Merkel’s approach to China is multifaceted, driven by a geoeconomic outlook and a belief in multilateral engagement. Yet she’s out of step with growing skepticism in the United States and the EU.
By ERIK BRATTBERG, Carnegie Endownment for International Peace,
During her sixteen years as German chancellor, Angela Merkel has dealt with almost every policy area of importance in both Germany and Europe. But in recent years, China has emerged as one of the key issues where she has left a distinctive mark—and also an area of divergence between her and the administration of U.S. President Joe Biden.
While Merkel’s approach to China is multifaceted—shaped by her own long-time dealings with Beijing and a keen understanding of the challenges—she remains driven by a geoeconomic outlook and a belief in multilateral engagement. This approach is increasingly out of step with growing skepticism and tougher views in the United States, the European Union, and even within her own Germany. Those with a sympathetic view argue that she is driven by a desire to avoid a damaging confrontation with China that could start a new cold war. A close look, however, reveals that her approach is, in many ways, outdated, shortsighted, and tactical rather than strategic.
Looking back on Merkel’s tenure as she prepares to leave office, how has her outlook on China evolved over the years? How has she shaped German and European policies toward China? And will her policies remain intact under the next German government?
When Merkel first assumed office in 2005, China hardly featured in the European and transatlantic foreign policy debate. It was seen as an emerging power and growing trade partner with potential to one day become a responsible player in the international system. In contrast to her predecessor, Gerhard Schröder, Merkel initially prioritized human rights more, met with the Dalai Lama, pledged to maintain EU arms embargo on China, and pushed for an EU-holistic approach in her early years in the Chancellery.
Though not seen initially as particularly pro-business when it came to China, Merkel opted for closer economic cooperation through bilateral engagement with China following the 2008 global financial crisis (similar to Schröder’s approach in the early 2000s). This move was driven by a desire to boost German industry and car exports to the growing Chinese market, known as wandel durch handel (change through trade). This economics-driven approach—a kind of Germany First strategy—prioritized strong trade and investment with Beijing over concerns regarding human rights and values issues. The approach paid off. German companies (ranging from automobile groups like Volkswagen to major manufacturing giants like Siemens) have grown their footprint and profits in the Chinese market over the past two decades. Illustrating Beijing’s growing significance to Berlin, in 2014, Merkel elevated Germany’s relationship with China to a comprehensive strategic partnership.
Merkel has also sought to promote economic ties between the EU and China and ease bilateral trade tensions, such as by opposing the EU anti-dumping tariffs on Chinese solar panels in 2013. During this time, Merkel’s China policy was broadly in line with other European capitals and Washington.
STRUGGLING TO KEEP UP WITH A RISING CHINA
In recent years, though, Merkel has struggled to adjust to the new reality of Beijing’s growing assertiveness under President Xi Jinping and intensifying U.S.-China competition. Amid this geopolitical upheaval, Merkel’s approach to China has had five crucial elements: favoring carrots over sticks, leading Europe’s pro-engagement camp, shoring up German and European economic self-defense, maintaining European unity on China, and keeping U.S.-China competition at an arm’s length.
FAVORING CARROTS OVER STICKS
A common theme when it comes to Merkel’s dealings with China has been her reluctance to openly antagonize Beijing for fear of triggering a downturn in bilateral diplomatic relations or economic retaliation against German companies. Underpinning this approach is a recognition that Germany and, more broadly, Europe remain economically dependent on China and should therefore resist policies that could hurt their own economic interests. Notably, China overtook the United States as the EU’s biggest trading partner in 2020 and Germany is by far the largest EU exporter to China.
As a result, Merkel has been careful to avoid an openly confrontational approach, even when criticizing Beijing over its domestic human rights record or international assertiveness. While still an open critic of China’s human rights record, Merkel has favored addressing this issue in the context of the regular EU-China human rights dialogue or in private conversations with her Chinese counterparts. She has also made a point of meeting with civil society activists and dissidents during her trips to China.
Moreover, as China has become more aggressive in its diplomacy toward Europe during the COVID-19 pandemic (including the use of so-called wolf warrior diplomacy), Merkel has kept a low profile. She even shied away from openly condemning China’s use of sanctions against German academics, think tanks, and members of the European Parliament in March 2021. Another recent illustrative example occurred in mid-2021, when German Defense Minister Annegret Kramp-Karrenbauer wanted to dispatch a German frigate to the Indo-Pacific to demonstrate commitment to freedom of navigation in the South China Sea. Merkel allegedly pushed to have the vessel also conduct a port of call in Shanghai in an effort to avoid the appearance of taking sides, only to later be rebuffed by Beijing.
LEADING EUROPE’S PRO-ENGAGEMENT CAMP
While Merkel does not have any illusions about Xi—whom she has met with several times and whose objectives she understands well—she has been slower than others to realize how the current Chinese leadership differs from previous eras, when the country’s leaders were more collective in their decisionmaking and less nationalistic or confrontational than Xi.
Moreover, at a time when Washington and other European capitals have begun reassessing their own relationships with China, Merkel has remained a staunch advocate for promoting engagement over competition. Rejecting the notion that engagement equals accommodation, Merkel sees maintaining strong direct ties with China as essential to staving off the risk of future conflagration.
She also clings to a belief in multilateralism and the hope that Beijing can slowly become a more responsible player in the international system at a time when few in Washington still share this assessment. A notable example of this approach was Merkel’s push to finalize negotiations with China on a Comprehensive Agreement on Investments (CAI) in late December 2020, despite skepticism in some other corners of Europe and in Washington. In dealing with China, Merkel has sometimes sought to take on the role of chief interlocutor for Europe, similar to the part she has played with Russia over the years (and sometimes acting together with France). This approach has not always resulted in much to show for, however, as the European Parliament’s current freeze in the implementation of the CAI suggests.
SHORING UP GERMAN AND EUROPEAN ECONOMIC SELF-DEFENSE
While keen on maintaining strong trade ties with China, Merkel has become more concerned that China’s predatory economic model poses an existential threat to German economic competitiveness. As a result, she has supported steps to protect German and European industry and promote a more level economic playing field with China. This has included pushing for tougher policies toward China in areas such as new national investment screening legislation—particularly following China’s 2016 takeover of German robotics firm Kuka—and imposing EU limits on foreign subsidies.
Moreover, in a clear shift from the past, the German government, led by Merkel’s Christian Democratic Union (CDU) party, has gradually become more willing to sign onto elements of French President Emmanuel Macron’s European sovereignty agenda. Recent examples include German Economics Minister Peter Altmaier’s push for industrial European champions together with his French counterpart, Germany’s U-turn on reforming European competition policy, and new joint Franco-German investments in strengthening Europe’s technological competitiveness. However, while Merkel has taken some steps to reduce German and European economic dependencies and vulnerabilities when it comes to China, she continues to warn against economic decoupling from China and is careful not to be seen as antagonistic toward Beijing.
MAINTAINING EUROPEAN UNITY ON CHINA
To her credit, Merkel strongly believes that the key to dealing with China is having a strong and united Europe behind her. In this regard, she views China’s attempts to divide the EU through both bilateral relations and divisive regional initiatives like the 17+1 format as worrisome. She has also signaled her concern about China’s Belt and Road Initiative and its growing influence in regions of significant importance to Germany, such as the Western Balkans.
To Merkel, maintaining European unity is a precondition for the EU being able to have a say in the growing U.S.-China competition. A clear illustration of this approach was her insistence on hosting a summit in Leipzig with Xi and the twenty-seven EU heads of state during Germany’s fall 2020 term as European Council president. Though canceled (ostensibly due to COVID-19 but also likely because of the lack of progress made on the CAI at the time), this summit was meant to showcase European strength and unity. Even so, Merkel has also faced criticism from other European leaders for essentially steamrolling them when it comes to China policy at the European level—such as when she and Macron rammed through the CAI with Beijing in December 2020.
KEEPING U.S-CHINA COMPETITION AT AN ARM’S LENGTH
A committed transatlanticist, Merkel’s tumultuous experience with former U.S. president Donald Trump has nevertheless tainted her view of Washington’s reliability, turning her into a stronger advocate for Europe’s need to stand on its own two feet. This is particularly the case when it comes to China policy. Merkel has distanced herself from the evolving bipartisan consensus in Washington that China is a systemic competitor and rival. Strongly influenced by her own upbringing in East Germany during the Cold War, Merkel genuinely believes Europe should avoid siding directly with the United States against China. Instead, she believes Europe should seek to carve out a mediating role between the two rivaling superpowers. In this way, she sees it as part of her legacy to promote relations between the West and China and is wary of Europe once again becoming a victim of great-power competition.
This hedging explains why Merkel did not bow to significant U.S. and domestic pressure to explicitly ban Huawei from Germany’s 5G networks. Moreover, Merkel was also the key driver behind finalizing investment talks with Beijing on the eve of the Biden administration’s inauguration, despite criticism from Biden’s incoming national security adviser, Jake Sullivan. And she has repeatedly been lukewarm toward Biden’s call for a joint democratic agenda to push back against China, most recently at the G7 summit in June. Merkel refuses to choose between pursuing deeper engagement with China and aligning with a likeminded grouping of democracies opposed to China’s growing influence, which is the Biden administration’s purported goal with its European and Asian allies.
OUT OF STEP ON CHINA BACK HOME
While Merkel’s approach toward China was the consensus position in Europe a few years ago, her status quo engagement approach is increasingly outdated. This includes the debate within her own country, as German politicians, the general public, and even German industry leaders are increasingly skeptical of China’s actions around the world and rising authoritarianism at home.
Notably, a much-read report from the influential BDI business lobby in January 2019 cautioned companies to reduce their dependency on the Chinese market. The BDI also warned Beijing recently that human rights violations in Xinjiang and Hong Kong could hurt business ties. Other agencies in the German government—such as the Foreign Office and the armed forces (Bundeswehr), as well as leaders from all major parliamentary groupings (including prominent parliamentarians from her own party in the Bundestag)—have pushed for a tougher line on China, such as in the 5G debate.
At the European level, too, the tone toward China has become tougher. In March 2019, an EU white paper labeled China a “systemic rival,” and the EU is currently engaged in a strategic review of its China policy. Other European countries (such as the UK, Lithuania, Sweden, and the Czech Republic) have taken even more stringent approaches in their response to growing Chinese assertiveness and bullying. Merkel’s attempts to separate out the more contentious values-driven issues from economic engagement with China has led many to criticize her slow and at times quiet response to Beijing’s actions in Xinjiang and Hong Kong. Her pro-engagement approach has also created friction with other European leaders and with the Biden administration.
AFTER THE ELECTION: MERKEL’S LEGACY ON GERMAN CHINA POLICY
While foreign policy has generally not featured heavily in the German election debate, the departure of Merkel nevertheless marks an opportunity to rethink German China policy. The most vocal candidate for a sharp departure from the status quo is Green leader Annalena Baerbock, who has called for a more values-driven approach toward China centered on human rights. On the other side of the spectrum is CDU leader Armin Laschet, who would likely continue Merkel’s policy toward China if elected chancellor. He has suggested a trade-off between trade and human rights and warned against a new cold war with China. Somewhere in between is Olaf Scholz of the Social Democratic Party (SPD), who has a track record of pragmatically promoting trade with China dating back to his days as mayor of the port city of Hamburg and is not prone to confrontation.
In other words, there will be a lot of continuity regardless of the next government composition—though both the Greens and the Free Democratic Party (FDP) are likely to push for a tougher stance if they find themselves part of the next coalition government. Even if Baerbock becomes foreign minister in either a CDU- or SPD-led coalition and is as outspoken as Joschka Fischer in the early 2000s, the Foreign Office has been weakened and foreign-policy decisionmaking power ultimately resides in the chancellery. Since German foreign policy tends also not to suddenly shift one way or the other, it is hardly realistic to assume that a new German government would suddenly cease promoting lucrative German business interests in China. Berlin will continue to want to focus on economic engagement with Beijing and will resist any overtures from Washington that might overly antagonize China, thus making the transatlantic China agenda far from straightforward even after Merkel’s departure.
However, the status quo is clearly shifting in Germany, providing political space for the next government to revisit Merkel’s approach. All major political parties have prominent voices advocating a tougher China policy and recent polls suggest most Germans agree. Moreover, Merkel is a uniquely powerful political figure, and any new German chancellor would hardly match her influence in Europe or on the international stage vis-à-vis Beijing. Though her successor will likely take a mostly status quo approach, differences in emphasis—such as a less unilateral approach toward China at the EU level, more focus on human rights and democracy, or responding more forcefully to Chinese bullying in Europe—are certainly within reach.
The biggest impact, however, might be if the next chancellor engages in a broader strategic rethink of German and European foreign policy that reconsiders what role Germany and the EU should play in an age of growing systemic competition between two democratic and authoritarian blocs. If so, the real question is whether this approach presages deeper alignment with the Biden administration or a continued insistence on a distinct European middle way.
