Berlin, Dusseldorf The German economy welcomes the traffic light’s plan for dealing with Beijing. “The federal government’s new China strategy comes at the right time,” DIHK foreign trade chief Volker Treier told the Handelsblatt. “The many German companies active abroad need planning security and guidelines for their future engagement in China.”
The first draft of the China strategy, which will be published in spring or summer 2023, was announced on Thursday. The 59-page paper takes a sober look at German-Chinese relations.
For several years, it says, the exchange with China has not developed further, but rather backwards. Beijing’s isolation has led to a “growing asymmetry” in relations. The European triad of partner, system competitor and systemic rival set the right framework, according to the paper, “however, the latter two aspects are becoming increasingly important”.
The Federal Foreign Office has been working intensively on the draft in recent weeks. So far, Germany has not had an independent strategy exclusively for China. Their development was agreed in the coalition agreement.
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In the past few months, the individual departments had delivered, and the Federal Foreign Office brought them together into one plan. The draft is an interim status and is still being revised with other departments, but the first signals are clearly recognizable.
>> Read also: This is what the first draft of the new German China strategy looks like
The most important aspects are the diversification of the economy and the reduction of dependence on the Chinese market – the strategy contains several possible measures, such as limiting investment guarantees, i.e. state financial security for investments in countries considered to be high-risk.
For many companies, it is not an option to do without China entirely, Treier, head of the DIHK foreign trade, made it clear. Rather, the German economy is about positioning itself more broadly. “It is therefore important that the new China strategy emphasizes the goal of continued close economic ties between Germany and China and the continuation of trade relations,” said Treier.
Petra Sigmund, head of the Asia department at the Federal Foreign Office, also made it clear to the Handelsblatt that the China strategy is not about completely turning away from trade with China. “The message of the China strategy is: preserve China as a trading partner and sales market and diversify at the same time, in short: China plus X,” said Sigmund. At the working level, Sigmund is in charge of strategy.
Foreign Minister Annalena Baerbock and her Chinese counterpart Wang Yi: China refuses a German assessment of the country.
(Photo: IMAGO/photothek)
The Association of German Mechanical and Plant Engineering (VDMA) also rated the draft positively. “The VDMA expressly welcomes the creation of a China strategy by Germany and the EU,” said Ulrich Ackermann, Head of Foreign Trade at the VDMA. “We have to do our homework and take into account the changed conditions in relation to China.”
>> Also read: “Like in the Cold War” – China sharply criticizes plans for a new German China strategy
In the context of the planned China strategy, it is essential for the association to have a clear target as to what exactly Germany wants to achieve and what is planned if China still does not have an “sympathetic ear” to the concerns.
The DIHK foreign trade boss Treier warned against too many new rules for the companies. The planned obligation to notify and possible stress tests for companies considered to be particularly exposed to China should not become an additional bureaucratic burden for companies, said Treier.
>> Read also: How Europe wants to reduce dependence on China
He is referring to the proposal in the draft that the extent to which companies have become dependent on China should become more transparent. Companies that are particularly exposed to China should “be obliged to specify and summarize relevant China-related developments and figures, for example in the form of a separate notification obligation”.
“On this basis, we will examine whether affected companies should carry out regular stress tests in order to be able to identify China-specific risks at an early stage and take remedial measures,” the paper says. The creation of a legal basis is also to be examined “in order to be able to subject foreign investments by German and European companies in security-critical areas to an examination”.
China stress test for the economy: where China can be in or on
Johannes Vogel, First Parliamentary Secretary of the FDP parliamentary group, spoke out in favor of an overall economic stress test. “There is nothing to be said against economic cooperation in areas that are not security-related,” said Vogel. But Germany must define where China can be in or on it – and where not.
>> Read also: Siemens-CEO Busch in an interview – “Diversification is not possible without China”
That is why a comprehensive China stress test is needed. “We have to check carefully where there is already too much dependency on China – both on supplies and on the Chinese sales market,” said Vogel. It must also be defined what security-relevant infrastructure is, in which Germany does not want the Chinese Communist Party and the companies it controls to have any influence.
Only a strong Europe and a strong, innovative and less bureaucratic Germany will be able to face China successfully on an equal footing. Eduard R. Dörrenberg, managing partner of Dr. Wolf Group
Eduard R. Dörrenberg, managing partner of the family company Dr. Wolff Group, warned against the Handelsblatt with a view to the China strategy and changes within Germany. A China strategy is important, but so is the market there, says Dörrenberg. “Only a strong Europe and a strong, innovative and less bureaucratic Germany will be able to successfully meet China on an equal footing.”
The Chinese Foreign Ministry reacted angrily to the draft on Thursday. When asked by the German Press Agency in Beijing, a statement said that the classification of China as a “competitor” and “systemic rival” was a “legacy of thinking from the Cold War”. The Chinese government also rejects the “denigration of China by the German side” with so-called human rights issues as well as “lies and rumours”, it said.
The chairman of the Expert Commission for Research and Innovation (EFI), Uwe Cantner, on the other hand, praised the strategy as a concept of how “dependencies can be further reduced and, above all, avoided in advance”. It is “not the intention to simply break off relations with China, but to bring them to eye level”.
Afterwards, “trade is still possible, but no longer purely on China’s terms, but on the basis of our own strength as a research and innovation location and within our own scope for action – such as the possibility of import bans without German companies suffering as a result”.
The European context in which the China strategy is to be implemented and further developed is important. Another important component of the strategy, said Cantner, is to diversify far more broadly and intelligently. “You can organize this in a very technology-specific way” and the strategy paper seems to contain appropriate measures here.
The strategy will now be discussed in the ministries in the coming months. During the voting process, things are usually specified, supplemented or completely deleted.
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