German Industry Criticizes Berlin’s China Strategy, Wants More Support

The Association of German Chambers of Industry and Commerce (DIHK), one of Germany’s main industry lobby groups, urged the government for more support for industry to diversify trade beyond China. Berlin has been trying to prepare a new policy aimed at reducing economic dependency on China. The industry group said businesses have been facing an administrative burden as the government is considering several measures such as stress tests and increased scrutiny on China investments.

“Everything we have heard so far about the German government’s China strategy is extremely defensive,” DIHK’s foreign trade chief Treier said.

“There is a lack of an encouragement strategy for building out sustainable economic relations, particularly in the wider Asia-Pacific realm, to avoid one-sided dependencies.”

After Russia’s invasion of Ukraine and Moscow’s subsequent gas supply cuts to Europe exposed Germany’s energy dependency on Russia, Berlin has started to re-examine its economic ties with Beijing. German businesses have developed close relations with China in recent years, especially those in manufacturing.

Four German companies; automakers Volkswagen, BMW and Mercedez-Benz, along with chemicals major BASF, have accounted for one third of European investment in China between 2018 and 2021.

German foreign ministry’s document on China, which is still to be approved by other ministries, said key industries including automotive and chemicals must avoid risks to companies and the country of investing too heavily in China.

Mercedes-Benz said it was important for the company to work on greater diversification of supply chains.

“We need an active and resilient industrial policy and strategy in Europe with regards to raw materials, batteries or semiconductors.” the automotive giant added in a statement.

BMW said it was as heavily invested in Europe and the Americas as in China, and would “continue to pursue the goal of opening up new sales markets in the future”.

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