Between economic openness and strategic caution: Germany’s response to China’s investment

Abstract

Leading Western economies face major dilemmas regarding China’s rise as different geopolitical considerations and economic interests inform how such states engage China. This article seeks to understand Western approaches to China’s rise through an analysis of Germany’s response to Chinese investment. The discussion shows that the Sino-German relationship has increasingly been affected by rising Chinese investment in Germany that entails common benefits in technology and industrial policy. Despite enhanced economic opportunities, however, Germany’s position is gradually shifting to a more cautious approach due to increasing economic asymmetry and political uncertainty in Sino-German ties. The concerns of the German leadership are focused on the lack of reciprocity, the exposure of the EU to China’s influence, and the antagonistic positions of the two economic powers in the global economy, and are imposing limits on Germany’s cooperation with China.