German Chancellor’s China Visit Motivated by Eagerness to Strengthen Economic Ties

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News Analysis

German Chancellor Olaf Scholz has confirmed that he will lead a German business delegation to visit China in early November. The visit comes after EU leaders shared their concerns about Europe’s economic dependence on China under the leadership of the Chinese Communist regime. However, Scholz stated repeatedly that Germany must continue trade with China.

Scholz announced his long-planned trip to China after the EU summit on Oct. 21. He will be the first Western leader to visit China after the Chinese Communist Party’s (CCP) 20th Congress, and the first leader of a G7 country to visit China since the outbreak of the COVID-19 pandemic. The trip is scheduled for Nov. 3 to 4. The timing is particularly significant since Chinese leader Xi Jinping just started his unprecedented third term in office, further consolidating his power within the CCP.

Scholz’s planned China visit has been the subject of much attention in the German press. In early October, it was reported that the trip had been postponed but might still happen before the end of the year.

It has been only 10 months since Scholz took office as the German Chancellor in December 2021. Since then, the relationship between the EU and China deteriorated over a range of issues, from human rights in Xinjiang, to the pro-democracy protests in Hong Kong, the Russia-Ukrainian war, and trade and investment barriers.

The EU’s relationship with China was on the agenda at the Oct. 21 EU summit in Brussels, Belgium. Along with growing tensions between the United States and China, smaller countries in the EU have begun to call for a unified EU stance toward the Chinese regime. Scholz, on the other hand, said that Germany must continue its trade with China. His recent statements included saying that delinking the German economy from China is the wrong way to go and that Germany must do business with many countries, including China.

Electric Car Manufacturing Partnerships

According to Mike Sun, a veteran U.S.-China investment strategist and China expert, Scholz’s visit to China could be seen as a gesture of goodwill toward the CCP at a time when other EU countries have negative views of the regime.

China is currently the largest market for German cars, exceeding both the United States and the domestic German market. At the same time, Chinese electric car manufacturers, such as BYD and Azera, are already cooperating with German manufacturers to establish new research and development centers in Europe, Sun told The Epoch Times.

In the past, with traditional fuel cars, Chinese car manufacturers relied largely on imported parts and technologies as China’s know-how lagged behind the West. But in electric car manufacturing, the technologies are all quite similar and there is less of a gap between Chinese and Western technologies. China is now able to adopt an approach where Chinese car manufacturers invest in Europe and cooperate with European manufacturers in terms of technology. Those electric vehicles are not just exported to Europe but are developed between Chinese and European manufacturers who share the profits and technology.

Chinese auto workers on the assembly line at the FAW-Volkswagen plant in Chengdu, southwest China’s Sichuan province, during the visit of German Chancellor Angela Merkel on July 6, 2014. The plant, the second one in China, produced its first car in October 2011 and was operating in full capacity with an expected production of 600,000 vehicles in 2014. (Got Chai/AFP via Getty Images)

Sun pointed out that, in a way, Europe is cooperating with the CCP’s scheme to hold the EU economy hostage since countries like Germany now cannot simply say that they are giving up on trade with China when their own companies are benefiting hugely from cooperation. This will also prompt European governments to look the other way when it comes to China’s human rights issues and growing authoritarianism.

Chinese Acquisition in Port of Hamburg

Aerial view of a container terminal in the port of Hamburg, Germany, on Nov. 14, 2019. (Fabian Bimmer/Reuters)

Recently, Scholz allowed Chinese shipping company COSCO to acquire stakes in the German Port of Hamburg, despite unanimous opposition from the German ministries of economy, interior, defense, transport, foreign affairs, and finance. German media Deutsche Welle reported that Scholz has been under fire from both his allies and opposition about the deal, as well as receiving criticism from other EU countries.

The Port of Hamburg is the largest port in Germany and one of the most important hubs for European trade with China. COSCO is China’s largest shipping company and is currently seeking a 35 percent stake in the Container Terminal Tollerort of the Port of Hamburg. The acquisition is said to be part of a broader strategic initiative by the CCP to gain control of infrastructure critical to its global Belt and Road initiative.

The Belt and Road initiative consists of a series of infrastructure projects, from roads and ports, to telecommunications and banking facilities. The primary strategy is for Chinese state-owned banks to provide loans to developing countries, and allowing the borrowing countries to use these funds to pay Chinese companies for infrastructure construction.

COSCO already holds shares in the Rotterdam and Antwerp ports in the Netherlands, two of Europe’s largest ports. It also holds stakes in the Piraeus Port Authority in Athens, Greece. The Port of Hamburg will be the final link in its European plan.

The Deutsche Welle reported on Oct. 21 that Hamburg is worried that if COSCO’s deal fails, a large part of the container business will be taken away by Rotterdam and Antwerp in The Netherlands, or Wilhelmshaven in Germany, and even ports in the Mediterranean will also take business from the Port of Hamburg in the future. The report said that Hamburg’s green light for Chinese investment in the port came as a surprise, as the city had previously resisted foreign investment in the port on the grounds that key infrastructure should not be influenced by foreign powers.

German Vice Chancellor Robert Habeck has repeatedly said that Germany is reconsidering its overall trade policy with China. The Federal Ministry for Economic Affairs and Climate Action in Germany is reviewing the Hamburg deal under an investment screening process. Scholz, for his part, has asked the ministry to draft a compromise proposal to be approved by the end of October, when the government’s legal deadline arrives. If the government fails to pass a resolution banning the deal by the end of the deadline, the deal is legally considered done.

In addition, a Chinese stake in the Port of Hamburg may give COSCO an undue competitive advantage. German companies have so far been unable to take a stake in key infrastructure such as ports in China, while COSCO, a CCP-controlled enterprise, will receive substantial subsidies, both explicit and implicit, from the Chinese regime. This raises concerns that the Chinese regime can further interfere with domestic affairs in Germany and the wider EU.

European Commission President Ursula von der Leyen attends a meeting of the College of European Commissioners at the EU headquarters, in Brussels, Belgium, on April 27, 2022. (Kenzo Tribouillard/Pool via Reuters/File Photo)

Ursula von der Leyen, president of the European Commission, said that the EU has learned a lesson from its dependence on Russian energy imports and needs to remain vigilant against the Chinese regime. Among all EU countries, Germany has relied the most on Russian energy and was initially reluctant to abandon Russian oil and gas amid Putin’s invasion of Ukraine. It is increasingly concerning that Germany now is becoming economically dependent on another authoritarian regime, the CCP, von der Leyen said.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.