Reciprocity key to Sino-German cooperation

The world media’s attention is focused on the on-going G20 Leaders Summit in Hamburg, Germany. But there seems to be little momentum going into Hamburg. The air has been let out of the global summitry balloon.

Last year, China as the summit host had the good fortune of building on the Paris climate change agreement adopted in December 2015 and signed in April 2016. China also did a lot of advanced diplomacy, and invested heavily in the gala.

This time, the governments of many of the leading economies are focused instead on domestic issues. The biggest deflator is the United States, where President Donald Trump’s fixation on putting “America First” and preference for stateto-state bargaining have left the US in a spoiler role.

Trump’s decision to pull his nation out of the world compact on climate change was not received happily by the G20 host and chair Germany.

Brexit and the disastrous electoral result for the ruling British Conservative Party have left the United Kingdom in a position of diminishing significance going into the summit. It is a long way from the heady days of Gordon Brown, former British prime minister, leading the global charge into the London G20 in April 2009.

The on-going domestic troubles in a number of the emerging economies have meant the loss of some of the new dynamism in global governance of the last decade. South Africa, to its credit, is still trying to strengthen commitments on African development in Hamburg.

Canada and Australia, the traditional middle powers, are in wait-and-see mode, despite their activist sounding diplomatic rhetoric.

It is not surprising, therefore, that hope for the summit has been pinned on Germany and China, and whether they can inject some momentum. The good news is that the truly transformative structural changes that China and Germany are bringing to the world are already happening, and have been going on for four decades. These changes have unpinned the transition to a multipolar world, and are of much greater significance than G20 summits.

Since the 1980s, German corporations, small, medium and large, have shown themselves to be some of the most proactive and committed partners to China. Volkswagen, Siemens, BASF, Lufthansa and many other small and medium-sized German companies started investing when China was far from being the “world’s factory”. They have been integral ingredients in China’s success.

Germany, from the era of former chancellor Helmut Schmidt to incumbent Chancellor Angela Merkel today, has proven itself to be an exceptionally reliable and committed partner of China. Few other countries, including my own (Canada) can match the German record.

More recently, Germany has also distinguished itself by working with China on international currency. It may come as a surprise to casual observers that Beijing has been one of the most reliable partners to eurozone. In return, Merkel expressed her country’s gratitude, standing beside Chinese President Xi Jinping in Frankfurt, in March 2014, and declared Germany’s support in internationalizing China’s currency, the renminbi.

For the Hamburg summit, Beijing and Berlin have pledged to ensure consistency between the agendas and outcomes of last year’s summit in Hangzhou and those of the on-going one.

Beijing has declared that it will spare no effort in helping the Hamburg summit achieve success, and to strengthen China-Germany cooperation under the G20 framework.

In early June, Merkel said Germany must expand its partnership with China in a “time of global insecurity”. Both countries want to send a “clear signal” about their shared desire to maintain an open world economy, free trade and globalization, though in a fairer direction. They both want to encourage the G20 countries to speed up the implementation of the Paris climate change accord, the 2030 Agenda for Sustainable Development, and to support African development.

Ironically, the G20 summits tend to gain some relevancy when the hosts can tie the agenda to the deeper national interests of the major G20 member states. For instance, one of the more significant outcomes from last year’s Hangzhou summit was the strategic work of the Green Finance Study Group. However, China’s world leading issuance of green bonds is due to the fact that Beijing is committed to green finance regardless of whether or not there is a “G20”.

Germany as the G20 chair is hesitant to spend further after millions of migrants arrived in Germany over the past three years, and with the domestic election coming in early fall.

Despite these limitations for Berlin, Hamburg is an opportunity for Beijing to not only support the German G20 chair, but also to smooth over the bilateral trade and investment tensions with Germany.

The Sino-German relationship needs to be put back onto more sustainable and strategic footing if Germany and China are to help manage the new uncertain multipolar world. This means addressing the alleged discrimination that German companies experience in China, and limited access to Chinese markets for German exporters. The watchword is “reciprocity”.

The author is an associate professor of Political Economy at York University, Canada.