Germany's China policy changes: EU plans to push "red button" to counter economic coercion

(Deutsche Welle Chinese website) "Süddeutsche Zeitung" commented that Germany is known as the "brake pad" when it comes to the EU's tough policy towards China. But now, Germany's China policy is clearly changing. The commentary titled "Germany realizes its own problems" reads:

"What is the EU's weak link? Beijing has always been very clear about this: the weak link is not Brussels, but the capitals of each member state. Because of this, Beijing's carrot and stick policy in the past few years has always deliberately bypassed Brussels, but instead co-opted or pressured individual member states. For example, in Hungary, Chinese companies have invested billions of euros in building factories, and Budapest under Orban will repeatedly obstruct the EU from issuing tough statements against China. In 2021, after a dispute with Lithuania over the status of Taiwan, China immediately removed Lithuania from its customs system. Overnight, any Lithuanian products can no longer be imported into China.

Germany has also been repeatedly targeted by Beijing’s ‘divide and rule’ policy. In July this year, when Chinese Minister of Commerce Wang Wentao met with German Economic Minister Reiche, he stated that China hopes that Germany will play an active role within the EU and promote Brussels to adopt a "rational stance." This shows what role Beijing wants Berlin to play.

Germany took this step for a reason. Over the past few decades, German companies, mainly in the automotive industry, have invested huge amounts of money in China. Therefore, Germany is always worried that if it offends Beijing, its investment and business in China will be threatened. It is precisely because of this that whenever the EU plans to introduce tough measures against China, Germany will always hit the brakes. From Germany's perspective, this seems reasonable, but the EU has to pay a high price for Germany's actions. Because as long as Beijing can still believe that putting pressure on individual companies or member states is enough to tie the hands of Brussels, then the EU, with its huge economy, will still only be able to act as a political dwarf. "

"Süddeutsche Zeitung" commented that there are reports that Germany and France are promoting a new plan within the EU so that the EU can initiate severe countermeasures in a timely manner when it is subject to economic coercion. The plan would significantly reduce the influence of individual member states over decisions in Brussels.

"This new measure taken by Germany cannot protect its industry from China's retaliation. If Beijing retaliates against the EU's countermeasures in accordance with the new regulations, German companies will still bear the brunt. After all, the supply chain of German industry is closely intertwined with China, and Germany has huge economic interests in China. Some companies have begun to hoard rare earths in order to prepare in advance for possible conflicts between China and Europe.

But in the long run, Germany's approach will effectively weaken Beijing's most powerful weapon: divide and rule the EU. This is exactly what the EU urgently needs. "

Will the EU soon have a "red button" to deal with China?

Regarding the new plan jointly proposed by Germany and France, the Frankfurter Allgemeine Zeitung reported:

"Germany and France are obviously unwilling to wait any longer. In the next few days, German Chancellor Mertz and French President Macron will propose a position paper on China. Information obtained by the Frankfurter Allgemeine Zeitung shows that Germany and France will support the establishment of a new trade protection tool that will enable the EU to exclude China from the EU's internal market through quick procedures. EU diplomats said this is a 'red button' that will take effect within 24 hours.

The European Commission can activate this tool once the EU comes under economic attack from China. This will be a defensive tool for the EU against pressure from China. Member states can only prevent the EU from using this tool if they form a qualified majority. This will undoubtedly greatly expand the EU's space for action. And China will not be able to block EU decision-making by wooing or pressuring individual member states.

Bernd Lange, chairman of the European Parliament’s Trade Committee and a politician from the German Social Democratic Party, believes that the simplest way is to reform the current EU’s Anti-Coercive Tools Act. The European Commission originally established this tool to quickly respond to economic coercion from China and other countries. But some EU member states believe the move would give the European Commission too much power. At the insistence of these countries, Brussels can only take counter-action if it has majority support. This is why the tool has never been launched since it took effect at the end of 2023. "