Climateer Investing: "Hamburg Is at the Heart of Germany's Growing Dilemma Over China"

Monday, October 25, 2021

"Hamburg Is at the Heart of Germany's Growing Dilemma Over China"

From Bloomberg, October 23:

COSCO Shipping occupies a prime waterfront location in Hamburg. The Chinese marine transportation giant’s European headquarters sit between a historic red-brick warehouse complex and the glass and steel of the redeveloped harbor area. The company is about to expand its presence after striking a deal last month to acquire a stake in a container terminal.
For a city that markets itself as China’s gateway to Europe, the agreement is a step toward becoming a go-to hub for COSCO’s vast cargo shipments. But away from the business of trade that Hamburg has thrived on for centuries, the tighter embrace of China is stirring concerns.
The dilemma is whether such economic ties now leave Hamburg exposed to the vagaries of great power politics as tensions between the U.S. and China spill into global supply chains. Its status as Germany’s biggest port also puts it at the heart of a broader debate over the country’s role as Europe’s political heavyweight and the world’s No. 3 exporter.
Five years ago, many companies wanted to be part of China’s Belt and Road infrastructure and investment initiative, despite issues over reciprocal market access. Now there’s more hesitation, said Doris Hillger, head of the foreign trade department at Hamburg Chamber of Commerce.
“Any deepening of interaction with China is from the start viewed more or less critically,” Hillger said in an interview at her office this month. “And that’s what makes it very difficult for businesses, but also for business locations such as a port city like Hamburg.”
How to handle that delicate balance of interests will confront Germany’s incoming government from the get go. The likely next chancellor, Olaf Scholz, is a Hamburg native and was the city-state’s mayor from 2011 until 2018, when he took up the post of finance minister in Angela Merkel’s federal government. Total Germany-China trade had burgeoned to more than $200 billion by 2019, half of it passing through Hamburg.
Scholz has credentials as a China enthusiast. He met with President Xi Jinping in 2017 when the Chinese leader attended the Group of 20 summit in Hamburg. As finance minister, he issued a personal invitation to Vice Premier Liu He to attend a Europe-China forum known as the Hamburg Summit in November 2018. Scholz visited China in early 2019, when he was chided by the Sueddeutsche Zeitung newspaper for not bringing up human rights.
But Scholz has maintained a strategic ambiguity on what China policy might look like under his leadership of Europe’s biggest economy. His Social Democratic Party’s election program barely mentioned China, and foreign policy hardly featured in the campaign.
With the Biden administration pressing Europe to align more clearly with the U.S. in its standoff with Beijing, Scholz will come under immediate pressure to show his hand on what Secretary of State Antony Blinken has called the world’s “greatest geopolitical test.”
“The name Scholz hardly rings a bell to the Chinese public,” China’s state-run Global Times newspaper said in an article the day after the SPD won the election on Sept. 26, adding that he’s been “reticent about his blueprint on China policy.” It added, though, that “Chinese observers said Scholz shares abundant connections with China, and the new government will be more likely than others to continue Merkel’s policy.”....

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