The Chinese state shipping company Cosco wants to buy part of the port of Hamburg. The Green Minister of Economic Affairs, Robert Habeck, opposes this. He does not want an authoritarian state to influence part of Germany’s ‘critical infrastructure’. The port is now hoping for the intervention of Social Democratic Chancellor Olaf Scholz, former mayor of Hamburg.
In the Süddeutsche Zeitung Green Foreign Minister Annalena Baerbock said Germany must learn from its failed Russia policy and never again become “existentially dependent” on a country that does not share our values.
The affair marks the changed relationships in the world. The ‘business first’ that has characterized European politics since 1989 is under discussion. Relations between the European Union and China have soured considerably. The EU must take a tougher stance against China, the Union’s foreign service says in a discussion paper that heads of government will discuss at the European summit in Brussels this week. This ‘strategic’ discussion will not lead to concrete results, but there is a sense of urgency.
Problem case China
China has become a problem because of its support for Russia, its repression of the Uyghurs and democracy in Hong Kong, and its threats to Taiwan. China is increasingly posing as the leader of the authoritarian world against the democracies.
In 2019, the European Union adopted its China Strategy. China was ‘strategic partner, economic competitor and systemic rival’. China represents a different world order, Europeans say, but can be a partner in areas such as climate. In the meantime, you can simply trade. This balancing act is becoming increasingly difficult to maintain, a senior EU diplomat admits: ‘The systemic rivalry is becoming increasingly important.’
Thus the European organization after 1989 is falling apart. “The United States took care of our security. China and Russia laid the foundation for our prosperity. This world no longer exists,” EU foreign affairs chief Josep Borrell said recently. Under President Biden, the United States is taking a decidedly pro-European course, but the Congressional elections on November 8 will provide an indication of its sustainability.
Precious Fraction
Cheap Russian energy has disappeared and has plunged Europe into an acute crisis that dominates the summit in Brussels. Tensions between the EU and China are mounting, while in recent decades China has been a crucial trading partner – the workshop of the world that produced cheap products that maintained the purchasing power of European consumers. Its size alone made it a lucrative market for European, especially German companies. For example, China is the largest market for the Volkswagen group.
A break with China would be much more costly than the break with Russia. China is the EU’s most important trading partner: 22% of EU imports come from China, 10% of exports go there. For Russia, these figures were 8 percent imports (mainly energy) and 4 percent exports. The figures show that, in financial terms, China is more dependent on the European market than vice versa.
But Europe is heavily dependent on China for strategically important chips and rare metals used in the production of batteries, solar panels and wind turbines. The energy transition could sharpen the geopolitical battle for rare metals.
The EU must therefore reduce its dependence, says the EU Foreign Service, through diversification of supply lines, more production in the EU itself, recycling and the search for alternative materials. This fits in with the European striving for ‘strategic autonomy’, for a Europe that can stand on its own two feet in an increasingly raw world.
Lost naivety
Europe has lost its naivety, Foreign Minister Hoekstra said this week. Since 2020 it is possible to screen foreign investments in the EU for strategic risks. An investment deal with China was postponed indefinitely in early 2021 due to a conflict over China’s treatment of the Uyghurs. In February of this year, the European Commission presented a Chips Act that should make Europe less dependent on the production of chips in Asia. At the beginning of next year, a plan will be drawn up to guarantee European access to raw materials.
However, establishing autonomy takes time and the question is how much time is given to the EU. Given the strong mutual interests, the EU and China are likely to approach each other cautiously, especially in a period of unprecedented economic turbulence.
But Russian President Putin has shown that dictators are not always guided by rational considerations. Just this week, the US Secretary of State warned of a Chinese attack on Taiwan. “Beijing is determined to achieve reunification with Taiwan in the near future,” said Blinken. US Admiral Michael Gilday said on Wednesday that the invasion of Taiwan could take place as early as this year. If that happens, Europe will have little choice and another pillar of prosperity will be removed from the period after the fall of the Wall, as happened before with cheap Russian gas.
But first, German Chancellor Olaf Scholz will go to China in early November, followed by an armada of automakers and other businessmen. “We must continue to do business,” Scholz told the mechanical engineering employers last week. ‘I say explicitly: also business with China.’