Olaf Scholz on a state visit to China

Good morning dear readers,

what would happen if, starting tomorrow, only journalists sat in German authorities? Three forecasts, fed from 25 years of professional experience:

• In official documents, numbers only appear in the form “around 100”, “clearly four digits” or “in the million range” (the exact number could not be found quickly, see next point).
• In principle, work on ordinance texts would begin on the day of the deadline and all ordinances would not be ready until twenty minutes after the deadline (30 minutes if the boss does not call and push).
• Administrative decisions would be made primarily on the basis of which vote is the more surprising.

In this respect it is good that the higher German civil service consists mainly of lawyers, for whom the legal certainty of their work is more important than the entertainment value. But the state gives us another problem: for years it has been promising to relieve its citizens of too much bureaucracy. Instead, there are always new regulations and requirements. The most recent nightmares are property tax returns and the Supply Chain Due Diligence Act. A reduction in superfluous regulations would be an economic stimulus package for free – bureaucracy costs a typical medium-sized company 2.5 percent of its annual turnover.

In our Friday title, the capital city reporters Heike Anger and Teresa Stiens get to the bottom of the German bureaucracy madness. They vividly explain why new rules are created so easily and why they are so difficult to break.

The authors also list in a bureaucratic alphabet 26 particularly complicated to absurd regulations and name ways of simplifying them. Starting with the A1 certificate, which you are sure to take with you on every business trip to other EU countries – or not?

One of the myths that has been circulated time and time again is that the public sector cannot function more efficiently because it is being “saved to death”. At least as far as staffing is concerned, there can be no question of that, as our graphic shows. The number of jobs in the public sector has increased significantly since 2010. It is probably more as the long-standing head of the Regulatory Control Council, Johannes Ludewig, put it in the Handelsblatt: “Everyone is calling for additional permanent positions, but nobody is checking what can actually be done with the available resources.”

In Europe, there is growing concern that the US could siphon off investments with lavish state aid and further weaken the European economy. “The USA is actually opening a subsidy race and is possibly discriminating against European providers,” said EU Internal Market Commissioner Thierry Breton in an interview with the Handelsblatt. “It is unfortunate that our so-called like-minded partners resort to such means.”

Federal Minister of Economics Robert Habeck even warns of a new trade war. As of today, a transatlantic task force is to look for ways to resolve the conflict.

Background of the dispute: The US government directs 400 billion euros of tax money into climate-neutral industry, 260 billion dollars into the expansion of solar, wind and hydropower alone. There is growing fear in the European Union that this Inflation Reduction Act, signed by Biden in mid-August, will incentivize European companies to relocate production to the USA.

The USA is becoming more and more attractive, especially for German companies, thanks to its cheap energy. “What the Americans are doing at the moment with the ‘Inflation Reduction Act’ is insane support, I would say it is too much, it is subsidised,” said Habeck yesterday at an event in Berlin.

You can also see things differently: The US is finally doing something to do at least a little bit of decarbonization. In the fight against climate change, this is far more efficient than if Germany continues to pursue the increasingly unrealistic goal of becoming climate-neutral by 2045, analyzes Handelsblatt chief economist Bert Rürup. Because: “The world climate only benefits from a global climate policy in which CO2 is consistently saved where it can be avoided most cheaply.”

Translated into practice, according to Rürup, this means: Ultimately, the USA, China, India and the European community of states in particular must give the world an answer as to how quickly coal-fired power generation, which is particularly harmful to the climate, can be phased out – without energy becoming significantly more expensive overall.

Olaf Scholz has arrived in Beijing for his one-day state visit. There, the chancellor and his delegation are only allowed to move within a “bubble” that is strictly sealed off from the outside world. Anyone who comes into direct contact with the group of visitors from outside must then be quarantined for seven days, locked in a hotel room.

Therefore, only a few of the local Germans are willing to step into this “visitor bubble”. One of them is Jens Hildebrandt, head of the German Chamber of Commerce in China. He already went into isolation at the Diaoyutai state guest house before the Scholz visit. Hildebrandt wants to personally inform the delegation about the situation in China and the mood of the companies there – also because there are so many sensitive issues.

Especially after party leader Xi Jinping’s demonstration of power at the party congress in mid-October, Hildebrandt told the Handelsblatt that “ideology and security considerations will overshadow the pragmatism of the past”. Hopes of a departure from the strict zero-Covid policy were disappointed. According to Hildebrandt, this is “like lead” on the growth potential of China’s economy.

The Handelsblatt is in Beijing and today keeps you up to date on everything relevant that there is to report about the Scholz visit – inside and outside the bubble.

This briefing started out self-referential, and that’s how it should end. Katy Perry, pop idol of the Instagram generation, made a statement on Twitter that should warm the heart of every journalist: One of her favorite sounds is that of “a fresh daily newspaper read during an hour-long breakfast”, “turning the page, scribbling in a crossword…”. The 38-year-old ends her declaration of love for printed journalism with a wish: “I hope it never goes out of style in our digital world. It’s so romantic.”

I wish you an end to the week that doesn’t just crackle when you turn the pages.

Best regards

Her

Christian Rickens

Editor-in-Chief Handelsblatt