Visit to China by German Chancellor Scholz shows divisions in EU over how to engage with Beijing on trade and Russia

Visit to China by German Chancellor Scholz shows divisions in EU over how to engage with Beijing on trade and Russia

German Chancellor Olaf Scholz’s three-day visit to China, hailed in Beijing as a success, may have laid bare European Union divisions over how to engage with China.

At a press conference in the Chinese capital on Tuesday evening, Scholz said meetings with Chinese President Xi Jinping and Premier Li Qiang had been “calm, careful and honest”.

Scholz called for “pragmatic” economic relations with China, and said he had raised Western concerns that China is stepping up the provision of dual-use military goods to Russian forces, following Moscow’s invasion of Ukraine in 2022.

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“For me, it is important to make clear that there is an urgent need not to supply Russia with arms. But of course, the dual-use question also belongs to that question. It has been possible to raise all the necessary issues here in a way that cannot be misunderstood,” said the chancellor, who declined to comment on whether he had extracted any new commitments from Xi.

A day earlier, he had gently cajoled Beijing over economic grievances, including intellectual property theft and overcapacity.

“Competition must be fair,” Scholz said in an address to students in Shanghai on Monday, in rhetoric that was a world away from the hardline approach favoured in Brussels these days. “We want a level playing field, of course we want our companies to have no restrictions.”

The social democrat declined to say whether he agreed with EU and US assertions that China was “dumping cheap green technology products on the global market”.

“It is obvious that there is a need to discuss the issue of overcapacities, that we have to discuss subsidy races, which is an essential topic because the question of subsidies can be found all over the world,” Scholz said.

“It is important that we be very pragmatic when discussing these questions. My hope is that this will swiftly be translated into concrete facts.”

But while the European Commission has launched an investigation into subsidies in China’s electric vehicle sector, Scholz’s delegation signed “a joint declaration of intent on dialogue and cooperation in the field of automated and connected driving” with Chinese counterparts.

The tone and activity will have pleased the delegation of high-powered German industrialists – many representing automotive companies – who travelled with Scholz.

On the eve of the trip, Volkswagen announced a new US$2.67 billion investment in its production and innovation hub in Hefei, in China’s Anhui province, and throughout the visit executives discouraged a confrontational approach to China.

“What we can’t use as an export nation are increasing trade barriers,” Mercedes boss Ola Källenius told the German public broadcaster ARD.

BMW CEO Oliver Zipse said he saw “more opportunities than risks”, adding that there should be no barriers against Chinese electric cars.

“We don’t feel threatened. This time too, we shouldn’t exaggerate our fear of foreign manufacturers. We are confident that we are competitive,” Zipse said.

Andreas Rade, managing director of the German Association of the Automotive Industry (VDA), issued a statement before Scholz’s trip criticising Brussels’ decision to probe Chinese EVs for not coordinating sufficiently with EU capitals.

“As far as I know, this procedure was not a joint project between Berlin and Paris, so to speak, but was initiated by Brussels in the meantime in the context of a candidature,” Rade said on April 11 at an event of the Green group in the German parliament.

Critics said Scholz’s China trip was reminiscent of his predecessor Angela Merkel.

“We don’t know what Scholz told Xi behind closed doors, but it was remarkable how little he said in public about China’s support for Russia’s military campaign in Ukraine and the worsening state of trade relations between Europe and China,” said Noah Barkin, a senior adviser with research house Rhodium Group’s China practice.

In public remarks before and after meeting Xi, the chancellor declined to throw his support behind Brussels’ de-risking agenda and focused primarily on German business interests. Previously, he has expressed scepticism about the EV probe.

His rhetoric was noticeably softer than that found in Brussels. In a speech last week, EU competition boss Margrethe Vestager said the bloc must consider the “trustworthiness” of cleantech imports from China.

“These products become connected. And more and more, they are an essential part of our critical energy and transport infrastructure. So, we must make sure that we can trust them, and we can make sure that they uphold our values,” Vestager said.

Abigaël Vasselier, head of foreign relations at the Mercator Institute for China Studies, a German think tank, believed the trip would damage EU unity.

“I have to say it’s a disaster … there was no European dimension, either in the preparation or in the outcome of the visit. It shows how nationally Scholz played this and how non-European he has been,” she said.

“It’s almost like if what’s happening in Brussels is a completely different universe,” added Vasselier, who was the deputy head of the EU’s China division until last year.

Cora Jungbluth, an expert on China at the Bertelsmann think tank near Bielefeld, criticised Scholz for not inviting the Federation of German Industries (BDI), a lobby group that helped define the EU’s triptych approach in which it views China simultaneously as a partner, competitor and rival.

“This is regrettable, as the BDI made an important contribution to rethinking European and German China policy with its China paper from 2019,” Jungbluth said.

“The message that Germany could send with the composition of the delegation is unfavourable: an overly critical attitude towards the largest trading partner seems undesirable.”

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