Relations between Germany, the EU and China are at a turning point.
Taiwan Semiconductor Manufacturing Co (TSMC) recently broke ground in Germany on its first European plant — a win-win situation for Germany and the EU.
Two German warships, making rare visits to Japan, await orders from German Chancellor Olaf Scholz on whether they would pass through the Taiwan Strait next month.
The European Commission has announced plans to slap tariffs on Chinese-made electric vehicles (EVs) to counter alleged subsidies by the Chinese government.
German automakers have criticized the move, as they are worried about Chinese retaliation. Beijing has reacted by launching an anti-subsidy probe into European dairy imports.
The 27-strong bloc is due to vote in October on whether to impose additional duties on Chinese EVs. Germany and the EU are considering what actions are to be taken against China.
China had been Germany’s most important trade partner until the US took its place this year.
Chinese economic growth has been sluggish, with its property market crisis still unresolved. Geopolitical risks with the US have grown, while industrial investment has slackened. These are all factors contributing to the worsening trade ties between Germany and China.
Having learned a lesson from the Russia-Ukraine war, Germany is trying not to rely too much on China, whose president, Xi Jinping (習近平), describes it partnership with Russia as having “no limits.”
Germany has formulated a new “derisking” strategy toward China out of geopolitical concerns: economic diversification. However, Germany’s direct investment in China has boomed this year, with automakers being the largest target of investment.
Many German enterprises have altered their market strategies, trying to avoid being too dependent on China. German exporters sold more goods to Poland than to China in the first half of the year.
To avoid compromising its commercial interests, Germany had employed a high-wire diplomatic strategy toward China by not raising the Taiwan issue.
However, the situation has changed. German Minister of Education and Research Bettina Stark-Watzinger made a historical visit to Taiwan in March last year, being the first German Cabinet member to arrive in the Asian nation in 26 years.
The cooperation between Germany, the EU and Taiwan on the development of key technology, and the possibility that German warships might pass through the Taiwan Strait are signs that Germany is trying to balance geopolitical risks.
Chinese EV makers have threatened not to invest in some EU states. Despite facing pressure from German automakers and a potential trade war, the EU has not backed down from its plans to slap tariffs on Chinese EVs.
“We mustn’t be naive, we have no interest to get into a trade war... but maybe it’s unavoidable,” EU High Representative for Foreign Affairs and Security Policy Josep Borrell said.
Although it would depend on how its member states vote, it is clear that the EU is determined to push ahead with tariff increases which would not only apply to EVs. The EU is no longer afraid of irritating China.
Whatever actions Germany or the EU takes, they intend to defend their national or regional interests. If they adopt a new strategy, it means their adversary is not as strong as it used to be.
Chang Meng-jen is chair of Fu Jen Catholic University’s Department of Italian Language and Culture, and coordinator of the university’s diplomacy and international affairs program.
Translated by Fion Khan
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