Germany and China: The New Special Relationship

Now that the German Chancellor is once again visiting China, accompanied by scores of her top ministers and an outsized contingent of CEOs, the world is beginning to take note.

The Chinese are extremely meticulous when it comes to symbolic moves and announcements. Every step they take, especially regarding expressing favor or disfavor, is calculated to the nth degree. Such is the hallmark of a highly refined, court-centered political culture that reaches back thousands of years.

Thus, when the two countries announced two years ago — in July 2010, during Angela Merkel’s fourth visit to China as German Chancellor — that that they would start a strategic dialogue, it was a significant event.

At the time, most of the world did not notice that the Chinese leadership had just anointed a nation other than the United States the privileged status of conducting a “strategic dialogue.”

Such announcements can easily be meaningless. Moreover, the Chinese favor arranging world affairs in such a manner. They like to maintain a multitude of different relationships simultaneously. The size of the country’s population naturally puts China at the center of the various overlapping country pairings.

The Chinese-German dialogue is certainly based on a warm personal rapport. That became readily apparent at its launch two years ago. Prime Minister Wen Jiabao, who had just met with his German counterpart in Beijing, accompanied her on a trip to Xian, China’s ancient imperial capital.

Better yet, Wen, ever the perfect host, welcomed Mrs. Merkel that day — which happened to be her 56th birthday — at her hotel for breakfast with a traditional Chinese birthday cake. And now that Wen is leaving his post as prime minister, Mrs. Merkel is coming to visit to pay her personal respect to him before the leadership change.

The personal dimension aside, what should the world make of the Chinese-German relationship?

  Is it a crafty Chinese charm offensive to which the gullible Germans are succumbing?

  A strategic summit of two mega-mercantilists?

  The natural consequence of the economic confusion in present-day Europe?

  Or no big deal whatsoever?

To be sure, the Chinese, for the time being, are tired of the constant European hoopla. Since China’s national interest is completely tied to stability of the world economy, they understandably want to talk to the key person on handling the euro crisis. Mrs. Merkel is just that.

But the French, British and the Americans would delude themselves if they believed it was just that one factor that attracts the Chinese to the Germans.

What unites the Chinese and the Germans is also far more than potential solidarity between two major countries that are criticized (unfairly) for pursuing mercantilist trade policies.

Both countries know that they have their problems and drawbacks — as virtually all nations do. But they also know that, rather than letting problems fester, they are consistently working on remedying them, whether by strengthening domestic demand or letting the renminbi appreciate.

And they know that playing unilateral blame games, as is frequently the case in the Untied States, is often just a highly transparent effort to deflect attention from one’s homegrown problems.

Beyond their common belief that we are living in a world where all are sinners and all need to strive for self-improvement, the Chinese and Germans share:

  a strong belief in the need for fiscal consolidation,

  a desire to achieve balanced growth in socioeconomic terms,

  strong doubts about the primacy of the financial economy, and

  a shared reliance on the manufacturing sector as a vital tool for economic growth.

In addition, the fact that the German economy has delivered engineering excellence for a century and a half resonates strongly with the band of engineers — not lawyers — that makes up the Chinese leadership. They see that as worth striving for.

That Mrs. Merkel trained as a scientist only adds further to the (mutual) respect. So does the fact that she — along with many of her country’s leading manufacturers — is focused on being on the cutting edge of green growth.

China’s interest is further tickled by the fact that Germany — having badly failed in that endeavor before — carries no big stick and rather seeks to convince more by the power of its example and performance than by grandiloquent speeches or the military.

Counterbalancing the U.S.

Another reason for the Chinese to raise Germany to an elevated partner status relates to counterbalancing the United States, which is a natural Chinese interest.

The two countries’ leaderships share a genuine concern that the political situation inside the United States is so disjointed that there are very real doubts about the continued ability of the United States to manage world affairs.

Even more worrisome is the question of whether the United States is actually able at this point to pursue a rational course on key domestic policy initiatives, such as fiscal policy.

But the Chinese are realists. Their ambition is not to unhinge the Germans from their alliance with the United States. Rather, it is about the hope that, by partnering with Germany, Chinese arguments regarding the future stability-oriented path of the global economy will have more weight in the G20 and other international forums.

Finally, the German-Chinese relationship also has a direct bearing on the current regional tensions between Tokyo and Beijing. The positive example of the Chinese relationship with Germany must be especially stinging to the Japanese.

That could also be precisely how the Chinese intend for it to come across. They know that Japan and Germany are both keen on overcoming a difficult legacy stemming from World War II.

Yet it is far too early to assess what the real, long-term impact of the strategic dialogue between Germany and China will be. But what is certain is that China’s motives span across a wide range of interpretations, reasons and interests.