Keywords

Current debates on international relations are marked by increasing tensions. In this sense, the discourse is comparable to the developments of the 1950s, although the conditions today are completely different and we no longer live in a dualistic system characterized by two power blocs, but in a de facto multipolar world. Business expertise is contrasted with political values, rather than the latter taking advantage of the former. The result is a new difference between the political ambitions of the so-called Western world and the objective interests of access to markets, sources of raw materials, supply chains and trading partners. At the same time, we are also experiencing a speechlessness in foreign policy in certain areas, which in turn can be bridged through economic cooperation. Where political dialogue is silent or exhausted by abstract objectives such as securing the natural foundations of human life, the economy builds new bridges of mutual understanding.

This contribution aims to show the importance of economic diplomacy using the example of Sino-German business and trade cooperation. The guiding question here is how economic diplomacy can bring about more understanding at the international level and what benefit it provides in the current constellation of international relations. First of all, this term will be defined and narrowed down with regard to the research interest. The article then focuses on the lessons to be learned from bilateral economic cooperation between China and Germany, which also takes place in a European context. Finally, the authors argue for an expansion of economic diplomacy as a way to overcome conflict constellations in foreign policy.

Economic diplomacy is understood as the contribution of corporate stakeholders or national economies as a whole towards a solution for political and diplomatic challenges, which cannot be resolved at the political level only. In this sense, it constitutes a second and third tier approach that complements, not substitutes, traditional diplomacy. Other terms such as business diplomacy, commercial diplomacy, or trade diplomacy focus on certain aspects, but are all covered by the general term of economic diplomacy which is further used here. Arnaldo Abruzzini, the former CEO of the Confederation of European Chambers of Commerce and Industry (Eurochambres), defined economic diplomacy as “how much business can contribute to the settlement of political and diplomatic situations that the only political level cannot necessarily efficiently solve.”Footnote 1 This pragmatic understanding is of course not the only one, there are also more institutionalized approaches such as the description from the German Federal Foreign Office that states, “Germany's system of economic diplomacy is supported jointly by the state and business and is institutionally bundled into three pillars abroad […] The missions abroad are available to companies worldwide as partners and helpers. All three institutions [German missions abroad, chambers of commerce and the national marketing agency GTAI] are present in the world's most important markets for Germany.“Footnote 2

Economic diplomacy in the sense understood here refers to the abilities of entrepreneurial actors to build new bridges complementary to state foreign policy, which ultimately not only serve economic objectives, but can also open up new channels of dialogue.

The geopolitical changes of 2022 are often interpreted as meaning that the concept of “change through trade” has failed and that the tasks of the economy must be reoriented on the international stage. However, this debate addresses the wrong issues within the overall problem, as it ignores the existing realities. Europe and Germany in particular, are highly dependent on exports; the level of prosperity and standard of living achieved to date, not least a driver of the international reputation of this part of the world, is substantially dependent on functioning and resilient foreign economic relations. The task of business is increasingly seen as universalizing particular (Western) values under the guise of humanitarian responsibility. This approach not only follows colonial patterns of thought, it also ignores the real diversity of cultures, civilisations and traditions of thought and action in the world. The multipolar reality in the third decade of the twenty-first century is often subject to attempts to describe it in debates characterized by an inadequate understanding of multilateralism. However, this approach, combined with the role of the economy as a driver of transfer of one's own values, ignores the existing realities. Therefore, the current debate on this is far too short-sighted and needs to be put on a new geostrategic and temporal footing.

First of all, the discourse on China’s image in Germany—as well as that of the image of Germany in China—must be understood in order to be able to locate the effects of bilateral economic relations more precisely. In this context, it is important to refrain from a black-and-white viewpoint in order to adequately grasp the complex dynamics and multi-layered nature of these relations. The concept of “change through trade” is necessary to complement the idea of a “dialogue of civilisations”Footnote 3—as a counternarrative to Huntington's Clash of Cultures—which follows the maxim of learning from and benefiting each other, ultimately transforming both sides. At the same time, this presupposes that a suitable concept of change is used as a basis; one that can do without missionary pretensions and recognizes the multipolar reality. Entrepreneurs do not have a missionary mandate and are much better able to transfer “values” into practice through their own examples of success. These values change in the international context through local experiences and lead to feedback, which in turn gives impetus and also triggers changes at their country of origin.

At the European level, the spheres of the economic and the political have largely moved away from each other. This decoupling process has led to political decision-makers losing practical and constructive access to experiences from other cultural areas in many cases. Morality and the simplistic categorisation into “good” and “evil” remain as an escape from a complex and multi-layered reality.Footnote 4 Meanwhile, the image of one's own experiences with other cultures is substantially hampered by this artificial dichotomy.

The example of Sino-German economic relations shows that business provides real insight into China’s competence, while politics has lost access to many real-world experiences. However, this problem is increasingly working in both directions. Economic relations, understood through continued and long-term interactions, can make a substantial contribution to filling this void. Overcoming speechlessness requires dialogue with a willingness to engage with the other person's perspective, to see the world through their eyes and to understand this perspective intersubjectively. Understanding does not at all mean having a normative or emotional understanding of something. This principle, which forms one of the basic ideas of the European Enlightenment, is the basis for the analysis and classification undertaken here. Since there are always personalities standing behind economic actors, the following by three portraits of selected business leaders serve to elucidate the impact of Sino-German economic relations.

Karl-Heinz Gass

The life of the German entrepreneur Karl-Heinz Gass is an impressive example of the concrete effects and impact mechanisms of economic diplomacy in Sino-German relations. Famous in China, but rather unknown in his own country of origin, Karl-Heinz Gass, born in 1940, a trained master butcher from the south-western German Federal State of Rhineland-Palatinate. The son of a railwayman, Gass was not a trained business or policy advisor, but a master butcher by profession with no previous diplomatic experience. He ended up working as a networker between Germany and China for years—an early pioneer for German companies in China as well as for the activities of Chinese companies overseas. It all began in the 1980s with an individual friendship. Gass met the Chief of General Staff of the Chinese People's Liberation Army by chance and since then visited China many times. Gass introduced numerous companies and politicians from Germany and China to each other, arranged various company contracts and even trained Chinese workers in his own company, some of whom later took up high-level administrative posts. He was also one of the few foreigners to make it into the Chinese Military Museum. The initial meeting by chance with the Chinese Chief of General Staff in 1981 during a holiday in Switzerland developed into a basis for intensive exchange. As he was at first unable to travel directly to Beijing because of his commitments, he wrote to the Chinese Embassy. Here he made suggestions on how to better process products in China and at the same time contacted companies in Germany. Afterwards, a China working group was founded in Heidelberg, and in 1985 he went to various trade fairs in China with German companies for the first time and also met the Chief of Staff again. Gass spoke about this in an interview, saying “For our politicians this was of course incomprehensible. I wasn’t a member of any party, I was free and could speak my mind. I think I surprised the Chinese with my openness and my lack of understanding of diplomacy.”Footnote 5 His background beyond politics and diplomacy hence enabled him to act unfettered by official instructions and with entrepreneurial efficiency.

As a result of these relationships, which grew on the basis of mutual trust, Gass attended two to three trade fairs with German business delegations in various Chinese cities every year. From 1986 onwards, he worked as a consultant for the steel group Friedrich Krupp AG. In 1988 he founded a German-Chinese friendship society, and in 1994 he became self-employed as a consultant for German companies on their China businesses. Gass met with Chancellor Helmut Kohl in Beijing several times, but was never part of the German Chancellor's official delegation. In 1986, he presented a ten-point programme to the Chief of General Staff, and in 1988 he was awarded the Chinese army's highest honour—the Red Star. The programme was pushed through various ministries and with it Gass had successfully made his way into the highest government circles. By his own account, as mentioned in the 2019 interview quoted above, Gass visited the People’s Republic 291 times and the 30-year continuity of these trips was only broken by the global Covid-19 pandemic.Footnote 6

Hans-Jochem Steim

Another example is the life and business activities of the Swabian entrepreneur Hans-Jochem Steim. Steim, who later also went into politics and was a member of the State Parliament of Baden-Württemberg for the Christian Democratic Union (CDU) from 1996 to 2006, laid the foundation for the boom in German companies settling in Taicang through his entrepreneurial activities. A shareholder in the Kern-Liebers Group of Companies, a family-owned business in the area of metal processing, Steim was born in 1942 in the town of Schramberg, located in the German Federal State of Baden-Württemberg. After obtaining a PhD in engineering in 1970, he took an active part in the development of the family business. The company had been founded by his great-grandfather in 1888 as a production facility for tension springs for the clock industry in the Black Forest region and was further developed in the twentieth century by his father into a leading company with a diverse product range. He came into contact with China out of an entrepreneurial motivation to find a suitable site for a branch of his family business. Building on Kern-Liebers’ development in the city of Taicang, Steim was able to motivate other entrepreneurs from his personal environment in southwest Germany to enter the Chinese market. These recommendations developed a momentum of their own, which created the conditions for over 450 German companies to be located in Taicang today, most of which are also medium-sized businesses,Footnote 7 which China, the company now generates more than 100 million euros in turnover—making the market one of the most important in the world for the company. The example of Kern-Liebers and the development of Taicang into a preferred location for German companies through the initial commitment of Hans-Jochem Steim also shows that the momentum of entrepreneurial action can lead to unintended effects that not only help a city or region to prosper, but also form an important building block in the framework of bilateral economic relations. In this case, the organic growth of relations between Chinese and German business people was the driving force for the emergence of a movement that did not need political steering.

Jörg Wuttke

The third case briefly presented here is of a personality that exemplify how economic diplomacy can be extended to the present day and thus illustrates a continuity of economic bridge-building between China and Germany beyond the mainstream political climate. Jörg Wuttke, born in 1958, has been Managing Director and General Representative of BASF China since 1997. His first professional encounter with China dates back to 1988, when he was a finance and administration manager at ABB Beijing. In 1993, he became the company’s Chief Representative in China, and in 1994, he became ABB’s President in Beijing. In 1997, he joined the leading German chemical corporation BASF as General Manager and Chief Representative in China. In 1999, he was a founding member of the German Chamber of Commerce in China and from 2001–2004 he served as its Chairman of the Board. Since April 2007, he has been President of the European Union’s Chamber of Commerce in China, which represents more than 1,200 companies from the EU member countries in the People’s Republic. In May 2019, Wuttke was re-elected as the Chamber’s President for the third time. Since 2019, he has also been Vice-Chairman of the International Cooperation Committee, a group representing multinational companies in the China Chemical Industry Federation (CPCIF).

Wuttke has been serving the interests of German industry in China for more than 30 years since his first visit to China in 1982. He is valued as a mediator in politics and business by decision-makers from both sides in both countries. The development of business activities of European, and especially German companies, in China during the last few years have shown continuous growth. Jörg Wuttke has played a personal role in this development and it is often due to his commitment that the interests of German companies are heard by Chinese politicians.Footnote 8

These three portraits are not exhaustive in any way, but rather fulfil three heuristic functions. Firstly, they can be used as examples to illustrate the continuity of German-Chinese economic relations in different historical phases of political relations and economic development. Secondly, it is clear that such different personalities as a master craftsman, a traditional medium-sized businessman and a corporate lobbyist, have all been able to have a successful and lasting effect in their respective environments as mediators for economic exchange in the Sino-German context. Finally, it should be noted that these three personalities have succeeded in achieving a broad impact beyond their immediate environment, which has been reflected in the development of economic relations. Whole libraries could be filled with the numerous other personalities who have made significant contributions to the development of Sino-German economic relations, but at this point we are concerned with the basic statement about the effectiveness of economic diplomacy in general and its effectiveness in Sino-German relations in particular.

The decoupling of politics and the economy is a fundamental problem that not only affects European countries. It is important to take countermeasures and to jointly build and stabilize new bridges of understanding through economic diplomacy. To this end, the public image of entrepreneurship must again have positive connotations. A compulsion to “value-driven business” is not expedient, but prevents constructive impulses from entrepreneurship itself and thus real improvements in the concerned context. The paradigm of confrontation must be overcome on a global scale. Dichotomies and dualisms cannot provide adequate solutions because they do not sufficiently grasp the world in its complexity. More differentiation and knowledge through dialogue and one's own view is urgently needed. Hence, economic diplomacy in the sense described here is crucial in fostering a future of international understanding in a globalized world, which must therefore be strengthened by all sides and at all levels. The example of Sino-German economic cooperation can provide valuable inspiration for such processes, which of course always take place under specific conditions. That is why there cannot be a general answer on how economic diplomacy in the future works, but the principle outlined here may provide a serious guideline for enhanced peaceful understanding through joint business activities.

China remains an indispensable partner in tackling the global challenges facing humanity in the twenty-first century—combating climate change, pandemics and wars, and not least hunger and poverty in the world. The experiences of German-Chinese economic relations exemplify how mechanisms of cooperation can function effectively despite political divergences. And they show that the concept of “change through trade” also has a future in this century.