With President Trump in London to discuss the future of NATO, the future of the Eurozone itself is unclear. Germany finds itself rising to a great power position it hasn’t known in almost 65 years. This emerging reality is due in part to a very messy, on-again, off-again Brexit divorce, as well as deteriorating relations with the United States.
That trend is still heading downward.
China Looks for Markets
In the midst of the ongoing trade war with the United States, China is shopping for markets and Germany would like to pick up at least some of the slack. But the deepening ties between the two countries began before Trump took office, in 2016. From that year through 2018, China has been Germany’s largest trading partner, importing 219.46 billion dollars’ worth of German products last year.The United States was fourth, behind runner-up Holland and third-place France.
Germany Emerging From the US Shadow
And yet, today, both nations find themselves needing the other economically and increasingly at odds with the United States, both politically and economically. But Germany’s second-tier status—if that—in global politics is changing. That subordinate role no longer fits the dominant player in the European Union (EU).Germany Walking a Tightrope
German trade officials, however, are wary of doing so. They fear offending their biggest trading partner, China, more than they fear offending their main security partner, the United States. Germany’s national security authorities, on the other hand, want to be rid of the Huawei equipment to protect military secrets. That would presumably include U.S.-led NATO military secrets, of which Germany remains a part, at least for the moment.But it’s not all Black Forest cake and sweet rice balls between Germany and China, either. Chinese automotive factories, for example, are now competing with German cars for the rapidly shrinking Chinese car market. Care to guess which cars will be bought in China in today’s trade-war climate?
China-Germany Trade Peaked?
But that’s not Trump’s fault. Germany’s economic numbers were already slowing from 2017 to 2018, falling from 13.3 percent in 2017 to 8 percent in 2018 to 2.7 percent by October of 2019. And China’s imports from Germany fell 3.6 percent year-over-year in August of 2019.Breaking the Atlantic Alliance?
From a strategic perspective, deepening its market penetration into Europe would give China the leverage it desperately seeks to permanently unwind the already weakening Atlantic alliance. This would isolate America from the world’s largest economic trading zone and their biggest global ally via NATO.A key point to understand is that unlike Western nations, from China’s perspective, the military-economic trade-off is less of an issue. The long-term vision is market penetration, technology transfer and then manufacturing and market domination, followed by rising political influence. Corporate profits aren’t China’s top priority as they are for Western corporations.
In the current trade environment, however, even that calculus seems less plausible than it did even a year ago. China’s economy continues to contract, as does Germany’s. That means that expanding trading relations may be on the wish list of both nations, but likely will be a much longer process and perhaps to a lesser degree than they’d like. That’s simply due to the need for Europe—and Germany specifically—to address their own economic and employment challenges, just as China must do as well.