China's Key Bilateral Relationships: Germany, Japan and Beyond
The Eurasia Group believes that the dynamics between China and Germany will be the most interesting bilateral relationship in global affairs for the medium term. This conjecture is applicable to German-Chinese relations, but also with significant second-order effects for political and economic dynamics within their respective regions and the world as a whole.
The Capstone team’s primary hypothesis was that in the medium (five-year) term, Germany will adopt certain policies in response to a rapidly rising China. In addition, there will be major changes in Chinese economic and regulatory policies in response to interactions with Germany. Moreover, the research indicates that there is asymmetry in this relationship. For instance, Germany’s motivations and incentives are primarily economic– given the nature and structure of its economy. On the other hand, there are potentially more strategic, and not necessarily purely economic, motivations driving the Chinese policymaking apparatus.
By way of comparison, the team incorporated an analysis of Japan, South Korea, and Russia, as China’s bilateral relationships with these countries are also significant. Like Germany, Japan and South Korea are also experiencing greater economic interdependence with China, yet for these two countries their security concerns also shape their respective bilateral relations with China. The team found Japan is attempting to mitigate its economic dependence upon China, whereas South Korea is only deepening economic ties. As for Russia, its relationship with China is one in which asymmetric dependence is increasingly prominent, potentially leading to strategic competition.
To test the hypotheses, the team researched the foreign policies, trade relations, legal and regulatory regimes, and investment flows of each country. Based upon available data and current trends, the team made predictions about the trajectory of these critical bilateral relationships and their impacts at both regional and global levels.