A new German strategy toward China: Berlin's policy toward Beijing must become more European

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This is an opinionated piece by Mikko Huotari, executive director at Mercator Institute for China Studies (MERICS), a European Think tank.

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While German exports in particular are falling rapidly, European business groups are complaining about continuing and new difficulties in securing a fair footing in the Chinese market. In many cases, there has been a role reversal: These days, companies are not only seeking salvation in China’s market size and favorable investment conditions but have also become dependent partners profiting from the globalization and innovation of Chinese players.

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Europe’s security and resilience are at stake ...] Russia's escalation in the Ukraine war has been accompanied by increasing Chinese support for Moscow—including through deliveries of drones. Chinese espionage against German companies has become an underestimated part of everyday life and is on the rise. Cyberattacks on the Federal Agency for Cartography or the Christian Democratic Union (CDU) party headquarters, for example, have been attributed to China.

The hybrid threat to Europe is becoming increasingly serious, while simmering tensions in the Taiwan Strait and the South China Sea mark geopolitical fault lines. Beijing is using authoritarian partnerships and pragmatic parallel structures to open up new international spheres, pushing into gaps in the political order that the US no longer wants to fill and that are beyond the EU’s reach.

The outcome of this foreboding weather system won’t just shape the future of European competitiveness and security but will also determine whether Germany’s green and digital transformation will succeed—and whether democratic societies will remain resilient. The old scenario outlined by Germany’s China strategy isn’t obsolete yet, but the urgency to act has increased immensely.

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There is a clear focus on risk and systemic conflict with the emphasis on the axis of autocracies between China, Russia, Iran, and North Korea. A National Security Council could provide a framework for resolving departmental conflicts of interest and internally updating guidelines on dealing with China. In addition, the Weimar Triangle—i.e., closer cooperation between Berlin, Paris, and Warsaw—is to be revived as a new source of strength for a united European policy.

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Anyone who still hopes for Beijing’s support for European security interests against Moscow, or who regards China as a reliable stabilizing factor in global trade or is counting on political change, is deluding themselves.

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If parts of German industry see the future of the automotive and green energy sectors primarily in China or with Chinese investment in Europe, or if dependencies on raw materials are so strong that they can only be scaled back slowly, the macroeconomic risks must be soberly analyzed and clearly stated. More German trade and investment with China can still be in Europe’s interest—but only under certain conditions.

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In the next legislative period, the KRITIS Umbrella Act, can finally be passed to improve the protection of critical infrastructures. In “outbound investments” in highly sensitive sectors, a European inspection framework should be designed in such a way that it closes gaps in export controls and also provides guidance for German companies. Clear and regular attribution of verifiable Chinese cyberattacks and information campaigns should be part of a standard repertoire to heighten business and public awareness of the forms of hybrid conflict. Cooperation between the security authorities of like-minded states must be intensified, while investment in broad-based expertise on China will remain necessary.

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As a possible response to autocratic cooperation worldwide, the new German government could therefore strive to broaden the G7 mechanism into a G11, thereby strengthening Europe’s effectiveness vis-à-vis China and embedding that approach in transatlantic cooperation. It would be in Germany’s and Europe's interest to include Australia, India, and South Korea, and to give the European Union its own seat to do justice to the pressing realities of security and economic policy—including its policy toward China. Such a structure would reflect the fact that Europe and the Indo Pacific are increasingly closely linked through supply chains, investment flows, and security policy concerns. India as an emerging economic power and South Korea with its cutting-edge technology could, together with Australia, considerably broaden the horizon and resonance of Europe’s China policy.

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