Few Illusions Left

Abstract

For decades, Germany accepted a trade-off of technology for market access when its multinational corporations invested in China. What has changed in recent years is that China’s model of political authoritarianism and state capitalism is reaching out to the world. Increasingly competitive in China, Chinese multinationals have busied themselves with entering overseas markets and buying foreign corporations. China’s aim is to climb the global competitiveness ladder through its “Made in China 2025” policy and lead production in higher-value goods and services in the automotive, aviation, machinery, robotics, and other industries. Standing in direct competition with German industry, this set off alarm bells in Berlin. China’s investment restrictions and controls at home, coupled with its targeted investment abroad, antagonized relations in Berlin and other European capitals. New policies to protect German and European corporations from foreign takeover, and efforts to reform the World Trade Organization, have grown as this lack of reciprocity has been exposed.