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BERLIN – German businesses are uncomfortable with China.
For decades, German industry – a forerunner in the Chinese market – has looked the other way amid Beijing’s human rights abuses, as managers and engineers like Siemens and Volkswagen have helped turn the country into the most major trading partner of Germany. But as Chinese leader Xi Jinping bolsters the country’s surveillance state, threatens its neighbors, and adopts an increasingly belligerent tone with the West, Germany’s Chinese strategy, designed to meet the needs of its industry export, seems increasingly unsustainable.
So much so, in fact, that major German industry players are joining prominent politicians in calling for a rethinking of the country’s approach to China and other autocratic states.
“Human rights are not the internal affairs of states,” said Siegfried Russwurm, head of the Federation of German Industries (BDI), adding that companies have “an obligation to define lines themselves. red for their global commitment, “instead of waiting for their own governments to do so.
If Russwurm looks more like an Amnesty International activist than the main lobbying arm of German business, it is because Germany Inc. is more concerned than ever with the outlook and realities on the business ground in China and other autocratic states. . Like many foreign investors in China, German companies have long been convinced that they will end up being on a level playing field with their local counterparts. But Xi, who has tighter foreign companies, convinced them otherwise.
Today, German companies, which have more exposure to China than any of their European counterparts, face an impossible choice between preserving a crucial business relationship and upholding the liberal ideals dear to them. ‘Germany.
Asked how trade could be maintained amid reports of human rights abuses in China, a spokesperson for Siemens said in an emailed statement that the conglomerate “categorically rejects all forms of human rights abuse. oppression and participation in human rights violations ”, adding that they“ trust the United States, China and Europe to find political solutions based on… reliable and transparent rules of cooperation as well as on a open dialogue. “
In an effort to help businesses close this circle, the BDI recently published an article titled “Responsible Coexistence with Autocracies”. While the document underlines the importance for Western companies to ‘lead by example’ on human rights and environmental issues, it also makes it clear that severing trade ties with difficult regimes does not is not a viable option.
“It is a fact that companies must generate profits in order to maintain their competitiveness in the long term,” the document concludes. “We cannot defend democratic values any better if we weaken economically.”
Nonetheless, it is a difficult case to face in the face of Beijing’s crackdown on Uyghurs, its crushing of the Hong Kong democratic movement, and its belligerent stance towards longtime partners like Australia.
VW, the world’s largest automaker, headquartered in Wolfsburg, has come under scrutiny this year for running a factory in Xinjiang – the region where much inhumane treatment has been documented against China’s Uyghur Muslim minority, which some countries have called genocide. But VW CEO Herbert Diess defended his company’s commitment to the region, saying it upholds its “values in Xinjiang, including employee representation, respect for minorities, and social and labor standards.”
Once seen as the key to Germany’s long-term prosperity, China is now seen in Berlin as a long-term problem.
Even the biggest defenders of China in Germany no longer claim that economic prosperity will turn the Asian juggernaut into a Western-style democracy, an idea known as “transformation through trade” which has been propagated by German leaders and politicians since the Cold War.
“The sober assessment is that ‘transformation through trade’ has reached its limits,” the BDI concluded. “The expectation that global economic interdependence would automatically facilitate the spread and development of market economies and democratic structures has not materialized.”
This reality check has left German companies at a standstill, and not just when it comes to China. One in four German jobs depends on exports and despite persistent pressure from its partners, Germany has one of the largest trade surpluses in the world for decades. Much of this trade is done with autocratic states like China and Russia.
While Germany has always traded with unsavory regimes, it has never relied on one as it now relies on China. Although the United States is still Germany’s largest export market overall, China has been responsible for much of the growth in demand for German machinery and automobiles. over the past decades and has been Germany’s largest trading partner (exports and imports combined) for five consecutive years.
The question is to what extent these trends are sustainable. Many German industrialists have begun to understand that China, which has relied on their engineering skills to modernize its economy, may no longer need it. Over time, China became quite good at designing and building the specialized machines, tools, and other equipment it needed for Germany.
The debate over China’s German industry comes as the country’s political winds turn. The Greens and the Free Liberal Democrats, the two parties that expected them to join the Social Democrats in forming a new government, take a considerably tougher stance on China than outgoing Chancellor Angela has taken. Merkel.
Merkel has been criticized for years as being too gentle on China. Amid last year’s democracy protests in Hong Kong, Merkel flew to China with a large business delegation and met Xi. It has also been the driving force behind the EU’s investment deal with China. The deal, signed last December, has met strong resistance in Washington, where a bipartisan consensus has formed in recent years that the West needs to take a stronger stance on China.
“Those who expect Europe to be neutral in the stalemate between China and the United States are missing the point,” said Bijan Djir-Sarai, spokesman for the Free Democrats in the German parliament . “Of course, we are also fighting for European interests, but our place is in a close partnership with the United States and we must have no illusions.”
Among the BDI’s guidelines for the new European foreign economic policy, for example, is a call for a stronger euro against other currencies, arguing that this “would give Europe more leverage in the payments system. international and global financial markets “.
Nils Schmid, SPD foreign policy spokesperson in the German parliament, argued that Germany needs to push harder in the EU for a common position on China – a position which is not necessarily opposed to that of the United States but which puts European interests first.
The new German government must “strengthen the foundations of its capacity to act, both at national and European level”, he said. “Then there will be no need to declare a new cold war with China.”
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