© REUTERS/Andrea Verdelli/Pool

Let’s start with a thought experiment: Imagine you work for a German company, university or government agency, and you’re flying to the United States for a business trip. There you meet American colleagues, and after the official work is done you go out to eat together. You’re talking about your families and recent holidays, and eventually the conversation lands on current politics: on Donald Trump’s latest Twitter thunderstorm and the support he gets from Fox News. On the situation at the Mexican border, where human rights activists are arguing with the authorities about a humane way of dealing with migrants. On the deep division between the political camps and the outlook for the coming elections. Can you imagine such a conversation with American colleagues? Probably.

And now imagine the same situation in China. You are on a business trip in Beijing or Shanghai. You meet Chinese colleagues, and after the official conversations you go to dinner. You chat about this and that and eventually, of course, also about current politics: about Xi Jinping, around whom the state broadcaster CCTV is building up a Mao-like cult of personality and whose words of wisdom are the subject of a mandatory learning app. About the internment of Uighurs in the western province of Xinjiang, which human rights activists condemn. About the protests in Hong Kong and the question of who might become China’s next head of state. Can you imagine having such a conversation with to your Chinese colleagues? Probably not. And that’s a problem.

The Things You Can’t Talk About

It is harder to speak frankly about China than about any other major topic of our time. The People’s Republic and the United States are the two formative global powers of our time. We have important relationships with both of them; neither one is easy these days. But our discussions with and about China differ from those with and about the US in a fundamental way: with Americans, we can talk about anything; with Chinese, we can’t talk so readily about a lot of things. Even when we are among ourselves, we often act differently—because Beijing could be listening. And when you can’t speak openly about something, it’s hard to reach a consensus and settle on a functional strategy.

When German top politicians go to China, commentators always ask whether they use “the right tone.” What do they say in public? What about behind locked doors? And what, in the best case, not at all? There’s no other big country that attracts the same amount of attention from commentators when it comes to this issue—not even Donald Trump’s America. There, too, diplomats do their best to skillfully handle the unpredictable president. But otherwise one can have open and “grown-up” conversations with American counterparts.

There are more than 70 bilateral dialogues between Germany and China. Among the most important are the encounters between German top managers and the Chinese leadership in the framework of Chancellor Angela Merkel’s state visits. While complaints about the conditions on the Chinese market often dominate during the run-up to the talks, in the actual conversations with the Chinese side the Germans mostly praise the good cooperation.

The fact that the managers prefer to leave the unpleasant messages to the chancellor is a something Merkel has repeatedly complained about to the business representatives.

For years, surveys conducted by German and European chambers of commerce in China have shown that foreign companies there suffer from increasingly difficult market conditions, for example due to worsening legal standards or the systemic discrimination against foreign companies. However, what is clearly apparent in surveys and is also a permanent topic in confidential discussions is not illustrated by specific examples in the press. No company wants to talk publicly about problems in China. And Chinese diplomats like to use this circumstance to refute criticism: If there really were grievances in China, why can’t this be substantiated with concrete cases? After all, one can supposedly talk about anything!

Fear of the Party State

But you cannot—at least not without consequences. Sure, there are open discussions with Chinese people. But when they occur, they are the exception rather than the rule, and proof of a particularly trusting relationship. The more the Communist Party extends its control over public discourses—in the media, in classrooms, on the Internet—the greater the worry that one might say something wrong.

Why is it so difficult for us to maintain an open dialogue with China when we can do so with the United States or other major partners? The reason is not cultural differences, which people often cite in the China case. The real reason is much more profane: We are afraid. We fear that criticism of China will have a negative effect on us: on business, on political access, on the next visa application. It’s not so much a fear of individuals, of individual business partners or interlocutors, but a fear of an increasingly autocratic political system, whose power is not restricted by laws and which employs a huge apparatus to prosecute attacks on the authority of the party.

Many incidents in recent years show that this concern is not unfounded. When a Dalai Lama quote appeared in a Daimler Instagram channel in 2018, there was immediately a wave of indignation in China. The calls for a boycott only stopped when the car manufacturer formally apologized. The Marriott hotel chain had similar problems because it had Taiwan on its list of independent countries in its booking system.

After Chinese democracy pioneer Liu Xiaobo was awarded the Nobel Peace Prize in 2010, Norway was inflicted with a Chinese political and economic boycott for years—despite the fact that the Nobel Prize Committee is not under the control of the Norwegian government (let alone the Norwegian salmon exporters who were excluded from the Chinese market).

Combining Political and Economic Pressure

Canada currently sees itself under similar pressure: After the Canadian police arrested Meng Wanzhou, CFO and daughter of the founder of Huawei, on the basis of an international arrest warrant, several Canadian citizens were arrested in China, including China expert and former diplomat Michael Kovrig.

This way of combining political and economic pressure has a real effect. The message is: If you are critical of China, you have to expect consequences. These often turn out to be far less dramatic than the headline-grabbing cases: permits are delayed, visas are not issued, or warnings are dropped in conversations. That’s enough to turn heads in the West. If you want smooth business or cooperation, you’d better be a little overcautious.

Often the result is heated arguments about what to say and what not to say. For example, the Federation of German Industries (BDI) published a paper in January in which it took the rather moderate position that China was not only a partner for Germany but also a “systemic competitor.” It received much praise for this unusual openness, but it also faced accusations of negligence: in China, something like this could lead to unpleasant demands and diplomatic disgruntlement that could have been avoided. This temptation to self-censor becomes fully visible when in press interviews, personalities like former German chancellor Gerhard Schroeder or Volkswagen’s CEO Herbert Diess painstakingly avoid taking a position on the detentions in Xinjiang and even claim to not know anything about them.

Distorted Discussions

From a business perspective, it’s quite understandable and, in a certain way, reasonable not to take a political position on China. Whoever is responsible for a company and its employees is therefore also responsible for ensuring that business runs smoothly. Moralizing appeals are of little use here. But on a broad scale this leads to distorted discussions, because the Communist Party has a say in what we talk about when we talk about China—not only in China, but also here in Germany and Europe.

However, with the Chinese leadership being increasingly open in its commitment to the course of authoritarian state capitalism, we have to recognize the fact that when we talk about China’s economy, we must also talk about politics. For a long time, we believed we could avoid this fact. There was hope that the economic opening would eventually be followed by a political one, and that many of our concerns would thus be resolved. This position has always been controversial, but there have always been indications that this is ultimately also the position of the Chinese leadership.

The fact that Xi Jinping began his term in office with a major reform agenda raised hopes for a new wave of liberalization. But six years later, it’s hard to avoid the reality that Chinese politics has developed differently—toward more state, more control, and more nationalism, in politics as well as in the economy.

The Limits of Misunderstandings

What can be done to hold on to China as a partner and take it seriously as a competitor? Beijing would like things to continue as before. And to interpret the West’s critical perceptions as misunderstandings. After all, China’s government insists that it is committed to the rule of law,  transparency, open markets and a multilateral world order.

There is no doubt that we would prefer nothing more than for some of our criticisms to turn out to indeed be misunderstandings. For that, the impetus, however, would need to come from Beijing. The annual position paper of the European Chamber of Commerce in China, for example, sets out what steps the Chinese government could take to convince European companies and politicians that the world’s second largest economy is still on course towards open markets and a level playing field. At the end of September, the chamber published a list of more than 800 problems that concern European companies in China. The greatest wish is “competition neutrality”, i.e. equal treatment for all companies, regardless of their ownership structure.

Five Recommendations

In Beijing, Germans and Europeans can only wish. However, at home, we have a real capacity to act. So, what can we do?

First, we must openly name and admit the dilemma we are in. That may sound obvious, but it’s not. Politicians and entrepreneurs prefer to project security rather than uncertainty or fear. Academics and think tankers prefer to talk about their knowledge rather than about gaps in that knowledge or mistakes.

It’s easy to accuse others of self-censorship, but harder to admit it ourselves. Tactically weighing up what can and cannot be said in and about China is the core of our dilemma. We have to be clear about this: The things we do not talk about in China—such as the political system, the arbitrary use of the legal system or human rights—are sensitive because they are important, not the other way round. If they had no relevance, they would not be taboo.

Second, we need more media organizations, academics, think tanks and associations that are able and willing to do research without regard to political constraints and also to name critical issues. Freedom of the press, freedom of expression and research are among the central values that distinguish our political system from the Chinese one. What comes out of this is not always pleasant, undisputed or correct. That’s the nature of such things. However, a general bashing of “the China reporting in the German media” undermines the quality of our discussions, as does the sweeping labelling of positions as pro-Chinese and anti-Chinese.

Third, Germany and Europe need strategies for a world order in which our relationship with China will be difficult for the foreseeable future. As long as Beijing’s authoritarian and nationalistic course continues, we cannot avoid seeing China in many areas as a “systemic competitor” or even rival, and drawing the necessary conclusions from this.

This in no way means that the People’s Republic is our opponent or enemy. It is not! This does, however, provide the context in which we define and prioritize our own work at home. Central to this is the strengthening of Europe as an economic area and global player. That is easier said than done, but that urgency has finally been recognized in Brussels.

Criticism Is Possible

This is exactly what the incoming European Commission President Ursula von der Leyen is talking about when she says she wants to lead a “geopolitical” commission. She is inheriting a number of initiatives and discussions that can be developed in the coming years: The EU’s Connectivity Strategy, first presented in 2018, aims to put cooperation with emerging economies on a new platform and provide a response to China’s Belt and Road Initiative.

Initiatives to promote education, research and future technologies should strengthen Europe’s competitiveness. The free trade agreement with Japan shows that Europe is in a position to forge new alliances. All these are all hard nuts to crack—but they are the right ones.

Fourth, we should talk as openly as possible with Chinese interlocutors about the dilemmas in which we find ourselves. They should be made aware how unsettled we are by China’s current course and how hard we struggle to respond properly. That applies to dealing with the government as well as with individuals. For the West’s critical attitude towards China, many Chinese only have the explanation that Beijing’s party propaganda gives them: that the West wants to prevent China’s rise. If we want them to understand our view of things, we need to explain it better.

Beijing Listens

China’s government is also reliant—as strange as this may sound—on comprehension aids. Experience in recent years has shown that Beijing can listen attentively. At the recent Belt and Road summit, Xi Jinping systematically worked through the criticisms that have been levelled at the giant project for years, such as the massive indebtedness of the partner countries or a lack of consideration for sustainability. The party no longer publicly mentions its “Made in China 2025” industrial policy, at least not by name.

Whether the new rhetoric will be followed by action is still open, but the message has at least been received. Critical strategy papers from Europe, such as the Federation of German Industry’s China paper or the EU Commission’s 10-point plan, were received in China not with joy, but with respect, and did not lead to the tit-for-tat response feared by some.

Fifth, we need a positive agenda for constructive cooperation with China. Despite the current difficulties and concerns, China is an important partner for Germany – and should remain so. A decoupling strategy such as that of the US under Donald Trump is not a realistic, let alone desirable, option for Germany and Europe.

Global political tasks such as combating climate change and its consequences, implementing the UN’s sustainability goals or securing peace only have a chance of success if the largest, richest and most powerful countries work together.

Economically, Germany and China—and by extension, Europe and China—have benefited enormously from each other in recent decades. They can continue to do so. To create open and fair market conditions for this is possible and is in both sides’ interest; a realization that is political mainstream at least when it comes to words and that can be followed by action again once the wave of economic nationalist solo attempts subsides. Germany and China are also more socially networked than ever before.

The much-described era of a “low trust world” does not need to become a self-fulfilling prophecy if cooperation continues: with new openness on both sides. Europeans and the Chinese will continue to be successful together where this succeeds. And nothing creates more trust and understanding than mutual success.

The post Silence is Silver appeared first on Berlin Policy Journal - Blog.

© REUTERS/Hoang Dinh Nam/Pool

It was some 100 years ago that a Japanese doctor, Hakaru Hashimoto, first described a troubling malady afflicting patients. The symptoms included listlessness, fatigue, and bouts of depression. Hashimoto had discovered a widespread autoimmune disorder affecting the thyroid gland. The eponymous condition cannot be cured, only aided by medication. Those suffering from Hashimoto have to adjust to living with diminished energy.

It can be argued that the doctor’s native country is suffering from the very same malaise. For a generation now, the Japanese have been yearning to return to the boom years of the 1970s and 80s, when the world and many Japanese believed their country could achieve the same grandeur China is ascribed today—the ability to conquer the world. The Japanese economy has witnessed a series of ups and downs but has not regained its swagger. Meanwhile the Japanese themselves and indeed the world still seem to see the Japan of today through the lens of the country’s boom days.

It would serve Europe well to look kindly upon Japan in its struggles. Europe and Germany in particular are suffering from many of the same symptoms, and Japan’s efforts to turn things around may provide an important blueprint. In Europe, most eyes are fixed upon China and India today, but among Asian economies, Japan is still the closest to ours.

The components of Japan’s woes are well known by now: stagnant economic growth, an over-dependency on exports, and soaring (public) debt on the one hand; a shrinking society and a growing chasm between rich and poor on the other; politically, a democracy facing real challenges to its governance and caught in a tricky position among neighbors in the region.

No Sick Man of Asia

And yet Japan is no sick man of Asia. Its challenges are not merely the result of failures, but also of important successes. Japan may not be a part of the current boom in Asia, but that is precisely because it was Japan that originally mastered it. And despite its woes, the country fares well in leading international benchmarks.

Japan ranked sixth in the Bloomberg Innovation Index in 2018, for example, while Germany came in fourth and the US in eleventh place. On the Human Development Index, Japan ranked 17th worldwide in 2016 (here, too, Germany landed fourth and France far further down at 21). While social inequality is a growing problem in Japan, it remains rather moderate by global standards. The country is ranked 22nd on the Gini coefficient of inequality register of OECD countries, between Italy and Australia. Germany, meanwhile, is ranked 13th. The United States is near the bottom (34), just ahead of Turkey and behind Russia.

Japan, it would appear, is suffering from first-world problems. Still, the extent to which these problems weigh on the country, and its economy, is unusual. Japan’s GDP in real terms has mostly stagnated over the last 20 years while the country’s public debt soared to 240 percent of GDP in 2017 (it is around 65 percent in Germany).
Meanwhile, Japan’s population is shrinking at record speed. If the current demographic trend continues, the country will plummet from 127 million people today to 87 million by the year 2060. In comparison, Germany will see a steady decline from 82 million to 68 in the same time period.

The fact that these trends affect Japan more than other wealthy countries is also reflected in the well-being of its citizens. In the UN’s annual World Happiness Report, Japan recently placed a lowly 51, alongside Russia, Belize, and Algeria; Germany ranks 16th. The studies show that many Japanese feel their country is not heading in the right direction. There is a lack of clear perspectives and opportunities.

Conflicting Interests

Part of the problem is that Japan finds itself in an uncomfortable position. Trade with China is currently the biggest opportunity for economic growth; at the same time, the rise of China is Tokyo’s biggest foreign policy challenge.

For years, the foreign policy debate in Japan has centered around both the commitment to the United States and integration in the region. At one end of the scale are the moderate pragmatists who advocate regional integration. They demand a more independent foreign policy, especially with an eye to China: They fear that cozying up too close to America will hurt Japanese interests. China is Japan’s biggest trading partner—in fact, the value of bilateral trade exceeds that between Japan and the US by more than half. And that gap is widening.

At the opposite end of the scale are the traditionalists, led by Prime Minister Shinzo Abe; they see a strong alliance with America as the highest priority. They believe Japan must work toward curbing China’s rise to prevent its powerful neighbor from becoming overly dominant—and that will only be possible with the help of Washington.

It would be as if Germany’s biggest trading partner were a booming, surging Russia—a Russia that is on the verge of dominating Europe economically and dethroning America as the most powerful in the world; a Russia where defense spending grows by double digits every year and which, at the same time, starts to make territorial claims on Germany and other European states. It is an imagined parallel, of course, but it helps to understand why Japan is lukewarm toward its budding partnership with China.

When Barack Obama was still US president, Abe knew he was on the safe side. Obama’s “pivot to Asia” was very much founded upon a strong alliance with Japan. Donald Trump has complicated the relationship, however; Abe was the first leader invited to golf with the new US president, but that show of friendship has brought Japan very little benefit so far.

Tools of Trade

The turmoil in the US has left Tokyo with no other choice than to take its fate into its own hands. The Trans-Pacific Partnership (TPP) provided the first example. Negotiated under the Obama administration, the TPP was to become the largest free trade area in the world, bringing together ten other Pacific Rim nations with the US and Japan. China was not invited to the club, which Beijing rightly saw as an attempt to rein in its influence in East and Southeast Asia.

After Trump’s withdrawal from the TPP, Abe’s government pursued a fresh deal with the remaining ten interested parties. The agreement, now known as TPP-11, is due to be signed in March. It is a striking success for Japan, not only because Tokyo led the negotiations. Its goal of creating a serious counterweight to China may not be achievable without the US, but the TPP-11 is an important signal that Japan supports global free trade and is capable of forging its own alliances.

Tokyo’s free trade agreement with the EU, called JEFTA, which enters into force next year, also shows that Japan is an important global player. Together, the participating countries in JEFTA account for around 30 percent of global GDP. Shinzo Abe described the agreement as “the birth of the largest economic zone in the world.” And JEFTA should bring significant benefit to Japan: According to a study by Germany’s Bertelsmann Foundation, it will generate growth of up to 1.6 percent of Japan’s GDP. Germany stands to benefit most of all the EU countries, with growth expected to reach 0.7 percent of GDP. It is not a game changer for any of the participating countries, but it certainly brings significant improvement and sends a signal of strength.

Abe’s Populism

Nevertheless, Japan’s possibilities are more limited than its economic power would suggest at first glance. This holds especially true in its own region. East Asia lacks the solid institutional basis that is taken for granted here in Europe. There is nothing in East Asia that comes close to the EU or NATO.

In all fairness, East Asia does present a unique set of circumstances. The size and proportions of East Asian nations are vastly different. China will never engage in European-style alliances in the region but rather pursue its own agenda; Japan is still so dominant that its neighbors fear integration would lead to domination.

Not to mention that today, more than 70 years after the Second World War, Tokyo still has not clearly distanced itself from its war-time atrocities—and that, too, worries neighbors. Nearly every post-war government in Japan has taken a revisionist stance on the country’s history, especially Shinzo Abe. Donald Trump’s former chief advisor Steve Bannon gave him the dubious praise of being a “Trump before Trump.” In reality, Abe is a far cry from the US president. But his aim to revise Japan’s pacifist constitution, restore pride in the country’s military traditions, and discredit “mainstream media” resemble the right-wing’s platform in the US.

In fact, Abe’s populist overtones have possibly prevented any party from gaining ground to the right of his Liberal Democrats. The populist sentiment he has stoked has served Abe well in cementing power at home. But abroad, he has harmed Japan’s image and deepened his country’s malaise.

Economic Strengths

Still, Japan’s technology and economy could emerge as possible bright spots for the future. Though economic growth has been weak, the country is well-positioned in key industries and has good opportunity to extend its advantage going forward.

For example, Japan regularly spends around 3.5 percent of GDP on research and development (R&D) . This is an extraordinarily high proportion, surpassed only by Israel and South Korea (in Germany, R&D expenditure has reached around 2.8 percent in recent years). Even in absolute terms, R&D spending in Japan—at around $180 billion—is among the best in the world, surpassed only by the US and China. German R&D spending, meanwhile, is around $110 billion a year.

Japan excels in robotics—it is currently the world’s number one manufacturer of industrial robots, meeting around 52 percent of global demand. This is nothing short of spectacular. While there is one major industrial robotics player in Germany (Kuka, which is now a Chinese-owned company), Japan’s Fanuc, Yaskawa, and Kawasaki Heavy are all competing.

Germany may have Siemens, but Japan has Hitachi, NEC, and Toshiba. A similar picture can be found in the chip industry and Japan’s electronics companies, which are growing and investing again after years of crisis.

Japan also has extremely ambitious goals in terms of energy and transport, including the evolution of hydrogen as an energy source. It is promoting this technology far more than any other country, and Shinzo Abe regularly speaks of a “hydrogen society” when talking about the future of Japan energy technology.
The focus on promoting new technology in the public and private sector has placed Japan on a unique path, turning the country into one of the leading drivers of innovation worldwide.

Robots for Guests

That spirit of innovation is too often overshadowed in debates and analysis of Japan. Outsiders struggle to shed the image of a directionless, listless Japan—a bit like Germany in the late years of former Chancellor Helmut Kohl’s leadership. Many are hoping the Olympic Games in 2020, due to be held in Tokyo, will jolt Japan back to life.

Even the best sports extravaganza in the world cannot change Japan’s situation dramatically, but it can certainly have a positive influence on its image. The games could provide a platform for the country to display its prowess in technology. That is why Tokyo has said it will prepare a small army of robots for the Olympics, to impress and woo foreign guests as soon as they arrive at the airport.

There is, for example, Cinnamon the humanoid who can talk to people and give directions; robotic stuffed animals translate into four languages at the airport while other robots help carry travelers’ luggage. Japan’s hydrogen technology, too, will be on display.

It may be entertaining and even useful. It could also serve as reminder to the rest of the world, that Japan is not on a detour. It is busy registering the results of its own success, and Europe would be well advised to pay closer attention.

The post An Uncomfortable Position appeared first on Berlin Policy Journal - Blog.