China’s ‘Investment Slavery’ Could Bring UK & Germany To Their Knees; Both Seek ‘De-Risking’ Ties With Beijing

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The UK and Germany, two of Europe’s leading economies, have taken affront to China’s use of economic prowess to force its political goals on others.

 

The recent reports suggest China is trying to create a world in which it is “going to be increasingly hard to… swim against the tide of what China wants to happen in global, economic, political and military settings.”

 

Hence, both countries seek ‘de-risking’ their economic ties with China.

 

The two countries arrived at a similar conclusion in two separate reports. In an indication of the changing world order, Germany published its first-ever “Strategy on China,” a 61-page document emphasizing the tightrope that Berlin must walk to secure itself from China’s penetration and dominance of every economic field.

 

The country seeks to de-risk its economic ties while calling the Asian superpower “a partner, competitor and systemic rival.” The trade between China and Germany reached 300 billion euros in 2022.

 

Strategies (Made in China 2025, Dual Circulation) and statements by the Chinese leadership (e.g., President Xi Jinping’s to party committees in 2020) indicate that China is seeking to create economic and technological dependencies and to use these to assert political objectives and interests.

 

Elucidating its response against China, Germany asserts its goal to ‘de-risk’ its economic relationship while continuing trade with Beijing.

 

In pursuit of this, Germany has announced plans to reduce its dependence on China in “critical sectors,” including medicine, lithium batteries used in electric cars, and other elements essential to chipmaking.

 

Germany has decided to pursue the strategy despite the Chinese Foreign Minister Qin Gang warning the EU against the decoupling in the name of de-risking. “If the EU seeks to decouple from China in the name of “de-risking,” it will decouple from opportunities, cooperation, stability, and development.

 

“China, Germany, and the EU should all abide by international trade rules and the spirit of the contract, keep opening up to each other, and refrain from politicizing normal economic, trade, and investment cooperation and interfering with the market,” Gang said this in a statement during his visit to Germany in May 2023.

 

After unveiling the strategy, German Chancellor Olaf Scholz tweeted: “The goal is not to decouple us. However, we want to avoid critical dependencies in the future. With the ‘China Strategy,’ we are responding to a China that is changing and taking a more offensive stance. For us, the following applies: China is and will remain a partner, competitor, and systemic rival.”

 

Germany’s adoption of the new China Strategy was preceded by Beijing putting an export regulation in place for Germanium and Gallium used in mobile phones, electric vehicles, nuclear energy, and other devices, including weapons.

 

“Unilateral dependence on critical preliminary products, cutting-edge technologies, and individual markets can limit trade options and make countries vulnerable to political pressure,” the document named ‘Strategy on China of the Government of the Federal Republic of Germany’ said. It also talked about the “asymmetries” in the relationship between the two countries.

 

“It (China) is deliberately bringing its economic power to bear to achieve its political goals. China’s relations with many countries in its neighborhood and beyond have deteriorated significantly as a result of this robust approach,” notes the report. At the same time, China, citing security interests, is working to make itself more independent from foreign contributions and supplies.

 

Independence from foreign economic influence is also a strategy followed by China. “China’s Military-Civil Fusion policy is placing limits on our cooperation. We are taking into account the fact that civilian research projects, including basic research, are also being considered by China in strategic terms concerning their military use,” reads the report.

 

Germany has decided to continue to narrowly interpret the EU’s arms embargo against China that has been in place since 1989. The export control is primarily about exports of dual-use goods.

 

Taking China’s Military-Civil fusion policy into account, Germany states: “Export controls are intended to ensure that goods and technologies from Germany that are subject to authorization do not encourage systematic human rights violations in China, exacerbate repression in the country, promote the proliferation of weapons of mass destruction or support further military rearmament.”

 

Undoubtedly, China wields great economic, technological, military, and political influence in the present-day world. Its defense spending is second to only the US, and it already has the largest maritime force in the world in terms of sheer number.

 

China Is Using The UK For Technological Supremacy

The House of Commons Intelligence and Security Committee (ISC) has released a comprehensive scathing report on the means employed by China to become a “manufacturing superpower” through investing in and then leveraging foreign industries and expediting mastery of the manufacturing process.

 

In addition, China also co-opts state-owned and non-state-owned companies, as well as academic and cultural establishments and ordinary citizens for espionage.

 

“China targets other countries’ technology, Intellectual Property (IP), and data to ‘bypass costly and time-consuming research, development and training.’ This approach means it can exploit foreign expertise, gaining economic and technological advantages and thereby achieving prosperity and growth more quickly – and at the expense of others,” the 207-page report said.

 

China’s attempt at achieving economic advantage have evoked its interest in particular fields in the UK, like, the telecommunications sector, the aerospace sector, key emerging technology sectors (e.g., artificial intelligence (AI), quantum and synthetic biology), traditional technology sectors (e.g., trains and ocean engineering), nuclear energy sector and the economy and academia.

 

“In recent years, it appears that there has been a general rise in attempts to penetrate the Government or the UK Intelligence Community. UK students studying in China can also be targeted,” said the report compiled from the evidence presented by different intelligence agencies of the UK.

 

To cultivate influence, the Chinese use methods like covert support to individuals and institutions favorable to its policies, co-opting academics, think-tank employees, former officials, and former military figures, and discrediting those critical of its views.

 

The scathing parliamentary report found that the British response to China’s “increasingly sophisticated” spying operations has been “completely inadequate,” underscored by the ‘whole-of-government’ approach to the threat posed by Beijing.

 

The biggest challenge for Germany and the UK is to strike a balance between protecting vital sectors and infrastructure while keeping trade and commerce flowing with China.

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