by Katja Hoyer
Tuesday, 31
May 2022
Explainer
10:15

Germany’s dangerous dependency on China

It is now extremely difficult for Olaf Scholz to pursue an independent foreign policy
by Katja Hoyer
Credit: Getty

The war in Ukraine has asked a fundamental question of Germany: how far does an aggressor need to go before Berlin rethinks its economic ties to the regime? The answer may be uncomfortable in relation to Russia. But Germany’s reliance on China is even more worrying.

Amidst inflation, war and domestic politics, the Xinjiang Police Files are only the latest cache of evidence about human rights violations in China. Yet, according to one recent survey, 94% of German companies want to maintain their presence in China; 71% want to even increase investment. Volkswagen Group China alone employs 90,000 people including in a factory in Ürümqi, the capital of Xinjiang province.

But the problem goes far beyond the morality of individual private businesses. The bigger picture of Germany’s economic ties to China reveals a dependency that dwarfs that of Russia, seriously impeding Berlin’s ability to enact an independent foreign policy.

No other European country maintains trade closer relations with China than Germany. Since 2015, China has been its most important economic partner year on year. Trade between the two nations was worth nearly €250 billion in 2021 alone. But while Germany once dominated this relationship, having been the biggest exporting country in the world in the early 2000s, the tables have turned. Germany is only China’s sixth most important trading partner and has long been overtaken in exports.

The most vulnerable sector is Germany’s car industry, which still sits at the heart of its economy. It relies on China as an export market but also for the import of parts (the latter sector was worth €113,8 billion alone last year). With the rise of electric cars, batteries and their chemical components have become essential, also largely imported from China.

Volkswagen CEOs have at best pretended to be ignorant of the morality of their business in China, but at worst, outright callous. Stephan Wöllenstein, head of the China group, said: “We must stand by our commitment in China as a whole, and we will also stand by our commitment in Xinjiang as long as we believe that it is economically feasible.” The truth is, he would find it difficult to shut the factory in Ürümqi down, even if it wasn’t feasible. China holds all the economic cards. It is in a position to blackmail its German trading partners while the same can no longer be said in reverse.

German companies have lost control over the dangerous dependencies they have created in their search for profit while the German government is only just waking up to them. The economics ministry has made a small start by denying VW government guarantees for further investment in China, but there does not seem to be a grand strategy on how Germany can regain its economic and political independence.

It has allowed both Russia and China to worm themselves so deeply into the nervous system of the once mighty German economy. Germany will find it difficult to walk away from the brutal dictatorships it has courted for too long.

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Andrew Horsman
Andrew Horsman
27 days ago

This is what happens when you do a deal with the devil. It’s always a voluntary choice, and then you’re trapped. Germany isn’t alone in this. Many western countries are going to have to make a hard choice between their short term material wellbeing and their spiritual and moral integrity, and Judeo-Christian heritage values. We cannot have it both ways and something will have to give.

Gary Taylor
Gary Taylor
27 days ago

Germany – never knowingly on the right side of history

Tom Watson
Tom Watson
27 days ago

Lol, have we forgotten what happened last time Germany had a “grand strategy to regain its economic and political independence”?

Henry Cunha
Henry Cunha
27 days ago

This is an alarmist article without any real substance. Goodness, the US, Japan, SK and others hold more FDI stock in China than Germany.

ARNAUD ALMARIC
ARNAUD ALMARIC
27 days ago

That’s better!
20.40 BST.

ARNAUD ALMARIC
ARNAUD ALMARIC
27 days ago

QED: The. censorship on this essay has been quite appalling.
19:24 BST.

Jürg Gassmann
Jürg Gassmann
27 days ago

This is a bizarre article – the US has in the past 25 years launched unprovoked and in international law flagrantly illegal wars of aggression against Serbia, Iraq, Libya, Syria, and numerous other members of the UN, without so much as a murmur of official objection from the German government – which even participated and lied its way into the illegal war on Serbia.
Occasional noises are made about the Saudi and UAE murderous war on Yemen, or the Saudis chopping up one of their nationals in their Consulate in Istanbul, so clearly, those aggressors have not gone far enough to worry the principled “West”.
Germany is the poodle to the US, cutting its own flesh to gratify the US’ every whim, and we’re hyping the relationship with China?
The hypocrisy must end.

ARNAUD ALMARIC
ARNAUD ALMARIC
27 days ago
Reply to  Jürg Gassmann

Spot on!
Even I am surprised that the UnHeard readership is so naive as to believe all the hypocritical tosh that has emanated from the US in recent years.

Last edited 26 days ago by ARNAUD ALMARIC
Anton van der Merwe
Anton van der Merwe
27 days ago
Reply to  Jürg Gassmann

To equate US policy with Chinese policy suggests that you are extremely biased. You are either extremely anti-American or extremely pro-China. Possibly both. China is engaged in genocide within its borders. It is not a good look for Germany to ignore genocide, given its history.

ARNAUD ALMARIC
ARNAUD ALMARIC
27 days ago

Correct, China is an existential threat to our civilisation and will have to be dealt with sooner or later.
However that does not absolve the US of its frankly disgraceful behaviour in the Middle East and elsewhere.
‘We’ expect the ‘ Leader of the Free World’ to set an example, which it lamentably has failed to do recently.

Jeanie K
Jeanie K
26 days ago
Reply to  ARNAUD ALMARIC

I mainly agree, except, America’s ‘bad behaviour’ is not just recently. It was most of the 20th century and certainly 22 years of this century.