Germany and China are chief among the countries whose economic policies have drawn United States President Donald Trump’s ire. While the US has the largest current-account deficit in the world, Germany and China are running the largest surpluses, and that irks Trump and his advisers to no end.
Trump’s top trade adviser, Peter Navarro, insists that China is suppressing the value of its currency, the renminbi. More surprisingly, Navarro has also accused Germany, an American ally, of “exploiting” the US and its European partners through an undervalued euro. Most economists agree that Navarro’s accusations are largely unfounded. Trump has contradicted Navarro on occasion, even as he remains openly suspicious of US trade partners’ policies generally.
Since Trump was elected last year, Germany and China have also been chief among the countries expected to supplant US global leadership. But Germany and China are profoundly different, and there is no consensus on whether either country can or will fill America’s shoes.
In a case of curious timing, both German Chancellor Angela Merkel and Chinese President Xi Jinping are approaching domestic political events that are widely expected to solidify their leadership positions in the coming years. In Germany, Merkel is favoured to win a fourth term as chancellor in the federal elections tomorrow. A victory will put her on track to match Helmut Kohl’s 16 years in office — a tenure exceeded only by Otto von Bismarck.
Campaign-season debates in Germany have centred on Merkel’s “open doors” policy in response to the refugee crisis in 2015. Merkel’s welcoming of refugees has exposed her to ferocious attacks — including from Trump himself — and energised the German far right, which, through the Alternative for Germany (AfD) party, will probably elect representatives to the Bundestag for the first time since the Second World War.
Fortunately for Merkel, her relentless defence of humanitarian values does not seem to have cost her much support among those who voted for her previously. She and her party, the Christian Democratic Union, experienced a backlash in polls and state elections after the summer of 2015, but that storm has blown over. In fact, Merkel’s refugee policy has actually reinforced her popularity among younger voters.
Towards the end of the 20th century, former US secretary of state Madeleine Albright defined the US as the “indispensable nation”. Now, almost 20 years later, The Economist magazine has deemed Merkel the “indispensable European”. But as Merkel herself has warned, it would be “grotesque and absurd” to expect that she could carry the standard of liberal internationalism.
Germany, owing to its history, is reticent about reclaiming a leading role on the world stage. But at the European level, Merkel can and should use a fourth term to establish an international legacy that measures up to her political stature. With the election behind her, and with a potential partner in French President Emmanuel Macron, she will have a prime opportunity to pursue measures to rebalance and strengthen the European Union.
Meanwhile, Xi’s legacy is also at stake. In mid-October, China’s political elite will convene for the 19th National Congress of the Chinese Communist Party (CCP), an event that will inevitably centre on Xi. As of last year, Xi has been officially declared the “core leader” of the CCP, a designation that his predecessor, Hu Jintao, never achieved.
At the Congress, CCP delegates will elect a new Central Committee, which will then fill the highest positions in the Party. Xi’s reelection as CCP General Secretary is seen as a fait accompli, and most analysts expect that he will continue to surround himself with faithful allies and oust potential rivals, as he has already done through a much-publicised anticorruption campaign.
In 2015, Wang Qishan, Xi’s right-hand man who has been leading the anticorruption campaign, raised the question of the CCP’s “legitimacy” in a statement that previously would have been taboo. With China’s economy slowing down in recent years, the CCP knows that it can no longer rely on growth alone to guarantee its political standing in the eyes of ordinary Chinese.
Xi’s anticorruption campaign is a central component of the CCP’s new legitimising narrative. So, too, is nationalism, which the CCP has been fostering through a highly visible and more assertive foreign policy. According to CCP tradition, Xi’s second five-year term should also be his last. But whether he will use his newly secured position to push for ambitious economic reforms remains to be seen. His role within China after 2022 is also not yet known.
On the foreign-policy front, Xi has signalled that he might be ready to fill the leadership vacuum created by Trump’s “America First” approach. But China cannot hope to replace the US unless it vastly increases its “soft power” and cultivates alliances and partnerships that it currently lacks. The CCP’s stoking of Chinese nationalism does not make either of those tasks any easier.
The ongoing North Korea crisis implies that the US-China relationship during the Trump-Xi era will be one of intense strategic competition. Will other actors, such as Merkel’s Germany or the EU as a whole, step in to ensure that great-power cooperation does not deteriorate beyond a point of no return? The answer to that question will likely determine whether the international order retains any order to speak of in the years ahead.
— Project Syndicate, 2017
Javier Solana was EU high representative for foreign and security policy, secretary-general of Nato, and foreign minister of Spain. He is currently president of the ESADE Center for Global Economy and Geopolitics, distinguished fellow at the Brookings Institution, and a member of the World Economic Forum’s Global Agenda Council on Europe.