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A week ago, German Chancellor Scholz wrapped up his second visit to China since taking office. The German government published its first 鈥楥hina strategy鈥� last year, siding with the European Commission鈥檚 hardline policy toward China. But is Chancellor Olaf Scholz鈥檚 heart really in it? 

For both economic and historical reasons, Germany cannot let go of China in the same way the US and some other European countries have. In fact, Scholz is caught in an unenviable cage of Germany鈥檚 own making: its continuing economic dependence on China. Scholz is therefore pursuing a rather cautious course toward China. This approach is in line with recent German politics, not least the legacy of 顿茅迟别苍迟别 and Ostpolitik, and the needs of the German economy.

Scholz鈥檚 visit to China

To make up for his very short initial one-day visit to China as Chancellor in November 2023, Scholz spent a full three days in China, visiting a German factory in Chongqing, giving a talk at Tongji University in Shanghai, and meeting with President Xi and other officials. Scholz brought three other cabinet members along as well as the CEOs of twelve leading German companies, including the leaders of BMW, Mercedes, BASF, Merck, Thyssenkrupp, and many others.

Not surprisingly, the Chancellor鈥檚 visit to China was dominated by economic and business concerns, such as market access reciprocity, intellectual property issues, and the looming danger of Chinese overcapacity and dumping of products on the German and EU markets. Yet, climate change and several geopolitical concerns鈥攏otably the war in Ukraine, the increasingly close cooperation between China and Russia, and the threat of a widening regional conflict in the Middle East 鈥� were also on Scholz鈥檚 agenda. 

The first outcomes of Scholz鈥檚 trip have already emerged and have given us some idea about the Chancellor鈥檚 policy on China. The visit underlined Scholz鈥檚 tendency to prioritize German-Chinese economic cooperation rather than focusing on issues of disagreement.

Regarding the economy, and especially the automotive industry, 鈥淕ermany and China a joint declaration to cooperate on autonomous and connected driving which Germany hopes will enable carmakers to transfer data from China to Germany.鈥� With regard to the envisaged Swiss plan to organize an international peace conference to resolve the Ukraine war, both Scholz and Xi to promote the holding of such a summit.

To 鈥榙e-risk鈥� or not to 鈥榙e-risk鈥�?

After having bitterly learned from its energy dependencies on Russia, Scholz is wants to avoid making the same mistake again. Germany adopted its first Strategy on China in 2023 focusing on de-risking and diversifying. Berlin now views China as a 鈥溾�� However, initial studies that while Chinese imports to Germany have decreased,  there remains a  high dependency on Chinese products, particularly in critical industries. 

Economic interests鈥攂oth German and European ones鈥攔emain on Scholz鈥檚 mind even after his Beijing trip. Germany, as one of the world鈥檚 top car producers, has started becoming deeply concerned about the possibility of widespread imports of Chinese EVs. This is a concern echoed by the EU, which a probe late last year to investigate EV imports and Chinese subsidies into car production. The number of EU probes into Chinese imports has multiplied since then, ranging from wind turbines to medical devices. Still, Scholz is aware that he needs to delicately balance his de-risking strategy. 

While diversifying away from China to some extent, the German Chancellor also needs to ensure the continued access of German companies and products to the tightly-ruled Chinese market. This explains why Scholz was accompanied by a large delegation of German CEOs in Beijing. In the case of Volkswagen for example, China its biggest market. Overall, Scholz鈥檚 approach to China remains one of caution and continuation, rather than any abrupt change of course. 

Historical and domestic context of German China policy

Scholz鈥檚 China policy reflects the conciliatory strategies most of his predecessors pursued. In 1994, Helmut Kohl was the first Western leader to visit China following the 1989 disruption of ties between China and the Western world. Kohl brought German business leaders from top companies鈥攕uch as Lufthansa鈥攚ith him, which resulted in dozens of agreements being signed. Approximately $7 billion dollars worth of business were concluded during his trip. 

Kohl saw the potential of Chinese economic growth for the German economy. In fact, Kohl, the leader of the German conservative party (the Christian Democrats), continued the policy of 鈥榗hange through鈥� trade with China, which had first flourished under the social democratic chancellor Helmut Schmidt. 

Chancellors Gerhard Schroeder and Angela Merkel followed in Kohl鈥檚 footsteps and maintained a close partnership with China. While Angela Merkel pursued intensive trade relations with China鈥攚hich eventually Germany鈥檚 top trading partner in 2016鈥攕he also pursued a variety of initiatives, such as a  in the later years of her chancellorship. Merkel was also one of the rare Western leaders who truly took the time to visit China and learn about the country, not only to the capital and industrial hotspots, but also to Xi鈥檃n, Chengdu, Guangzhou, Tianjin, Nanjing, and Hefei, among others

Is Scholz carefully balancing or is he falling behind EU policy?

Since Scholz became German Chancellor in December 2021 he has carefully sought to re-define Germany鈥檚 China policy. As head of a three-party coalition government, this has proven rather difficult. While the geopolitical climate has drastically changed, Germany鈥檚 dependence on trade and investment relations with China is still as large as before, if not even more. 

Yet, as the term 鈥榮ystemic rivalry鈥� indicates, Germany, like the EU and the US, has woken up to the challenges China鈥檚 increasingly assertive economic and geopolitical policies present. Still, Scholz鈥檚 recent China visit did not reflect this. His visit was very much in the tradition of Angela Merkel鈥檚 regular polite visits to China. While this may boost the German economy in the short-term, it does little for Germany鈥檚 reputation as Europe鈥檚 foremost country.