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Foreign Policy

China-Germany Ties Help Forestall a Technology Cold War

Sep 23, 2019
  • Zhang Yun

    Associate Professor at National Niigata University in Japan, Nonresident Senior Fellow at University of Hong Kong

Angela Merkel paid her 12th visit to China as German chancellor in early September. She is the most frequent visitor to China among all leaders of developed Western economies.
Germany is China’s largest economic and trading partner in Europe and for three consecutive years has been Germany’s largest trade partner, with bilateral trade reaching $183.9 billion in 2018, 9.4 percent up from the same period the previous year. From January to July this year, bilateral trade reached $106.93 billion (up 2.4 percent); German investment in China increased $1.17 billion, (up 62.7 percent); and Chinese investment in Germany increased $1.01 billion (up 27.6 percent).

As the world’s second- and fourth-largest economies, stronger China-Germany relations will not only help themselves and the European Union but have important strategic significance for preventing a general China-US confrontation, especially a technology cold war, as the ongoing trade war brews unprecedented uncertainties.

During her visit, Merkel explicitly expressed support for multilateralism and free trade and her expectation that negotiations for an EU-China investment agreement would be completed during her country’s EU presidency. She promoted a more reliable trade partnership between the EU and China and took a consistent stance welcoming the investment of Chinese companies in Germany.

Last year, for alleged national security reasons, the United States adopted a de facto policy of exclusion against high-tech Chinese companies — notably Huawei — with regard to 5G technologies, and it asked key allies to take the same measures. In response earlier this year, the German government diverged from the U.S., saying it won’t exclude specific companies.

The actions by the U.S. reflected its concern that it will be surpassed by China in the high-tech field. This was an attempt not only to technologically “decouple” the two countries but to divide China and the West more generally by slowing high-tech development in China.

The whole idea of decoupling contradicts reality at a time of economic globalization and deepening interdependence. Take Huawei as an example: The process of its development was itself one of growing up in step with globalization and trade liberalization. That Huawei continues to import hardware and software from the U.S. provides a vivid illustration of the strong mutually complementary and beneficial nature of the China-U.S. economic relationship. The outcome of the U.S. attempt to strike China via technological decoupling — taking advantage of the fragility of their mutual dependence — will make China believe the U.S. has embarked on a long-term path of confrontation, and reinforce its conviction that China can only rely on itself to reduce its weakness before the U.S. as soon as possible. At the same time, forceful U.S. suppression may motivate China to seek out U.S. weaknesses and strike back where it hurts. Once the negative spiral of such mutual perceptions is established, a “Thucydides trap” will materialize.

To prevent this circumstance from developing, the first priority is for China and the U.S. to perceive each other correctly and build consensus through timely, effective strategic communication. In the process, the importance of third parties, including Germany, should not be ignored. From a long-term perspective, the aforementioned U.S. deeds run against historical trends, but Germany and other European countries’ stances on the 5G issue also show they are not willing to blindly follow the U.S. lead. Without close followers, the U.S. cannot wage a technology cold war simply because of the basic principle of “no followers, no leaders.” China, for its part, needs to convince the non-U.S. world that its technological progress is not a threat by proactively developing relations with other major economies, including Germany, and build the image that it is willing to jointly develop technologies, pursue common progress and protect intellectual property rights. It should project the firm belief that the both the idea and practice of technological decoupling are undesirable. The purpose of doing this is not a way to juxtapose the U.S. and Germany. Rather, by enhancing cooperation with Germany and non-US major powers, it would help the U.S. understand that the idea of unilateral sanctions and decoupling is incorrect, thereby preventing it from sliding further into destructive protectionism and pull it back to global multilateralism.

Political leadership by Chinese and German authorities is of critical significance in maintaining benign rhetoric between China and the West. For instance, during her visit to China Merkel mentioned China’s responsible behavior after the 2008 financial crisis. She also stated that China, like other countries in the world, is entitled to development, and such rights should not be subject to suppression. From such diplomatic language we can see continuity in Germany’s China policies as it spans both previous and present leaders. And that is conducive to maintaining a healthy tone for a cooperative China-Germany relationship.

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