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This is not a blog which expresses instant opinions on current events. It rather uses incidents, books (old and new), links and papers as jumping-off points for some reflections about our social endeavours.
So old posts are as good as new! And lots of useful links!

Saturday, August 28, 2010

Germany and China

I am a rare British example of a Germanophile – it was bred by my father’s reconciliation (Versoehnungsmission) work in the late 1950s in the Detmold area where he twinned (in the modern jargon) with a church in Heiligenkirchen village. The visit the family made with him in 1955 was instrumental in my opting tofocus my scholastic activities on modern languages in senior school and the first two years of University. I enjoy my visits to Germany and have worked for 3 German companies – one of which (a small Berlin energy consultancy InnoTech) famously told me in 1992 or so “We don’t pay you to think’we pay you to obey”). I had started to object that an EU programme which was supposed to be helping central Europeans adjust their energy systems was just a front for western commercial interests.
And I did notice in Uzbekistan that it was the Germans who cosied up to the regime when the rest of Europe was boycotting it; and also, more recently in Beijing, that Germany had a very high profile in China.
An interesting article in der Spiegel points to the dangers of the growing German dependence on the Chinese economy
The Chinese to this day admire imperial latecomer Germany for having caught up with Britain and France. After World War I, German officers and representatives of heavy industry came to the aid of the Chinese nationalist general Chiang Kai-shek.
Economic relations were eagerly revived in the 1980s. In 1984, VW signed a joint venture agreement with the state-owned Shanghai automaker. Even after the bloody suppression of student protests on Tiananmen Square in 1989, German industry was unwilling to spoil its cozy relationship with Beijing's leaders. Only three months after the massacre, Otto Wolff von Amerongen, chairman of the German East-West Trade Committee, became the first foreign official to pay a visit to then-Prime Minister Li Peng. During the administrations of former Chancellors Helmut Kohl and Gerhard Schröder, the Germans were viewed in Beijing as docile partners who were more interested in their business deals than in questions of human rights.
The first major rift happened in 2007, when Merkel received the Dalai Lama, the spiritual leader of Chinese-occupied Tibet, in Berlin. The furious Chinese cancelled scheduled diplomatic meetings and threatened to suspend contracts. German business leaders, like BASF CEO Jürgen Hambrecht, argued that it would be preferable to settle differences with China on the quiet.
But Merkel was unimpressed at first, noting that as German chancellor, she would decide with whom she was to meet. It's debatable whether Merkel would get away with such a gesture today. China has become stronger and more powerful since then, and unnecessarily provoking the country is probably not a good idea.
During her most recent visit to Beijing, the chancellor handed her hosts a list of dissidents in Chinese prisons. She addressed the subject of human rights, but she did it quietly enough so as not to embarrass the Communist Party leadership.
Merkel is convinced that China wants to become a superpower at all costs. The financial crisis has only accelerated this process. The chancellor senses the new self-confidence of Beijing's leaders, and she wants to ensure that Germany will not be left in the dust when the world's political center of gravity shifts.
Hence, she is interested in a good relationship with the Chinese. But how does one build close relations with a country when one is simultaneously criticizing it for its human rights violations and contempt for international rules?
This is the big question that currently shapes Germany's China policy. Merkel's challenge is to cultivate the relationship without creating the impression that she doesn't care about democracy, civil rights or protecting German economic interests.

German Impotence
Speaking recently to a small group of confidants, she mused that it doesn't help to vehemently parade one's own impotence on the issue of human rights. Instead, during her recent visit to Beijing in July, she encouraged German business leaders to air their frustrations over trademark piracy and mandatory discounts -- and she was successful. Siemens CEO Peter Löscher complained about the poor prospects for Western companies in bidding for government contracts in China. BASF CEO Jürgen Hambrecht criticized Beijing's policy of forcing Western companies to disclose their know-how, noting that it "doesn't quite correspond to our notion of a partnership." Officials at the German Economics Ministry say that "there was a completely new tone" at the meeting.
The effort shows that, 30 years after the beginning of Chinese reform policies, Germany's involvement in China has reached a turning point. Until now, it was considered de rigueur for anyone doing business in China to conform to local norms, sometimes to the point of self-denial. Those who managed to sidle up to Beijing's functionaries -- derisively referred to as "panda huggers" -- were most likely to garner the best contracts. In the future, Germans will face a completely new challenge in China. They'll have to learn that sometimes it's in their best interest to say no.
For politicians, this means defending Western values of democracy and the rule of law, even in the face of Chinese opposition. All around the world, from Africa to Asia to South America, Beijing is trying to tout its model of authoritarian state capitalism as the better alternative. If the West hopes to preserve its influence in these regions, it will have to prove that it is not prepared to abandon its basic principles. After all, credibility is also a value.

No Choice
It is no less important for the rivals of East Asia's rising industrial power to do their homework. For example, the United States, by long pursuing a policy of paying for its consumption with borrowed funds, has become dangerously dependent on Beijing. China has been the US's biggest creditor for years. With its trillions in foreign currency reserves, Beijing could manipulate the value of the dollar almost at will.
If the United States hopes to liberate itself from this dependency, it has no choice but to find its way back to the type of economy that was long held in high regard in the US. The government in Washington should finally clean up its deficit, and US consumers need to save more.
For Europe, too, much depends on whether it manages to solve the financial problems in the euro zone. As long as countries like Greece, Ireland and Spain are threatened by bankruptcy, the euro remains acutely at risk. But if the monetary union collapsed, the Germans would also suffer. Their currency would most likely become much stronger, thereby significantly curbing exports. The challenges for European politicians are obvious. Merkel, French President Nicolas Sarkozy and others must avert national bankruptcies in the euro zone and reestablish a sustainable basis for the monetary union in the long term.
The German economy faces an enormous challenge, and yet sometimes it seems as if its business leaders are still reluctant to take on the Chinese. "We can either do without this huge growth market, or we submit to the Chinese conditions," says one German auto executive. "There is nothing in between."

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