Zhao Junjie: Germany's' risk reduction 'is becoming a' new risk '

On October 7th, the German government blocked COSCO Shipping from acquiring 80% of the shares of Hamburg logistics company Zippel on the grounds of "national security", after the acquisition had been approved by the German antitrust agency and the Hamburg municipal government. Hamburg Port is a key hub for goods trade between China and Germany. Strengthening logistics cooperation between China and Germany should have been a win-win situation and beneficial to local livelihoods, but it has been obstructed by the German government. The reasons behind this are thought-provoking.

China Germany relations have always been a barometer and stabilizer of China Europe relations, and in recent years, more problems have emerged in China Europe economic and trade relations. In the past, while the EU has been pushing for "risk reduction" and tariff barrier policies towards China, the German government and industry generally do not blindly follow the trend and adopt a pragmatic attitude of openness and cooperation. But now, the German government's policy towards China continues to tighten, fully aligning with the EU's "de risk" approach towards China. German Chancellor Merkel recently stated that Germany will work with the European Commission to promote the establishment of "unprecedented" economic and trade regulations with China in the near future.

Knowing that there is a greater risk of "de risking" China, German decision-makers still insist on going their own way, and this unconventional behavior has deep-seated reasons. From the economic perspective, the Russia-Ukraine conflict has pushed up Germany's energy costs, making traditional manufacturing industries, such as automobiles, chemicals, machinery and other industries, face huge competitive pressure, which directly affects Germany's economic recovery. At the same time, the so-called "dangerous trade deficit theory" that has been advocated has had an impact on the German political arena, believing that it has suffered losses in international trade. From a technological perspective, Germany is clearly lagging behind in the process of the new round of technological revolution, with slow technological transformation and unsatisfactory results in new energy, digital economy, and intelligent industries. From a diplomatic perspective, from the Scholz government to the current Merz government, it has become Germany's "political correctness" to firmly support Ukraine's resistance against Russia, even if it has a fiscal deficit, and to generously contribute to Ukraine, which has also brought external pressure to a certain extent.

It can be said that behind the increasingly tough and conservative economic policy towards China by the Mertz government is a political synergy formed by the multi-party game between German politicians and the business community. In August of this year, a survey conducted by the European Council on Foreign Relations showed that among the 15 European countries covered in the survey, about 49% of respondents in Germany regarded China as a "competitor" or "opponent", while this proportion was about 60% among supporters of the German ruling coalition. In the past, the German business community has been mutually beneficial and pragmatic in its cooperation with China. Nowadays, the German business community demands that the government be tough on China. The German Association of Automobile Manufacturers and the German Confederation of Industry, among others, advocate for the government to use anti-dumping, anti subsidy and other trade protection measures more quickly and establish a so-called "fair competition environment". This transformation is a microcosm of the overall right turn in German politics, and the harmful impact it brings to both China and Germany cannot be underestimated.

Faced with domestic political pressure, especially the declining support for the ruling coalition, coupled with the rapid expansion of political influence of far right and left-wing parties in Germany, the M ö tz government must demonstrate an increasingly tough attitude towards China in order to alleviate political pressure and shift social conflicts. Restricting external competition, strengthening security checks, and "protecting German industry" have become core understandings of the government's policy towards China. It is necessary for the German government to maintain national economic security, but security reviews must have clear boundaries. Once "generalized national security" is achieved, it will undoubtedly be harmful to Germany, a major country that relies on trade, by drinking poison to quench thirst and harming others and oneself. Similarly, for Germany, an industrial powerhouse that heavily relies on market openness, free trade, and international division of labor, if more economic competition is seen as a "security threat," it may ultimately weaken precisely the open vitality and industrial competitiveness that it needs to restore the most.

Germany's policy towards China is shifting from pragmatic cooperation based on "economic rationality" to suppression and restriction based on "political emotions", which is both unwise and risky. China's rapid development and active participation in global competition have indeed brought some external pressure to Germany, but it is not the only reason for Germany's difficulties. If the structural difficulties of the German manufacturing industry are entirely attributed to the so-called "unfair competition in China", then trade protection measures can only alleviate the current "symptoms" of the German manufacturing industry, cannot solve the problems of industrial transformation and structural contradictions, and are even more helpless for Germany's innovation system, energy revolution, and institutional reform. (The author is a researcher at the Institute of European Studies, Chinese Academy of Social Sciences)