Speech by Foreign Minister Baerbock at MERICS on the future of Germany’s policy on China

13.07.2023 - Speech

800 million people. That is the number of Chinese who have found their way out of poverty over the past few decades.

298 billion euro. That is the value of trade in goods between Germany and China last year – a record.

87 gigawatts. That’s how much solar energy China installed last year alone – more than Germany’s entire installed solar capacity.

96 percent. That’s China’s share of global gallium production – and last week China announced that it wants to restrict exports of this commodity.

69 warships. With these, China has, over the past five years, made its navy the world’s biggest, in numerical terms.

One million Hong Kong dollars. That is the bounty put up by the Hong Kong police for eight pro-democracy activists living abroad.

These are all aspects of a country that is as complex and as multi-faceted as the 1.4 billion people who live there.

A country that has perhaps changed more rapidly than any other in the world over the past ten years.

A country whose development will shape this century.

And that’s why it is so important that our society faces up to this reality.

For Germany, China remains a partner, competitor and systemic rival.

In the last few years, however, the systemic rival aspect has come more and more to the fore.

So we don’t need to look hard to see that China has changed. Anyone who listens to China knows how self-confidently it will exert crucial influence on developments in our world – more repressively at home, more assertively abroad.

China has changed, and so we need to change our approach to China.

That is precisely the aim of this first Federal Government Strategy on China, which we adopted in cabinet today.

The Strategy is the product of countless discussions over the past few months, among the federal ministries, with colleagues in the German Bundestag, with representatives of the German business community, with all parts of the scientific and academic community, with NGOs and above all with our international partners, worldwide.

And of course we also talked to our Chinese partners: intensively – and especially once face-to-face meetings became possible again – in Peking, in Berlin, and at many international meetings.

This process took its time. But it was necessary.

Because our relations with China mean much more than just contact between individual ministries, contact between two Foreign Ministers, or between the President and the Federal Chancellor.

Relations between China and Germany, between China and the European Union, also mean the workers at a car manufacturer in Baden-Württemberg that gets lithium for the batteries for its electric vehicles from China.

Our joint relations also mean a company from North Rhine-Westphalia that manufactures medicines against deadly diseases in China.

Our relations are also the universities. The university in Saxony that offers a research project on artificial intelligence and then has to think about how to handle applications from China.

As a society, we need coherent answers to these questions.

So I would like to mention three aspects of our Strategy on China that are particularly important to me.

Firstly, our aim is not to decouple from China, but to reduce risks as far as possible.

Last year we were given a painful reminder of how vulnerable one-sided dependencies make us. In order not to repeat that mistake, we, the Federal Government and the EU have made de-risking a priority.

This includes ensuring that the responsibilities for risky corporate decisions remain clear. Trusting in the market’s invisible hand in good times and demanding the strong arm of the state in difficult times, in times of crisis – that will not work in the long term. Not even one of the world’s strongest economies can manage that.

So, in our economic and common social interest, we need to focus more on our economic security.

And above all else that means minimising concentration risks that affect not only individuals but an entire economy. That is why companies that make themselves very dependent on the Chinese market will in future have to bear more of the financial risk themselves.

Economic security also means that companies make sure that human rights are not being violated along their supply chains.

Because of our responsibility to uphold human rights, obviously – but also in order to minimise the risk to Germany and Europe as locations for business and investment. Because if we were to accept that, it would be a distortion of competition, especially for European companies.

At the same time we will protect our European economy against unfair competition by developing new, above all else European, instruments – and then by using them together.

For example, the Anti-Coercion Instrument, with which we can if necessary protect European companies against attempts at blackmail by third countries, with tariffs or trade restrictions if required. In a joint European move – because that’s the only way it will function.

We have seen from the case of Lithuania that this is no theoretical debate. And we have also seen what happens if we don’t tackle this vulnerability together: it is exploited to the detriment of an individual European state and its society.

At moments like that, our European unity is our strength. The shared European internal market is our most effective instrument in this context. It is both a lever and a shield. Because yes, we cannot ignore the huge Chinese market. Nor do we want to. At the same time, however, it is equally true that the Chinese market needs the European market.

That is why we cannot be indifferent to the tensions over Taiwan. Military escalation would endanger millions of people, all over the world, so here too.

Half of the world’s container ships pass through the Taiwan Strait. Container ships – and this is something else we learnt last year and in recent months – transport things like anti-fever medicine, machine parts, foodstuffs, vital medicines. All these things are transported through this lifeline of the global economy.

So for us that means we have to look closely. But it also means that the more diverse our trade and supply chains are, the more resilient Europe and Germany are as locations for business and investment.

This brings me to my second point. In order to make ourselves less dependent, we are investing in our global partnerships.

For example, by concluding raw materials partnerships in Africa, Latin America and more intensively in the Indo-Pacific.

The EU currently imports 98 percent of the rare earths needed for electric motors and generators from China. Obviously we cannot change that overnight. But we can make a start. And we have indeed begun to tap into new sources and in doing so to shape fair value-added chains. Not just in Europe, but particularly beyond.

This is one of our goals in driving forward new trade agreements. Last month, my colleague Hubertus Heil and I visited Brazil, a country that now exports almost six times as many goods to China as to Germany.

And talking about rare earths and rare commodities and then looking closely at the region, we see that you have to search very hard indeed to find European and German companies in the field there.

So if we do not want to be left behind in this competition, one thing we need is a robust agreement between the EU and MERCOSUR. That’s what we want, all of us.

And the good thing is that we are not having to be forced: rather, it is in our mutual interest. And we will thus be able to shape global trade in a positive way. We can set global standards for fairness and sustainability, in a new age as equal partners.

My third point is this: we want to diversify. But we also want to further expand cooperation with China, because we need it.

That is true of our commercial contacts. Because we do not want to impede either China’s economic development or our own.

But it is also true of the biggest global crisis, trying to control the climate crisis. China produces almost a third of global CO2 emissions and is known to be building more coal-fired power stations.

On the other hand, China has not only recognised the huge opportunities presented by the energy transition, but is also seizing them at a tremendous rate that we could never manage, producing more solar energy than the rest of the world put together.

At the intergovernmental consultations in June, too, we saw not only our willingness but our shared aspiration to step up cooperation on climate action.

We want to use this potential, not only as Europeans with China, but especially with our partners worldwide – our American friends but many other partners around the world, too – because we all need this green transformation.

It is clear that, without China, we will be able neither effectively to contain the climate crisis nor to increase equitable prosperity in the world.

Ladies and gentlemen,

All of these points, and many more, are issues that are not only addressed in our Strategy on China, but given a political framework.

We are thereby facing up to the challenges resulting from China’s actions in the last ten years.

And we are highlighting ways and instruments to enable Germany at the heart of Europe to cooperate with China, without endangering our liberal democratic order, our prosperity or our partnership with other countries.

We are showing how 1.4 billion people, in all their wonderful diversity, from Xinjiang to Shandong, can once again enjoy greater contact, exchange and coexistence with 450 million citizens in the EU, from Porto to Vilnius.

And at the same time we are showing that we are realistic, but not naive. I firmly believe that we will, if we all want, grow together in facing these challenges – for the benefit of our world.

By strengthening the European internal market, with a good location policy for the Federal Republic of Germany, and above all with all sections of society.

From the university in Saxony to the car manufacturer in Baden-Württemberg to every federal ministry that makes up this fine Federal Government.

And so I am looking forward to talking with you now.

I am grateful to my colleagues in the Bundestag, but also to everyone else, for being as flexible as global politics currently is.

And I would especially like to thank MERICS, one of the leading research institutes in Europe, for allowing us to present the Federal Republic of Germany’s first Strategy on China here today – even though the date was not entirely clear, not just for 83 weeks, but even for the last 83 hours.

Thank you very much.


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