Hong Kong: German Chancellor Olaf Scholz will be visiting China on Friday, becoming the first leader from the Group of Seven (G7) to land in China in about three years. In a whirlwind one-day visit, Scholz is expected to meet with Chinese leader Xi Jinping and Premier Li Keqiang in Beijing, reported CNN.
The visit comes in the backdrop of shortage of semiconductors across the world, after US banned the sale of advanced computer chips to China, escalating efforts to contain China’s tech and military ambitions. The moves are designed to cut off supplies of critical technology to China that may be used across sectors including advanced computing and weapons manufacture. Scholz is visiting China with a team of top executives implying that business with the world’s second-largest economy must continue. The visit — the first by a G7 leader to China in roughly three years — comes as Germany slides towards recession. But it has fired up concerns that the economic interests of Europe’s biggest economy are still too closely tied to those of Beijing.
Joining Scholz is a delegation of 12 German industry titans, including the CEOs of Volkswagen (VLKAF), Deutsche Bank (DB), Siemens (SIEGY) and chemicals giant BASF (BASFY), according to a person familiar with the matter. They are set to meet with Chinese companies behind closed doors, reported CNN. As the German delegation touches down on Friday, they will be faced with another issue, which has become the single biggest headache for companies across China. ‘The biggest challenge for German businesses remains China’s zero-Covid policy’, said Maximilian Butek of the German Chamber of Commerce in China.
In a brief statement, Volkswagen told CNN Business that its CEO was attending the trip since ‘there have been no direct meetings for almost three years’ due to the coronavirus pandemic. ‘In view of the completely changed geopolitical and global economic situation, the trip to Beijing offers the opportunity for a personal exchange of views’, the automaker said. Scholz’s coalition government is nervous about the country’s deepening ties with China. The tension was highlighted recently by a fierce debate over a bid by Chinese state shipping giant Cosco to buy a 35% stake in the operator of one of the four terminals at the port of Hamburg. Under pressure from some members of the government, the size of the investment was limited to 24.9%, reported CNN.
The potential deal has raised concerns in Germany that closer ties with China will leave critical infrastructure exposed to political pressure from Beijing, and disproportionately benefit Chinese companies. Moreover, as Western countries have imposed economic sanctions on Russia, China has publicly maintained its ‘neutrality’ in the war while ramping up its trade with Moscow. That has triggered a backlash in Europe, where some companies are already becoming wary of doing business in China because of its stringent ‘zero Covid’ restrictions, reported CNN.
Pressure on Berlin is also mounting over China’s human rights record. In an open letter Wednesday, a coalition of 70 civil rights groups urged Scholz to ‘rethink’ his trip to Beijing. ‘The invitation of a German trade delegation to join your visit will be viewed as an indication that Germany is ready to deepen trade and economic links, at the cost of human rights and international law’, they wrote in the memo, published by the World Uyghur Congress. Based in Germany, the organization is run by Uyghurs raising awareness of allegations of genocide in China’s Xinjiang region. It suggested Berlin was ‘loosening economic dependence on one authoritarian power, only to deepen economic dependence on another’, reported CNN.
In an op-ed published in a German newspaper on Wednesday, Scholz said he would use his visit to ‘address difficult issues’, including ‘respect for civil and political liberties and the rights of ethnic minorities in Xinjiang province’. A spokesperson for the German government addressed wider criticism last week, saying at a press conference that it had no intention of ‘decoupling’ from its most important trading partner. ‘The chancellor has basically said again and again that he is not a friend of decoupling, or turning away, from China. But he also says: diversify and minimize risk’, the spokesperson said, reported CNN.
Last year, China was Germany’s biggest trading partner for the sixth year in a row, with the value of trade up over 15% from 2020, according to official statistics. Together, Chinese imports from, and exports to, Germany were worth Euro 245 billion (USD 242 billion) in 2021. Its dependency on China can be seen across industries. While about 12% of total imports came from China last year, the country was responsible for 80% of imported laptops and 70% of mobile phones. The automobile, chemical and electrical industries are also reliant on Chinese trade, reported CNN.