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Germany’s economy ministry recommends excluding components from authoritarian state providers in critical infrastructure and introducing stricter requirements for firms dealing with China, a strategic document seen by Reuters shows. Those German firms with particular exposure to China should share details of that business with the government and undergo regular stress tests, according to the ministry’s “Internal Guidelines for China,” which are classified as confidential.
Reuters previously reported some of the measures being considered by the economy ministry to curb Germany’s reliance on China as the new government improves its relationship with the rising Asian superpower. Company executives including chemical giant BASF, Deutsche Bank and industrial group Siemens rejected the government’s plans in talks with Economy Minister Robert Habeck in September, Reuters reported, citing sources. The companies declined to comment at the time. Any new plan would still have to be approved by Habek’s Green Party coalition partners.
Deep trade ties link Asia’s largest economy to Europe, with China’s rapid expansion and demand for German cars and machinery fueling German growth over the past two decades. China became Germany’s largest single trading partner in 2016. However, that relationship has come under scrutiny since Russia’s invasion of Ukraine in February, which disrupted a decade-long energy relationship with Moscow and led to numerous companies exiting their local businesses.
The document seen by Reuters, which totals 104 pages and is dated November 24, appears to detail the latest view and is likely to fit into a broader Chinese government strategy it intends to release next year. It could extend control of IT component suppliers from some countries to firms that make components for critical infrastructure such as transport, healthcare or water and food supply.
Berlin should consider screening outbound German investments in Chinese companies if they operate in security-relevant sectors or are suspected of violating human rights, the statement said. German development funding for China is set to end by next year, and the political support of senior officials for projects there has been called into question. China’s foreign ministry did not immediately respond to a Reuters request for comment outside business hours.
“VULNERABLE TO BLACKMAIL” Germany did not aim to break away from its biggest trading partner, China, the newspaper said, and was first reported by the online portal The Pioneer. But Russia’s invasion of Ukraine demonstrated the high risks of close economic relations with autocratic states seeking an alternative world order.
“China’s importance as an export market for many German industrial sectors, as well as critical dependencies in certain … areas, could make Germany vulnerable to blackmail and limit its political capacity to act,” the document said. German companies should receive more help to diversify their trade, for example through government export credits for other markets, the statement said. Also, the European Union should consider excluding companies from third countries from tenders for particularly important projects such as the semiconductor sector.
Volker Treier, head of trade at the German Chambers of Commerce and Industry (DIHK), said the ministry’s document would make it harder to do business with China without showing how to build new sustainable trade relations. The development of China is described in the paper as very problematic and still in the direction of systemic rivalry, moving away from partnership. This is “proved by China’s pro-Russian attitude towards the attack on Ukraine”.
The paper highlighted the fact that 2027 has been repeatedly mentioned as the year China could invade Taiwan. The Ministry of Economy is led by Habek from the Greens, who have long warned about the risks of excessive reliance on China. The document still needs to be approved by Chancellor Olaf Scholz’s Social Democrats and the liberal FDP, coalition partners in the German government.
SPD lawmaker Isabel Cademartori told Reuters that everyone in the German government agrees that Europe’s biggest economy needs to reduce its dependence on China. But we should not start a game of moral supremacy, who will call for the clearest words and the harshest measures,” she said and added that a change in Berlin’s policy towards China would have extremely large consequences for German medium-sized companies, i.e. the backbone of its economy. (Additional reporting by Christian Kremer and Ryan Wu; Writing by Sarah Marsh, Paul Carrel and Maria Sheehan; Editing by Raissa Kasolowski, Mark Potter, Sandra Mahler, Philippa Fletcher, William Maclean)
(This story was not edited by Devdiscourse staff and was automatically generated from a syndicated feed.)
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