Germany’s first China strategy just dropped

Germany released its long-awaited China strategy on Thursday, as the EU’s biggest economy re-thinks how it approaches its top trade partner.

The strategy describes China as a “partner, competitor and systemic rival” that’s “changed” as it seeks more assertively to re-shape the world in its own image. So… Germany says:

• 🚧 It doesn’t intend to impede China’s development, but
• ⏳ De-risking is now “urgently needed“, particularly in “critical sectors” like medicine, lithium batteries and chip-making, and
• 💰 It calls on German businesses to plan accordingly, as they’ll have to “carry the financial risk more heavily themselves” in the future.

German businesses have been pretty positive in response, saying the strategy:

• 👍 Validates (and incentivises) what they were already doing, but
• 🤷 Some say it’s light on detail and could curb entrepreneurialism.

And for its part, an irritated Beijing said:

• 🔥 It’s a “fatal miscalculation” to see China as the source of risk, and
• 🤝 The two countries are actually “partners, not rivals”.

Intrigue’s take: The West has dusted off various d-words to re-calibrate ties with China: de-couple, de-risk, diversify. So here’s another: disentangle.

Germany is entangled in a web of competing interests and concerns: human rights, Beijing-Moscow ties, EU unity, Beijing’s efforts to re-shape global norms, and China’s key role in Germany’s own export-led growth.

The sheer complexity of disentangling all this, while managing internal divisions (meticulously documented by China’s state media), might explain why Berlin was still tweaking the strategy hours before it was released.

But initial reactions suggest it’s done a fairly solid job of disentangling in a way that’s coherent, if not always concrete.

Also worth noting:

• Germany’s strategy says it won’t be possible “to overcome the climate crisis without China.”
• Germany’s spy chief warned a parliamentary inquiry last year that “Russia is the storm, China is climate change.”
• Major German companies like Siemens, BASF and Volkswagen have recently released strategies that retain a heavy China focus.