German Shepherd, Contradicting Behavior?

Earlier today, I was out walking my eight week-old German shepherd puppy. A neighbor with a shih tzu was nearby. Our dogs' eyes met; at first my German shepherd puppy was curious and so was the shih tzu. However, the shih tzu suddenly charged forward on its leash - rendering my canine in a fanatical state of consciousness - sending it yelping and running away from me, with its tail in its legs. I thought German Shepherds were supposed to be very brave - or is my dog too young (eight weeks old). Perhaps my dog's bloodlines are diluted? Please answer my inquires, this matter has adorned me with prodigious interest. I am bereft of a guard/watch dog - the behavior displayed today widely daunts my confidence in it.