The recent elections in Germany brought not only the end of the Merkel era but also a redrawing of the electoral landscape in the country. Despite these changes, Germany is likely to remain a model of stability in Europe and beyond, members heard at our webinar on 18 October.
Dr Roland Vogt, Associate Professor of European Studies at the University of Hong Kong, said that although the two major parties – the Christian Democrats and Social Democratic Party (SDP) – continue to dominate, the new map is more nuanced and differentiated.
“The right-wing populist AfD now has a foothold in the east, and we are seeing a couple of green specks on the map. The Greens have very strong support in urban centres, which is also a new shift.”
He noted that this fragmentation and drop in support for the major parties is one of the ways in which German politics is moving closer to the European mainstream.
Talks about forming a coalition were still ongoing at the time of the webinar, but it seemed likely that Olaf Scholz from the centre-left SDP will take the reins in a new coalition. Despite this change, there will probably be a high degree of policy continuity, with Germany’s status as an anchor of fiscal stability remaining constant under Scholz, who served as Finance Minister in Merkel’s coalition.
It also means that Germany’s engagement with China will not change dramatically.
“Germany has been at the forefront of finding a way to have constructive engagement with China,” Vogt said. “There are a lot of German businesses in China, and there is a strong push to keep an even keel to this relationship.”
Having said that, recent years have also seen increasing scrutiny of Chinese investment in German businesses and a more proactive policy to develop trade relationships across the Asia Pacific.
One interesting thing about the election campaign is that it was largely focused on domestic issues, with very little discussion of Europe, never mind the rest of the world, Vogt said. However, Germany will continue to play an important role in the European Union and globally.
Eberhard Brodhage, Founder of Asia Europe Business Partners, is based in Germany and also spent many years working in Hong Kong as a banker, including helping German companies to access the growing opportunities in the Mainland.
He said that a SPD-led coalition with the Greens and liberal Free Democrats is likely, and he also remarked on the growing confidence of the two smaller parties, who started talks together before involving the SPD. He agreed with Vogt that despite these changes in the political make-up, “a revolution is unlikely” in Germany’s policy approach.
Brodhage noted that while economic recovery from the pandemic is patchy around the word, Germany, like much of Europe, is expected to see reasonably strong growth in the year ahead. He also expects that the country’s good relationship with China will continue.
“The ties that have been established globally over the last 50 years are strong, and they cannot be untangled,” he said.
Brodhage explained that during her 16 years in power, Merkel built strong ties with China and was referred to as an “old friend” by President Xi Jinping. As he explained, Germany’s policy towards China has been driven by the Finance Ministry, not the Foreign Office.
The consensus across the political spectrum in Germany is that the country will aim to reduce its dependence on China for goods in certain sectors, the risks of which were highlighted in the early days of the Covid-19 pandemic.
However, it will do this not by trading less with China, but by growing its ties with other parts of the world, Brodhage said. This means that Hong Kong will continue to play its key role in supporting the links between Germany companies in China and across Asia.