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EXPLAINED: Why is Olaf Scholz’s stance on China so controversial in Germany?

The German Chancellor has allowed a Chinese state-owned company to acquire a stake in the Port of Hamburg, against all expert advice - just as the German public wants to become more independent of China. There are fears that Germany could repeat the mistakes it made with Russia.

EXPLAINED: Why is Olaf Scholz's stance on China so controversial in Germany?
Olaf Scholz, now German Chancellor, during a 2019 visit to China as German Finance Minister. Photo: picture alliance/dpa | Wu Hong

In early November, Olaf Scholz will be the first G7 leader to visit China since the beginning of the Covid-19 pandemic.

It comes right after a Communist Party Congress that saw President Xi Jinping stack the Chinese Politburo with his allies, forcibly remove his immediate predecessor, and amend the party Charter to oppose Taiwanese independence.

Scholz’s position on expanding business ties with China has led to major rows in his coalition government as warnings grow of allowing foreign powers to gain hold of critical infrastructure and repeating the mistakes that happened with Russia. 

OPINION: Germany has failed to do its energy ‘homework’ and now faces years of catching up

Foreign policy experts say more politicians – and even regular Germans – are waking up to the threat that over-reliance on China poses, but the Scholz Chancellery is choosing to ignore the warnings.

“Scholz isn’t sleepwalking into a China dependency. His eyes are wide open, says Jessica Berlin, Visiting Fellow at the German Marshall Fund of the United States.

“He knows his own government is against this but nevertheless is choosing to continue the mistaken policies of the previous government, where he served as both Vice Chancellor and Finance Minister.”

Public wants to reduce economic links with China

At the time of Russia’s invasion of Ukraine, Germany was getting over half its gas from Moscow. Becoming independent of Vladimir Putin’s Russia has resulted in a massive dent in the economy as well as the average person in Germany having to pay higher electricity, heating, and grocery bills.

But the public isn’t backing down. Around three-quarters of people in Germany have said they are willing to pay higher prices if it helps Ukraine. Wary of replacing its dependence on one dictatorship by becoming reliant on another, a staggering estimated 84 percent of people in Germany want the country to reduce economic links with China, according to a recent poll by broadcaster ZDF. 

An October 2022 poll for German public broadcaster ZDF asks if respondents agree that becoming more independent of China is important. Source: ZDF

Yet the Chancellor seems keen to arrive in Beijing with as many hands held out as possible for Chinese cash. Scholz is bringing CEOs of large German companies like Siemens and Volkswagen with him. Volkswagen is particularly exposed, now relying on China for over 40 percent of all its sales. The company even operates a factory in the heart of Xinjiang, where the Chinese Muslim minority, the Uyghurs, are regularly detained in forced labour camps, tortured, and even subjected to forced sterilisation.

Foreign Minister Annalena Baerbock of the Greens, coalition partner to Scholz’s Social Democrats (SPD), recently told the Süddeutsche Zeitung newspaper that it’s risky for major German companies to be so dependent on a single market with authoritarian rulers – especially given the possibility that history may repeat itself.

“Complete economic dependence based on hope leaves us open to political blackmail,” she told the newspaper. “The task of a responsible economy – and even more so of politics – is to not allow us to get back into a situation where we have to save the chemical and auto companies with billions in tax money, because they made themselves dependent on the Chinese market.”

German Foreign Minister Annalena Baerbock meets with her Chinese counterpart at a G20 meeting in Indonesia. Baerbock’s Greens advocate economically disentangling Germany from China. Photo: picture alliance/dpa/photothek.net | Thomas Imo

Controversy over Hamburg 

Scholz also appears keen to bring in Chinese money closer to home, by allowing Chinese state-owned shipping giant Cosco to acquire a stake in the Port of Hamburg – against advice from his own advisors, several ministries, Germany’s allies, his coalition partners, and the European Commission.

“The Chinese Communist Party must not have access to our country’s critical infrastructure,” General Secretary of the liberal FDP Bijan Djir-Sarai, whose party governs with Scholz, told the German DPA press agency.

READ ALSO: German Chancellor under fire over alleged support for China project

As a compromise to smooth the tensions in the government, Germany will only allow Cosco to acquire a 24.9 percent stake in Hamburg’s port, unlike the 35 percent that was originally planned.

The government officially approved the investment on Wednesday morning. A total of six German ministries, including the economy, defence and foreign offices, wanted to veto the Cosco deal, while former Hamburg mayor Scholz supported the sale.

A source told AFP that reducing the stake, would “prevent a strategic participation and reduce it to a purely financial participation”.

“Of course, this does not solve the actual concerns,” the source said, adding that the six ministries would still have preferred an outright ban.

container ships discharged at hamburg port

Container ships are discharged at Hamburg Port terminals. The EU is said to have warned Germany months ago about backing China’s investment in the port. (Photo by Axel Heimken / AFP)

On Tuesday, German President Frank-Walter Steinmeier joined in with the warnings against Germany becoming too dependent on China. “For the future, it means we have to learn lessons, and learning the lesson means we have to reduce unilateral dependencies wherever possible, and that applies especially to China,” Steinmeier told broadcaster ARD.

But the problem goes deeper than business links, with the chief of the German BND intelligence service saying last week that some sections of German society still have a certain “naivety” where China is concerned, especially in areas of scientific collaboration – where Chinese companies, backed by state money, have been known to steal trade and technological secrets from their western partners.

Germany “must be prepared for the fact that economic levers could be used to enforce Chinese ideas,” BND Chief Bruno Kahl told an annual meeting of German secret service. “Should there be differences in political views between Germany and China, these means will be used.”

Foreign policy expert Jessica Berlin told The Local that German dependence on Chinese buyers and low production costs go back decades, and that old habits are hard to break.

“The Chancellery is the part of German government that’s most resistant to change. This is something that will increasingly cause tensions in the governing coalition and in German society more widely,” said Benjamin Tallis, Research Fellow and the German Council on Foreign Relations.

“The Chancellery might have their heads in the sand when it comes to Chinese dependence, but I’m not sure anyone else does anymore. That’s actually encouraging, because it shows the level of fight and debate that’s going on.”

However, with China a top trading partner for Germany, Scholz is keen to stand his ground. 

“We do not have to decouple ourselves from some countries, we must continue doing business with individual countries – and I will say explicitly, also with China,” Scholz recently said.

With reporting from AFP

Member comments

  1. Doing business with China is fine, if we must. Allowing them to have any form of control is a total no-no.

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CITIZENSHIP

German parliament to hold urgent debate on citizenship

Politicians will gather in the Bundestag on Thursday afternoon for an urgent session on Germany's planned changes to citizenship law.

German parliament to hold urgent debate on citizenship

According to information on the Bundestag website, the urgent discussion was scheduled on the request of the opposition CDU party, who have been fiercely critical of the planned reforms in recent days.

The debate, which is scheduled to start at 2:50pm and last an hour, will see MPs air their views on the government’s planned changes to citizenship law.

Interior Minister Nancy Faeser (SPD) is currently in the process of drafting a bill that will simplify and speed up the naturalisation process in Germany, which she said this week is “as good as done”.  

The law will end a ban on dual nationality for non-EU citizens, meaning people from places like India, the USA and the UK can naturalise as Germans without losing their current citizenship – or citizenships. 

It also foresees a dramatic reduction in the amount of time it takes to become eligible for German citizenship.

In future, people would be able to naturalise after five years of residence in the country rather than the current eight, while people who speak good German or fulfil other integration criteria could naturalise after three years rather than six.

Additionally, the Interior Ministry wants to grant automatic German citizenship to the children of foreign parents – provided their parents have been in the country at least five years – and remove language requirements for members of the guest-worker generation who want to become German. 

READ ALSO:

‘We don’t need reform’

High-profile politicians from the CDU have slammed the government’s plans to ease citizenship rules, with parliamentary leader Thorsten Frei describing the move as an attempt to “sell-off” German passports as a “junk commodity”.

“We don’t need reform,” Frei told public broadcaster ZDF. “There would no majority whatsoever in any party’s supporters for this change.”

Earlier this week, CDU leader Friedrich Merz had argued that expediting the naturalisation process would damage integration and allow people to immigrate into the benefits system more easily. 

“The CDU will not close its mind to a further modernisation of immigration law and the citizenship law of the Federal Republic of Germany,” Merz told a meeting of CDU and CSU MPs in Berlin on Tuesday.

“However, we also attach importance to the fact that the granting of citizenship takes place at the end of an integration process and not at the beginning of it.” 

The CDU and CSU have previously been vocal opponents of permitting dual nationality, arguing that holding more than one citizenship would prevent people from fully integrating into German life. 

Nevertheless, it remains unclear if the opposition will be able to block the legislation in any meaningful way.

If there aren’t any substantial changes to the core of the citizenship bill when the amendments are made, the Interior Ministry believes it won’t need to be put to a vote in the Bundesrat – the upper house where the CDU and CSU hold a majority.

Instead, the parties of the traffic-light coalition – the Social Democrats (SPD), Greens and Free Democrats (FDP) – would simply be able to vote it through in the Bundestag. 

READ ALSO: EXPLAINED: Could Germany’s conservatives block dual citizenship?

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