Germany’s Indo-Pacific aspirations and realities
Germany’s Indo-Pacific aspirations and realities
WRITTEN BY DR RAFAL ULATOWSKI
9 January 2024
The Indo-Pacific region is growing in economic and political importance, and Germany, like other EU member states and the EU itself, is becoming increasingly engaged in this part of the world. Since the early 1990s, the German governments have invested time and resources to develop close bilateral relations with Indo-Pacific regional powers. The liberal international order (LIO) provided a favourable environment for this policy by supporting political stability and open markets. China, the biggest country in the region by territory, size of its economy and (up to 2023) population, became Germany’s largest trade partner, as well as one of its most important political partners. Chinese-German cooperation goes well beyond economic and political cooperation to include other sectors such as education, research, and cultural exchange. The two countries also hold regular intergovernmental consultations. The tight network of connections that has been developed in recent decades makes China the dominant partner in the region.
However, the German-Chinese partnership reached its limit with the end of the LIO. Now, Germany faces the need to reshape its engagement in the Indo-Pacific. This need was acknowledged by the publication of three documents: Policy Guidelines for the Indo-Pacific in 2020, National Security Strategy in 2023, and Strategy on China in 2023. As US-Chinese competition increases, Germany is diversifying its political and economic relations in the Indo-Pacific region, prioritising partners with which it shares democratic values.
Germany’s interests and partners
As recently as 2014, German-Chinese relations were elevated to a comprehensive strategic partnership, yet in 2019 questions began to be raised by Germany’s economic elites about the consequences of that partnership. In a policy paper, the Federation of German Industries (BDI) described China as a “partner and competitor”. This vocabulary was immediately picked up and developed by Germany’s political elites. Germany, along with other European countries like Italy, has been taking a more critical view of its relations with China in the last few years. Today, the German authorities tend to see China in three ways: as an important partner, a competitor, and a systemic rival.
Germany is too weak militarily to change the balance of power in the Indo-Pacific. Its military presence satisfies the expectations of the regional middle powers and of the United States while having only a minor adverse impact on Germany’s relations with China.
Another sign of a new German Indo-Pacific policy has been the increasing German military presence in the region. In August 2021, Germany sent the frigate Bayern on a mission to the Indo-Pacific, and in August 2022, a squad of aircraft were sent as part of Operation Rapid Pacific. In 2023, the German armed forces also participated in exercises in Australia. While China has objected to this largely symbolic presence, Germany is unlikely to change its policy — planning to send another ship to the region in 2024, and German politicians have been actively working to develop diplomatic ties with the region’s middle powers.
Since 2020, there has been an intensive diplomatic exchange with the region’s democracies: Japan, India, South Korea, Singapore, and Australia. As argued in German strategic documents and by German politicians, Germany prefers to have partners that are “democracies” and countries “with shared values”, since such partnerships have both economic and strategic potential. They can support Germany in creating resilient supply chains and create significant markets for German arms exports. This implies a greater distance from China. Germany wants to keep the pieces of the LIO in the region alive but has to consider growing US-Chinese competition.
Limitations of Germany’s Indo-Pacific policy
However, Germany’s policy towards the Indo-Pacific faces economic, political, and military limitations.
First, among the major European economies, it is Germany that depends most on China. China is not only Germany’s biggest trade partner but also an important market for German investments. German exports to China in 2022, worth EUR 106.853 billion, were greater than its combined exports to the next nine countries in the Indo-Pacific (South Korea, Japan, India, Australia, Taiwan, Singapore, Hong Kong, Malaysia, and Thailand) which totalled EUR 105.451 billion. China is Germany’s third-largest destination for FDI (only behind the United States and Luxembourg), worth almost EUR 103 billion. As a result, any significant reduction in Germany’s economic exchange with China could harm the German economy. That is why German Chancellor Olaf Scholz and Foreign Minister Annalena Baerbock believe that China should not be isolated and that German-Chinese cooperation should continue, although the risks of overdependence on China should be reduced. As argued in Strategy on China, “de-risking is urgently needed. However, we are not pursuing a decoupling of our economies”. The final document takes a much softer approach towards China than the initial one prepared by the Foreign Office. The Greens wanted far more hawkish formulations than the Social Democrats, particularly regarding investments by German companies in China, and including a ban on German companies manufacturing sensitive technologies in China.
Second, Germany is not a resident power in the Indo-Pacific and, unlike the United Kingdom, is not part of regional networks. Germany has no territories or military bases in the region. Its armed forces (Bundeswehr) are just beginning to cooperate with other armies in the region. Since 2021, they have been participating in various exercises, and there is a desire on both sides to strengthen this cooperation in the years to come.
Third, Germany projects no power in the Indo-Pacific, and this is a significant weakness, as the competition in the region increasingly concerns security. Germany’s armed forces are weak. Chancellor Scholz has initiated a strengthening of the military as part of Zeitenwende after Russia’s invasion of Ukraine and Germany plans to invest EUR 100 billion in the coming years to achieve NATO’s goal of 2 per cent of GDP for defence spending. However, current reports suggest that the growth in defence spending is proceeding slower than expected and that the additional funds will only cover the most urgent needs.
Germany’s main security challenges are in Europe. The German armed forces will not be able to play any meaningful role in the Indo-Pacific, and in fact, Germany has no such aspirations. Berlin prefers to pass the buck of containing China on to the United States and the Indo-Pacific’s regional powers, whose interests are directly threatened by the rise of China. This allows Germany to avoid any direct confrontation with China and to continue cooperating with China economically. Germany prefers to support regional powers by selling them arms. Economic and strategic interests are intertwined, as those transactions work to secure employment at home, strengthen the domestic defence industry, and support allied security. As SIPRI data from 2010 to 2021 shows, the biggest importers of German arms into the Indo-Pacific were South Korea (USD 2.397 billion), Singapore (USD 532 million), and India (USD 456 million). From 2010 to 2021 Germany was the fifth-largest arms exporter in the world, with exports worth USD 17.765 billion; South Korea alone was responsible for almost 13.5 per cent of German arms exports in this period. Even more importantly, as security competition in the Indo-Pacific intensifies and local economies perform well, the countries of this region look very promising as future buyers.
Towards Germany’s new grand strategy?
Since 2020, when the Policy Guidelines for the Indo-Pacific were published, the Indo-Pacific region has emerged as an important region in Germany’s foreign policy strategy, and this has caused a change in Germany’s relationship with China and regional powers. Two years afterwards, in 2022, taken aback by the Russia-Ukrainian war, Chancellor Scholz declared a Zeitenwende and a plan for sweeping changes in German foreign policy. Germany’s partnership with Russia came to an abrupt end. The conflict has also revealed Germany’s military weakness and its dependence on US security guarantees. Germany needs to rethink its relations with the great powers of today: the United States, Russia, and China. It hopes to diversify its political and economic relations in the Indo-Pacific beyond China without weakening its economic and political relations with China. Germany does not want to suffer any political or economic damage from weakening that partnership. A symbol of this policy was Olaf Scholz’s visit to China in November 2022; Scholz was the first European leader to visit China since the outbreak of the COVID-19 pandemic.
At the same time, Germany is developing political and economic relations with other states in the Indo-Pacific. Its political relations with Australia, India, Japan, South Korea, and Singapore have become very intensive since 2020; yet China still dominates Germany’s economic exchange with the region, and Germany’s military presence there is of symbolic value only. Germany is too weak militarily to change the balance of power in the Indo-Pacific. Its military presence satisfies the expectations of the regional middle powers and of the United States while having only a minor adverse impact on Germany’s relations with China.
In contrast to German politicians’ bold declarations about their vision for the Indo-Pacific, Germany’s impact on the reality in the region is very limited. Mostly, it reacts to shifts in the regional balance of power but does not create them. It has few instruments of power with which it can exercise influence there. Nevertheless, Germany’s position is still important, for it is still one of the richest and most influential states in the world, and especially in the European Union, which, despite the power shift to the east, still plays a significant role in global politics.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform. Nor do they represent the official positions of the University of Warsaw.
Author biography
Dr Rafal Ulatowski is an associate professor at the Faculty of Political Science and International Studies, University of Warsaw. He has been awarded scholarships by the Konrad Adenauer Foundation (2007–2011), the German Academic Exchange Service (2013 and 2014–2015), the German Institute of Polish Culture (2015), and the French government (2015). His research focuses on German foreign policy and the international political economy of developing countries. Image credit: Flickr/U.S. Pacific Fleet.