Germany's Scholz backs EU shift away from China

Chancellor says bloc needs to be smart when doing business with Beijing, as Chinese Foreign Minister visits Berlin

German Chancellor Olaf Scholz says Europe needs to consider the implications as China moves closer to Russia. AFP

German Chancellor Olaf Scholz on Tuesday said that Europe must move its trade relations away from China, in what he described as “smart de-risking”.

The uneasy relationship between Europe and China has come under renewed scrutiny this week with the visit of Foreign Minister Qin Gang.

“Rivalry and competition on the side of China have certainly increased,” Mr Scholz said in a speech to the European Parliament in Strasbourg.

“The EU has seen this and is reacting,” said Mr Scholz. “I agree with [EU Commission President] Ursula von der Leyen when she says no decoupling but a smart de-risking is the way to go.”

In Berlin on Tuesday, Mr Qin said China wanted to have a stable business relationship with Europe and be a partner on shared challenges.

China and Germany should “have enough wisdom” to work together, he said.

But Mr Qin said Beijing would respond to protect its interests if the West imposes sanctions on Chinese companies for alleged links to Russia's war effort in Ukraine.

German Foreign Minister Annalena Baerbock said Europe would ensure that its needs are met if conflict, or natural disaster, cuts off trade with China.

She said Europe had “looked at where we are vulnerable” after Russia's invasion of Ukraine left it exposed on energy markets.

German Foreign Minister Annalena Baerbock, right, met her Chinese counterpart Qin Gang in Berlin. Reuters

The coronavirus pandemic and Russia's invasion of Ukraine sent Europe hurrying to invest in its industries to avoid disruption of supplies.

Mr Scholz said that the initial processing of raw materials must take place “in situ” rather than in China.

The Netherlands recently stopped exporting advanced semiconductors to China in a recent example of tensions with Beijing.

Western countries want to slow down China's access to the technology, a component in a number of products — including smartphones and wind turbines.

The European Commission has pushed for the mass production of semiconductors in Europe.

European leaders have also expressed uneasiness with what they view as China's implicit support for Russia's war in Ukraine — while China has presented itself as neutral in the conflict.

Several media reports suggested this week that Brussels is considering imposing sanctions on Chinese companies found to be supporting Russia’s war effort in Ukraine.

Addressing the war, Mr Scholz called on fellow Europeans to “not be intimidated” by Russian President Vladimir Putin.

Mr Putin on Tuesday oversaw the Victory Day military parade in Moscow's Red Square, commemorating millions of Russian dead in the Second World War and the defeat of Nazi Germany in 1945.

Mr Scholz was addressing European politicians on Europe Day, which celebrates the 1950 proposal of the European Union's predecessor, the European Coal and Steel Community.

“We need to ensure Europe an appropriate place in the world tomorrow that is not greater or lesser than other countries or regions but on equal footing with others,” said Mr Scholz.

He also said that Europe needs a solution to what political leaders repeatedly describe as a migrant crisis.

Numbers of attempts to enter the EU through illegal routes have recently increased, although overall figures remain lower in most countries than in 2015, when arrivals of Syrian refugees fleeing conflict spiked.

Mr Scholz highlighted that some countries are in urgent need of labour and that Europe needs “smart-managed controlled migration”.

“We need a solution in line with the European claim to solidarity, but we can’t wait until this solidarity appears to us like the holy ghost,” said Mr Scholz.