Germany’s new economic pivot to Asia – DW – 11/19/2022

German Chancellor Olaf Schulz walks with Vietnamese Prime Minister Pham Minh Chinh on the red carpet during a recent visit to Hanoi
As Germany looks to diversify its interests in Asia, Vietnam is emerging as an alternative to ChinaPhoto: Kay Nietfeld/dpa/picture alliance

The new idea of ​​the German government is that Asia is more than China. This may seem obvious to many, but after 16 years of one-sidedness in China under the leadership of Angela Merkel, it represents another change, this time in the economic sphere. As with Russian gas, Merkel made Germany unhealthily and irrationally dependent.

Under his leadership, China became Germany’s largest trading partner and an important market for many companies. With each major deal that German industrial groups made, dependence on China grew. Today, the German government sees China as a strategic enemy.

A one-way look at China

Merkel’s travel statistics speak for themselves: She visited China 12 times, always accompanied by large business delegations. But what about Singapore or Vietnam? Or recent G20 country Indonesia? The former German chancellor visited each of them only once. These are the countries, which – each in its own way – are the most economically prosperous in the Southeast Asian Association ASEAN with its approximately 650 million people.

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Indonesia boasts the world’s largest gross domestic product (GDP) in 2021 at around $1.19 trillion (€1.8 trillion). Singapore admits that it has a very limited economy. However, the most developed islands, roughly the size of Hamburg, have a higher GDP per capita than the United States or Germany. It also operates the second largest port in the world and is the financial center of Asia.

When it comes to democracy and human rights, Vietnam is no less oppressive and brutal than China. China’s neighbor to the south is in the process of doubling its production in less than 10 years and will soon overtake the most developed nation of Malaysia.

Photo by DW Business editor Thomas Kohlmann
DW Business editor Thomas KohlmannImage: private

Rapid change in Germany is unlikely

And yet looking at China’s economic power is difficult. The People’s Republic is Germany’s most important business partner in the region. Germany and China trade goods worth about €250 billion ($258 billion) a year. In comparison, the amount of trade with Vietnam and Singapore is only € 14.5 billion and more than 11 billion respectively.

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Therefore, rapid change is not possible; The way to improve the diversification of foreign trade should be competitive.

The same applies to providing the necessary equipment. Besides new energy suppliers, new suppliers of scarce resources are also important to support the energy transition. Copper, lithium and rare earths are the main sounds here.

Germany must quickly address its failings in this regard. Why did their German counterparts lose out to competitors in Bolivia’s lithium extraction? What happened to the mining operation in Mongolia, which is expected to be mined along with copper? All of these tools are important for energy conversion. Whether it is the copper of electric motors or the earth metals used to make permanent magnets used in wind turbines.

‘More than China’: Germany rethinks Asia

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A new Chinese strategy that was delayed

Worse, the German coalition government is not expected to unveil its new China strategy until the middle of next year. Economic policy adapted to the new reality was slow – and not just focused on China. The government must find solutions and define a way to work together with businessmen. The business, for its part, has already started to completely change its chains in the wake of the coronavirus pandemic.

Where does Germany see its economy in five, 10 or 20 years? Sorry, the answers are missing. China, on the other hand, has already defined its path to economic development. Beijing has spelled out precisely the nature and timing of its plans. In Germany, these goals are limited to announcing which energy sources are to be shut down and when.

It would not be fair to expect the government to correct 16 years of one-sided China-focussing under the leadership of Angela Merkel in time. However, there is no more time to waste.

This article was originally published in German.


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