Scholz's visit to China
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Marv Gandall
Charlie says "German business's turn against China predates the war in Ukraine. Look at a few article headlines from 2020 that I found at random".
The strong turnout of US, German, and other European and Asian firms at China's annual International Import Exhibition earlier this month would seem to indicate otherwise. Clearly there are big differences between the US and allied military and political establishments and the major multinationals who profit from their ties to China. |
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Vladimiro Giacche'
Yours, for instance …
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Inviato da iPhone Il giorno 9 nov 2022, alle ore 20:26, Charlie <charles1848@...> ha scritto:
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Cherry-picked. As Mark Twain acknowledged that he took from Disraeli, ci sono bugie, maledette bugie e statistiche.
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Vladimiro Giacche'
It could also be said that “much of German capital is currently polarized IN China”.
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Some data can also be helpful: in 2021: 1) Trade Germany-China > 200bn 2) among the 10 biggest listed German companies, 9 receive 10% of their revenues from sales in China (the same is true only for 2 of the biggest American companies); 3) Every 5 sold VW cars, 2 are sold in China; 4) last year Germany did 14% of ALL FDI in China. (Source : MilanoFinanza, 5.11.2022). Bye V Inviato da iPhone Il giorno 9 nov 2022, alle ore 19:39, Charlie <charles1848@...> ha scritto:
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your selection of 'random' clips may I fear, suffer from a selection bias.Of course there was a bias, namely, selection by date: these reports of German wariness of Chinese expansionism came in before the Ukraine war, since Marv erroneously tried to tie the growing antagonism to the war. German capital is polarizing over China. Examples show it week after week. I posted one report that came in today at https://groups.io/g/marxmail/topic/germany_blocks_chinese_stake/94917506 |
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Vladimiro Giacche'
Right. I think Scholz’s visit to China is also a kind (and late) way to express his discontent to Washington moves.
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And yes, the economic importance of German-Chinese ties is much greater than Charlie appears to think they are. VG Inviato da iPhone Il giorno 8 nov 2022, alle ore 13:05, hari kumar <hari6.kumar@...> ha scritto:
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hari kumar
Charlie: "In Summary: In the dynamic of 21st century capitalism, under Merkel Germany has tried to ride several horses. But the increasingly tense race between USA and Chinese imperialism, will likely force Merkel’s heirs to be clearer about opposing US imperialism. " 25/07.21 at: |
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"Anti-China animus is largely an effect of the war in Ukraine. ... It's not unreasonable to expect that changing German attitudes to the war in Ukraine will also soften public hostility to China."
No, Marv, you need real evidence; and the ploy of kicking the can down road doesn't really roll here. German business's turn against China predates the war in Ukraine. Look at a few article headlines from 2020 that I found at random:
“Try as It Might, Germany Isn’t Warming to Huawei,” The Diplomat, January 09, 2020 “Germany bolsters corporate defenses against Chinese 'predators',” Nikkei Asian Review, April 03, 2020 “India toughens rules on investments from neighbours, seen aimed at China,” Reuters, April 18, 2020 (the article mentions Germany and other countries doing the same) |
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Marv Gandall
Charlie is right that German business - or at least that part of it not dependent on Chinese parts or access to its market - as well as many Germans are wary of Germany’s trading relationship with China, but there is no indication that the relationship is becoming "more and more unacceptable".
Anti-China animus is largely an effect of the war in Ukraine. Widespread popular hostility to the Russian invasion and German dependence on Russian energy supplies quickly extended to alarm about similar close economic ties to China. However, support for NATO and a prolongation of the war is waning because of rising energy costs which have hit Germans hardest, together with a globally shared concern about the rising danger of nuclear confrontation. It's not unreasonable to expect that changing German attitudes to the war in Ukraine will also soften public hostility to China.
That German attitudes to the war are changing seems to be confirmed by the most recent study, reported yesterday in the pro-Ukraine publication Meduza:
"In response to the question 'Do you believe that NATO provoked Russia for so long that it had to go to war?' 19 percent of respondents answered in the affirmative. Twenty-one percent said they partially agreed with the idea.” Meduza interpreted the result to mean that "nearly 40 percent of Germans believe that the cause of the war is unclear and that NATO shares responsibility for it, or even forced Russia into war. In the former GDR in eastern Germany, the share of respondents who answered in the affirmative is 59 percent — making it essentially a mainstream belief.. In April, surveys showed that 71% of those polled refused to blame NATO for the war in whole or in part.
https://meduza.io/en/feature/2022/11/06/there-are-many-losing-sides-in-this-war-germany-among-them
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Marv, all the examples you quote from Tooze are from the "small number of large multinationals" who are increasingly isolated in Germany. Still very powerful, of course – but there is no point denying that German business as well as the popular masses find the lure of tying German capitalism to Chinese capitalism more and more unacceptable.
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Marv Gandall
Charlie: "Mr. Parpart is one bourgeois point of view...Another bourgeois analyst takes care to do a more refined analysis of the economic forces.”
The analysis of the third “bourgeois” commentator, Adam Tooze, is far weightier than Parpart’s report in the Asia Times, and should be read in full. He makes the point that though German industry as a whole is less dependent on increasingly costly Chinese imports and its exports to China are less than they were as a share of German GDP, the China market is still critically important for China’s leading firms. Some excerpts:
"For the powerful group of German firms, whose businesses are deeply engaged in China, three questions that matter: Is their business following the same pattern that Brad Setser has highlighted in the aggregate trade data. Has their business in China plateaued? Apart from sales, how are their profits? And what is the outlook for the China business? What strategic plans are major German corporations making? It is not easy to get a complete picture on all three of these questions but from recent reporting a clear picture does emerge, not of corporate German withdrawing from China, but of new engagement.
“BASF recently announced that it was intending to “downsize “permanently” in Europe, with high energy costs making the region increasingly uncompetitive. The statement from the world’s largest chemicals group by revenue came after it opened the first part of its new €10bn plastics engineering facility in China a month ago, which it said would support growing demand in the country. BASF’s chief executive Martin Brudermüller has defended the approach and hit out at critics of his China investments. “I think it’s urgently necessary to stop this China bashing and look at ourselves a bit more self-critically,” he said last week. Experts say BASF has little choice but to focus its efforts on China. “China has 60 per cent of the world’s chemical companies and talent and 40 per cent of the resources,” says Wang Yiwei, professor of international relations at Renmin University and an adviser to the Chinese government. “If they don’t invest in China, where do they go?” "At Siemens, CEO Roland Busch like his predecessor Joe Kaeser, is an unapologetic China bull. Under the code name Marco Polo he is driving a major program to prioritize development of Siemens digital industries in China. "For VW, China is quite simple existential. But it is a market in which the company is struggling to maintain its position. For many years VW was the leading car brand in China and the China business made a major contribution to its bottom line. But sales peaked in 2019 at 4.23 million units and have fallen sharply since. But the firm has no plans to exit China or rethink its commitment, on the contrary. To increase its ability to respond to challenges in the China market, VW has opted to reorganize and localize control. "Ola Kallenius, CEO of Mercedes Benz, meanwhile, has suggested the west’s hands will be tied if Beijing were to try to seize Taiwan. “If one thinks that the Chinese economy could be unbundled from the European or the American, it is a total illusion,” he said in an interview with Die Welt in September. “It would have dramatic consequences for the world economy that would in no way be comparable to those of the Ukraine war.” "BMW CEO Oliver Zipse October 19 even went so far as to defend China’s market policies and compare them favorably to how President Joe Biden is changing the playing field in the U.S. The 50-50 joint ventures that Beijing required foreign carmakers to set up in China were “fair for everyone,” Zipse said in an interview near BMW's plant in Spartanburg, South Carolina. He warned that the Biden administration’s climate law designed to wean the US off battery materials sourced from China could provoke retaliatory steps and set off a “dangerous” game of trade barriers.
"The ongoing commitment by corporate Germany to China shows up at the aggregate level in figures for direct investment. All in all, a recent IW economic research report concludes that German direct investment in China in the first half of 2022 has hit a record 10 billion euros. This is more than the annual total in any previous year and twice the level in 2021. "Geopolitical tensions are mounting on all sides. But the collective imperative to face the technological challenge of the energy transition remains and China remains a key arena for global economic development. It is tempting to see this as a crisis peculiar to the German model. But in fact it is an expression of forces that are making themselves felt around the world in the current moment of polycrisis - the intersection of multiple, diverse, incommensurate and yet interacting forces that are disrupting the once taken for granted logic of economic globalization and the American-led unipolar order." |
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Mr. Parpart is one bourgeois point of view. Asia Times, where he is published, promotes ties between Western capital and Chinese state capital. Another bourgeois analyst takes care to do a more refined analysis of the economic forces:
In recent years, China has become Germany’s largest trading partner. But Germany is not dependent on China. Be it in trade or foreign investment, there is no single market outside of Europe on which Germany is critically reliant. Rather than national economic interest, it is the special interests of select German multinationals and industries that drive a China-dependency narrative.
In 2021, China topped the rankings of Germany’s trading partners in representing 9.5 percent of its total exports and imports in goods. Following closely behind China at the top, the United States, France, Poland, and other European countries each represent between 5 percent and 8 percent of Germany’s total trade in goods. Including trade in services, which makes up roughly one-fifth of total global trade of late, narrows the gap between China and Germany’s Western trading partners further.
Unlike South Korea, Japan, and Australia, which have trade dependencies on China of between 20 percent and 30 percent, Germany has far more space for geopolitical maneuvering.
China only made up about one-tenth of Germany’s export growth between 1991 and 2018.
If there is a single market Germany depends on, it is the European Union common market. This is where Germany’s world-leading automotive and mechanical engineering industries are deeply integrated. For example, Germany trades 40 percent more with its Visegrád countries—Poland, Hungary, the Czech Republic, and Slovakia—than it does with China. This despite its four neighbors representing 7 percent of China’s economic size.
In complex global supply chains in which Chinese inputs are first processed in a third country before final export production in Germany, the Munich-based Ifo Institute for Economic Research finds that China accounts for 7 percent of all foreign value added, whereas the EU represents 44 percent and the United States, 10 percent.
Contrary to conventional thinking, China does not make everything. In Europe, as elsewhere in the world, economic regionalization still trumps globalization.
German investment in China is over five times lower than what German companies invested in the 19 countries of the Eurozone.
Germany’s foreign investment in China has become highly concentrated among a small number of large multinationals. German carmakers Volkswagen, Mercedes-Benz, and BMW lead the way. Unlike the mechanical engineering, electrical equipment, and chemical industries, the German automotive industry has significantly expanded its foreign investment in China, which represented 29 percent of its total foreign investment in 2019. It is no surprise that some of Germany’s leading companies are strongly lobbying to put a stop to efforts within the German government to limit high corporate dependencies from growing further.
China is not Germany’s ticket to economic prosperity. A fixation on the Chinese economy undermines attention needed to overcome Germany’s innovation and productivity challenges, from poor digital infrastructure to labor shortages. Germany can incentivize trade and investment in India and Southeast Asia, but at the end of the day its political and industry decision-makers must keep German and European domestic competitiveness in mind.
As the world’s fourth-largest economy, Germany could act with strategic urgency and lead the EU in working closely with countries—such as Japan, Australia, and the United States—actively taking on the immense challenge of building alternative supply chains in critical sectors.
Luke Patey is a senior researcher at the Danish Institute for International Studies and the author of How China Loses: The Pushback Against Chinese Global Ambitions.
From https://foreignpolicy.com/2022/11/04/germany-can-afford-to-spurn-china/ |
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Marv Gandall
The US and its mostly liberal Cold Warrior supporters in Germany and elsewhere were upset by Olaf Scholz’s recent visit to Beijing, but the visit by the German chancellor points to the difficulties the US faces in seeking to prevent its major European and Asian allies from maintaining relations with the world’s largest and fastest-growing market.
Adam Tooze does a deep dive into the significance of Scholz’s visit in his newsletter (https://adamtooze.substack.com/p/chartbook-168-germanys-economic-entanglement?utm_source=substack&utm_medium=email). Scholz was notably accompanied on the trip by the chief executives of Siemens, Volkswagen, and BASF because, as Tooze writes, "for Germany’s lone semiconductor champion - Infineon (formerly Siemens) - and for Germany’s entire automotive industry, China is clearly very important indeed.” The sweeping US export controls on semiconductor and other advanced technology to China was clearly at the heart of Scholz’s visit, although it was mainly promoted as a peace initiative designed to secure Chinese cooperation in resolving the Ukraine conflict and rising tensions over Taiwan. In today’s Asia Times, Uwe Parpart says that Scholz’s visit was prompted by "an imminent possibility that Beijing will react sharply to the US chips embargo on China sooner rather than later” and that he assured his hosts that Germany “opposes decoupling” and that “the world needs a multipolar pattern”, rhetoric which runs directly counter to US interests. See: https://asiatimes.com/2022/11/olaf-scholzs-peace-mission-to-china/?mc_cid=435ddd1568&mc_eid=8fb953d004 |
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