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Germany seeks less China reliance after Russia ‘mistake’

  • November 22, 2022

German Chancellor Olaf Scholz on Tuesday assured that trade diversification was underway and referred to Berlin’s decades-long dependence on Russian energy supplies as a “mistake” that would not be repeated.

His remarks at an economic forum hosted by the Süddeutsche Zeitung newspaper comes amid concerns reported by German industries over Berlin’s approach toward Germany’s biggest trading partner, China.

“With Russia we have seen what it means to become dependent on a strategic resource such as gas,” Scholz said.

“The mistake of dependence as with Russia will not happen again,” he said.

Germany has reduced its reliance on Russian energy supplies since the start of Moscow’s invasion of Ukraine.

Is Germany at risk of an industrial slowdown?

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Cutting reliance on China

Separately, German Economy Minister Robert Habeck said on Tuesday that Berlin would limit investment guarantees for companies doing business with China as “a strong incentive for diversification” while Germany reevaluates its economic relationship.

Habeck said during a trip to Paris that a quota would be implemented “so that not all German guarantees are aimed at one country, that is to say, China.” 

“There will be an upper limit for investments in a particular country,” with a figure of €3 billion ($3.1 billion) being discussed, Habeck said.

Habeck told DW earlier this month that Germany needed to diversify its business interests in Asia to reduce dependency on China, noting that Russia’s war on Ukraine proved the need for such a move.

A leaked German government draft on China strategy has called for more political support support in diversifying trade and securing key raw materials.

According to reports of the leaked draft, the Foreign Ministry calls for stronger ties to other economies and more controls on German trade with China, including so-called stress tests on material dependency.

Reuters news agency quoted a business representative as saying that the tone of the document risked hurting German industries’ relationship with Beijing.

German Foreign Minister Annalena Baerbock told the economic event Tuesday that Germany cannot “decouple from China, nor can we completely do without the Chinese market.” 

On Tuesday, China’s Foreign Ministry warned Germany in a statement that erecting protectionist barriers could destabilize supply chains, adding that “politicizing normal economic trade… is contrary to the principles of market economy.”

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fb/jcg (Reuters, dpa, EFE)

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