Ni how?

Germany’s China syndrome

Angela Merkel besucht China
Xi’s in it to win it. Source: DPA

These are bewildering times for Germans, who are wont to crave order in their lives. On one hand the US, which is considered a friend, ally and business partner, is threatening Germany with a shock-and-awe trade war that would punish German steel and cars. On the other hand China, a country that Germans also consider an important business partner and a potential future friend, just accepted Xi Jinping as president-for-life. This turn of the Middle Kingdom to Maoism 2.0 robs Germany of an important hedge if transatlantic relations turn sour. Germans suddenly feel vulnerable. The disorder they have been dreading is here.

Germans have always had a hard time figuring out China. The great German philosopher Gottfried Wilhelm Leibniz was a great admirer of the Middle Kingdom and saw China as Europe’s soulmate on the other side of the world. That was when Europe was just starting its rise on the world stage and China was declining as a global superpower.

By the 1960s, Leibniz’s sentiment came back to Germans. “I can only say: China, China, China,” said Kurt Georg Kiesinger, a chancellor at the time, in awe of China’s economic potential and its political and military ambitions. This ambivalence captures the “China syndrome” of Germany’s political elite to this day. Even Angela Merkel zigs and zags through human-rights issues and the economic interests of German business every time she visits China – nine times as chancellor so far.

The latest bout of “China syndrome” started when a Chinese automotive conglomerate, called Geely, secretly bought almost 10 percent of Daimler, one of Germany’s most admired industrial icons. The specter of a hostile takeover by state-sponsored Chinese enterprises has caused alarm in Berlin’s political circles and in the German business community. Daimler took a stand when it emphasized that the company won’t share any technological knowhow with its new shareholder. But the management also groveled with apologies to Beijing after Daimler’s subsidiary, Mercedes Benz, quoted the Dalai Lama in an Instagram post last week.

The time will come when Germany must take a stand.

It is not the first time that China tries to get a foot in the door of the German economy. Last year the Chinese conglomerate Midea bought the German robot maker Kuka. The transaction caused widespread angst that Germany was selling its most innovative companies to a competitor who often plays foul with foreign investors in China. But the German government was afraid to block the Kuka transaction because it feared Germany might lose its pole position as Mr. Xi’s preferred business partner. When the Chinese company Fujian tried to buy the German chipmaker Aixtron the Germans gladly left it to US president Obama to veto the transaction on grounds of national security.

Just as ambivalently, Germany’s leaders are now watching as China pours billions into south-eastern Europe to build a “New Silk Road” as part of a vast geopolitical project to project Chinese power across the Eurasian continent by sea and land.  This so-called “One Belt One Road” is a pet project of Mr. Xi’s. The outgoing German foreign minister, Sigmar Gabriel, suspiciously called it “geo-economics” – Mr. Xi’s strategy of exporting socialism with Chinese characteristics to the world. “China has a plan, we don’t,” lamented Gabriel. And he is right.

The time will come when Germany must take a stand. Could “One Belt, One Road”, and all that Chinese investment in Western firms, be a Trojan horse bearing a Chinese mix of capitalism with political totalitarianism? Even some German business leaders who have long admired the China model as more efficient than the cumbersome decision-making in Western democracies are now having second thoughts. If Mr. Xi can make himself the new Emperor of the Middle Kingdom, it is only a matter of time before he demands the kowtow.

It doesn’t help that Germany’s old friend, Uncle Sam, is turning into a bully at just the same time. Because Donald Trump is threatening to punish German steel- and carmakers with tariffs, Germany now feels squeezed between two nationalistic superpowers. My guess is that Germans, confronted with a bad choice, will side with their estranged American friends and hope for the best. But any sense of order and security is gone.

To contact the author: riecke@handelsblatt.com

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