Germany Recalibrates Approach To China Amid Shifting International Relations

Germany has significantly adjusted its strategy toward China in light of Beijing’s changing international behavior, according to Thomas Bagger, Director-General for Foreign Affairs at the German Foreign Ministry. During a foreign policy event at the Hudson Institute on June 28, Bagger outlined Germany’s evolving stance, which now emphasizes competition and rivalry over partnership and cooperation.

Bagger pointed out that Germany is now focusing on de-risking and reducing economic dependencies on China, particularly in areas highlighted by the COVID-19 pandemic. These areas include medical supplies and critical raw materials for technological development. He acknowledged that a complete decoupling from China would have substantial economic consequences for Germany, indicating a careful balancing act in the country’s revised approach.

Germany’s strategic shift was formally recognized last year with the introduction of its first Strategy on China. This new framework aims to diminish economic reliance on China while fostering fair cooperation aligned with German values and interests. Despite aligning with the U.S. on several key issues, including China’s conduct in the South China Sea, Bagger stressed that Germany maintains its independent approach, rejecting the notion of being subservient to American policies.

Bagger also addressed the broader geopolitical implications of China’s support for Russia in its conflict with Ukraine. He warned that Beijing’s backing of Russia could harm its relations with Europe and have significant repercussions for its global standing. Continued support for Russia would result in increased costs for China concerning its bilateral and European relationships.

China has been Germany’s leading trading partner since 2015. However, recent data indicates a shift, with the United States surpassing China in trade volume in the first quarter of this year. Germany’s trade with the U.S. amounted to €63 billion ($68 billion) from January to March, compared to nearly €60 billion with China.

This economic shift is accompanied by rising tensions. The European Union announced plans to impose a 38.1 percent tariff on imported Chinese electric vehicles, accusing China of unfair subsidies. Germany opposed the EU’s tariff hike, concerned about potential retaliatory tariffs from China affecting its major automakers such as BMW, Mercedes-Benz, and Volkswagen, which have extensive manufacturing operations in China.

Additionally, business confidence among European companies operating in China has declined. A survey by the European Union Chamber of Commerce in China revealed that 68 percent of European companies find the business environment increasingly challenging due to market access restrictions, regulatory hurdles, and China’s economic issues, including slowing demand and a struggling property sector.

Germany’s recalibrated approach to China reflects its need to navigate complex economic and geopolitical landscapes. As the country seeks to balance its economic interests with growing concerns over China’s international behavior, it underscores the shifting dynamics in global trade and international relations.

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