Special Alert - 22 October 2014
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Nervousness over Germany-China dialogue

Germany and China are to hold their third ‘government-to-government’ consultation in Berlin at the end of this week.  It follows on from the agreement in March between Germany’s Chancellor Angela Merkel and China’s President Xi Jinping to enhance the ‘bilateral strategic dialogue’ between the two countries by including foreign policy and security issues.  It is expected that in due course defence issues will be added to the agenda.  There is some nervousness in Washington (and Tokyo) over these developments.

There is a powerful strand within European thought, strongly represented in German business and political circles, that believes that the European Union should exploit US difficulties with China by distancing itself from any US-led ‘contain-China’ policy; by strict neutrality in the territorial disputes between China and many of its East Asian neighbours, including Japan, Vietnam, and the Philippines; and by soft-pedalling on human rights.

This strand of opinion was publicly expressed in early 2012 by the EU-funded Europe-China Research and Advice Network (Ecran).  In a report on the economic opportunities presented by China’s 12th five-year programme (12FYP) Ecran noted that the ‘China-threat discourse’ emanates largely from the US, and it asserted that “China poses no military threat to Europe”.  The report acknowledged that China was seeking to impose a sphere of influence in East and Southeast Asia “to protect its borders and to safeguard oil exploration projects in the South China Sea”.  And it added that China also aspires to develop a second line of defence through a naval presence in the Indian Ocean and “potentially the Pacific”.  But, it concluded, “in neither case are European interests directly involved – something that promises to benefit the EU in its engagement with China”.

A few months after this report, in June 2012, the European Union Institute for Security Studies (EUISS), which is an agency of the EU operating under the Union’s Common Foreign and Security Policy (CFSP), argued that China’s evident desire to balance its dollar-denominated assets with more euro-denominated assets provided an opportunity “for the EU to consider a political and economic grand bargain with China”.

The EUISS was clear that this opportunity was in part a consequence of the US pivot to Asia, which was pushing China “to hedge against an eventual US-led encirclement strategy”.  And it was not shy in declaring this an opportunity for Europe, saying that “China’s financial clout could well contribute to shielding the eurozone from international speculation coming mainly from Wall Street”.

This is the background that makes this week’s China-Germany ‘bilateral strategic dialogue’ so significant.

Germany has been notably lukewarm about any signs of France, the UK, or the EU itself siding with the US and/or Japan over disputes with China, and the unspoken message from this week’s China-Germany strategic dialogue may well be that if the European Union and its principal member states show any propensity to take anti-Beijing stances then Germany will undermine those moves by deepening its bilateral relations with China.

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