ties with China are increasingly viewed as a political risk, as shown by the debate over a COSCO investment into Hamburg port. | Foto: Raimond Spekking via wikimedia commons | CC BY-SA 4.0

Germany’s New China Strategy: A Defensive Shift

After a lengthy process of internal deliberation, the German government released its China strategy on July 13. The document signals a policy shift away from the business-focused approach taken by previous governments, and towards a “de-risking” of ties with China. It also reframes the relationship by stressing elements of competition and even rivalry, based on the perception that Chinese authoritarianism is becoming a threat to Germany and its role in the world. Instead of seeking to transform autocracies through engagement, the new approach is much more about shoring up Germany’s own system.

Germany’s China strategy has been a long time in the making: in their 2021 coalition agreement, the three governing parties had already agreed to conduct a general review of Germany’s China policy and to formulate a strategy for the future. Since views on how to deal with China differ significantly within the government – with the Social Democrats favoring a more cooperative approach and the Greens a more confrontational one – the process of negotiating details between several ministries has been lengthy and complex: an initial draft formulated by the Foreign Ministry was already leaked to the press in December 2022, while the final version – despite featuring many of the same ideas and elements – took an additional seven months to hash out.

The final document reflects these diverging views and adopts a model that was first proposed by the EU in 2019, casting China as a simultaneous “partner, competitor and systemic rival”. Much of this shift is driven by real and perceived regime differences with China, especially in the latter two dimensions: China’s deepening authoritarianism under Xi Jinping and its state-led industrial-technological policy are the twin forces that have turned the old approach of “change through trade” on its head, and now make economic ties with China appear as a risk to Germany and Europe.

This is immediately apparent in the China strategy’s implicit aim, which appears somewhat hidden among a list of mostly technical purposes served by the document (p.9 in the English translation); only one of which encapsulates an actual political goal, namely “to present means and instruments by which the Federal Government can work with China, without endangering Germany’s free and democratic way of life, our sovereignty and prosperity, as well as our security and partnerships with others.” This firmly situates the German strategy within the EU’s recent approach of “de-risking” in its ties with China, i.e. selectively cutting back on asymmetric economic vulnerabilities and potential avenues for Chinese political influence, while retaining robust business and social exchanges. As a result, both the basic aims and specific measures of the strategy are fundamentally defensive, focused on “strengthen(ing) the resilience of our society, economy and scientific community while preserving the openness of our system” (p. 11). Regime differences with China are clearly foundational to its perception as a political and economic threat, and the point of departure for a shift in German policy.

Regime Differences with China: Less Prominent, But Still Foundational

At first glance, the final version of the strategy features considerably less material on regime differences than the foreign ministry’s original draft. The latter had set the stage in a lengthy preamble on the tightening of China’s authoritarianism under Xi Jinping, and explicitly connected its assertiveness in foreign policy to an innate authoritarian desire for control. When discussing some features of China’s regime, like the ability to use business actors for political ends and long-term planning in foreign policy, it came close to portraying these as competitive advantages in times of systemic rivalry and a rush to autarky (p. 3 in the original draft). The assertion that “China is changing, and our approach to China needs to change as well” (p. 1) was programmatic for the document and featured as the title of its first section.

The final version retains this formula (p. 9), albeit less prominently placed and stripped of much of the material on domestic political developments in China. This is likely to avoid offending Beijing, which reacts sensitively to any such comments, but also reflects different perceptions within the German government. The foreign ministry’s version had concluded its description of German-Chinese relations on the charge that “systemic rivalry has become a defining feature of China’s relations with the Western community of values” and the main impetus for a policy change in Germany. Conversely, the final document opens and closes its introduction by stressing a desire to cooperate in spite of such differences (p. 10, p. 11: “systemic rivalry with China does not mean that we cannot cooperate”). This is not a cosmetic change, but gives the strategy a markedly different framing and thrust.

Interestingly, the strategy still deals at length with China’s economic system and the competitive challenge which it poses for German industry and technology. It acknowledges that in many sectors China has already achieved a “market-leading role” (p. 34) on the basis of an active industrial policy and tightly restricted access to its own market. While the strategy asserts Germany’s market economic system as a strength (p. 34), it subsequently delves into a lot of state-led measures designed to fend off mounting Chinese economic pressure: this covers self-strengthening through the onshoring of critical supply chains (p. 35-36), increased R&D spending (p. 37), and tighter screening of Chinese investments (p. 40, 42); as well as more regulation and scrutiny of outbound investments (p. 38) and constraints on transfers of technologies with potential military uses (p. 41, 42). One of the most controversial measures, a proposed “China stress test” for German enterprises, did not make the final version. Still, these policies amount to an assertion of government control over private business decisions and an ambition to actively reshape existing economic ties in line with a new political agenda – which actually mirrors Chinese practices elsewhere described as problematic (p. 8, 34). Similarly to how China selectively introduced market economic principles in its reform era, Germany and the EU are now hoping to compete with the resulting system by appropriating some of its statist features.

Can Germany “Rival” China?

Aside from the realm of economics, the strategy also finds an essentially competitive dynamic when it comes to the future of the international system, but frames this relationship under the more eye-catching term of a “systemic rivalry” with China. Where the recently-released German national security strategy had prominently mentioned this concept, but skipped a definition, the China strategy now defines it as “different concepts of the principles governing the international order in important areas” (p. 10). At this level, the growing tensions between Berlin and Beijing primarily arise from how the latter aims 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.” (p. 10). While the China strategy sees rivalry as rooted in different domestic regime types, it is not one between them – as in the Cold War – but over incompatible visions for the normative content of the international order.

The natural arena for such a contest is made up of international organizations and especially the United Nations (UN). At this level, Chinese agency has indeed focused on advancing definitions of human rights that are focused on an economic right to development and downplay aspects of political self-determination. This strategy is of course motivated by a desire to remove a prominent vector for Western political pressure on China itself, but also part of an active human rights diplomacy that has found significant support among other countries of the Global South. The China strategy does not really offer any new ideas on how to implement a German human rights agenda amidst this ongoing power shift – here, its only prescriptions are greater Western coordination on UN personnel appointments and continuing to call out human rights violations in China (p. 54). However, as shown by the difficulties of organizing a broad sanctions regime in response to Russia’s invasion of Ukraine, mere rhetoric is unlikely to move governments in the Global South that have strong and growing material stakes in maintaining close relations with China. The strategy acknowledges this problem (“China has a particular advantage when we offer our partners too little, are not sufficiently present, or do not advertise enough what we have to offer“, p. 48), but does not offer much in the way of a solution. In development policy, it dedicates a section to the EU’s “Global Gateway” infrastructure program as an answer to China’s Belt and Road Initiative (p. 52). However, it is an open question whether this effort, which is still mostly about pooling and better coordinating resources from existing programs, will ultimately boost European (let alone German) geopolitical agency to the point of rivaling China’s.

Conclusion

Despite a noticeable shift in tone from the foreign ministry’s original draft, the final version of Germany’s China strategy still focuses heavily on regime differences and the resulting political dynamics. In this, it is clearly a product of the Zeitenwende turn in German thinking about international relations. It mainly sees China, its domestic authoritarianism and international assertiveness as a (however manageable) risk to German and European sovereignty and ways of life, a competitive challenge to its industrial and technological leadership, and a challenger to international norms that Germany holds dear. While the strategy sees these tensions as rooted in Chinese authoritarianism, it develops an agenda that is primarily focused on reasserting greater political control over the relationship on the German side. Its measures are predominantly defensive, and there is no ambition to change the Chinese regime (or even just its political calculus). The strategy is the most concrete and convincing where it discusses policies that can be implemented domestically or at the EU level, where it dovetails with the de-risking approach of the European Commission. However, it becomes much less so whenever German international agency is concerned. In this too, it is perhaps a sign of the times, of an inward turn in German foreign policy, and of an agenda that is more concerned with maintaining Germany’s own regime than of transforming others in its image.

Pascal Abb

Pascal Abb

Dr. Pascal Abb ist Koordinator der Forschungsgruppe „Regimewettbewerb“ und wissenschaftlicher Mitarbeiter am PRIF mit Schwerpunkt China. Er betreibt aktuell ein Forschungsprojekt zu den Auswirkungen der Belt-and-Road-Initiative auf Konfliktstaaten. // Dr Pascal Abb is Coordinator of the Research Group “Regime Competition” and Senior Researcher at PRIF with a focus on China. He is currently conducting a research project on the impact of the Belt and Road Initiative on conflict states.

Pascal Abb

Dr. Pascal Abb ist Koordinator der Forschungsgruppe „Regimewettbewerb“ und wissenschaftlicher Mitarbeiter am PRIF mit Schwerpunkt China. Er betreibt aktuell ein Forschungsprojekt zu den Auswirkungen der Belt-and-Road-Initiative auf Konfliktstaaten. // Dr Pascal Abb is Coordinator of the Research Group “Regime Competition” and Senior Researcher at PRIF with a focus on China. He is currently conducting a research project on the impact of the Belt and Road Initiative on conflict states.

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