Germany political ambitions laid bare: Sees future as junior tech partner for China

Ros Atkins exposes huge inconsistency in Germany's climate record

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Chancellor Angela Merkel chose to take Olaf Scholz, the man likely to replace her as German leader, along to a number of meetings in recent weeks. He accompanied her to the table during the COP26 summit in Glasgow, speaking with world leaders on methods to curb human-induced climate change. Mr Scholz was also brought to a number of bilateral meetings occurring on the sidelines of the G20 leaders’ summit in Rome ahead of COP26.

He has spent the last month engaged in talks with other German parties in a bid to strike a coalition government, having won the October election.

The most likely government to come from the talks as things stand is a Greens and Free Democrats (FDP) coalition, both of which placed third and fourth respectively.

Mrs Merkel’s Christian Democratic Union (CDU) and Christian Social Union (CSU) came second, with leader Armin Laschet failing to reproduce the success of his predecessor.

Much has been said of the direction Germany might take post-Merkel.

Many have pondered the country’s place within the EU, and whether Mr Scholz will pick up the reforming torch Mrs Merkel has carried for the past 16 years.

Questions have also been asked of what Germany’s relationship with China will look like in the coming years.

The country holds a special and complicated relationship with the communist nation: it is its biggest trading partner and technology exporter in Europe; it became China’s largest trading partner in 2017, overtaking the US, with trade volume between China and Germany surpassing $100billion (€86billion; £74billion).

In a comment and analysis piece for Euro Intelligence last month, journalist Wolfgang Münchau suggested that a Germany under Mr Scholz and his traffic light coalition would focus more on domestic investment than EU reform.

He noted many of the changes Germany is likely to undergo, but said: “What I do not expect to change is Germany’s over-reliance on widget exports for its economic growth, which informs all the other stuff that’s wrong with German politics in Europe right now: persistent current surpluses; dependence on Russian gas imports; dependence on China for exports, so much so that the German-Chinese relationship is probably the most strategic geopolitical relationship in the world right now.

“A future German government will pay lip service to the concept of European strategic autonomy, just as the outgoing government does.”

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Remaining on the theme of technology — a mainstay of the German-China relationship — Mr Münchau said: “Technology runs at a faster pace than European reform”.

He claimed: “I suspect that Germany will see its future as a junior technology partner for China, while pretending to be a loyal ally to the US and a good European at the same time.”

China already has a wealth of economic interests in Germany, as it does right across Europe.

Earlier this year, Express.co.uk mapped just some of the businesses that have or had considerable Chinese ownership in Germany that could pose a risk to both German and European security and industry.

Frankfurt Airport

HNA Group Co Ltd is a Chinese conglomerate based in Haikou, Hainan, China.

In 2017, the group acquired a majority 82.5 percent stake, the first such purchase of an overseas airport by HNA.

At the time, China Daily reported: “It is also the latest in a succession of acquisitions mounted by the company of various international assets, in order to step up its global expansion.”

The group isn’t state-owned, instead owned by a handful of individuals and companies based mostly in China.

George Soros, the billionaire philanthropist, once held a stake but has since sold it.

Daimler, car manufacturer

Geely owns a 9.69 percent stake in Daimler, which is worth $9billion (£6.4billion).

The car manufacturer, started in 1997, is owned by Chinese billionaire business magnate Li Shufu, and was the country’s first non-state-owned car maker.

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Kuka, robot maker

Midea owns 95 percent of Kuka, an industrial robot maker.

The Chinese company ‒ publicly listed ‒ bought a 25 percent stake in the German robotics manufacturer in 2016.

By the next year, it saw the potential of owning a European-based and world-leading robotics expert, tipped to help speed up automated production further, and secured a 95 percent stake.

Kuka’s estimated worth at the time of the share acquisition was €4.6billion (£3.9billion).

Aixtron SE, failed

China’s Fujian Grand Chip Investment Fund takeover of Aixtron SE ‒ a chip equipment maker ‒ failed after then US President Barack Obama blocked the deal.

The German company was ready to secure the transaction in 2016, but it was thwarted at the last minute over concerns and growing objections in Germany and the US of China buying up firms with strategic technologies abroad without allowing reciprocal transactions at home.

The €670million euro (£580million) takeover offer was already in doubt after the German government withdrew its approval, reportedly at the US’ bidding.

Mr Obama had before this stopped Fujian from buying Aixtron US, following an assessment by the Committee on Foreign Investment in the United States (CFIUS), an inter-agency task force under the Treasury Department.

KraussMaffei Group

In 2016, the state-owned Chinese chemicals company, ChemChina, bought machinery maker KraussMaffei Group for about $1billion (£707billion).

It was the biggest-ever Chinese acquisition of a German company.

At the time, Reuters noted: “The deal is the latest example in recent years of deep-pocketed Chinese companies seeking to gain the technological expertise, distribution networks and branding of Western firms, often built up over several decades.”

It came as China’s currency was weakening and the country encouraged companies to shift investments overseas in order to drive more dealmaking.

Cotesa, aerospace suppliers

In 2018, China’s Advanced Technology & Materials (AT&M) ‒ whose largest shareholder is a state-owned company ‒ took over German aerospace supplier Cotesa.

On hearing of the deal, the German economy ministry tightened the rules on foreign corporate takeovers, concerned that important technology and know-how was being transferred to foreign countries.

They then launched a review into the Cotesa takeover.

Leifeld Metal Spinning, failed

In the same year, the Chinese takeover by Yantai Taihai of Leifeld Metal Spinning was blocked by Germany’s government.

A government source said: “The cabinet today decided to grant authorisation for a veto.

“This authorisation allows for vetoing the purchase of a domestic company by a foreign company for security reasons.”

IMST, communications technology, failed

Late in 2020, just days before the EU secured an investment deal with China, Germany blocked the takeover of satellite and radar technology firm IMST by a subsidiary of state-controlled missile maker China Aerospace and Industry Group (CASIC).

The German government, as in past cases, said it was due to national security concerns.

Berlin views IMST as an important provider of satellite communication, radar and radio technology.

Its knowledge of such technologies is crucial to Germany and Europe.

Mrs Merkel’s cabinet is said to have on this occasion grown concerned over unfair competition caused by state-backed enterprises and restrictions on market access.

The trend of Chinese investment, according to authors Shuwen Bian and Oliver Emons writing in the 2017 research journal, ‘Chinese investment in Europe: corporate strategies and labour relations’, is symptomatic of its wider global agenda.

They say China is moving from being a Foreign Direct Investment (FDI) country, to an FDI export country.

Since the turn of the 21st century, China has moved towards pumping money into countries around the world rather than attracting foreign investment.

Much of the investment in Germany, for example, enables China to circumvent hefty EU tariffs on products.

Mrs Merkel’s time in power expertly outlines the importance of the German-China relationship.

During her time at the helm she visited China 12 times as part of trade missions.

German companies have also tread carefully around the political ties: in 2018, Mercedes-Benz apologised to China for quoting the Dalai Lama — the spiritual and exiled leader of Tibet — on Instagram.

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