The News
German Chancellor Olaf Scholz met Chinese Leader Xi Jinping on Tuesday, during a three-day visit to China where he pressed the country on unfair business practices that have flooded Europe with cheap Chinese green tech, stymying competition.
Scholz urged Xi to grant German firms equal access to the Chinese market to ensure fair trade practices, Reuters reported. Xi doubled down on his protectionist views of Chinese exports and tariff-free entryway into foreign markets, claiming Chinese business is helping mitigate the global climate crisis.
“China’s exports of electric vehicles, lithium batteries and photovoltaic products have not only enriched global supply and alleviated inflationary pressure, but also contributed greatly to the response to climate change and green and low-carbon transformation,” Xi told Scholz.
The two leaders also discussed the war in Ukraine, with Scholz reportedly urging Xi to take a more forceful approach against Moscow.
Observers say that Scholz’s meeting with Xi is largely symbolic, with Scholz seeming to bow to Chinese pressure on economic links and security concerns knowing that Germany is incredibly dependent on Chinese business and cannot distance itself too far from China.
SIGNALS
Scholz may be repeating Russian policy mistakes with China
Xi and Scholz’s meeting suggested that the German leader may have “weakened his position” on Vladimir Putin’s nuclear threats, according to Deutsche Welle editor Richard Walker: A readout of the meeting said the two men agreed to “oppose the use of nuclear weapons,” unlike their 2022 agreement to oppose both the use and the threat to use them. Scholz’s foreign policy approach is to maintain stability through “economic ties with autocracies,” political scientist Andreas Fulda argued, pointing to the German government’s failure to anticipate Moscow’s plans to invade Ukraine. “The Scholz administration may not be able to learn from the mistakes made in Russian policy in time to adequately address the challenges posed by China’s Xi regime,” Fulda said.
German government remains enthusiastic about Chinese business
Even as Scholz pushes Xi on Chinese overcapacity of cheap green technology, he is pragmatic about needing China’s business to keep the Germany economy afloat. Scholz has adopted a “fight instead of flight” approach in China by embracing Chinese investment while ensuring German firms are compensated equitably, a European commerce official told the Frankfurter Allgemeine Zeitung. China is Germany’s largest trading partner and the latter’s economy would contract by 5% if it decoupled from China, The Wall Street Journal reported. Scholz has also historically avoided criticizing China’s treatment of the Uyghur ethnic minority, likely because of the business ties that German companies like Volkswagen and BASF have to Xinjiang, although he reportedly pressed Xi about the issue “behind closed doors,” Tagesspiegel reported.
China’s economy growing from cheap green tech
The global flood of cheap Chinese green technology has contributed to the country’s impressive economic growth this first business quarter. China’s National Bureau of Statistics on Tuesday reported 5.3% GDP growth, comfortably above the predicted 4.6% estimate from Reuters analysts. Economists have attributed the growth to massive funding of factories producing electric vehicle batteries and electronic components, CNN reported. But there are “familiar signs of weakness in consumption and real estate,” The Wall Street Journal reported, with Chinese consumers still wary about spending too much on non-essential goods. The model of heavily investing into manufacturing is leading to a “lopsided recovery” that might not be sustainable in the long run, the WSJ reported.
