Germany has made the compromise agreed with Beijing on investments one of the priorities of its presidency of the European Union.
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The firing window was very small, it was used to the end. Germany, at the head of the rotating presidency of the European Union until December 31, managed in extremis to wrest the investment treaty between China and the EU to which it was so keen … even if it meant lending its side to criticism. On Wednesday, December 30, in the afternoon, the two parties initialed the agreement which should make it possible to reciprocally rebalance their investment conditions.
Angela Merkel, who signed the text a central issue of the German presidency of the EU, can claim an important victory. For once, it was she who jostled her European partners, so that the agreement was concluded on time. The Chancellor knew the opportunity was unique: the German Presidency, on the one hand, provided her with the necessary impetus and authority; the transition of power in Washington, on the other hand, gave it leeway likely to be reduced to the installation in power of Joe Biden on January 20, 2021. All this in a year when the Covid-19 pandemic has heightened the perception in Germany of the urgency to strengthen European “sovereignty”, in particular in health and technology, in the context of the Beijing-Washington face-to-face meeting.
Germany is also the European country which had the greatest economic advantage to conclude this agreement. Today it is by far the largest trading partner of the People’s Republic in Europe. In 2019, the volume of trade between the two countries amounted to 206 billion euros: 96 billion euros were exported by German companies to China, which itself sold 110 billion euros of goods in Germany. These transactions, which represent around a third of the total volume traded between China and the European Union, are carried out in industries vital for “made in Germany”: machinery, automotive, electrical engineering and chemicals, whose companies have become extremely dependent on the Chinese market.
Mistrust of Beijing
If Germany hopes to continue to benefit from the dynamism of the Chinese market, it now refuses to do it at any cost. After the euphoria of the early 2010s, during which Chinese orders had allowed Germany to make a spectacular economic rebound after the 2009 crisis, followed by solid growth, Berlin’s mistrust of from Beijing gradually settled. From the middle of the decade, German economic and political circles understood that, contrary to their expectations, the increase in trade, direct investment in China and the associated technology transfers did not lead to further opening up of the country. Chinese economy or on a more level playing field for businesses.
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