Commentary on Political Economy

Saturday 5 November 2022

Mr. Scholz Goes to Beijing

Germany’s leader may speak only for himself on this diplomatic mission.

By The Editorial BoardFollow

Nov. 3, 2022 6:44 pm ET





German Chancellor Olaf Scholz


German Chancellor Olaf Scholz visits Beijing Friday, and the event is noteworthy as the first leader of a major Western country Chinese President Xi Jinping has received since the pandemic began. Mr. Scholz in particular is worth watching for signs of what he has learned from Russia’s invasion of Ukraine.


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Mr. Scholz’s trip comes when the European Union, and especially Germany, is rethinking its relationship with China. Russia’s invasion opened many European eyes to the dangers of close diplomatic and economic ties with autocrats. An all-too-real concern is that Beijing could attempt a similar invasion of Taiwan. This is the same Mr. Xi who pledged “no-limits” friendship with Vladimir Putin on the eve of the Ukraine war.

The German Chancellor’s priority seems to be energizing the Sino-German economic relationship. Germany’s strategic rethink this year has come with new doubts about the country’s strategy of Wandel durch Handel, seeking to transform autocracies via trade. Yet many German companies still depend on China for large portions of their revenue, or as a manufacturing hub.

Mr. Scholz is traveling with a delegation of high-profile business leaders, some of whom have recently announced new investments in China. This may not be enough to firm up the economic relationship. Mr. Xi is consolidating an ever larger share of the Chinese economy in state hands, pursuing an erratic zero-Covid policy, and orchestrating a slow-rolling property deflation. This hurts the middle-class consumers Western firms hope to target, while making it difficult for those companies to operate their businesses on a daily basis.


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Meanwhile, it’s not clear for whom Mr. Scholz will speak while he’s in Beijing. His coalition government is deeply divided on China policy, and the hawks last week forced Mr. Scholz to retreat from his plan to push through a 35% stake sale in a Hamburg port terminal to Chinese state-owned company Cosco. The stake was cut to 24.9% to preclude Chinese managerial control. Ministers in his cabinet are demanding tighter inbound investment restrictions, while media criticism of German investment in China is growing.

Germany also faces pressure from fellow members of the European Union. Belgium and Lithuania, among others, have tussled with Beijing over concerns about Chinese investment in European infrastructure or relations with Taiwan. Berlin exercises outsize influence within the bloc. But if Mr. Xi hopes to pressure Mr. Scholz to lobby other EU members, the German leader might struggle to deliver.

The main lesson for Germany—and Europe—from the Ukraine disaster is that instead of trying to coax autocrats into good behavior, the West needs to prepare itself for their bad behavior. Mr. Scholz’s personal re-education on this score remains incomplete, even regarding Russia and his hesitation to support Ukraine with the best weapons.

Others in Germany are faster learners. The result may be a summit in which Mr. Xi won’t offer the economic opening Mr. Scholz wants, and Mr. Scholz can’t offer the opening Mr. Xi demands.

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