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"Steinmeier is right to focus on dialogue about the digital transformation and its economic and social implications"

On his first visit to China, German President Frank-Walter Steinmeier will travel to Guangzhou, Chengdu and Beijing, where he will meet Chinese President Xi Jinping. The digital economy and the changes it brings to societies will be the focus of the trip from December 4 to 10.

Questions to Mikko Huotari, Deputy Director of MERICS.

What do you expect of Steinmeier’s visit to China?

The exchange between Germany and China has intensified, as shown by the high frequency of high-level mutual visits over the past weeks. Steinmeier is right to focus on dialogue about the digital transformation and its economic and social implications. Not only that China is a driving force of this transformation, it is also at the center of an increasingly heated international debate over technology and digital policy issues. The German president will likely also address a number of sensitive political issues. He has to raise the human rights violations in Xinjiang.

Will Steinmeier encounter a strong country and a strong leader?

China’s party and state leader Xi Jinping faces enormous challenges. The pressure on China’s economy will rise in the coming quarter, caused by the trade war with the United States but also by the fact that China has not succeeded in restructuring its economy. Most of Xi’s reform projects over the past five years have been put on halt as the Chinese leadership prioritizes stability and its ability to control.

As China prepares to celebrate the 40th anniversary of the launch of Deng Xiaoping’s reform and opening up to the world this December, a number of prominent voices dared to question Xi’s state capitalist economic course, among them Deng’s son as well as China’s former premier Zhu Rongji. These remarkable expressions of dissent signal a lack of consensus among China’s top leadership on the future economic path.

China’s leadership has massively increased its control over all aspects of China’s political, economic and social life. What does this mean for Germany and other Western countries?

China’s Communist Party is pioneering new formats of surveillance of citizens and companies. We have to watch closely how monitoring and control instruments such as the Social Credit System will affect foreign companies, citizens and organizations in China. The fact that the operations of German foundations in China are still limited as a result of China’s NGO Law continues to strain the bilateral relationship. I assume that President Steinmeier will address this in talks with the Chinese leadership and perhaps even in a speech to students, but the wider Chinese public will not be a part of this conversation.

China is seen as a driver in the digital economy. How can Western countries like Germany remain competitive?

Germany has an important edge when it comes to digitization and automation of industrial production (Industrie 4.0), but it is falling behind China on a number of new technologies such as quantum computing, 5G or blockchain. Countries like Germany have to do their own homework to catch up in these areas, but they should also be prepared to push back against Chinese industrial policies if those threaten to distort the markets for these technologies.

Is there sufficient trust between Germany and China to cooperate in innovative industries?

German and Chinese companies already cooperate intensively and successfully in the digital economy. The digitization and automation of industrial production, the use of big data in the health care sector or networked mobility concepts are all promising areas for cooperation. In other areas such as AI, blockchain, 5G and supercomputing, Germany is already falling behind and will need to compete or collaborate from a weak position.

There are other obvious risks in cooperating with China. We should not accept that China invites European companies to provide technology but then exposes them to unfair competition in its own market. Europe also needs better political coordination and will have to adjust its export control regime to deal with challenges such as safeguarding critical infrastructure, protecting citizen’s data and individual rights but also preventing the abuse of dual use civil-military technologies. The United States is currently very wary of high-tech cooperation with China. It has ruled out Huawei as a partner to build up its 5G infrastructure. Given the uncertainty, the German government needs to opt for risk-minimization, position itself in the European interest and do the same.

How open is Chinese society towards new technologies and how critical of the risks?

Chinese society is much more open to new technologies and much less risk-averse than European societies. The boom of mobile payment and investment systems (FinTech) and the use of facial recognition technologies are creating new social norms and changing social behavior. The downside of China’s enthusiasm for new technologies is often a relative lack of concern over their ethical implications. The most recent example is the claim by a Chinese researcher to have genetically engineered two babies. But let's be clear: these questions are also discussed in China despite censorship.

The Chinese government’s repression of the Muslim population in Xinjiang has caused international concern. How can Steinmeier influence this situation?

I would expect that Steinmeier will at least demand more transparency, just as German foreign minister Heiko Maas did during his recent visit to Beijing. Maas also made it clear that Germany would not accept internment camps in Xinjiang

But official exchanges on this issue are all but impossible as the Chinese side tries to ignore, downplay or deny accusations of human rights violations. Governments, if not economic actors, will rightly question what forms of cooperations are still possible with a state and party that considers practices like in Xinjiang normal. If Steinmeier brings back good advice on this issue, his trip might be considered a success.

This interview or excerpts may be quoted with proper attribution. 

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