A Reality Check, before it’s too late: 4th Quarter GDP, Semiconductor Production, Anti-corruption, Unemployment, Special Weekend Edition of 23 January
Intelligence and Insights on China's government actions, foreign policy, economy, and the capital markets.
A Letter from the Editor:
Melian councilors: So can we not be friends rather than enemies? Would you not accept our inactive neutrality?
Athenian envoys: Your friendship is more dangerous to us than your hostility. To our subjects, friendship indicates weakness on our part, but hatred is a sign of our strength.
– a dialogue between the representatives of the Athens-led Delian League and those of Melos, a neutral city suspected of secret allegiance to Athens’ warring foes
Years 15-16, Book Five, the Peloponnesian War, Thucydides
As the world watches with shock the escalating tension in Eastern Ukraine, a video captured from an Indian think tank went viral in Europe and China. Vice Admiral Schönbach, chief of the German Navy, was caught on camera lobbying rapprochement with Russia in the urgent need to contain China, all but downplaying the security assurance provided by NATO and the EU.
Like an enfant terrible, Vice Admiral Schönbach finally elucidated what had failed to come across. The reason why China needs to be dealt with seriously, and the true calculation behind it has to do with the fear of being outclassed by China, militarily, economically, and in influence, and little to do with protecting nations or values.
On the surface, the Vice-Admiral described some thinking known as “reverse Kissinger,” a bid to drive a wedge between Russia and China, turning one against the other, which would help Germany secure energy supply from Russia, eliminate the risk of a war in Europe (with only four brigades of American troops present in Europe, a NATO war with Russia will have to be fought at the cost of European lives), and also help Germany enhance its influence in the Asia Pacific which is already the most dynamic economic region in the world.
But the calculation proved short-lived after the controversy became public. Vice Admiral Schönbach quickly resigned over the “misjudgment''. But Germany still has to decide if China is a credible threat, and in this case, Russia, a partner.
What can be affirmed is that the German position is steering away from both Schönbach’s Kissingerian assessment and minister Annalena Baerbock’s earlier liberal hawkishness. Why? It’s "the economy, stupid."
In the most recent virtual meeting between Baerbock and Wang Yi, the naked facts about the two economies’ interdependence were made explicit. In exchange, China asks Germany to refrain from “microphone diplomacy,” a pejorative term used by China to disqualify high-pressure public diplomacy. The two countries once again pledged to strengthen the economic bond and deepen mutual understanding. The stance was welcomed by the German corporates, which reportedly already began pressuring Lithuanian companies to bend the country’s newfound desire to test Beijing’s commitment to the One China Policy.
Earlier, President Biden, the leader of the free world, told in his first presidential presser that he thinks Russia “will move in” to Ukraine. But “it is one thing if it is a minor incursion…”, signaling no intention to intervene under such circumstances directly militarily.
We face the first reality check of 2022, reflecting a 15th Century European playbook: is it better to be loved or feared if one cannot do both?
Keep reading with a 7-day free trial
Subscribe to China BIG Idea to keep reading this post and get 7 days of free access to the full post archives.