【2011.6.29 E!Sharp】Germany and China’s new “entente commerciale”

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http://www.esharp.eu/Web-special ... entente-commerciale



Chinese Premier Wen is on his last stop in Europe. It is also the most important for China. It takes place in Berlin, the real capital of the European relationship with China. Germany now makes up 47 percent of the accumulated European exports to China. The European number two, France, comes in far below with 10 percent. The UK is present at the bottom of the scorecard with Europe’s highest trade deficit: a staggering 105 billion euros. During his visit to the UK, Wen inspected the MG car factory, now Chinese. In Germany, the local car industry is thriving from China’s booming economy. As a German economic commentator says, ‘every carmaker is happy that China exists’. In a ranking by The German Business Chamber, China has in 2011 replaced Europe as the most desired investment destination.

Germany and China’s thriving economic relations are about to be translated into a political condominium. Wen brought with him yesterday in Berlin 13 ministers for a full cabinet sit-down with Merkel and her ministers on the other side. That was the meeting of the powerhouse of the East and of the West. For Germany, this is a novelty and not seen before with any country outside of Europe. For China, it marks a further step towards privileging bilateral dealings inside the European Union. In the lead-up to the visit, China published its first government scorecard specifically on its relationship with Germany.

There will be different interpretations of this new ‘entente commerciale’. Some will argue that Germany is outgrowing Europe. They will point to Germany siding with China in the G-20 on deflecting criticism of setting targets for currency account surplus. Both countries amass considerable amounts with their export-driven growth. China’s surplus is a thorn in the US’ side underlining an unbalanced currency relationship between the two powers. More recently, Germany sided with China and the BRIC countries and abstained on the last UN resolution on Libya. France and the UK stood on the other side voting yes and took immediate action following up on their words.

Yet, Germany is taking most of the European-level concerns on board in its relationship with China. It is not selling out values and human rights for trade deals – at least not to a greater level than the average European hypocrisy on this. Foreign Minister Westerwelle and Chancellor Merkel have been vocal in their signals to China particularly since the artist Ai Weiwei woke up the outside world to the clamp-down in China that reverberated after the Arab Spring. Ai Weiwei - with very fortunate timing - was released on bail just before Wen started his European round trip.

Germany is also quite lucid about the potential pitfalls of the German export miracle in China. Business Minister Rössler said before the cabinet meeting that free markets cannot be a ‘one-way street’. China has to open up its markets further, particularly in public procurement and infrastructure where Europe and again Germany in particular can now sell the official cars but is barred from large scale public works. Continued European success in China depends on further opening up of the Chinese market for European companies and a better protection of their industrial innovations. China is moving beyond cheap goods and manufacturing in its next development phase. It needs Europe for high technology and for green growth know how. Europe can provide that but not free of cost through involuntary technology transfers. Also here, Germany seems ready to defend Europe’s priorities in a new phase of the relationship with China.

Still, the picture of Germany jumping out of Europe and into the arms of China might still prevail. This will be due to Germany’s inept strategic culture and public diplomacy. Germany is still a ‘premature hegemon’ in Europe that does not realise the amount of convincing it now has to do about its motives and show how it can trace a path for the whole of Europe.

China will be a test case for the new Germany in Europe just as the on-going eurocrisis still is. It will be an assessment of whether a stronger Germany can still convince that its interests are aligned with Europe’s. Germany has to do its homework with its European partners to assure them of this. The narrative should be that Germany’s China policy is mooring it at the heart of Europe not drifting away in extra-European flirtations with BRIC-identities.