Article Written by: Hugo Neves

In January, Germany chancellor Angela Merkel cited in a speech an observation by Henry Kissinger about the importance of Europe’s transatlantic relations and dependence with the United States, to reevaluate the strategic position of Europeans in the world, in the face of worsening tensions between the USA and China. By promoting the inclusion of China in multilateral negotiations, under a common international regulatory framework that guarantees fairness and equity, this speech, aimed at preventing the emergence of a new bipolar world and announcing the continuation of the German foreign policy strategy “Wandel durch Handel” (change by trade) of the past few decades. Until then, this strategy had not obtain visible results regarding the democratization and decentralization of power in Beijing, even after Xi Jinping promised to open the Chinese market to the world, a year after Chinese investment reached its historic peak, declining in the following years. Besides that, Merkel’s reluctance to criticize China was attacked, both by internal opposition and by the Federation of German Industries, and may also contribute to the fragmentation of the EU.

The Belt and Road Initiative (BRI) is, according to some economists, the biggest economic plan of the 21^st century, reaching approximately 900 projects in 74 countries. For Germany, this initiative represents a big opportunity for investment, as well as the growth of its economy and integration into new markets of its companies and businesses. According to the spokesman for the Federal Association of the German Silk Road Initiative (BVDSI): ‘’The future of markets, for example, are in Asia, in Africa, as well as in Eastern and Southeast Europe. These are very well connected. China has provided these connections, thus generating great opportunities’’. Considered alongside Hamburg an example of success of BRI, and used to transport masks during the pandemic of the new coronavirus (for countries like Italy, Spain and Holland), the rail route between Xinjiang and Duisburg – the ‘’health silk route’’– became essential for the transport of equipment by train between China and Europe, while dynamizing cities and their infrastructures; in the case of Hamburg’s sea-rail port, it has become the largest in Europe.

On the other hand, Europe has an essential role in the application of BRI’s project, as it represents a large market and an important geographic area of ​​great geopolitical influence. Germany is the most prosperous country in the EU, with the 4th highest GDP per capita in the world; as well as being China’s biggest trading partner. But what is Germany’s role in the project and what can be concluded about the role of BRI in the EU’s future? The German minister of economy gave positive signs in this regard when praising a speech by Xi Jinping in 2019, in which Xi defended multilateralism and sustainability, even suggesting revising regulations that could be an obstacle to deepening bilateral negotiations. In Brussels, Germany has used the EU-China connectivity platform to ensure BRI’s compliance with its regulations and procedures, focusing mainly on a new integration network between Europe and Asia and support for the Asian Infrastructure Investment Bank (AIIB), both Beijing creations. On the other hand, the state control of Chinese companies, the accusations of debt-trap and the lack of transparency within BRI are some of the criticisms that cast doubt on a possible deepening of this partnership, which, if successful, may reverberate in a significant change in the distribution of the world economic powers.

Geopolitical competition, censorship and human rights violations also contribute to German hesitation and American opposition. Here are some examples: in 2016, after a Chinese company bought Kuka – a leading German robotics manufacturer – the Obama administration pressured Germany to withdraw its approval for the purchase of Aixtron, another major company that produced technology used in American weapons. Two  years later, Daimler published an apology addressed to the Chinese for citing the Dalai Lama – simply because he was seen by Beijing as a separatist – in an ad, demonstrating the possible self-censorship of the companies most involved in BRI. In January 2020, Merkel refused, unlike the leaders of France and the United Kingdom, to congratulate Tsai Ing-Wen on her re-election as President of Taiwan. These factors, added to the censorship and repression of domestic political demonstrations in China, the imposition of authoritarian laws in Hong Kong, state surveillance, accusations of international espionage, as well as the growing power of the State and Xi Jinping over national companies, raise by themselves questions about the BRI and technological integration with other countries, in the so-called “digital silk road”.

Thus, the dispute for global geopolitical dominance may not be the only factor at the root of a series of US measures against Huawei in the implementation of 5G technology in several European countries, especially because this concern is shared by Ursula van der Leyen, the current  president of the European Commission and former German Defense Minister. In addition, China has not allowed the integration of technology companies in its domestic market, hoping, however, to be able to do the same in foreign markets. In this regard, several European countries have introduced measures to supervise foreign investment in order to limit investment in infrastructure and digital technology, following a legislative framework recently produced by the EU. The World Trade Organization (WTO) would be a fundamental mediator in this integration and in the dispute between the two major powers, but it has not been enough, and both China and the USA have not helped to reform it.

In the case of Beijing, it is accused of violations of trade rules, violations of intellectual property rights and illicit technology transfer. However, Angela Merkel has already expressed her interest and acceptance for the integration of BRI in Europe, while recognizing at the same time the danger of political fragmentation and dissolution of the EU. For that reason, France president Emmanuel Macron invited Merkel, Jean Claude Juncker – the then president of the European Commission – and Xi Jinping, to a meeting in Paris, in which  he declared that Europe should speak with one voice in relations with China. Indeed, Germany has become the European BRI coordinator, both in the OSCE and in G20. This is partly due to the fact that the German economy is strong enough to be able to negotiate from an equal position, unlike other members of the initiative with weaker economies, thus avoiding the possibility of dependency; at the same time, they plan to launch the “G20 Cooperation for Sustainable Investment in Infrastructure” to be able to fully integrate the BRI into its own development policy, after bilateral negotiations and meetings having already increased.

Germany recently released a new strategic orientation towards Asia, announcing that it will diversify its trade partners (to countries like Vietnam, Thailand, Malaysia, or even India), probably in response to the BRI concerns. The growing aggressiveness in China’s political measures has become a headache for those who advocate in favor of a “Wandel durch Handel” approach, but the great economic advantages of the project for Germany and Europe, combined with the absence of strong alternatives, constitute for the country and the continent a persistent dilemma. At the same time, the unilateral political trend of the current US administration weakens its ties with Europe and paves the way for alternatives and greater independence. Heiko Maas, Germany’s foreign minister, said in this regard: “We will not allow ourselves to become a toy of the superpowers, or of competition between the USA, Russia and China. We want to be in dialogue with everyone”. Regarding the future of the bilateral relationship between Germany and China, Niels Annen, the German Minister of State, said: “The challenge will be to defend our values, without losing China as a partner”.