A "Wake-Up Call": Liana Fix on China-Germany relations and Trends in European China Policy

Dr. Liana Fix speaks to CACR about China-Germany relations, European China policy, and transatlantic approaches to China-related issues. This interview has been edited for length and clarity. (March 20, 2023)

Liana Fix is a fellow for Europe at the Council on Foreign Relations (CFR). She is a historian and political scientist, with expertise in German and European foreign and security policy, European security, transatlantic relations, Russia, and Eastern Europe. She is also the author of A New German Power? Germany’s Role in European Russia Policy (Palgrave Macmillan, 2021). Dr. Fix’s work focuses on German domestic and foreign policy, the European Union, transatlantic relations, and Europe’s relations with Russia and China.

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Could you give us a brief overview of how the administration of Chancellor Scholz has viewed and interacted with China?

I think in recent years, there were two shocks when it came to Germany’s China policy. The first shock was obviously the pandemic, both the economic downturn and the realization of how dependent Europe was on China and its provision of essential materials like masks. The second shock was the invasion of Ukraine by Russia, which led to many questions being asked in the halls of Berlin. Germany was able to decouple relatively quickly from Russia– it was a huge effort, especially substituting Russian gas, but it was possible– but Russia was not as important a trading partner as China. So the question that came up was, what if we have to decouple from China in the same way that we had to decouple from Russia? This question led to a re-assessment of Germany’s vulnerabilities.

The new coalition that came to power in Germany is for the first time a three-party coalition of the Greens, Liberals, and Social Democrats. In that constellation, the Greens were always the ones who were more outspoken on China, were more forward-leaning, and demanded a reduction of dependencies on China and had a very normative human rights approach towards China. The invasion of Ukraine really helped to move the other parties forward, and the current position can be described as glass-half-full, glass-half-empty.

Berlin is currently developing a China strategy in the context of its first-ever national security strategy, and the question is, to what extent will Germany reduce its dependency and take the possible economic risks of reducing this dependency into account? The German public is actually quite forward-leaning. The majority of the German public says we should reduce our dependencies even if this means economic costs, but we still have major companies in Germany, especially the very big ones like BASF, that have invested a record amount in China in the last year. The concern is that if there are any disruptions with the Chinese market, those companies will need taxpayers’ money to be bailed out. The government insists that this is not about economic decoupling but just about diversification, defusing risks, and reducing dependencies, with many critics saying this is not far-reaching enough. As long as those big companies remain so dependent on the Chinese market, China can use this leverage towards Germany in the political field.

Have there been any security incidents or military incidents that have provoked a reconsideration of Germany’s relationship with China?

The most important example of that is the security of infrastructure. One question is whether Huawei should be part of the 5G network in Germany, which it is not, but we do see that Huawei does play a role in all the logistical infrastructure that’s needed around the 5G network and therefore still has quite significant influence. The other example is that there was Chinese interest in buying a stake in a port in Hamburg, which raised quite some attention to the question of whether critical infrastructure should be protected in a better way.

The other aspect is Chinese activities on German soil. There was a lot of reporting about Chinese overseas police stations and reports suggested that those are present in Germany and actually that one such station may be active in the vicinity of the German Federal Foreign office in Berlin. But overall we have to say that China is much less perceived as a security threat in Germany and in Europe than it is in the United States. Also, in public opinion polling, the majority of Americans consider China to be a military threat. That’s not at all the case in Germany, where only 7% consider China to be a major military threat. That very much also defines the European outlook on China, which is still much more dominated by economic issues than by security issues.

Is China attempting to put a floor under its relationship with Europe or Germany in the same way that it attempted to with the United States earlier this year?

We do indeed see attempts by the Chinese side to distance themselves a little bit in the eyes of the Europeans from Russia, because China certainly realized what a shock Russia’s war against Ukraine was for Europeans, and how critical Eruopeans considered China’s role at the beginning of the war, especially the meeting between Putin and Xi.

When Olaf Scholz made his trip to Beijing and Xi Jinping for the first time said that Russia’s nuclear threats, or he phrased it a little more broadly, were not welcome, that was interpreted by Europeans as a sign that there is a possibility to exert at least some influence on Russia via Beijing. This is obviously a very comfortable position that Beijing finds itself in, and perhaps for some Europeans it has also raised hopes that China can be somewhat of a constructive actor, which again is exactly what China’s intention was. I think it’s important not to become too naive towards these attempts and to see what actually is behind a move by China to move a little bit away from Russia and position itself in more favorable terms towards the Europeans.

Has China’s economic coercion against Lithuania encouraged Germany or Europe as a whole to reduce their economic dependence on China?

It was certainly an episode that was a wake-up call and something that should be unacceptable to Europeans if they take their talk of European strategic autonomy seriously. It has contributed to somewhat of a shift in overall European perceptions towards China, but there is also a divide now emerging between countries like Lithuania, which have a very clear-eyed view of Chinese coercion, and other countries like France and Germany that don’t follow this more hawkish line, as they perceive it. That’s a split which is not new within Europe, but it makes it all the more difficult to have a joint European China policy. This is especially true if we see European leaders like Olaf Scholz and Macron traveling separately to Beijing instead of trying to present a joint European stance that would increase leverage towards Beijing instead of leaving member states on their own in their fight against China.

Since the invasion of Ukraine, Taiwan has attempted to use that issue to raise awareness of the military threat posed to it by China, and that found a receptive audience in the United States. Are European countries also starting to worry more about a Taiwan conflict?

Yes, a potential escalation over Taiwan is much more on the map of the Europeans than it has been in the past. We also see more delegations from Europe traveling to Taiwan and taking the risk more seriously than they took it before Russia’s invasion of Ukraine. They have had the realization that sometimes what we think might be rational behavior for an autocrat is not exactly how the thinking of autocrats develops. This might well be the case with Xi Jinping too. So that’s new. The question is really what kind of role Europeans can play when it comes to Taiwan as a security actor. In the past, for example, Germany sent a frigate to the Indo-Pacific to demonstrate visibility there, but Europe’s military capabilities are certainly not well-equipped to have any kind of security role in a conflict over Taiwan. The main priorities here are to first reduce Europe’s dependency on China so that if an escalation happens, the cost to European economies will not be as immense as the cost of Russia’s war on Ukraine, and then again to think about what other measures Europeans can apply. Sanctions towards China might be a more productive path to think about rather than a security role. But Taiwan is certainly back on the radar, or perhaps on the radar for the first time, for Europeans.

Ever since the coronavirus pandemic started, there’s been discussion of US companies attempting to move their supply chains out of China or to hedge and invest in other places. Have German or European companies also attempted to hedge their bets on China or diversify their supply or industry chains so that they’re a little bit more insulated from either the pandemic or political issues?

Yes, there was a remarkable report from the German Federation of Industries that actually warned against exactly those risks, so it’s not only something which was present in the political sphere, but also in business circles, and we hear and see a lot of these concerns from a lot of small and medium sized enterprises.

We also see political incentives and signaling to diversify. Olaf Scholz traveled to Tokyo before he traveled to Beijing, which is a signal, and he spoke often to German companies about how diversification is really something they should look out for right now. But then again, when it comes to the big companies in Germany, we don’t see this kind of effort. What they try to argue is that China is in a very different box from Russia and that the double shock of decoupling from Russia and decoupling from China, even if that’s not exactly what the United States is demanding, would be too tough a challenge for the German economy. That’s a risk factor that’s still there, that these big companies can certainly have a more negative impact if they get into trouble than the small and medium sized enterprises.

Could you talk about the relationship between the governing coalition and German business right now? If the Christian Democrats come back into power, how could that impact the influence of the business sector on Germany’s China policy?

The most interesting aspect when it comes to the relationship between the new German governing coalition and the business side is that the Green party is actually in charge of the ministry of the economy in Germany now, and they have really embarked on quite a systematic review of dependencies of the German economy. That’s an approach which we haven’t seen in the past, where the ministry of the economy is proposing quite far-reaching measures. But we also see a tension between the different parties in the coalition. We have the pro-business liberals, and we also have the Chancellery in Social Democratic hands, headed by Olaf Scholz, which is more hesitant to follow the forward-leaning line of the Greens out of concern that the German economy might not survive two shocks, that it might be too sudden for the German economy. So the Chancellery is trying to play for more time when it comes to publishing the new China strategy, and the concern on the other side is that the German economy doesn’t have time, but needs to adapt very quickly and very radically.

How big or prominent is the Green Party in Germany? Is there any prospect of them becoming more influential than they currently are?

Yeah, the trajectory of the Greens in the last election is only going upwards, so they have become ever more powerful in these elections, and they have also become so powerful because the German political landscape has become more diverse. It is easier for a party even with smaller gains to leverage more influence and to have a decisive role in negotiations about the coalition because it’s not the case, as it was in the past in Germany, that two parties are sufficient to form a coalition. The future will likely be that Germany will always have to deal with a three-party coalition and with the Greens as the new emerging party, which especially with young voters is very popular. It’s likely that they will continue to play a major role in German politics.

How has the United States tried to influence Germany’s China policy under Scholz, and how successful has it been?

The United States is ringing the alarm bell when it comes to dependencies on China, but so far Europe– and we hear this especially from Macron– is trying to find its own way when it comes to China. This is reflected in the European strategy, which was published on China a couple of years ago, where China is called at the same time a competitor, rival, and partner. If you don’t want to say anything, you say three things which are completely contradictory and make it easy for every European country to keep doing whatever they want. That suggests that there is definitely not a full alignment with US policy towards China. The United States regards China as a peer competitor for the global role that the United States plays, but that’s not the level of analysis where the Europeans and the European Union are. There’s a concern that we have two superpowers, the US and China, fighting and Europeans who will be caught in between, and that gives rise to the idea that Europe can chart its own path on China. This is certainly not neutral in any way, it is leaning more towards Western values and the Western alliance, but it is not just allied with US priorities. There are also many consultations going on at the European Union on different levels and between individual member states on China policy. The challenge there is that as long as Europeans don’t come together on one China strategy, it is quite a challenge for the United States to work together with all different European partners on China.

The Biden Administration has recently been warning that Xi Jinping has given China’s military an order to be prepared to invade Taiwan by 2027. Is the issue of a Taiwan invasion playing any role in the United States’ relationship with Europe? Is the United States attempting to get Europe to pay more attention to a Taiwan contingency, and is Europe paying more attention to it?

Yes, and we’ve seen this kind of policy gaming or war gaming on Taiwan where people develop scenarios and think through what might happen and how Europeans will react. It’s actually taking place more often than in the past. I myself have conducted a policy game on how Europeans would react if China were to invade Taiwan, and that was before Russia’s war against Ukraine, and the outcome of that policy game was that the Europeans were very much detached from that. German policymakers did not know how they could explain in any way to their publics and to their constituencies at home why this is a major problem and what the status of Taiwan means and why it should be of concern to Germany because of the tyranny of distance. It has changed but I think it will also gain relevance for Europeans because the question will continue to grow in importance. If the United States remains so engaged in Europe, are they not lacking the capabilities that they would need to be engaged in Asia, when it comes to an escalation over Taiwan? This is a debate that we already see now among some Republicans in Congress, who are asking why Europeans are not shouldering the main burden when it comes to the war in Ukraine, and I think this will certainly increase if we have a crisis in Taiwan or conflict over Taiwan. Europeans would then rather think about what kind of contribution they can make to keep Europe stable, because the war in Ukraine is not likely to end anytime soon in a definite way, and what happens to European security if the United States shifts its attention to Asia? That’s a question that Europeans have not asked themselves so far. They have very much focused on US leadership in Europe in this war, very much focused on the moment, and I think that’s actually the more urgent question: what if the US’ attention shifts? Then what can Europeans do militarily over Taiwan?

The question of Chinese involvement in Russia’s war effort has been prominent ever since the invasion. If China were to become more directly involved in Ukraine, such as by provisioning equipment, would that affect Germany or the European bloc’s perception of China as a security threat?

It would, but if we look at the security perception of Russia, there’s also quite an interesting difference between Western Europeans and Central Europeans. In Central Europe, Russia is a fundamental and existential threat to the national security of those countries. If you look at Western countries, for instance Germany, about one-third of Germans see Russia as a major military threat, which is not a lot given that there is a war raging just next door. So it also has to do with the legacy of Western Europe, which from the end of the Cold War did not have to deal with immediate security challenges in its neighborhood and has almost lost its ability to critically assess threats to its security. Since China was viewed through the lens of economics for almost forever, so far, especially since the end of the Cold War, it really takes time to shift this perspective.

On the other hand, there are already reports about how Chinese parts are found in Russian military equipment. I think if we were to see direct Chinese involvement in terms of military deliveries of weapons to Russia, that would make it much more difficult for China, as they are trying to create the perception that they have distanced themselves from Russia.

If Russia were to use nuclear weapons in Ukraine, would China be able to distance itself from that in Europe’s eyes? Would a nuclear incident cause a fundamental shift in how Europe perceives China?

I think that’s very much correct. I don’t think it is in China’s interest to see Russian escalation, they certainly do not want to see such a disruptive event. But again, the question is, is it in their interest to really put something at stake to prevent Russia from doing it? Obviously, they could impose costs on Russia, but would they do it to prevent Russia from taking that step? How much would they know if Russia were planning that step? It’s very much unclear, and it’s also unclear whether after it happened, China would punish Russia in a way that is significant. I think that’s a very big question mark, which again says that relying on China cannot be the only instrument to deter Russia from nuclear use, and it should most certainly not be regarded as the most important instrument. The most important instrument is the deterrence that the United States and European countries can signal towards Russia, arguing that any nuclear use would only accelerate Russian defeat and would only increase the Western commitment to Ukraine and involvement in the war.

Is there anything else that you want to add about Germany’s relationship with China or Europe’s relationship with China that US China watchers might not know?

I think the difficulty for US China watchers is the multi-level China policy in Europe. There are domestic dynamics within the most important European member states and between political parties, as for instance in Germany with the Greens and the business community, but then there are also dynamics on the European level, where European leaders try to negotiate among themselves. I think these multi-level dynamics are sometimes quite complex to grasp, but they are essential to understand why it is so difficult to have a joint European stance on China, why individual interests are at stake, and where the role of the European Commission and Brussels actors are conducive or are limited. That’s not something that US policy analysts are necessarily used to, because it’s very different to the way national security works in the United States, but especially in the case of China, I think looking deep into these multi-level dynamics is crucial.