Bend It Like Scholz: Can Germany show the way to heal the EU-China relations?

That the EU-China relations have been facing challenges is not news. Lately we have been witnessing a change of course in the EU’s stance towards its biggest trade partner. Just a couple of years ago the EU started this turmoil by calling China “systemic rival” while the European Parliament froze the Comprehensive Investment Agreement (CAI). Indeed, issues like Hong Kong and Xinjiang have been reasons for serious disagreement between the two sides. This year, the crisis escalated after Russia’s invasion in Ukraine with NATO‘s unprecedented promulgation about China being a “challenge” for the next decade, which was mainly an opportunistic effort of the US to hurt China by trying to influence how the world sees the Asian giant. And then of course the cherry on the cake was Ms. Pelosi‘s provocative visit in Taiwan earlier this year, escalating further the Taiwan tensions and uncovering the US mission to harm China’s sovereignty by challenging the One Country Policy.

Obviously, all the above were nothing but strong efforts from the US and its obedient follower EU to influence China’s policy significantly. However, the key takeaway from the 20th National Congress of the Communist Party of China (CPC) a couple of weeks ago is that China in the coming decades will follow a strategy that is in the best interests of the Asian giant and not the interests of Washington or Washington satellites like Brussels. Of course, nobody would really expect less than the country with the world’s biggest population and second biggest economy.

The Congress

China came out stronger than ever from the 20th Chinese Communist Party Congress that took place from October 16-22. President Xi Xinping secured a third term of leadership, which will be soon ratified during the National People’s Congress later in March 2023.

The main takeaways from President Xi’s report are the following: a) to realize the country’s Second Centenary Goal by leading China into a great socialist country through rejuvenation and modernization; b) this socialist modernization will take place in two steps, one until 2035 and another by 2050 to fulfill China’s dream for a prosperous, self-sufficient, democratic and balanced socialist nation; c) the past decade witnessed the centenary of the party, embraced a new time of socialism for China and eradicated absolute poverty by creating opportunity to the Chinese people and thus realizing the First Centenary Goal; d) the most important economic highlights is that the GDP exceeded a two times increase, China’s share of the world economy raised from 11.3% to 18.5%, China became the world’s first grain producer and manufacture engine and finally the country possesses the world’s biggest foreign currency reserve.

Quotes from Xi’s report:

On economic policy. We must apply the new development philosophy, advance reforms to develop the socialist market economy, adhere to high-standard opening up, and accelerate efforts to foster a new pattern of development that is focused on domestic economy and features positive interplay between domestic and international economic flows.

On whole-process people’s democracy. We will continue to strengthen the institutions through which the people run the country, fully develop consultative democracy, actively develop democracy at the primary level, and consolidate and develop the broadest possible patriotic united front. 

On foreign policy.  China has always been committed to its foreign policy goals of upholding world peace and promoting common development, and it is dedicated to promoting a human community with a shared future. China remains firm in pursuing an independent foreign policy of peace, adheres to the Five Principles of Peaceful Coexistence in pursuing friendship and cooperation with other countries, and remains committed to its fundamental national policy of opening to the outside world. 

On One Country, Two Systems Policy.  This policy is a great innovation of socialism with Chinese characteristics and has proven to be the best institutional arrangement for ensuring sustained prosperity and stability in Hong Kong and Macao after their return to the motherland.  It must be adhered to over the long term. 

On Taiwan question. Resolving the Taiwan question is a matter for the Chinese, a matter that must be resolved by the Chinese. We will continue to strive for peaceful reunification with the greatest sincerity and the utmost effort, but we will never promise to renounce the use of force, and we reserve the option of taking all measures necessary. 

On green development. We must uphold and act on the principle that lucid waters and lush mountains are invaluable assets,  accelerate the transition to a model of green development, intensify pollution prevention and control, enhance diversity, stability, and sustainability in the ecosystems, and work actively and prudently toward the goals of reaching peak carbon emissions and carbon neutrality.

So, a key conclusion from this month’s 20th Chinese Communist Party Congress is that all the world’s (US, EU) strong efforts to influence Chinese policy and shape it to lean more towards the West’s goals and aspirations were as effective as a drop in an ocean can be. China this month showed that is stronger than ever and remains solid on its course and strategy for the future. It aspires global prosperity and peaceful coexistence through openness, investment, green development and international trade but without any compromise to the country’s national interests and sovereignty.

EU’s reaction

The unanimity at the CPC made it clear to the EU or the US or other global powers that they cannot have their way with China. This has affected and divided the EU regarding its stance towards the Asian country.

Already at the European Council meeting at the end of October that followed the 20th Chinese Communist Party Congress, the President of the European Council Michel said: “This discussion showed a very clear will to avoid being naive, but neither did we want to embark into a logic of systematic confrontation [with China],” …“We will always be firm in standing up to defend our principles, democracy, fundamental freedoms.”

The Commission’s President Von Der Leyen, said that (Beijing) “is continuing its mission to establish its dominance in East Asia and its influence globally”…“These developments will affect the EU-China relationship,”…“Obviously, we have to be very vigilant when it comes to dependencies. And we’ve learned our lesson,”

China’s answer

As expected, the Chinese Mission to EU came out to respond to those EU statements. “We disagree with the deeply ideology-oriented remarks.”…“China…equally opposes and urges all to stay alert to the rising clamour for ideological confrontation, which might lead to clashes or even confrontations among civilisations,”…“China and the EU are partners rather than rivals, and that China-EU cooperation far outweighs our competition”,…”Instead of scapegoating others for their own malaise, one should always take a good reflection on itself in the first place,”…”We always believe that China and the EU are partners rather than rivals, and that China-EU cooperation far outweighs our competition. Cooperation is the only way that can benefit us both, while conservatism and regression are a road that leads nowhere,”…”We hope that the European side will establish a clearer understanding of the current situation, comprehensively and accurately interpret the spirit of the 20th CPC National Congress, approach China-Europe relations in an objective manner, and walk with us in the same direction,” …”In building a community with a shared future for mankind, China will unwaveringly follow a win-win strategy of opening up, and actively participate in the reform and the building of the global governance system”.

Bend it like Scholz!

Nevertheless, for the EU’s economy powerhouse which is Germany, sanity and business are one and the same and should overcome any cultural or policy differences or global tactics to harm China. Therefore, at the same EU Summit following the 20th Chinese Communist Party Congress the German Chancellor Olaf Scholz defied the general sentiment of negativity towards China and stated that he will do business as usual with China and he will still travel to Beijing in November to discuss Cosco’s investment in Germany’s biggest port, Hamburg.

The latter though raised eyebrows in the EU and caused dissatisfaction. Apart from the complaints during the Summit and the criticism Scholz received from media, just the day before yesterday the EU Commissioner for Industry Thierry Breton made a statement against Scholz’s visit in Beijing warning against naiveness with China and urging the EU to be a united front.

“No one is saying that we can no longer invest there, that we can no longer import from China”, Scholz said at the sidelines of that same Summit. He also cunningly added that “there has been no vote for globalization or to get out of China”. And indeed, it is common knowledge that sometimes these days Brussels is shaped by bodies or persons that do not have democratic legitimization to represent peoples whatosever; but that is another topic of painful discussion on its own.

Mr. Scholz’s view is pure logic as nobody can just turn the back on its biggest trade partner, especially at turbulent times of wars, inflation and energy crises. Since for ever, Germany has been an economic leader in the EU block and luckily the country is taking up the lead again at a crucial point for the EU-China relations.

It’s the Economy, stupid!

All in all, after China’s firm reiteration after the Congress, the EU is called now to seriously embrace difference, both cultural and economic, vis a vis its relations with its important trade partner. Obviously, the EU needs China as China needs the EU to prosper. A new cold war stemming out of the EU’s keen tendency to echo Washington cannot ever be the solution in 2022.

At last, the EU should grab a pair of foreign policies that will be of its very own and for its own best interests, just like Germany does. And there are so many areas to work with China, as it has been the case since the past half a century now. Trade, Environment, Digital, Energy, Food and so many more. Fine, “be vigilant”, or better say “play your EU game” but at the same time cut to the chase and do the damn business. Just like Germany does, Europe’s biggest powerhouse. Anything else would be just like shooting your legs, and to be noted that they are already injured.

At the end of the day, it all comes down to our EU leaders, who should not care so much about their hefty EU salaries and making sure that they will never stop receiving them until their 80s/90s, another common trend in the US. They should live up to the expectations and not fall below the bar that the EU citizens have raised for them. Otherwise, just a pinch of more economic decadence in the EU, stemming from a possible trade war with China, will abruptly send the whole trembling EU edifice to ruins.

Obviously these are tough times, China is tough and solid and it is a one-way street that the EU finds a way to collaborate with this country.

“It’s the Economy, stupid” (Carville, 1992).