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Germany’s Merkel sees ties with Chinese premiers pay off

German Chancellor Angela Merkel may find her tenth visit to China, for next month’s G20 summit in Hangzhou, the most challenging since she took office in 2005.

It comes at a testing time for Sino-European ties and the once cosy relationship between China and Germany also appears to be faltering after a much-touted golden era of economic and trade cooperation.

Merkel, Europe’s longest-serving head of government, is largely preoccupied with the pressing challenges of dealing with an ongoing refugee crisis and the aftermath of Britain’s vote to leave the European Union.

A trained physicist who grew up in communist East Germany, Merkel is famed for her skill as an interlocutor with China’s largely enigmatic leaders, thanks partly to the lucrative commercial ties between China, the world’s second-largest economy, and Germany, Europe’s biggest.

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Her frequent visits to China, the most among all German chancellors and a record among Western leaders, underline her special ties with the country and reflect her keenness to show she “knows China best”.

But Merkel has also become the deeply troubled EU’s de facto leader as the 28-member bloc has struggled through a series of crises over Ukraine and levels of sovereign debt in the euro zone.

In an increasingly complicated world, and without seeking a leadership role on the international stage, Germany is now playing an anchor role in a Europe still reeling from the Brexit vote and the impact of a refugee crisis that gathered steam last year.

Merkel now faces the dilemma of finding a balance between Germany’s role as China’s most important business partner in Europe and the growing scepticism among many European nations about investment from China and Beijing’s increasing global assertiveness.

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With such a remarkable transformation of German foreign policy under way, the largely steady relationship between China and Germany has run into some unexpected tensions over the past year.

“Merkel has found herself confronted with many fresh challenges, such as the sudden influx of a large number of migrants and refugees and the heightened threat of terrorism across the continent,” said Cui Hongjian, director of European studies at the China Institute of International Studies in Beijing.

“Germany has apparently given high priority to its European problems over the importance of China-German relations as negative perceptions of China have picked up across Europe.”

Wang Yiwei, formerly a diplomat with the Chinese mission to the European Union, said the era when Germany exported advanced machinery, cars and other industrial goods and China served as a low-cost production base was gone. Instead, Merkel had become rather alarmed at the dawning of a new era featuring more complex, less complementary and increasingly competitive business relations, he said.

During her most recent visit to China, in June, Merkel and Premier Li Keqiang reached a broad consensus on accelerating cooperation between Germany’s Industry 4.0 industrial information technology programme and China’s Made in China 2025 blueprint for upgrading its industrial sector, which is aimed at making China a global manufacturing power.

But Cui noted that despite political commitments, such cooperation would be difficult before widespread concerns among foreign enterprises over China’s rather poor record in protecting intellectual property rights were properly addressed.

Michael Clauss, Germany’s ambassador to China, said China’s limited market access for foreign companies and its insistence on technology transfer, often listed as a mandatory requirement to operate in China, were obstacles to the deepening of industrial cooperation.

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“Despite ongoing reform, a growing number of German companies apparently feel that the business environment at present in China is not improving fast enough or not improving at all,” he said. “Many US and European companies seem to share this perception.”

China’s notorious Great Firewall and a draft cyber security law, aimed at further tightening internet and data control, would also impede efforts to promote such cooperation, Clauss said.

“Internet speed and accessibility is one of our companies’ major complaints now, and many German companies see the situation as deteriorating,” he said. “China needs to strike the right balance between security needs and business interests. Otherwise, the future potential of cooperation between Industry 4.0 and China will remain limited.”

Tensions over trade frictions and Chinese investment overshadowed Merkel’s visit to China in June, with disputes over China’s industrial overcapacity, especially in steel, and China’s bid for “market economy” status on full display.

In a rare move that irked her Chinese hosts, Merkel also expressed concerns over China’s deteriorating human-rights situation and stressed the importance of the rule of law at a time when Beijing was stepping up crackdowns on dissent, tightening control of media outlets and the internet and passing a new law restricting the operations of foreign NGOs.

Analysts noted it was not the first time Sino-German ties had run into difficulties since Merkel assumed office in November 2005.

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Shortly after her first official trip to China in 2007, Merkel met the Dalai Lama, the exiled Tibetan spiritual leader whom Beijing considers a separatist, in Berlin despite China’s protests. Her decision not to attend the opening ceremony of the 2008 Beijing Olympics further strained bilateral ties.

But in the wake of global financial crisis, which hit Europe hard, Merkel made her second trip to China in October 2008. It marked the start of her pivot to China, focusing on closer economic and trade links and diplomatic pleasantries.

The transformation of her policy towards China kick-started golden era in bilateral ties which gradually evolved into mutually beneficial economic interdependence and finally a “comprehensive” strategic partnership at the end of 2014.

Mikko Huotari, head of the Chinese foreign relations programme at the Berlin-based Mercator Institute for China Studies, said German chancellors dating back to Gerhard Schroeder in the late 1990s had traditionally taken China very seriously and Merkel had continued and expanded on that tradition.

“Germany’s bilateral relations with China benefit from a remarkably high degree of continuity and institutionalisation,” Huotari said. “Good personal relations and frank exchanges, for instance between Merkel and Premier Li, have also played a role in holding things on track.

“On critical issues such as the South China Sea tensions, the business environment for foreign companies, and the market economy status question, Merkel and the German government try to facilitate and carve out an independent European position that is in line with German and European interests, recognising, also, the limits of European power.”

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But while bilateral ties were still important to the German leadership, he said the relationship was becoming more complex and conflict-prone.

“All relevant international leaders, including Merkel, are rightly continuing their balancing acts in engaging China while voicing their doubts and criticisms when appropriate, including on China’s challenges to the international rules-based order, regarding investment openness, reciprocity and unfair competition,” Huotari said.

There would only be very limited time for direct bilateral exchanges at the G20 summit, he said, with the “bigger question” whether China could lead it to “really deliver new impetus on pressing global issues including global financial stability, growth and development”.

Over the years, Merkel has forged rather friendly ties with her Chinese counterparts, Li and predecessor Wen Jiabao. While still bringing up politically sensitive topics such as human rights issues during her public speeches in China, she largely refrained from lecturing her Chinese hosts on democracy and Western-style governance during bilateral meetings, which eventually paid off economically, with trade between the two countries increasing steadily. It has grown by an average of more than 14 per cent a year, nearly doubling every five years and making Germany China’s biggest economic partner in Europe.

According to data from Germany’s Federal Statistics Office, China is Germany largest source of imports and its fifth-biggest export market after the United States, France, Britain and the Netherlands.

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International relations specialist Pang Zhongying, from Renmin University in Beijing, said the fact that Merkel had spent the first 35 years of her life in East Germany had helped her better understand the world’s last major communist regime.

Her renowned knack for dealing with Chinese leaders was evident in a much talked about case during her visit to China in February 2012.

When police barred human rights lawyer Mo Shaoping from meeting her, Merkel did not protest publicly. Instead, she chose to complain to then premier Wen on the sidelines of an official function, so that her trade-focused trip would not be disrupted by an embarrassing diplomatic mishap. German media reports said Wen showed unusual patience in seeking to understand her argument instead of accusing Merkel of attempting to intervene in China’s internal affairs, as mainland politicians usually did.

After she left Beijing for Guangzhou during the same trip, Merkel publicly expressed regret over the incident and said the Communist Party should have the confidence to allow dissent.

Former vice-commerce minister Wei Jianguo, who met Merkel several times, described her as pragmatic and having the ability to grasp the essence of policy issues.

“She also attaches much importance to cultivating personal relationship with Chinese leaders, which has apparently helped our bilateral ties weather ups and downs over the years,” he said.

Wei and other analysts said China and Germany should make full use of bilateral and multilateral platforms, including the G20 summit, to better manage their differences over a wide range of political and economic issues and forge closer ties.

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“China-German relations look set to establish the future direction of Sino-European ties because we have a robust friendship both between our two countries and between our leaders,” Wei said.

He also noted that unlike China’s rivalry with the US, Beijing’s ties with Berlin were mutually beneficial and conducive to the restructuring of the existing international order.

“Despite our differences, both China and Germany are poised to take up greater international leadership roles in global governance,” he said.

Wei said it was time for Europe to rethink its China policies, which had been heavily influenced by the US, and pursue closer political and economic relations with the emerging Asian power.

Others said this year’s G20 summit was occurring at a critical juncture, with China and Germany facing some important choices which could have far-reaching regional and global impacts.

“While there are growing concerns in China over the EU’s ability to implement previous agreements in the post-Brexit era, Germany and Europe have become increasingly cautious towards China due to growing uncertainty over the Chinese economy,” Wang said.

Analysts said it was unrealistic to expect breakthroughs at the G20 summit on divisive issues such as cybersecurity, overcapacity and China’s overseas investments, but Germany should help China produce some tangible results at the two-day meeting.

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“Germany has become even more important for China after Brexit,” said Cui. “We understand Merkel may need time to get accustomed to the role of making decisions on behalf of the EU and to rebalancing the different, sometimes conflicting interests towards China among European nations. We hope both China and Germany will seize the momentum of good bilateral relations over the past decade, which have effectively become the engine of Sino-EU relations.”

Instead of viewing growing Chinese investment in Europe as a threat, Wei said Germany should seize on China’s One Belt, One Road initiative as an opportunity to boost its economy. “China’s investment in infrastructure projects, such as rail links, will surely bring Europe a much-needed capital injection, which will also make possible the flow of information and human resources,” he said.

But Pang said that although the One Belt, One Road initiative was largely aligned with German interests, Merkel might find it difficult to help China promote the scheme amid concerns and scepticism across the Europe.

Pang noted that Germany would host the G20 summit next year, which meant there would be a lot of room for China and Germany to cooperate in terms of addressing challenges both at home and abroad.

“To start with, China and Germany should make efforts to prevent the G20 summit from being rendered increasingly irrelevant and ineffective, as many critics say,” he said. “They should take up leadership roles in strengthening the platform while setting an example of how to jointly get through economic stagnation, overcome growing isolationism and tackle other crises and challenges.”

Dr Angela Stanzel, a China relations specialist at the European Council on Foreign Relations, said she believed China and Germany were working to coordinate their G20 presidencies.

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“The bottom line, however, is that in the German view China is an indispensable player on global economic and security issues and Germany certainly seeks to involve China as much as possible to tackle these issues together,” Stanzel said.

She described Merkel as a pragmatic leader who had been “rather reactive” to Chinese policy shifts, rather than proactive, and who would “continue to balance her approach towards China according to her economic and security concerns”.

“In light of the various crises in and around Europe, I believe Merkel has succeeded so far in balancing a firm stance on some issues and a cooperative approach on others,” Stanzel said.

Robert Goebbels, a former Luxembourg minister and a former member of the European Parliament, said Merkel, who saw her main role as door-opener for her industries and service providers, was likely to continue to try to ensure friendly ties with China, noting she had paid more visits to China than to any other non-EU country.

Additional reporting by Wendy Wu

Sino-German relations timeline

1949 – The German Democratic Republic (East Germany) recognises the People’s Republic of China

1957 – The German Committee on Eastern European Economic Relations, based in the Federal Republic of Germany (West Germany), and the China Council for the Promotion of International Trade sign initial trade agreement

1964 – Secret negotiations are held in Bern, Switzerland, between China and West Germany concerning future relations

1972 – West Germany recognises the People’s Republic of China. Chinese trade delegation visits West Germany

1973 – The first formal government-level trade agreement is signed between West Germany and China

1989 – West Germany imposes sanctions on China as a consequence of the crackdown on pro-democracy protesters in Beijing’s Tiananmen Square

1990 – Following German reunification, the German and Chinese foreign ministers meet at the United Nations General Assembly and agree to restore full diplomatic relations

1993 – Germany reaffirms its acceptance of the “one China” principle by refusing to sell submarines to Taiwan. German chancellor Helmut Kohl visits Beijing

1995 – President Jiang Zemin becomes the first Chinese head of state to visit Germany

1996 – German parliament condemns Chinese human rights abuses in Tibet, angering the Chinese government which cancels German foreign minister’s planned visit to Beijing

2002 – Jiang visits Germany to mark 30 years of Sino-German relations

2004 – Telephone hotline between Beijing and Berlin is established

2006 – Angela Merkel visits China for first time as German chancellor

2007 – Merkel becomes the first German leader to host the Dalai Lama, angering the Chinese government which cancels various meetings with German officials

2008 – German Foreign Minister Frank-Walter Steinmeier visits Beijing and Sino-German relations return to normal

2014 – President Xi Jinping visits Germany and Sino-German relations are upgraded to a “comprehensive strategic partnership”

2016 – German President Joachim Gauck visits China

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