New ostpolitik

Germany must rise to the Chinese challenge

Visitors look at an illuminated dragon during the opening of the China Light Festival at the zoo in Cologne
Time to dance with the dragon. Source: Reuters

There are things that are much more dangerous than fake news – the things that we don’t even realize we don’t know.

In Germany, China is considered one of these “unknown unknowns”, as former US Secretary of Defense Donald Rumsfeld put it. In view of the close economic ties between the two countries and the wide range of connections, it seems hard to believe that China is not even close to receiving the attention it deserves in German public opinion. As a result, there is one challenge that has been largely ignored to date, one that could pose a serious threat to our future well-being.

Germany owes its present prosperity in part to China’s rapid growth. The Chinese economy complemented ours in an ideal way: We supplied the capital goods, such as machines, which the Chinese used to industrialize their country and produce cheap consumer goods, and then they sold these to us. As incomes grew, they increasingly imported higher-end consumer goods made in Germany, such as automobiles.

But this dream partnership is about to fall apart. China is taking giant steps up the value-added ladder and competing with the German economy at its core level – in the production of technologically high-value goods. Although Berlin is trying to slow down this process by blocking the takeover of German high-tech companies by Chinese investors, it cannot be stopped. Given the current pace of development in both countries, China will have surpassed us in almost all future-oriented industries within 10 years. In fact, we are already lagging behind in some areas.

The world is facing a new competition of political and economic systems, this time between the West and China.

China is also increasingly competing with the West in terms of its political and economic might. For renowned Harvard University political scientist Graham Allison, China represents “the outstanding geostrategic challenge of our age.” And Wolfgang Schäuble, president of the German parliament, has already cautioned against the “end of our liberal world order.”

Colonialism and imperialism have given rise to globalization as an unintended consequence. Globalization has brought the world closer together economically, enhanced international exchange and considerably increased overall prosperity. Renowned political scientist Francis Fukuyama believed that prosperity has also led to democracy and capitalism. He referred to them as the “only framework for the political and economic organization of modern societies.”

But how wrong he was! The “end of history” that Mr. Fukuyama proclaimed after the collapse of the Soviet Union, i.e., the belief that one day globalization would produce a more or less uniform, Westernized world culture, turned out to be just as wrong as the assumption that it would lead to eternal peace. Even the “European man,” of whom Walter Hallstein, one of the founding fathers of the European Community, once dreamed, has proved to be an illusion, as evidenced by the current misery of the EU.

Even more than Islamist terrorism and the growing proliferation of authoritarian regimes around the world, the (re-)ascendancy of China disproves Mr. Fukuyama’s theory of convergence. Over the past three decades, China has gone from being the closed agricultural society it was for millennia to opening itself up to the world, taking advantage of globalization and transforming itself in leaps and bounds into a modern industrial and service society. Yet the underlying structure of Chinese culture has remained unchanged.

Throughout their long history, the Chinese have repeatedly absorbed foreign influences without losing their identity. In essence, this has enabled China to remain China. According to the current trust barometer of the Edelman PR agency, less than a quarter of Chinese think that their authoritarian one-party regime is not working. The vast majority of young Chinese, especially those who have studied in the West, do not regard Western civilization as their role model. On the contrary, they actually predict a better future for their own country.

In a survey conducted by the Ipsos polling firm last year, almost 90 percent of Chinese confirmed that their country was moving in the right direction – more than in any other of the more than two dozen participating countries and far above the average of 40 percent.

For Ian Bremmer, a political scientist and president of the Eurasia Group, a renowned risk consulting firm, the explanation is simple. Given the limited freedom there, he does not want to claim that it is better to live in China. But in a world where “the pace and scale of technological change are the most important variable,” authoritarian state capitalism is “better able to absorb the shocks” it causes.

One thing is certain: history is far from over. Rather, the world is facing a new competition of political and economic systems, this time between the West and China.

This involves a geostrategic competition between Beijing and Washington, which threatens to lead to the end of globalization, trade wars, a new Cold War or even a physical war. The German economy, which is highly intertwined internationally and relies on stability and peace, would be particularly hard hit.

China’s leaders have set their sights on nothing less than breaking open the unipolar, western and US-dominated world order and replacing it with a new, multipolar order. Their geopolitical and geo-economic focus will no longer be transatlantic relations, but will be shifted back to Eurasia, where it had been for thousands of years, with the exception of the last century or so.

Beijing’s “new Silk Road,” the largest development project in human history, financially as well as diplomatically and geostrategically, primarily serves this purpose. This modern trade route exposes Europe to new centrifugal forces and confronts Germany in particular, as Europe’s leading economy and China’s largest trading partner on the continent, with difficult decisions.

Should Berlin be involved in the project in order to take advantage of the new opportunities that development of the Middle East offers our capital goods industry? Or should it refrain from doing so for political reasons and remain faithful to the United States, which rightly sees the project as an attack on its global hegemonic position? Or is there perhaps a third way of using the project, together with European partners, to create a new, truly multipolar world order, not a monopoly of the United States or China, nor a duopoly of the two, but an order in which Europe also plays an important role?

Berlin has yet to find a suitable response to such questions. And how could it, given that the scope of the Chinese challenge does not even seem to be really clear? This is an indispensable precondition for being able to deal successfully with the dangers that the Chinese challenge entails and to take advantage of the opportunities it presents.

In light of what is at stake, China must quickly change from an “unknown unknown” to a “known unknown” and then to a “known known.” The time has come for a German Far East policy.

 

To contact the author: gastautor@handelsblatt.com

We hope you enjoyed this free article.

Subscribe today and get full access to market-moving news in Europe's leading economy.