Germany is trying to reduce its economic dependency on China, without decoupling completely. A new policy will be unveiled at the end of the year
Save time by listening to our audio articles as you multitaskThe most important aspect of the new China policy, whose publication has recently been postponed, will be a robust effort to reduce China’s economic leverage. Last year China was Germany’s top trading partner for the sixth consecutive year, with combined exports and imports of more than €245bn . Exports to China represent around 8% of Germany’s total.
“Germany is unique in the dependence of its biggest companies on the Chinese market,” says Noah Barkin, a China expert at Rhodium Group, a research firm. Volkswagen,and Daimler, three big carmakers, and Infineon, a maker of semiconductors, depend on the Chinese market for the lion’s share of their business. Bosch, a car supplier, employs 60,000 people in China.
European business has hit the pause button on new investments in China, says Jörg Wuttke, the German head of the European Union’s chamber of commerce in China. This is related to travel restrictions and China’s policies to contain the covid-19 pandemic rather than the war in Ukraine. German business fell out of love with China a while ago. The government has allowed German firms only very selective access. And the mounting evidence of human-rights abuses has become impossible to ignore.
The new government agrees. Its focus is on reducing dependence on China in areas that might limit its options in a serious geopolitical crisis, not decoupling from China altogether. Like many other countries, Germany depends on China for a big chunk of its imports of critical goods such as rare-earth minerals, solar panels and computer chips. But while lessening these vulnerabilities, Germany must continue to work with the Chinese to help them reduce their carbon emissions, say policymakers.
Germany’s foreign ministry now says it will unveil the government’s new China strategy at the end of the year, six months late. It will not shy away from mentioning the abuse of Uyghurs. But many critics fear that pragmatism will, once again, be the order of the day.Europe