Cyberspace, soccer and the real business of strong ties between China and Germany

Beijing and Berlin may have their disagreements on political issues but these “minor irritations” should not distract the two countries from their strong economic ties, according to a top German diplomat.

Renewing calls for Beijing to improve access for foreign companies to the Chinese market, German ambassador to China Michael Clauss told the South China Morning Post that economic exchanges were a mainstay of bilateral relations.

The comments come after Germany’s intelligence services released details last week of alleged covert Chinese social media accounts used to gather personal information on German officials and politicians, claims Beijing said were groundless.

Clauss said the findings could have been aired in a cyber issues forum both countries agreed in June last year to set up.

“Up till now this consultation mechanism, where these findings could have been discussed, has not seen the light of the day,” Clauss said. “I expect the Chinese side to join us in setting up the agreed upon cyber consultation mechanism by early 2018.”

Click here for a full transcript of the interview with German ambassador Michael Claus

Tensions also rose between the two countries last month when a tour of Germany by China’s under-20 men’s soccer team was suspended after spectators at the first match unfurled Tibetan flags in protest at Beijing’s policies over the autonomous region.

“[But] all these more or less minor irritations should not distract us from seeing the overall picture of our relations. In particular our economic exchanges, which constitute the principal pillar of our bilateral relations, are tremendously successful,” Clauss said.

He said Sino-German relations were “as close and intensive as never before in history”, extending from trade to addressing global challenges such as climate change.

China is Germany’s biggest trade partner while China has a strong appetite for German know-how in advanced manufacturing but there have been strong concerns about the growing difficulties for foreign companies operating in China.

Among the main fears is interference by Communist Party cells in the business decisions of joint ventures, with Beijing requiring the party to have firm leadership in every aspect of the political, military, economic and social activities.

Clauss said there were cases of foreign partners being required to amend the charter of joint ventures to give party cells roles on management boards.

“Recently we were pleased to receive encouraging signals from the State Council and higher levels of the party that party cells shall not have a role in the management boards of foreign equity joint ventures. Therefore I hope that the party and state authorities at all levels, national and regional, will act accordingly,” he said.

Other concerns included forced technology transfer in exchange for market access, Beijing’s tightening grip on internet access and the long lag between pledges and action on market access.

“[At the same time] we have witnessed that regulatory interventions like production quotas for electric vehicles or capital controls have increased,” Clauss said. “Our repeated requests to have a meaningful dialogue on [virtual private networks] and cyber-related questions with the relevant Chinese authorities did regrettably not yet receive a positive response.”

The German ambassador said he was also concerned that with industry strategies such as “Made in China 2025”, China might be “steering towards a self-centered economic system which will eventually leave little room for foreign businesses”, a move that would be “detrimental” to China itself.

“I am convinced that these issues, much more than differences on football cooperation or faked social media accounts, are the real challenges we will have to grasp in order to secure that our bilateral relations will remain smooth and advantageous for many more years to come,” he said.