THE DIPLOMAT What to Make of Germany’s China Strategy Insights from Tim Rühlig. Mercy A. Kuo By Mercy A. Kuo August 29, 2023

 THE DIPLOMAT

What to Make of Germany’s China Strategy

Insights from Tim Rühlig.

Mercy A. Kuo

By Mercy A. Kuo

August 29, 2023

What to Make of Germany’s China Strategy

Credit: Depositphotos

The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy.  This conversation with Dr. Tim Rühlig, senior research fellow at the Center for Geopolitics, Geoeconomics, and Technology of the German Council on Foreign Relations (DGAP) in Berlin, is the 380th in “The Trans-Pacific View Insight Series.” 

Identify the top three takeaways of Germany’s recently released “Strategy on China.”

First, Germany’s China strategy is all about the reduction of risks from economic dependencies. For decades Germany adopted a mercantilist approach to China  ̶  regardless of government. Strikingly, business with China always carried some risks, but these risks were socialized by means of export and investment guarantees of the government. This draws to an end now.

Second, Germany strives to “Europeanize” its China policy. Plenty of what you find in the strategy document is already on the agenda of Brussels. The strategy appears to strengthen the position of the European Commission, which has been driving the policy change in Europe.

Third, at first glance, the strategy simply adopts the EU’s three-sided approach of China as a partner, competitor, and systemic rival. But in contrast to the EU, Germany is explicit in stating that the elements of competition and rivalry are getting more and more prominent.

Evaluate the strengths and weaknesses of Berlin’s China strategy.

The strategy is both balanced and clear. It is a remarkably profound document if compared to papers normally released by governments. It is balanced in that it describes challenges alongside the need and the benefit of cooperation. It is somewhat realistic in that it implicitly acknowledges the limits of Germany’s capabilities if it tries to act without its allies and partners. But the document is also crystal clear in its steering towards a more realistic and tougher China policy.

At the same time, the strategy is weak on concrete implementation. It does not identify any actionable priorities that Germany could implement in a given timeframe. Alignment with the European Commission also implies that the German government mostly repeats what the Commission has proposed but it lacks new initiatives. More importantly, the EU is rather united at Union level, but the main challenge is that member states do not coordinate their policies. I see no reason to believe that Germany will make a serious effort to change this.

Analyze the interlinkages between Germany’s China Strategy and the EU’s Strategic Outlook on China.

As already mentioned, Germany’s Strategy on China resembles the Strategic Outlook’s three-sided approach but emphasizes rivalry and competition in particular. The strategy lends less to concrete implementation.

Describe ways in which Berlin might implement this China strategy.

While there will be regular evaluation and adaptation of the strategy, the implementation needs to be considered rather in explicit policy fields or even instruments. For example, we will see far fewer export and investment guarantees. A tightening of inbound investment screening seems to be imminent. Germany might also support a couple of EU policies more actively, such as free trade agreements with third countries for the purpose of diversification or the discussion on outbound investment screening.

A very interesting case is that of 5G. The strategy adopts a rather tough language on the protection of critical infrastructure in general but remains very vague on 5G. The government is currently assessing the cybersecurity of legacy components in 5G and considering banning Chinese vendors from parts or even the whole of the network. We will get to know the government’s decision soon.

Assess U.S. and EU response to Germany’s China strategy.     

The reception of the strategy has been rather positive or muted. European partners as well as the U.S. seem to generally like what they read. But it all depends on the implementation now.

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Mercy A. Kuo

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Mercy A. Kuo

Mercy Kuo is Executive Vice President at Pamir Consulting.

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