06 November 2020

A cooperation that does not suit the US: the China-Germany strategic relation

Sergiu Medar

As soon as the transatlantic relation started to get weaker and weaker, Germany began to search for a market for its products outside the US. The most convenient partner, considering its interest to get involved in Europe’s economic development, was China. Berlin aimed at keeping its leader position – economically speaking - in Europe. China and Germany’s interests follow the same line when it comes to the US. Germany also thinks that China is the perfect partner, in terms of economy, in its competition with the US. China and Germany together are way beyond US’s economy.

Image source: Profimedia

The summer of 2018 was marked by Donald Trump’s blunt discussions with Germany’s chancellor, Angela Merkel, about the funds each NATO member state should invest in the Alliance and the costs for the trade products exchanges between the two countries. A lopsided trade balance, favoring Germany, pushed the US to take measures to adjust it.

Through their global development, the world states sought, first of all, the intensification of their production efforts, innovation and digitalization of the industrialization processes, through national programs, which would influence the big powers competition. In 2012, the US launched the “Industry Interconnection” program. In 2013, Germany launched the strategy “Industry 4.0” and, in 2015, China launched the program “Made in China (MIC) 2015”, which aimed for all the high-tech products, acquired from the Chinese market, to be produced in China.  The 2025 MIC was preceded by the “Go Out” program, which was encouraging the Chinese companies to invest abroad. The Chinese Communist Party thinks the new program will bring China the victory in the “new industrial revolution”.

China wants to get modern networks, technical standards and technological platforms which will represent the foundation in the 21 century economy. For these high-tech products production, which should also include AI, to be a success, China encourages the establishment of partnerships with foreign companies, governments and institutions to develop new technologies which are, then, applied in the Chinese economy.

The first target of the MIC2025 is Germany, which is the source of the new technologies, a partner that will export standards favoring China and a competitor which is attracted in the leadership process of the current industrial revolution.

China is finding its bearings in the fields Germany is the best at: the car industry, the metalworking, chemistry, medicine, electronics, technologies to protect the environment and the new types of energy. At the same time, China wants to invest in Germany in the fields wherein it can influence the international global norms, like: the bank systems, alternative energy cars and everything related to “new energy”. China wants to get also information from fields wherein the global community does not have a leader: the 5G technology and the financial digital technology.

The Chinese government used different types of encouragement for the participation of Chinese firms to getting high-tech from other countries. These are encouraged to create mixed societies and make technologies’ transfer. In order to introduce their own norms, the Chinese companies are building trading estates, telecommunication infrastructure, logistics and others in Germany. They are not interested in profit, as the funding comes from the Chinese government. This is how China can win all auctions.

The cooperation with Germany is a strategic example for the Chinese Communist Party which will get Beijing to dominate the global economy. This does not mean only assimilating high technologies, but also the standards to actually apply them.

In Germany, China committed to create a Chinese hub for the systems, standards and platforms for both Europe and the entire world. The cooperation with Germany through Industry 4.0 will allow the introduction in China of some sophisticated technologies, wherein the AI will allows for the entire technological process, from planning to the production to be quick and precise.

Beijing thinks of Germany as of an easy target. When it comes to China, Berlin is more open to cooperation than Washington. Also, China thinks that Germany is the perfect European country to get economically close to. Yan Xuetong, the dean of the Institute for International Relations of the Tsinghua University, thinks that the pragmatic attitude of the Germans makes them the ideal partners of China in Europe.

A 2018 study of the German think tank Bertelsmann Stiftung assessed that 64% of the merger and procurement made by China between 2014 and 2017 in Germany were related to e energy-saving and new energy vehicles (20,5%), electrical equipment (18,8%), biomedicine and high-performance medical devices (16,1%) and high-end numerical control machinery and robotics(15,2%).

China’s investments in Germany are mainly directed towards the fields Beijing wants to become a global leader in. This category includes the procurement of a German industrial robots manufacturer KUKA, which delivers special robots to car manufacturers, or the investment of the Chinese company Geely’s, which acquired 10% of the Daimler AG company. To this latter business we can also add the recent involvement of Germany in the creation of a mixed society to build electric cars, in China and Germany.

The establishment of a mixed society between Shanghai Electric and Siemens for the production of gas turbines was a national interest program in China. It involved also the development of turbines for the military aviation. In 2014, China gave up this cooperation and bought 40% of the Italian company Ansaldo Energia.

The Chinese Communist Party introduced the obligation for any procurement of new technology whether it is legal or illegal to be made after analyzing the possibility of apply it in the military field, based on the “military fusion” program.

In order to become a global leader in various industrial and technological fields, China’s biggest investments were made in Germany. This is also the case of the mixed society for the production of crankshaft wherein the Chinese company Haowu, a branch for Neijiang Jinhong Crankshaft Co Ltd, has acquired 50% of the FEUER company and, together, created the mixed society Neijiang German Chankshaft project. The Chinese investment worth of 142 million dollars makes it the global leader in crankshaft manufacturing.

China thinks of the cooperation with Germany as of a method to extend its influence over global industrial norms the way Beijing wants it and considers its European partner a support in the competition with the US. China wants for Germany to use the new Chinese norms and infrastructure. For that to happen, China wants to insert the German development concept Industry 4.0 in the Chinese one MIC2025. Thus, Beijing now wants to have a voice, to take advantage of this situation and, on long term, to get new advantages. The global norms, wherein Beijing and Berlin want to prevail, are, among others, related to intelligent manufacturing, biomedicine, AI, new energy vehicles, finance, modern logistics, 5G communication, graphene and new electronic machines.

Currently, there are 25 Sino-German industrial parks in China and other 4 parks are currently being developed. Also, China has 3 big trading estates in Germany and wants to create more.

Something that really got China’s attention was the energy sector, especially in terms of new technologies. In 2016, Beijing Enterprise acquired the German company Energy from Estate, and the richest person in Hong Kong, Li Kashing, bought the trading estate group Ista, which produces metrology elements and management of energy.

Huawei, the global leader in 5G communications, has moved its European head office, in 2007, from Great Britain to Dusseldorf, Germany. In 2015, Huawei and Deutsche Telekom have signed the Open Telekom Cloud program, which is going to be the strongest competition of Amazon in the US.

Given these conditions and considering the current tendencies, as well as the speculated ones, Europe and Asia can be, together, a strategic threat against the US because only together they can be economically, financially and militarily superior.

Translated by Andreea Soare