It was perhaps her most difficult trip to China yet, but Chancellor Merkel was able to smooth over the differences. Despite bones of contention, the bilateral relationship remains pragmatic, says DW’s Frank Sieren.
German Chancellor Angela Merkel is a regular guest in China, which considers her its most reliable and important European partner. However, her ninth visit to the People’s Republic, which came to an end on Tuesday, was not a routine visit. She had several pressing issues to discuss, including the dispute over the South China Sea, a new NGO law and, most of all, the granting of market economy status to China and access to both the German and Chinese markets.
Beijing’s ire is less directed at Berlin than at Brussels, where there was some reluctance to grant China market economy status in December, although there had been an indication that this would happen 15 years ago when China joined the World Trade Organization (WTO). The European Parliament has already passed a non-binding resolution saying that China does not meet the criteria of a market economy. This triggered a threat from China that a trade war could ensue.
Bone of contention
German Economics Minister Sigmar Gabriel agrees that China is not yet a market economy. He has not dealt well with the Chinese home appliance maker Midea’s bid to increase its share in the German robotics group Kuka from 13.5 to 49 percent for 4.5 billion euros. This would give a Chinese company a major insight into pioneering German technology which Gabriel considers a serious problem. He would prefer investment from Germany or Europe even though this is currently not forthcoming.
Amid these difficult circumstances, Beijing was expecting more than a display of affection from Merkel. It played the diplomatic game superbly and got what it wanted: “It does not help us to emotionalize the whole subject,” the German chancellor said when she arrived in China. “I am convinced that we can find a solution on the lines of what was promised 15 years ago.” This alleviated some of the pressure on both countries and indicated that Germany was in favor of granting China market economy status.
Special clause for steel exports?
It also paves the way for negotiations over small print. Eventually, China might be granted “light” market economy status, with special clauses for key issues such as steel exports.
There are convincing arguments for this: Beijing cannot expect European politicians to act against the interests of their voters or risk not being re-elected just to remain on good terms with China. Beijing must be prepared to understand this.
Compromise is possible
Although it is regrettable that German and EU citizens are worried about the rise of China and whether their fears are justified or not is irrelevant here, this attitude will not change overnight. Objections from the EU’s business sector are more concrete. There is general annoyance that European companies do not have the same access to China’s markets, as Chinese companies do to the EU market.
Beijing has to pull up its socks here. It should be granted market economy status – why should it be denied something that Russia obtained? Moreover, the EU cannot make a binding agreement and then 15 years later put it up to a vote in the name of democracy, as this does nothing to boost the power of democracy. However, China must also play its part and do its homework if it wants to prevent growing ill will towards its rise.
The fact that France and especially Britain have signaled that China should be accorded market economy status indicates that a solution all parties can live with might well be found. The victory of pragmatism in Sino-German relations could mean a victory for pragmatism in Sino-EU relations, if the European Commission complies and strikes the same tone as Merkel. Market economy status yes, but with exceptions.
Frank Sieren has lived in Beijing for over 20 years.