HAMBURG - US newly-elected leader Donald Trump's plan to upend the Trans Pacific Partnership (TTP) trade deal provides a clear opening for China to extend its global influence and accelerate its One Belt, One Road initiative.
Former German foreign minister Joschka Fischer shared this view before participants at the November 23 2016 Hamburg China Summit that took place at a time when German-China relations are strained over Chinese takeovers of German firms and Trump’s victory in the backdrop. Chinese vice-premier Liu Yandong was guest of honour at the event.
“The Trump Presidency will be much more disruptive than many people think,” says Fischer, adding that “the big winner will be China”. “You can’t blame China for being there” if the US pulls back and moves toward a more domestic focus, he says.
Sebastian Heilmann, president of the Berlin-based Mercator Institute for China Studies (MERICS), says a Trump presidency will impact on China’s global efforts. “I assume that the shock of Trump’s victory will make the Chinese side more willing to negotiate market access issues with the Europeans,” he adds. “Europe should be open for such opportunities, while standing its ground on contentious issues.”
Heilemann also notes that “Europe needs to take a more active and constructive stance on China’s Belt and Road initiative, which is set to open up new economic spaces and markets in Eurasia.”
At the conference a number of panellists were critical of the EU for lacking a strategic vision for its links with Europe beyond the EU borders, and into Eurasia. It was noted that whereas they tend to see their Trans-European Transport Network (TEN-T) in narrow terms as a road and rail system, the Chinese side take a strategic view of industrial expansion and political influence along the land route through Eurasia, and on through countries such as Bulgaria and Serbia to the Adriatic coast in Montenegro.
Takeover backlash
This lack of an EU strategy has led to a lack of preparedness in its response to the growing Chinese presence, and a sudden reaction in recent months in Germany as the government stepped in to block the takeover of high-tech equipment manufacturer Aixtron by Fujian Grand Chip Investment Fund (FGC).
The announcement on Aixtron was followed by the trip to China of German Minister of Economic Affairs and Energy, Sigmar Gabriel, who used his visit to carry the blunt message that better market access is needed for EU companies. His basic viewpoint is widely supported in Germany, though some industrialists and fellow politicians feel that it was done in a clumsy and heavy-handed way, with public and aggressive statements made while in China.
Aixtron manufactures machines that produce computer chips, LEDs, layers and other components in mobile phones, telecoms equipment and military equipment.
Last week the powerful Committee on Foreign Investment in the United States (CFIUS) notified Aixtron management and FGC that it is recommending to President Obama that the deal should be blocked because of national security risks, and so has requested that Aixtron and FGC abandon the transaction. However Aixtron and FGC management have declined to drop the deal, but have said they will seek ways to mitigate concerns and make the transaction acceptable.
The assessment in Europe and the US is that the Aixtron deal, which was announced as a conventional commercial takeover offer by FGC, is part of state coordinated investments in European hi-tech industries, pushed forward with government coordination.
”In contrast to investments in hotels or real estate, there is a clearly stated political master plan behind Chinese hi-tech investments,” MERICS’ Heileman says at the Hamburg conference. ”China wants to leapfrog from a barely automated industrial landscape to smart manufacturing by identifying and buying technologies they currently lack. If such a strategy is pushed forward with government funding and coordination, it brings severe distortions to the open investment regimes and technological capacities of European market economies.
German Foreign Minister Frank Walter Steinmeier used his keynote speech at the Hamburg Summit to stress that investment and trade could not be a one way street, and that German companies were looking for fairer access to the Chinese market.
Fischer suggested that Germany and the EU should be better at communicating to China which areas it sees as strategic, notably in hi tech, where China should either understand it should avoid takeovers, or sound out the German government view beforehand.
Hamburg is the main location for Chinese companies in Germany. The Hamburg Chamber of Commerce was a founding member of the Belt & Road Industrial and Commercial Alliance (BRICA).
