Germany and the Indo-Pacific in an age of superpower competition

Introduction

As the international order continues its march toward multipolarity, strategic competition between the superpowers has returned, this time concentrated in the Indo-Pacific region. In recognition of this, Germany published its Policy Guidelines for the Indo-Pacific in 2020, in which it acknowledged that ‘the shape of tomorrow’s international order will be decided in the Indo-Pacific’ (Federal Government of Germany, 2020: 2). Germany’s policy towards the Indo-Pacific attracted great interest, and caused the emergence of significant literature discussing its various aspects. This article, together with the other articles in this special issue, aims to give a coherent picture of European policy towards the Indo-Pacific region.

In this article, I answer three questions on German Indo-Pacific policy. Firstly, why does Germany engage in the region? Secondly, how does Germany shape its Indo-Pacific policy? And thirdly, what is the importance of Germany’s engagement in the region for Germany itself and for regional powers? Drawing on the realist theory of international relations (IR), I advance three arguments. Firstly, Germany’s engagement in the region is due to the continuous rise in the strategic and economic importance of the Indo-Pacific. Secondly, Germany tries to build good relations with all the relevant countries in the region, but increasingly prioritizes those that are democracies and share the same values as Germany (a priority that mirrors the United Kingdom’s prioritization of Anglophone/democratic partners). Interests and values are becoming intertwined in Germany’s policy in Indo-Pacific. Thirdly, because the main focus of superpower competition has shifted away from Europe to the distant (from the German perspective) Indo-Pacific, Germany can follow a restrained foreign policy and concentrate on its economic interests. The United States and Asian countries cannot count on much support from Germany in their security competition with China (a stark contrast with the United Kingdom’s commitment).

It is important to notice that Germany’s policy towards the Indo-Pacific has not assumed its final shape, but is still in the process of being formulated. That policy is based on the Guidelines published in 2020, but two other documents are still awaited, though their publication dates have been pushed back repeatedly. The first of the two is the National Security Strategy. It was slated to be published in the first year of the government of Chancellor Scholz, but, due to differences among the coalition partners, this did not happen (Heide, 2023). The second document is a strategy on China, which should appear after the National Security Strategy.

This article is structured as follows. The first section discusses the importance of Germany’s economic relations with Indo-Pacific countries, and the challenges these entail. The second section discusses Germany’s security goals and its policy of ‘passing the buck’ of containing China on to the United States and the Indo-Pacific regional powers. The third section elaborates on the role of norms in Germany’s newly crafted Indo-Pacific policy. This article is based on analyses of documents published by the German government and the German armed forces (Bundeswehr), and on statements and media interviews by politicians and civilian and military officials.

Economy

Like their British and Italian counterparts, in the era of unipolarity, German governments neglected security considerations, pursuing a ‘change through trade’ strategy towards autocratic countries, such as Russia and China. It was believed that economic interactions would not only facilitate China’s evolution towards democracy and a liberal market economy, but would also support its integration into the liberal world order and ensure that its rise was a peaceful one (Rinke, 2021). Further, facing no significant direct threats to its security, Germany concentrated on securing its economic interests by building intensive economic relations with emerging economies. In numerous foreign policy documents beginning in the early 1990s, the German government argued in favour of developing intensive economic relations with the countries of Asia – not only China – seeing them as attractive markets. Yet, although Germany advocated diversity in its relations with Asian partners, it was China that became Germany’s main economic partner in the region.

Under unipolarity, this growing dependence on China was not seen as a significant risk to German interests. But as the world moved from unipolarity to multipolarity, China did not democratize, and relations between the two countries started to deteriorate; the failure of ‘change through trade’ became obvious. After she retired, Chancellor Angela Merkel gave her government an ambiguous grade for its policy on China: ‘Maybe initially we were rather too naive in our approach’ – words also applied to the British (see the article by Thomas Wilkins in this special issue; Rinke, 2021). Furthermore, Germany’s and China’s economies are no longer complementary. China’s economy has been transforming from a labour intensive one to an innovation-led one, making it competitive towards the Germany economy, and increasingly so (Li, 2018). German decision-makers have come to view the complex network of economic ties with China inherited after the three decades of unipolarity as a potential strategic vulnerability.

Germany, like the European Union, now describes China in three ways: as an important partner, as a competitor and as a systemic rival (Maas, 2020). Germany’s relations with China have become more complicated, but certainly not purely antagonistic, and economic exchange remains an important pillar. In a speech in the Bundestag on 27 February 2022, Chancellor Scholz declared a Zeitenwende (‘watershed moment’) for German foreign policy. But this applies mostly to Germany’s relations with Russia. During a speech and discussion in the German Council on Foreign Affairs, Scholz’s foreign policy advisor Jens Plötner (2022) said that ‘it would be a mistake to lump China and Russia together now’ or to strive for decoupling from China, as this could lead to a ‘self-fulfilling prophecy’ of strengthening cooperation between them – something to be avoided. He also expressed the view that systemic rivalry with China must be reduced ‘as far possible’.

Germany wants to continue cooperating with China, and especially to maintain close economic ties between the two countries, albeit on a more equal basis than in the past and based on the principle of reciprocity. In November 2022, amidst some controversy, Olaf Scholz became the first European leader to visit China since the outbreak of the COVID-19 pandemic. Chancellor Scholz believes that ‘China’s rise does not warrant isolating Beijing or curbing cooperation.’ He sees only ‘the end of an exceptional phase of globalization’ (Scholz, 2023) and indicated that ‘even in changed circumstances, China remains an important business and trading partner for Germany’ (Scholz, 2022). The goal of German economic policy towards China is to diversify economic relations beyond China, ‘dismantle one-sided dependencies’ (Scholz, 2022) and ‘de-risk’ economic relations with China – that is, mitigate the security risks in strategic economic sectors such as critical infrastructure. The term ‘de-risk’ was adopted by European Commission President Ursula von der Leyen before her March 2023 visit to China, and willingly picked up by the German politicians (Cave, 2023). Scholz opposes ‘protectionism’ or a ‘withdrawal’ of German companies from China (Scholz, 2022).

After a visit to China in April 2023, Foreign Minister Baerbock gave a comprehensive explanation of Germany’s dilemma on the future of its relations with China:

We can’t get past China. . . . . It’s Germany’s . . . biggest trading partner. . . . But we don’t want to repeat mistakes. We don’t want to be so naive as to believe that trade automatically leads to change. That is why it is now important not to decouple us from China. But to ensure that, just as China takes care of its security, we do the same, minimizing our risks. I think the President of the Commission summed it up perfectly with the term ‘de-risking’. (2023: 11475; author’s translation)

Scholz also defends German–Chinese economic cooperation as being focused on ‘products where there is neither a lack of alternative suppliers nor a risk of dangerous monopolies’ (2022). This behaviour is consistent with the hope Scholz expressed in his first phone conversation with Chinese president Xi Jinping in December 2021 that a new China–EU Investment Agreement ‘can come into effect as soon as possible’ – although it was later blocked in the European Parliament (see Lo, 2022).

At the same time, the German authorities would welcome stronger economic exchange with other countries in the Indo-Pacific. Much like manufacturing powerhouses Italy and France, Germany presents itself as an attractive partner for Indo-Pacific countries, one willing to ‘diversify its relations both geographically and in substance – with a view to avoiding unilateral dependencies and to strengthen ties with the global players of tomorrow’ (Federal Government of Germany, 2020: 9).Under the new balance of power, the German government also sees a need to introduce more strategic considerations in its economic relations in the region. This is well demonstrated by the content of the first German–Japanese intergovernmental consultations, where economic security was put at the centre of the discussions (Bundesregierung, 2023). Germany would like to shift its international cooperation towards ‘democracies and partners with shared values’ (Federal Government of Germany, 2020: 9).

But Germany’s economic exchange with Indo-Pacific countries other than China constitutes only a fraction of its trade with China. In 2021, China overtook Great Britain as the third-largest recipient of German foreign direct investment (FDI). By the end of that year, the value of accumulated German FDI in China was almost €103b. The number-one recipient was the United States with €409b, and the number two was Luxemburg with €109b in accumulated German FDIs. The total value of German FDI was €1506b. More than two-thirds of German FDI in China was invested in manufacturing (Bundesbank, 2023), a large contribution over the last four decades to the modernization of the Chinese industrial base. This trend continues. In the first half of 2022 alone, German FDI in China amounted to around €10b, a new half-year record. In 2022, Germany’s exports of goods to China were the largest among EU member states (€106.853b), and Germany’s share of exports of goods to China (15%) is larger than that of any other EU member. Germany has also been the second-largest importer of goods from China among all EU member states (Eurostat, 2023).

Further, Germany received the most Chinese FDI in the European Union from 2000 to 2021. At €30.1b, Germany is well ahead of second-place Italy (€16b) and third-place France (€15.7b). In Europe, only the United Kingdom received more Chinese investments in this period of time (€79.6b) (Kratz et al., 2022). Germany’s exports to China in 2022 (€106.853b) were significantly 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 amounted to €105.451b (Statistisches Bundesamt, 2023a). Also according to the German statistical office, almost half of German FDI in the Indo-Pacific was made in China (Statistisches Bundesamt, 2023b). The political declarations on economic diversification away from China are far from being fulfilled, as its trade dependence on China remains greater than any other European nation.

Security

Under unipolarity, Germany paid little attention to the security situation in the Indo-Pacific. Unlike the United Kingdom and France, and comparably to Italy, the Netherlands and the European Union, it had no direct strategic interests in the region, and German politicians were mainly concerned with the economic benefits to be gained from cooperating with China. But as the power distribution moved towards multipolarity and intense security competition began, security considerations began to be considered in Germany’s Indo-Pacific policy, as was the case in other European countries (see the articles by Gabriele Abbondanza and by Thomas Wilkins in this special issue; European Commission, 2019; North Atlantic Treaty Organization (NATO), 2022).

After two decades of ambiguity in German foreign policy, the country’s position became clearly formulated when defence minister Annegret Kramp-Karrenbauer decleared in early 2020: ‘We are not “somewhere in the middle”. We are and will continue to be part of the West’ (Kramp-Karrenbauer, 2020). Germany supports a rules-based order and ‘stronger political, economic and security policy networks’ (Federal Government of Germany, 2020: 11) in the Indo-Pacific to enforce rules and norms in areas such as the environment, labour and trade, dealing with pandemics, arms control and non-proliferation, disarmament and human rights (11). Germany hopes for the creation of an Indo-Pacific order where regional powers do not have to, or are not pushed to, choose sides, as was the case during the Cold War (9). Chancellor Scholz underlines that ‘we must also avoid the temptation to once again divide the world into blocs’ (Scholz, 2023). In the Policy Guidelines for the Indo-Pacific, it is indicated that Germany opposes the emergence of a ‘hegemony, as well as the consolidation of bipolar structures’ in the Indo-Pacific region (Federal Government of Germany, 2020: 9). This explains its desire, discussed above, to continue economic relations with China. But it is also true that Germany does not feel directly threatened by the rise of China, and has little incentive to engage in the Indo-Pacific militarily.

Nevertheless, the German government does acknowledge the rising security competition in the Indo-Pacific region. The Taiwan Strait was not mentioned in the Policy Guidelines for the Indo-Pacific, but, as stated in the Progress Report on the Implementation of the Federal Government Policy Guidelines for the Indo-Pacific 2022 published by the German government, ‘Rearmament in the region has accelerated, geopolitical tensions are exacerbating territorial conflicts and the risk of escalation is increasing, for instance in the Taiwan Strait.’ Germany emphasizes its position that ‘the status quo in the Taiwan Strait can only be changed by peaceful means and by mutual agreement’ (Federal Government of Germany, 2022: 1). Foreign Minister Annalena Baerbock indicated before her visit to Asia in April 2023 that the tensions in the Taiwan Strait matter for Germany (see Wyssuwa, 2023).

Unlike France or the United Kingdom, Germany is not a resident power in the Indo-Pacific region. It prefers to pass the buck of containing China on to the United States and the Indo-Pacific regional powers. This allows Germany to stay on the side-lines of the conflict, thereby avoiding the costs of confronting China, which may facilitate continuing economic cooperation with China. This last element may play important role for Germany; already the Chinese ambassador to Germany has threatened that there would be consequences for German automobile producers if Huawei was excluded from the German market (Bennhold and Ewing, 2020).

There are four factors that encourage Germany’s strategy of buck-passing. The first factor is geography. Germany and China are separated by thousands of miles and many countries (see Mearsheimer, 2001: 271–272). The second factor is military technology. A perceived offensive military advantage encourages states to chain-gang alliances, whereas a perceived defensive military advantage encourages states to pass the buck (Christensen and Snyder, 1990). The literature about military interventions by superpowers since the end of the Cold War paints a gloomy picture about the prospects for superpower success. In the case of Taiwan – the most serious potential reason for war in the Indo-Pacific region – studies show that invasion would be difficult, and the defence of the island potentially successful, if fully supported by Taiwan’s allies (Strobel, 2022).

The third factor is a relatively high level of security due to having a powerful ally ready to contain the threat (Snyder, 1984). Germany has such allies and partners in the Indo-Pacific region, of which the most important is the United States. And beyond the traditional alliances in the region, such as the US–Japan alliance and US–South Korea alliance, new forms of so-called ‘minilateral’ strategic cooperation are emerging (Wilkins, 2022). The fourth factor is the high cost of war, which encourages buck-passing (Posen, 1984: 232). The development and production of weapons systems frequently suffer from cost overruns, and the cost of weapons systems is rising faster than the overall inflation rate. The Bundeswehr’s programmes are no exemption (Essig et al., 2016). After the end of the Cold War, Germany successfully reduced its defence spending, enjoying a peace dividend. (Stockholm International Peace Research Institute (SIPRI), 2023).

Additionally, Germany’s security priority continues to be Europe. Germany seeks ‘to step up as one of the main providers of security in Europe’ (Scholz, 2023). Germany does not have the intention of building up military forces that would be able to continuously project power outside Europe. Eva Högl, Parliamentary Commissioner for the Armed Forces of Germany, has questioned whether the currently planned financial resources will be sufficient to finance a revival of the Bundeswehr (see Schmalz, 2023).

Germany’s military presence in the Indo-Pacific does not change the regional balance of power; this applies equally to the frigate Bayern’s Indo-Pacific mission from August 2021 to February 2022 and to the squad of aircraft sent to the region on 15 August 2022 as part of Operation Rapid Pacific. This was a ‘sign of solidarity’, to quote Annegret Kramp-Karrenbauer, the Defence Minister at the time of the Bayern’s voyage (see Bundesministerium der Verteidigung, 2021). The German armed forces will participate in 2023 in the Talisman Sabre 23 exercises in Australia, and in 2024 Germany is going to send another ship, probably again a frigate, to the Indo-Pacific. According to Chancellor Scholz, this will demonstrate Germany’s ‘commitment to the freedom of the seas’ (see Merkur Staff, 2023).

Germany is keen to support regional powers – potential buck-catchers – in their desire to build strong armies, a goal it clearly shares with France, Italy and the United Kingdom, as demonstrated by their own significant defence procurement activities with Indo-Pacific countries. For decades, Germany has been a leading arms exporter: between 2010 and 2021, it was the fifth-largest in the world, with exports worth US$17.765b (SIPRI, 2023). And among its customers, Indo-Pacific countries hold a significant position. From 2010 to 2021, the biggest were South Korea (US$2.397b), Singapore (US$532 million), India (US$456 million), Malaysia (US$391 million), Indonesia (US$364 million), Brunei (US$289 million) and Australia (US$241 million) (SIPRI, 2023). Strategic and economic considerations are intertwined, as demonstrated in December 2022 at the launch of two submarines at the shipyard in Kiel for the Singapore Navy. In a speech, Chancellor Scholz made the case that developing naval production and securing employment in Germany go hand-in-hand with strengthening security and stability in the Indo-Pacific. For the same reasons, Germany would also like to sell submarines to other partners in the Indo-Pacific region (Bundesregierung, 2022). The most attractive potential customer is India, where in June 2023 the German manufacturer Thyssenkrupp Marine Systems (TKMS) joined forces with the India’s Mazagon Dock Shipbuilders in a plan to supply India’s Navy with six conventional submarines of German design in a contract worth about €5b. According to the German defence ministry, the submarine contract, if signed, could be ‘a flagship project’ of German–Indian cooperation (Nilsson et al., 2023).

As early as 2012, this combination of strategic and economic interests through German arms exports was being broadly discussed under the term ‘Merkel Doctrine’. The idea was that the Merkel government was willing to increase arms exports to countries in regions such as the Middle East and Southeast Asia to support them with stabilizing their regional situation; this would further justify Germany’s reluctance to participate in military operations abroad, and at the same time guarantee its industry the export orders it needed in the absence of domestic orders (SPIEGEL Staff, 2012). In light of Berlin’s current foreign policy and defence procurement activities, it seems that this idea is still alive. Further, Germany is ready to develop closer ‘bilateral cooperation in the field of defence equipment and technology’ with Japan. This goal was formulated during the second Japan–Germany Foreign and Defence Ministers’ Meeting (‘2+2’) in November 2022 (Ministry of Foreign Affairs of Japan, 2022). This issue, as well as that of cooperation between the armies of the two countries, was also discussed during the first German–Japanese intergovernmental consultations in March 2023 (Japan Ministry of Defence, 2023). German Defence Minister Boris Pistorius sees new potential for cooperation between the two countries as they step up military spending in the face of growing security threats (see Merkur Staff, 2023).

Norms

With the shift to multipolarity and the increasing competition between the superpowers, Germany now faces a new strategic environment in the Indo-Pacific. The German government has clearly stated its position on the strategic competition between the United States and China. Norms play an important role in justifying Germany’s newly emerging policy in the Indo-Pacific region. Like all US allies in the region, Germany is a democracy, and it is now emphasizing its desire to cooperate more closely with ‘democracies and partners with shared values in the region’ (Federal Government of Germany, 2020: 9). Such a declaration implies an increasing distance from China.

Additional support for this normative argument has been given by the Russian–Ukrainian conflict that began in February 2022. In his Zeitenwende speech, Chancellor Scholz spoke about the need ‘to forge even closer relations with our friends, our partners and all those who share our convictions worldwide’ (Scholz, 2022). Foreign Minister Annalena Baerbock added in an interview that one of the lessons Germany learned from its mistakes in its dealings with Russia for its relations with China is ‘[t]hat we are never again going to make ourselves existentially dependent on a country that does not share our values’ (Baerbock, 2022). German authorities depict the security competition in the 21st century in words similar to those of US President Joe Biden, who talks about ‘the battle between democracy and autocracies’(Biden 2022).

Since the publication of the Policy Guidelines for the Indo-Pacific, Germany has intensified diplomatic exchanges and partnerships with ‘democracies and partners with shared values in the region’ (Australia, Japan, South Korea, Singapore, India and many others). German authorities have been frequent guests in the region, strengthening diplomatic ties between Germany and its regional partners (Federal Government of Germany, 2022). The visions of the future held by Germany and its democratic partners overlap (see, for example, Bundesregierung, 2023). These visions have overlapped several significant strategic partnerships, similarly to what has been done by France, the United Kingdom and Italy. So far, Germany has signed agreements on strategic partnerships with five countries from the Indo-Pacific region (Australia, China, India, Indonesia and Vietnam). Moreover, in 2021 Germany and Australia elevated their strategic partnership to a new level, that of an ‘enhanced strategic partnership’ (Ulatowski, 2022: 399). India and Indonesia are potential buyers of German weapons (Fähnders, 2023). Japan, South Korea and Singapore have not signed any agreements on a strategic partnership with Germany, yet bilateral cooperation is flourishing.

Conversely, Michael Müller, the chairman of the German–Japanese parliamentary group, argues that cooperation with China has now reached its limits (see Ganslmeier, 2023). Diplomatic exchanges with China, which were very lively up to 2020, have declined. The COVID-19 pandemic certainly had an impact on this, but it is important to note that since 2020 there has been only one visit to China by the German Chancellor (Olaf Scholz in November 2022) and one visit by the German Foreign Minister (Annalena Baerbock in April 2023). After her visit, Baerbock explained in the Bundestag ‘that the aspect of ‘systemic rivalry’ is increasing, not only because China is acting more offensively – one could also say more aggressively – outwardly, but above all more repressively internally. . . . It was really more than shocking’ (2023: 11475). The German government sees internal political developments in China as an important factor influencing China’s foreign policy, German–Chinese relations and German policy in the Indo-Pacific region.

Conclusions

This article has sought to address three questions: why does Germany engage in the Indo-Pacific? How does Germany shape its policy in the region? And what is the importance of Germany’s engagement in the region for Germany itself and for regional powers? As to the first question, the article has shown that that Germany’s growing engagement in the Indo-Pacific is due to the region’s steadily increasing strategic and economic importance. Over the last two decades, Germany, like the United Kingdom and Italy, has mostly concentrated on China. But the intensifying strategic competition between China and the United States in the Indo-Pacific has forced Germany to redesign its policy towards the region. Like its allies, though, Germany is increasingly worried about the growing tensions in the Indo-Pacific. A further escalation could threaten overall international security and stability. Germany’s economic dependence on the countries of the region has grown more than in other European cases. The Chinese market is crucial for Germany as both a destination for exports and a source of imports. Given the vulnerabilities that have resulted from overdependence on China, the German government is going to ‘dismantle one-sided dependencies’, diversify its economic relations with other countries and ‘de-risk’ its economic ties with China – goals it shares with its European partners. German politicians now argue for a stronger focus on political and economic relations with ‘democracies and partners with shared values in the region’ (Federal Government of Germany, 2020: 9). Germany has diversified its diplomatic exchanges in the Indo-Pacific since 2020, though its trade relations continue to be concentrated on China.

Secondly, the article has demonstrated that Germany is trying to build constructive relations with all relevant partners in the region, prioritizing those that are democratic and that share its values. Values, in particular, are becoming increasingly important for German policy in the Indo-Pacific. But this does not mean that Germany is planning to reduce its political and economic ties with China. It hopes to forestall aggressive rivalry between China and other countries, to the extent it is able. Germany opposes block-building.

Thirdly, this research has argued that the current concentration of superpower competition away from Europe, in the ‘distant’ Indo-Pacific region, allows Germany to pursue a restrained foreign policy and concentrate on its own economic interests. Unlike France or the United Kingdom, Germany is not a resident power in the Indo-Pacific. Its military activity, although on the rise, is limited. Germany has few incentives to build up any significant deployment force in the Indo-Pacific. Nevertheless, it is interested in military cooperation with those regional powers that belong to the group of ‘democracies and partners with shared values’ (Federal Government of Germany, 2020: 9). Furthermore, Germany – like France, Italy and the United Kingdom – is a significant exporter of military equipment to the Indo-Pacific, and this enables it to combine strategic and economic interests. Following a restrained foreign policy in the Indo-Pacific region allows Germany to strike a balance between rival superpowers and regional powers, and to pursue both political and economic gains.