In a live briefing following a virtual EU-China leaders’ meeting on September 14, German Chancellor Angela Merkel spent six minutes discussing Europe’s trade negotiations with China. “In the last 15 years, China has become much stronger economically and this means that the demand for reciprocity – for a level playing field – is of course very justified today,” Merkel said, adding that she pressed Xi on the need for progress on the long-stalled EU-China bilateral investment treaty.
She only spoke about Hong Kong and minority rights in China for 10 seconds.
Coming two weeks after Germany released a regional strategy for the Indo-Pacific, some have claimed the summit highlights a newly assertive European approach to China. But, like Monday’s summit, Berlin’s regional strategy tinkers around the edges of trade policy without risking the cost of a full-fledged strategic reckoning with China.
The past four years have seen a rapid proliferation of national engagement policies for the Indo-Pacific. Germany is the eighth democracy to release one, and the first to do so without claiming regional membership (lest anyone should doubt its credentials, France opens its 2019 policy paper: “A nation of the Indo-Pacific, France has large territory in the region, including 93% of its exclusive economic zone, home to a population of 1.5 million French citizens.”)
Germany’s strategy is not short on details, with nearly 70 pages of guidelines for multiple ministries across seven priority areas. It emphasizes multilateralism and urges NATO to expand ties with Japan and South Korea. It calls for the speedy conclusion of free trade agreements with countries like Australia and Indonesia and pledges to expand regional sustainable infrastructure initiatives. Some observers have argued that the German strategy crystallizes a new reckoning with China’s domestic human rights abuses and belligerent diplomatic behavior. One analyst points out that that, coming just as Germany assumes the rotating EU presidency, the policy could signal the coming formation of a unified European approach to China.
Critics of the plan, however, lament that it fails to grapple with the hard realities of Chinese power. It places its hopes in a flawed Code of Conduct between China and ASEAN to resolve tensions in the South China Sea, and criticizes “authoritarian actors and states” for spreading disinformation without naming names. Most tellingly, the document never mentions Taiwan, even as the United States moves the island republic closer to the heart of its regional agenda. “The new policy announcement offers no critical self-reflection about existing shortcomings of Berlin’s previous China engagement,” Andreas Fulda writes for RUSI.
Trade, of course, is the limiting factor that prevents Germany from adopting a more confrontational approach. China has been Germany’s biggest overall trading partner since 2016, and Germany accounts for more than half of all EU exports to China. Many of Germany’s flagship brands are particularly dependent on the relationship – nearly half of Volkswagen’s revenue comes from China, while petrochemicals giant BASF initiated a new 10 billion euro investment in China in 2019. Germany’s “change through trade” policy may have failed to effect change, but it remains profitable.
Compared to American policy in the Indo-Pacific, German strategic thinking appears meek. While the Trump administration has put its trade deal in the backseat amid a policy of broad geopolitical confrontation, Germany will play a more cautious hand lest it jeopardize negotiations over the long-desired investment treaty. Yet Germany’s new Indo-Pacific strategy still achieves an important shift in stance. To understand Germany’s regional strategy in context, a valuable point of comparison is that of the only other advanced economy that depends as heavily on trade as Germany: South Korea.
Seoul’s New Southern Policy (NSP) has put expanded ties with ASEAN and India at the center of South Korean foreign policy. Since the NSP was introduced in 2016, trade with India has grown by 30 percent, while exports to ASEAN have come to account for more than 20 percent of all Korean exports. To elevate Southeast Asia’s importance, President Moon Jae-in made a point of becoming the first Korean head of state to visit all 10 ASEAN member states. Though the NSP is by no means “tough on China,” South Korea has synced its efforts at offsetting dependence on China with American initiatives in the Indo-Pacific. Through a number of MOUs, the South Korean and American governments have agreed to coordinate regional projects in areas like infrastructure development, digital connectivity, and green energy. The two allies are far from aligned on China policy, but they can still partner on initiatives that counterbalance China’s regional dominance.
Germany also puts new relationships at the center of its regional policy – India and ASEAN are mentioned 57 and 66 times, respectively, in the document (individual ASEAN member states get mentioned, too, as many as 21 times in the case of Vietnam). Compared with the NSP, moreover, the German strategy is aggressive. South Korea’s regional strategy skirts traditional security issues entirely, instead focusing on nontraditional security issues like climate change and public health. The German document, while also elevating the issue of climate change, devotes an entire section to NATO, EU, and bilateral military partnerships in the region. Without explicitly pinning the blame on China for tensions in the South China Sea, it does seek to expand the European military and non-military presence, deepening the other regional relationships that will help form the foundation of a freer and more open Indo-Pacific.
But if a comparison with South Korea makes Germany look tough and points to a pathway for regional alignment with the United States, it also reveals a shortcoming in German strategic thinking. South Korean dependence on China goes much deeper than German dependence – China pummeled the Korean economy as punishment for a 2017 row over a new missile defense program, and Beijing’s help is crucial for negotiations with the North. South Korea, in other words, has better cause than Germany for taking a careful approach to China. To the extent that German regional strategy resembles the New Southern Policy, this indicates both the possibility of a gradual bolstering of regional relationships, and a need for Germany to grow bolder in its approach to China. The German policy might be an important first step in a European rethink on China, but it is a notably cautious one.
Coby Goldberg is a researcher with the Center for a New American Security Asia-Pacific Security Program. He has been published in The National Interest, World Politics Review, and The Wire China.