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German strategy paper targets China trade dependence

German strategy paper targets China trade dependence By Reuters

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Economy 7 minutes ago (Dec 01, 2022 21:40)

© Reuters. FILE PHOTO: German Economy Minister Robert Habeck addresses the media at a joint statement in Berlin, Germany, November 29, 2022. REUTERS/Christian Mang

By Andreas Rinke and Sarah Marsh

BERLIN (Reuters) -Germany’s economy ministry recommends excluding using components from providers from authoritarian states in critical infrastructure and imposing stricter requirements for firms doing business with China in a strategy paper seen by Reuters.

Those German firms particularly exposed to China should share details on that business with the government and undergo regular stress tests, according to the ministry’s “Internal Guidelines on China” marked confidential.

Reuters had previously reported on some of the measures the economy ministry was considering to curb German reliance on China as the new government refines its relationship with Asia’s rising superpower.

China became Germany’s top trade partner in 2016.

The paper which totals 104 pages and is dated Nov. 24 appears to detail the latest standpoint and would likely feed into the government’s broader China strategy which it intends to publish next year.

Berlin should consider checking outbound German investments in Chinese companies if these operated in security-relevant sectors or were suspected of human rights violations, it reads. German development financing for China should be phased out by next year and political support by high-ranking officials for projects there questioned.

Germany did not aim to decouple from its top trade partner, China, read the paper, first reported on by the online portal The Pioneer. But Russia’s invasion of Ukraine had shown the high risks of close economic relations with autocratic states seeking alternative world orders.

“The importance of China as an export market for many German industrial sectors as well as critical dependencies in certain … areas could make Germany vulnerable to blackmail and restrict its political capacity to act,” the paper read.

German companies should receive more aid to diversify their trade for example via state export credits for other markets, the paper read.

The European Union should consider excluding companies from third countries for tenders for especially important projects like in the semi conductor sector.

China’s development is described in the paper as very problematic and further in the direction of systemic rivalry, away from partner. This was “evidenced not least by the pro-Russian attitude of China towards the attack on Ukraine”.

The paper underscored the fact the year 2027 was repeatedly mentioned as the year China could invade Taiwan.

The economy ministry is led by Robert Habeck of the Greens who have long warned of the risks of being overreliant on China. The paper still has to be approved by other parties in the coalition, including Chancellor Olaf Scholz’s Social Democrats.

German strategy paper targets China trade dependence

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