Olaf Scholz: Speak truth to the leader

Mark O'Neill November 07, 2022 08:29

During the pandemic, China’s relations with Europe, including Germany, have deteriorated, over Hong Kong, Taiwan, Xinjiang, Beijing’s support for Russia’s invasion of Ukraine and economic disruptions caused by the Zero-Covid policy.

Last month Thomas Haldenwang, head of German domestic intelligence, told a meeting at the Bundestag (Parliament): “In the long term, China presents a much greater threat to German security than Russia. Russia is the ‘storm’, China is ‘climate change’, he said.

All this made last Friday’s meeting of Chancellor Olaf Scholz with President Xi Jinping in Beijing of great importance. It was Xi’s first face-to-face meeting with an EU leader since the start of the pandemic in January 2020 and the 20th Party Congress in October.

Scholz conveyed to Xi the messages which Europe wanted him to – unification with Taiwan only “peacefully and by mutual consent”: influence Putin to end the war in Ukraine: and better market access and protection of intellectual property and a level playing field for German investors.

"I think it's very good that Chancellor Scholz is coming," said Jörg Wuttke, president of the European Chamber of Commerce in China. “We haven't had a G7 government or head of state in China for 1,000 days now. We absolutely need clear language in this echo chamber that has evolved here since the pandemic. The chancellor must speak clearly.

“Exterior voices are incredibly important to break through this extremely tight echo chamber - you may not always see that from Berlin. My plea therefore, even though it may not look so good internally: the more politicians that come here, the better. Cause who else is going to tell him?” he said.

“Scholz is a direct person,” said one European diplomat. “He will look Xi in the eye and tell him the truth. This is particularly important with a leader who has concentrated all the power to himself. We do not know if those around him tell him correct information.”

Scholz heads a coalition government that is split down the middle over China. The Greens and part of his Social Democrat Party see the Communist Party as a systemic rival and say the country must learn the lesson of its over-dependence on Russia, for supplies of oil and gas.

But the other part of the Social Democrat Party and the Free Democrats see China as an indispensable economic partner.

In 2021, China was Germany’s top trading partner for the sixth consecutive year, accounting for 9.5 per cent of total trade in goods. Germany is the largest EU investor in China, with 10 billion euros invested in the first half of 2022 alone. China accounts for 40 per cent of total sales of Volkswagen cars and 15 per cent of sales of chemical giant BASF and 13 per cent of sales of Siemens.

Scholz brought with him a large business delegation, including representatives of BioNTech, BMW, Volkswagen, Deutsche Bank, BASF and Siemens.

In an editorial on Saturday, the China Daily said that 2022 marked the 50th anniversary of diplomatic relations between the two countries. “Germany has been Germany’s largest trading partner in Europe for 47 straight years. That shows how absurd are the efforts of Washington to ‘decouple’ China from the rest of the world.” It said that more than 5,000 German firms had invested in China and more than 2,000 Chinese ones invested in Germany.

“Germany does not propose to have any decoupling,” Scholz told a news conference in Beijing on Friday.

This division in his government was vividly demonstrated by the application of COSCO to buy 35 per cent of a container terminal in Hamburg. Last month six German ministries opposed it, including the Foreign Ministry. But Scholz got the deal approved, after cutting the stake to 25 per cent.

The government is working on a comprehensive review of its policy toward China. It will next year unveil the “China Strategy” that is likely to mark a great change from the mercantilist policies of Chancellor Angela Merkel. She went to China 12 times during her 16 years in office, always with a large business delegation. For her, economics took precedence over other considerations.

The three years of Zero-Covid had a severe impact on German firms. A survey of 460 members of the German Chamber of Commerce published in May found that 28 per cent of foreign employees planned to leave China.

“The current circumstances under which German companies have to operate in China can only be short-term solutions in emergency situations,” said Maximilian Butek, Executive Director of the Chamber. “Closed loop productions are unacceptable as a long-term solution for German companies to operate in China.”

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Mark O'Neill

A Hong Kong-based writer, teacher and speaker.