The group uses state guarantees for its investments in the country.
(Photo: Bloomberg)
The officials in the Federal Ministry of Economics want to drastically tighten the government’s China course: According to their ideas, the state guarantees for investments by German companies in the country should be curbed. It would be a far-reaching but equally necessary step.
The example of Russia has shown what happens when the German economy puts all its eggs in one nest, so to speak. If the nest is plundered, all the eggs are gone at once. This is what happened with the dependency on Russian natural gas: If Nord Stream 1 is disconnected, Germany will plunge into the supply crisis. Now the previous course has to be corrected harshly.
>> Read about this: New China policy in the Ministry of Economy – the plan with the investment guarantees
In terms of the economic dimension, however, Russia is only a sideshow. In the event of a decoupling from China, which seems increasingly conceivable due to the recent intensification of the Taiwan conflict, the economic damage would be far greater.
Top jobs of the day
Find the best jobs now and
be notified by email.
German companies mostly emphasize that they are focusing on diversifying their businesses – and the boardrooms are also well aware of the risk associated with China.
But companies are measured by operating results and the development of share prices and dividends. This inevitably means that they cannot ignore additional opportunities in the attractive Chinese market.
The guarantees block diversification
In fact, corporations like Volkswagen and BASF continue to invest diligently in the country. BASF boss Martin Brudermüller would hardly be able to explain to investors why the group is not further strengthening its position in the world’s largest and most promising chemical market.
Admittedly, shareholder representatives are beginning to take a critical look at a strong emphasis on China. But that’s not enough. The state must intervene. At the very least, this means that he does not financially secure the risky investments on a large scale.
Because in the end, such guarantees still promote the behavior of companies – with the result that investments continue to flow primarily to China. The German state has already secured eleven billion euros in China – more than a third of the total guarantees. There is no alternative to correcting this course.
More: Federal government initiates change of course in China policy