info@foreindia.com Wednesday 24th of July 2024





Germany needs to board the right train in Asia
Shairee Malhotra and Srinath Sridharan
2023-05-08
Region : Asia, Western Europe, Economy,
Issue : Security,
With Berlin left vulnerable to the weaponisation of its dependence on China, it is high time Germany diversifies to safer alternatives
According to the United Nations (UN), India recently overtook China as the world’s most populous nation. This news was depicted by the popular German weekly magazine, Der Spiegel, through a derogatory cartoon showing an overloaded old-fashioned train with scores of Indians sitting atop, holding a tricolour. To make matters worse, the image showed a hi-tech Chinese bullet train alongside the traditional Indian train.
‘Der Spiegel’ is German for ‘the mirror’. One wonders, if the cartoon demonstrates the German perception of India in contrast to that of China.
Germany’s ties with China: A risky enterprise
Germany is China’s largest trading partner, superseding the United States (US) since 2016, with bilateral trade crossing 245 billion euros in 2021. Germany’s reliance on China to generate much of its sectoral profits from Chinese markets is evident, as in the case of Volkswagen Auto. However, the balance of trade is heavily skewed in China’s favour.
While the European Union(EU) reconfigures its economic ties with China after the Russia-Ukraine crisis, German investments in China crossed 10 billion euros in the first half of 2022. And even as the EU talks of ‘de-risking’ its strategic sectors away from China, Germany allowed Chinese company, COSCO, to invest in the port of Hamburg. As Europe’s largest export-dependent economy, China’s massive market continues to hold allure for Germany. Chancellor Olaf Scholz’s visit to China in November last year, accompanied by a large German business delegation, was indicative of the country’s business-over-all-else approach towards Beijing. Thus, Germany continues to remain a laggard in the EU’s evolving approach towards China.
Critics argue that Germany’s engagement with China should not come at the cost of compressing its values and principles, and that it should be vigilant in addressing human rights concerns, promoting democratic governance and a rules-based global order. Interestingly, such issues are addressed positively in a large democracy in the region—India.
China is seemingly emerging as a potential partner for Old Europe’s most influential countries Germany and France, to balance against the uncertainties in transatlantic relations as well as the increasing US-China rivalry. The Germans have built closer ties with China on issues ranging from climate change to global governance.
Yet, it is time for Germany to wake up and smell the coffee.
China’s Belt and Road Initiative (BRI) promised significant trade and investment opportunities for Germany, particularly in sectors such as automotive, machinery, and chemicals, where German companies have a strong presence. But these have failed to deliver, given increasing geopolitical tensions with China and the country’s imbalanced trade practices.
Germany’s lopsided dependency on China is symbiotic of its similar equation with Russia given its pre-war gas dependency. Yet, despite the associated risks, Berlin continues its economic pursuits with China.
Differences over Taiwan and the issue of human rights in Xinjiang are also complicating Germany’s ties with China, coupled with an intensifying Moscow-Beijing axis and Chinese assertions in the Indo-Pacific region. Critics argue that Germany’s engagement with China should not come at the cost of compressing its values and principles and that it should be vigilant in addressing human rights concerns, promoting democratic governance and a rules-based global order. Interestingly, such issues are addressed positively in a large democracy in the region—India.
Deepening ties with India: A safer values-based approach
As with other EU member states vying to diversify their trade partners and supply chains, risky interdependencies are creating the need for safer alternatives, even for Berlin.
India and Germany offer a useful case study of the role of perceptions in international relations. However, with increasing engagement with New Delhi and Tokyo, it is evident that Berlin’s previously limited Asian focus is widening.
Germany’s decades-old policy of Wandel durch Handel, which translates to ‘change through trade’ and the expectation that economic engagement would moderate the behaviour of autocratic states like Russia and China, has backfired. Instead, this has left Berlin vulnerable to the perilous weaponisation of such interdependence, thereby resulting in 84 percent of Germans wishing for a reduction in economic ties with China.
Yet, contrast Germany’s relations with China with its relatively lacklustre ties with India, and a stark picture emerges, despite Germany’s status as India’s largest trading partner in the EU. In 2022, Sino-German bilateral trade in goods valued at almost US$ 320 billion, while Indo-German trade the same year valued at less than US$ 30 billion. Perceptions have also played a role here, coupled with German’s Asia policy’s primary focus on China. India and Germany offer a useful case study of the role of perceptions in international relations. However, with increasing engagement with New Delhi and Tokyo, it is evident that Berlin’s previously limited Asian focus is widening.
Recent high-level German visits to India demonstrate that a lack of political will is no longer an issue. In February this year, on the first anniversary of the Russia-Ukraine conflict, Scholz travelled to India with a high-powered business delegation and reiterated his commitment to the relaunched India-EU FTA negotiations. In a span of six months, German Foreign Minister Annalena Baerbock, whose Greens Party is particularly hawkish on China, visited India twice and emphasised values-based cooperation on both economic and security matters with India. This courtship of India is evidence of the German government’s cross-party intentions of fostering closer ties with India, as reiterated in the coalition agreement of December 2021.
Cooperation in the areas of green tech and renewable energy is also in full swing, coupled with scientific collaborations and robust economic linkages. As the world’s fastest-growing economy, the Indian market is a huge opportunity for Germany in several domains including agriculture, start-ups, and smart cities where Germany with its technical prowess is a valuable partner for India.
As the Russia-Ukraine crisis prompts soul-searching throughout Europe resulting in a resurgence of values-based partnerships, Europe is increasingly turning towards India. Surely for Berlin too, a rapidly growing democratic India with common values is a more promising long-term prospect compared to an autocratic China whose values better align with the authoritarians of the world.
This year, Germany is expected to launch its new China strategy. As Berlin balances cooperation and contestation in its ties to Beijing; Indo-German interests are also converging strategically with regards to a free and open Indo-Pacific, as demonstrated in Germany’s Indo-Pacific strategy released in 2020. India’s ongoing border standoff with China and its host of other differences with Beijing create ample common ground for strategic cooperation between such countries and New Delhi.
In December 2022, the two countries also signed an agreement to facilitate the movement of skilled workers and students in Germany, which would also enable Germany to reduce its skilled labour challenges.
Undoubtedly, a previously underperforming Indo-German partnership is now gauging its potential. There are talks of India and Germany setting up a formal bilateral dialogue to jointly discuss issues relating to China. Whether the dialogue comes to fruition and creates greater alignment between the two countries remains to be seen. For the time being though, along with enhanced engagement, the two countries could do with generating and adjusting perceptions about each other, beginning with cartoons.
It would be useful for Germans to recall that today, India makes its high-speed train coaches with world-class design. In addition, Germany’s own home-grown brand Siemens has received orders to deliver 1,200 electric locomotives and provide 35 years of full-service maintenance from the Indian Railways—a 3 billion euros project that is the largest such order in the company’s history. In this context, German media could consider adopting the appropriate images in their depictions of India, particularly, if Germany intends to hitch its relationship-wagon to the more promising engine.
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Shairee Malhotra is Associate Fellow at the Strategic Studies Programme at ORF.
Srinath Sridharan is Visiting Fellow at ORF.
This article originally appeared in Observer Research India (ORF)
The views expressed above belong to the author(s)

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