Germany's New Government: Business as Usual with China
Updated: Jan 1, 2022
by Soeren Kern
December 31, 2021
Olaf Scholz, who succeeded Angela Merkel as chancellor on December 8, pledged [in a telephone call with China's President Xi Jinping] to strengthen economic ties with China, but he failed to mention human rights or the destruction of democracy in Hong Kong.
The telephone call will disappoint those who had hoped that Germany's new government would break with the past and take distance from Merkel's policy of appeasing dictators and sacrificing human rights on the altar of financial gain.
If Scholz promised to advance bilateral economic relations without linking them to the protection of human rights, it would be a direct violation of Germany's coalition agreement, which pledged to make human rights the centerpiece of German foreign policy.
The Merkel government, apparently under pressure from German industry, largely ignored human rights abuses in Xinjiang.
China is Germany's biggest trading partner, with €212 billion in goods exchanged in 2020, according to the German Foreign Ministry. More than 5,000 German companies operate in China, according to the German Chamber of Commerce in China.
"Did the new German Chancellor pressure the Chinese dictator during their phone call over the Chinese blackmail of Lithuania, EU and NATO ally of Germany? Or does Germany still not care about the strategic reality and is its foreign policy still driven by greed and appeasement?" — Jakub Janda, Director of the Prague-based European Values think tank.
"Merkel will be judged harshly by future historians. She has done little to prepare Germany and the European Union for the challenges that the Putin and Xi regime pose to liberal democracies. And Scholz is doubling down on her failed foreign policies vis-a-vis autocracies. It will end in tears." — Andreas Fulda, German political scientist and expert on EU-China relations.
Germany's new chancellor, Olaf Scholz, has had his first telephone call with Chinese President Xi Jinping. Scholz, who succeeded Angela Merkel as chancellor on December 8, pledged to strengthen economic ties with China, but he failed to mention human rights or the destruction of democracy in Hong Kong.
The telephone call will disappoint those who had hoped that Germany's new government — a three-way coalition consisting of the center-left Social Democrats (SPD), the environmentalist Greens and the pro-business Free Democrats (FDP) — would break with the past and take distance from Merkel's policy of appeasing dictators and sacrificing human rights on the altar of financial gain.
The call raises the question of who will determine Germany's China policy: Chancellor Scholz (SPD), who advocates for pragmatism and continuity, or Foreign Minister Annalena Baerbock (Greens), who is critical of China and has called for a values-based foreign policy and the implementation of Western ideas of human rights and the rule of law.
A 50-word German readout of the telephone call, which was held on December 21, stated that Scholz and Xi talked about "the deepening of the bilateral relationship and economic relations" and "the development of EU-China relations."
A 950-word readout of the conversation published by China's state-run news agency Xinhua provided additional details, including apparent pledges by Scholz "to inherit and advance Germany-China friendship and cooperation" and "to work with China in the spirit of mutual respect and mutual trust to push for further development of the Germany-China all-round strategic partnership."
The Chinese readout added: "Scholz said that he hopes the EU-China investment agreement will enter into force at an early date, and that Germany is ready to work with China to uphold multilateralism in international affairs."
That statement is problematic in several ways. The European Parliament recently froze the EU-China trade deal, and it is unlikely that the agreement will be ratified anytime soon, regardless of what Scholz may have promised.
Moreover, the Chinese and the Europeans have mutually exclusive understandings of the term multilateralism. Broadly speaking, the Europeans view multilateralism as strengthening existing structures, including the United Nations system, to enforce a global rule-based liberal order enshrined in binding international treaties.
By contrast, China views multilateralism as counterbalancing the dominance of a liberal international order. China-led multilateralism has been described as "an interim arrangement in China's drive to acquire regional and global dominance."
German Coalition Agreement
Both the German and the Chinese readouts of the phone call omit any mention of human rights.
If Scholz promised to advance bilateral economic relations without linking them to the protection of human rights, it would be a direct violation of Germany's coalition agreement, which pledged to make human rights the centerpiece of German foreign policy. Strangely, Foreign Minister Baerbock has not commented on the statements attributed to Chancellor Scholz.
The 178-page coalition agreement was presented with great fanfare in Berlin on November 24 after two months of haggling (negotiators reportedly spent "hours" debating single sentences). It contains eight main sections that focus on a panoply of domestic and foreign policy issues to be pursued over the next four years. Human rights feature prominently:
Page 7: "For us, working for peace, freedom, human rights, democracy, the rule of law and sustainability is an indispensable part of a successful and credible foreign policy."
Page 130: "We will deepen and re-establish partnerships in our foreign, security and development policy and defend our values of freedom, democracy and human rights."
Page 131: "We advocate an EU that protects its values and the rule of law internally and externally and that stands up for them resolutely. As the largest member state, we will assume our special responsibility to serve as an example."
Page 135: "The EU's foreign policy engagement is committed to peace, international human rights and conflict prevention."
Page 143: "We will make our foreign, security and development policy more value-based and more European. Together with our partners, including from civil society, we will work to preserve our free way of life in Europe and to protect peace and human rights worldwide."
Page 143: "Human rights as the most important protective shield for the dignity of the individual form our compass."
Page 143: "For us, working for peace, freedom, human rights, democracy, the rule of law and sustainability is an indispensable part of a successful and credible foreign policy for Germany and Europe."
Page 146: "Human rights policy encompasses all aspects of state action on both an international and domestic level. In a global environment in which central actors also regularly question the universal validity of human rights, we want to defend and promote them together with our partners."
Page 147: "Civil societies — especially journalists, activists, scientists and other human rights defenders — are indispensable for building and maintaining functioning communities. We undertake to strengthen and protect these people and their work in a special way, even in the event of cross-border persecution.... We will create additional positions for human rights work at suitable missions abroad."
Page 147: "We will strengthen the European Court of Human Rights and insist on the implementation of its judgments in all member states. The EU sanctions mechanism must be used consistently and better coordinated with our international partners."
Page 147: "We will actively help shape the work of the UN Human Rights Council and strengthen the UN High Commissioner for Human Rights. We want to strengthen the work of the UN treaty bodies and special rapporteurs and strive for the ratification of further human rights conventions.... We want to strengthen the protection of human rights in the digital age and make internet freedom and digital human rights a priority for foreign policy."
Page 147: "Impunity for human rights violations must end worldwide. That is why we are committed to the work of the International Criminal Court and the ad hoc tribunals of the UN and will work for the further development of international humanitarian law. We support the establishment of further UN-led fact-finding missions as well as the work of UN investigation and monitoring mechanisms to enable future criminal proceedings. In Germany we want to expand our capacities for proceedings under the International Criminal Code."
Page 147: "Based on the UN guiding principles of business and human rights, we are committed to a European action plan on business and human rights. We will revise the national action plan on business and human rights in line with the supply chain law."
Page 157: "We want and must shape our relations with China in terms of partnership, competition and systemic rivalry. On the basis of human rights and applicable international law, we seek cooperation with China wherever possible. We want fair rules in the increasing competition with China. In order to be able to realize our values and interests in the systemic rivalry with China, we need a comprehensive China strategy in Germany within the framework of the common EU-China policy."
Page 157: "We strive for close transatlantic coordination in China policy and seek cooperation with like-minded countries in order to reduce strategic dependencies. Our expectation of Chinese foreign policy is that it will play a responsible role for peace and stability in its neighborhood. We are committed to ensuring that territorial disputes in the South and East China Seas are settled on the basis of international law of the sea. A change in the status quo in the Strait of Taiwan can only take place peacefully and by mutual agreement. As part of the EU's one-China policy, we support the relevant participation of democratic Taiwan in international organizations.... The principle of 'one country — two systems' in Hong Kong must be reasserted."
Page 157: "We will clearly address China's human rights violations, especially in Xinjiang."
Xinjiang is a remote autonomous region in northwestern China that is home to approximately 12 million mostly Muslim Uyghurs, a Turkic ethnic group native to the area. Human rights experts say that the Chinese Communist Party has detained at least one million Uyghurs in up to 380 internment camps, where they are subject to torture, mass rapes, forced labor and sterilizations.
Beijing is accused of seeking to forcibly eliminate the Uyghur identity in its quest to create a unitary Chinese state. Uyghurs are the second-largest ethnic group in China after the Han people, who lay claim to the Xinjiang region.
EU-China Investment Deal
The Merkel government, apparently under pressure from German industry, largely ignored human rights abuses in Xinjiang. In December 2020, just hours before the end of Germany's six-month EU presidency, Merkel — together with French President Emmanuel Macron, President of the European Commission Ursula von der Leyen and European Council President Charles Michel (other EU countries were excluded from the negotiations) — hastily concluded the so-called EU-China Comprehensive Agreement on Investment (CAI).
The lopsided agreement, which ostensibly aims to level the economic and financial playing field by providing European companies with improved access to the Chinese market, actually allows China to continue to restrict investment opportunities for European companies in many strategic sectors. The deal also lacks meaningful enforcement mechanisms for issues that the EU claims to care about, such as climate change and human rights, including forced labor.
In March 2021, the European Union, the United Kingdom and Canada, presumably under pressure from the United States, announced (here, here and here) that they had imposed sanctions on Chinese officials accused of Uyghur-related human rights abuses in Xinjiang.
In May 2021, the European Parliament voted overwhelmingly (599 votes in favor, 30 against and 58 abstentions) to halt ratification of the CAI until Beijing lifts sanctions on European lawmakers, academics and think tanks. The move, a rare display of fortitude by an institution notorious for vacillation, reflected a hardening stance in Europe toward the Chinese Communist Party.
If Scholz indeed promised Xi to advance the CAI, as China claims, Germany's new government would be at odds with the European Parliament, the EU's only directly elected institution.
Germany's Overdependence on China
China is Germany's biggest trading partner, with €212 billion in goods exchanged in 2020, according to the German Foreign Ministry. More than 5,000 German companies operate in China, according to the German Chamber of Commerce in China. Some German companies have become so dependent on the Chinese market that they cannot do without it. For instance, China accounted for roughly half of Volkswagen's global car sales during the first nine months of 2021.
On December 20, a day before the Scholz-Xi telephone call, Volkswagen's Chairman of the Board, Herbert Diess, admitted that the company is utterly dependent on China: "We need more cooperation and presence in China, not less! It would be very damaging if Germany or the EU wanted to decouple from China."
Diess wrote the post on LinkedIn, a U.S.-owned social media network. In October, Microsoft announced that it was shutting down LinkedIn in China due to pressure from the Chinese government.
Volkswagen operates a car factory in Xinjiang. During a recent interview with the BBC, Diess claimed that he did not know about the detention of Uyghurs in Xinjiang. When the BBC correspondent explained it to him, Diess responded: "I am not aware of that."
Volkswagen, which was founded by the German Nazi party in 1937 and used forced labor in its factories during World War II, has been accused of using forced Uyghur labor at its plant in Xinjiang.
In an interview with the BBC, Volkswagen's CEO in China, Stephan Wollenstein, defended the company's presence in Xinjiang's capital, Urumqi, where it runs a factory with 600 workers, producing up to 20,000 vehicles a year:
"What happened in the Nazi times was something that happened in our factories where we had forced labor, people producing Volkswagen cars. This certainly is an unacceptable situation. Therefore, we are making sure that none of our production sites have forced labor, and this is something that we specifically checked in Urumqi, and I can assure you, we do not have forced labor."
When asked whether he could be absolutely certain of that claim and give an assurance that none of the Urumqi workforce — of which around 25% is made up of Uyghurs and other minorities — had been in a Chinese detention camp, Wollenstein admitted that he could not.
"We try to control our company-related processes, including the HR process, which, for instance, means the hiring of people in the best possible manner. And this reduces for us the risk that something happens which we do not like and which is not complying to our standards. But I guess we could never reach 100% certainty."
The China Director of Human Rights Watch, Sophie Richardson, called on Diess to allow independent human rights observers to have "unfettered access" to Volkswagen's plant in Xinjiang.
The British historian Timothy Garton Ash noted that Volkswagen cannot afford to criticize the Chinese government. In an opinion article published by the Guardian, he wrote:
"The company has got itself stuck between the rock of Xi Jinping and the hard place of an increasingly outraged western public opinion. The result could be a moral car crash. "Behind this leading western company that is too dependent on China is a leading western country that is at risk of becoming too dependent on China. Under Angela Merkel, China has risen to be Germany's largest single trading partner.... "In the 2000s, it was still just possible to believe in the possibility of Wandel durch Handel (change through trade). But in the past decade, China has done more trade, become more repressive and exercised more leverage over the west. So, who has changed whom?"
Old habits, especially economically beneficial ones, are hard to break. On December 22, the German-Baltic Chamber of Commerce warned the Lithuanian government that German investors may be forced to close factories in Lithuania if Vilnius does not accede to Chinese demands that it rename a representative office of the Taiwanese government.
On December 1, China blocked all imports from Lithuania and ordered multinational companies to sever ties with the Baltic country or face being shut out of the Chinese market.
The extraordinary sanctions, which amount to a full economic boycott of Lithuania, are in retaliation for the country's decision to allow Taiwan to open a representative office in its capital, Vilnius.
Taiwan has other offices in Europe and the United States, but they use the name of its capital city, Taipei, due to the host countries' preference to avoid any semblance of treating Taiwan as a separate country. Beijing insists that the democratically self-ruled island is a part of the territory of the communist People's Republic of China and has no right to the trappings of a state.
Lithuanian President Gitanas Nausėda says that his country will not capitulate to bullying from China and that he is committed to defending the principles and values of democracy from attack.
On December 17, the Federation of German Industries (Bundesverband der Deutschen Industrie, BDI), a powerful business lobby, lashed out at China:
"The latest measures China has adopted against Lithuania amount to a trade boycott that will impact the whole of the EU. Imports from China, which are needed in German manufacturing facilities in Lithuania, are also being affected, as are exports from Germany to China which contain Lithuanian components. "In the long term, the escalation by China is a devastating own goal. It shows that China is prepared to decouple economically from 'politically undesirable' partners. It's clear to the BDI that any damage to the value chains that are at the heart of the EU single market, is not to be tolerated."
The BDI also criticized Lithuania for being "out of step" with EU policy: "It remains important to maintain economic relations with China on a high level."
Bewilderment and Consternation
Analysts, lawmakers and other observers who had been hoping that Germany's new government would usher in a change of direction regarding China have expressed disappointment at news of the Scholz-Xi telephone call.
French Asia expert Antoine Bondaz tweeted that the German Chancellery should have published more details about the call:
"I really thought the Germans were smarter... Chancellor Scholz just had his first call with Xi Jinping. And obviously Berlin didn't publish an explicit report, allowing the Chinese to impose their narrative. When will we learn? Europeans are incapable."
The South China Morning Post, a Hong Kong-based English-language newspaper, reported that Xi reminded Scholz that China has been Germany's largest trading partner in each of the past five years:
"Beijing has been increasingly anxious about a possible shift in Berlin from former chancellor Angela Merkel's pro-engagement policy towards Beijing, which could bring Europe's largest economy closer to the US, now locked in a strategic rivalry with China. "In a reflection of Beijing's eagerness to establish contact with the new German leader, Xi sent a congratulatory message to Scholz less than 10 minutes after his position was confirmed. "In stark contrast, it was more than two weeks after US President Joe Biden took office before he received a note from Xi, long after his counterparts in Germany and Britain acknowledged his ascension to power."
Jakub Janda, director of the Prague-based European Values think tank, tweeted:
"Did the new German Chancellor pressure the Chinese dictator during their phone call over the Chinese blackmail of Lithuania, EU and NATO ally of Germany? Or does Germany still not care about the strategic reality and is its foreign policy still driven by greed and appeasement?"
The German newsmagazine Spiegel wrote that Xi, by seeking a "direct line" to Scholz, was "taking the lead" against Foreign Minister Baerbock:
"In a telephone conversation with Federal Chancellor Olaf Scholz (SPD), Xi emphasized that both countries should see the development of the other 'as an opportunity.' They should also preserve the 'excellent tradition of high-ranking leadership,' the state media quoted the president as saying. "The statement can be seen as a concealed knife-jab against Foreign Minister Annalena Baerbock. Xi apparently hopes that Scholz, like former Chancellor Angela Merkel (CDU), will determine German China policy. Baerbock had already announced a tougher course against China at the beginning of December. Both sides should 'stay on course' in the development of the relationship, Xi said now."
The German newsmagazine Focus agreed. It wrote that "between the lines," Xi "took a shot" at Baerbock.
China expert Mareike Ohlberg tweeted:
"I'm not yet ready to give up my optimism about the new federal government's China policy, but Olaf Scholz is making it really difficult."
German political scientist, Andreas Fulda, an expert on EU-China relations, concluded:
"Merkel will be judged harshly by future historians. She has done little to prepare Germany and the European Union for the challenges that the Putin and Xi regime pose to liberal democracies. And Scholz is doubling down on her failed foreign policies vis-a-vis autocracies. It will end in tears."