The mood towards Berlin from Beijing to Beijing

Until recently, Germany was one of the few major Western countries with which China had friendly relations in an increasingly hostile international environment for Beijing's export and foreign investment industries. Germany, China's fourth largest trading partner, has not joined US President Donald Trump in his outright condemnation of Beijing's trade and investment practices or its geopolitical ambitions in East Asia. Instead, Berlin has frequently closed ranks with Beijing by condemning US threats of tariffs, sanctions and trade wars.

But in recent times, Berlin has sent discrete but increasingly clear signals of frustration over China's economic practices, showing that despite the mistrust of Trump's economic collision course, German officials and trade ultimately many of Beijing's fundamental critics.

Germany's leading business badociations and economic research institutes, which previously refrained from explicitly criticizing Beijing, have begun to advocate for harsh economic measures against China. A particularly remarkable case is that of Bundesverband der Deutschen Industrie (BDI), Germany's most powerful industrial lobby group, representing more than 100,000 companies and having regular access to German decision-makers. In January 2019, the BDI sourced a strategy paper urging the German government and the European Commission to refine their economic instruments in the "conflict of economic systems" with Chinese "state capitalism" and to exert more pressure on Beijing.

The BDI newspaper accused China of distorting markets and prices as a result of state interventions, generating global overcapacity in sectors such as steel production, as well as in sectors high technology such as robotics and battery production. The document set out 54 concrete political requirements, including a strengthening of the EU's anti-subsidy instruments aimed at controlling and, if necessary, preventing foreign acquisitions of EU-sponsored technology companies from around the world.

The IDB said it is particularly concerned that, although China has been able to create huge global corporations through the intervention and support of governments, mergers of large companies in Europe are blocked by restrictive antitrust legislation from the EU. She suggested that market forces be allowed to form large-scale "European champions" among companies in the sector.

This is the first time that a large German business badociation has used such unequivocal and conflicting rhetoric to criticize Beijing's industrial policy. The main proposals of the BDI were then adopted by the German Minister of Economy Peter Altmaier in his response to the rejection by the European Commission at the beginning of February of the proposed merger between two of the largest companies of railway wagons in Europe – the German Siemens and the French Alstom – for antitrust reasons. The two companies considered the merger an important step in countering the growing competition from China's rail car companies, particularly the China Railway Rolling Stock Corporation (CRRC).

Altmaier, one of Chancellor Angela Merkel's closest confidants in the ruling CDU party and former director of her federal chancellery, then presented the draft "National Strategy for the Industry". horizon 2030 ", a broad-based reform of macroeconomic planning aimed at stimulating the German industrial sector. to increase its technological competitiveness, particularly with respect to China.

The project signaled a change in Germany 's industrial policy and was prompting immediate criticism from opposition politicians and economists, accusing Altmaier of protectionism and intrusive intervention from Germany. the share of the state, even going so far as to bring his ideas closer to China's own economic planning. But no less important economists and leading industrialists defended this plan, usually referring to the threat of rising Chinese competition.

Germany has gone further in what presumed future future German Chancellor Annegret Kramp-Karrenbauer has described as a "systems conflict" between Europe and China. Another controversy has arisen over strengthening foreign investment controls, in the face of growing concerns over Chinese investments in strategic sectors of the German economy. In December, new investment screening rules were agreed. They stipulate that in the "security sectors" of the economy such as defense, food production and a very wide range of "critical infrastructures", the German government may review and refuse approval of any transaction in which a foreign investor (non-EU member) plans to buy more than 10% from a German company (the threshold was previously 25%). Most observers agree that this measure was aimed mainly at China and was the result of previous controversies over state-imposed Chinese investments or attempts to invest in German high-tech companies, such as Kuka industrial robot manufacturer, 50Hertz energy supplier or semiconductor producer. Aixtron.

Highly-publicized and well-publicized Chinese companies had begun to gain cautious optimism, but more recently, some of these new Sino-German partnerships in the high-tech sector, including society. Robotics Kuka and carmaker Grammer have turned sour after forced restructuring of management and increased support by Chinese investors from the company's day-to-day business activities.

Chinese electronics giant Huawei has also been in the spotlight, with concerns over possible political espionage, subversive activities and foreign interference in critical national infrastructure. In late January, the main German intelligence and security agencies recommended to exclude Huawei technology from the planned construction of the new 5G telecommunications network, so that the Chinese government does not use it for the purpose of 39, spying and surveillance, or even installing hidden "disabling switches". hypothetically, large parts of the German critical infrastructure could be deactivated in the future.

It is becoming increasingly clear that Germany's decades-long (and exceptionally lucrative) economic romance with China is now mired with suspicion, suspicion and a sense of urgency. fierce competition – a point also underscored by Berlin's growing dislike for Chinese economic activities in Southern and Eastern Europe. .

After avoiding confrontation for years, Germany is now at a crossroads of its economic relations with China and the atmosphere in Berlin has undeniably rocked against Beijing.