{"id":1687533,"date":"2022-10-13T06:56:40","date_gmt":"2022-10-13T10:56:40","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1687533"},"modified":"2022-10-13T06:56:43","modified_gmt":"2022-10-13T10:56:43","slug":"german-business-chiefs-clash-with-berlin-over-china-policies","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/german-business-chiefs-clash-with-berlin-over-china-policies\/","title":{"rendered":"German business chiefs clash with Berlin over China policies"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fgerman-business-chiefs-clash-with-berlin-over-china-policies%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1687533&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Andreas Rinke, Victoria Waldersee and Sarah Marsh<\/p>\n<p>BERLIN (Reuters) \u2013     When German business chiefs got wind last month of an economy ministry proposal to screen all company investment going into China as part of a raft of new measures, there was uproar.     <\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\">\n<\/div>\n<p>The investment proposal was soon shelved, a source in the ministry and a business leader told Reuters.    <\/p>\n<p>Annoyed they hadn\u2019t been sufficiently consulted on proposals to make business with China less attractive that could have big repercussions for German firms, senior business leaders later pushed back in a meeting with Economy Minister Robert Habeck.    <\/p>\n<p>While no conclusions were drawn during the video call on Sept. 21, the meeting, recounted by two of the participants, shines a light on the angst within German boardrooms about the government\u2019s push to recalibrate its relationship with China.    <\/p>\n<p>Executives who attended the meeting included the chief executives of chemicals giant BASF, Deutsche Bank and industrial group Siemens, the two sources said. The companies declined to comment.    <\/p>\n<p>The economy ministry declined to comment when asked about the meeting. The Green Party, which runs the ministry, has long advocated taking a harder line on China and Habeck said last month that Germany would adopt a tougher approach on trade.<\/p>\n<p>The investment screening proposal floated by the ministry was driven by a desire to limit transfers of certain technology and to avoid increasing dependencies in some sectors, one of the people at the meeting and a government source said.<\/p>\n<p>\u201cWe can only warn against Germany turning away from China,\u201d said Markus Jerger, head of the Mittelstand Association, part of an alliance representing over 900,000 of the small and medium-sized firms that form the backbone of Europe\u2019s biggest economy.<\/p>\n<p>\u201cTo put a break on the German economy\u2019s China activities, as the economy ministry would like, or is trying to do, is the wrong way,\u201d said Jerger, who also attended the meeting with Habeck.<\/p>\n<p>Politicians and executives in Germany have broadly come to agree that the country needs to lessen its economic dependence on China, given their concerns about industrial espionage, unfair competition or human rights violations \u2013 concerns that Beijing has strongly rejected as being unfounded.<\/p>\n<p>Russia\u2019s invasion of Ukraine has also been a blow to the long-held German maxim that economic interdependency would help open up authoritarian states and sharpened Berlin\u2019s focus on how it should weigh profit against risk in its relations with them.<\/p>\n<p>But when it comes to China, businesses say the sticking point is how Germany can reduce its dependence without inflicting more harm on an economy already facing a recession next year \u2013 and without provoking a backlash from Beijing.<\/p>\n<p>\u2018LOCAL FOR LOCAL\u2019<\/p>\n<p>Cracks are also emerging within the three-way coalition government that took office in December and is due to publish Germany\u2019s first China strategy document next year. <\/p>\n<p>The junior parties, the Greens and Free Democrats, are more hawkish than Chancellor Olaf Scholz\u2019s Social Democrats (SPD), who want to avoid triggering a U.S.-style Cold war with China. <\/p>\n<p>\u201cDecoupling is the wrong answer. We don\u2019t have to decouple from some countries,\u201d Scholz, who plans to visit China later this year, said on Tuesday. \u201cI say emphatically we must continue to do business with China.\u201d<\/p>\n<p>German investment and trade in China hit record levels in the first half of 2022 and big business says there\u2019s no question of pulling back from the world\u2019s second-biggest economy.<\/p>\n<p>Instead, corporate giants such as BASF and carmakers BMW, Mercedes-Benz and Volkswagen are ploughing more money into China to create independent local supply chains, in part to ring-fence their operations from geopolitical disputes and trade wars.<\/p>\n<p>\u201cWith the \u2018local for local\u2019 strategy, we stabilise our regional portfolio against external influences in the best possible way,\u201d a BASF spokesperson said.<\/p>\n<p>Mercedes-Benz, Volkswagen, BMW and BASF were together responsible for a third of all European investment in China in 2018-2021, according to a study by Rhodium Group, a research company based in New York. <\/p>\n<p>\u201cIt is impossible to completely disentangle China and Europe,\u201d said Tobias Just, spokesperson for Mercedes-Benz, which sells three times as many cars in China than the United States and counts two Chinese entities as its biggest shareholders. <\/p>\n<p>\u201cOur strategy is local for local, not just for geopolitical reasons, but for natural hedging, proximity to core markets and cost benefits as well,\u201d Just said.<\/p>\n<p>BMW and Volkswagen also told Reuters they were standing by plans to invest more in their long-standing Chinese operations.<\/p>\n<p>The Rhodium study said, however, that smaller European companies were becoming more reluctant to accept the growing risks of investing in China.<\/p>\n<p>A spokesperson for the economy ministry said it was closely following the investment behaviour of German companies as part of its strategic considerations on how to deal with China. <\/p>\n<p>\u2018STEEP LEARNING CURVE\u2019<\/p>\n<p>During their meeting with Habeck, big business leaders tried to make clear they were not naive about China and were looking to diversify, at the same time as doubling down on existing operations, the two participants who declined to be name said.<\/p>\n<p>Habeck promised to continue the dialogue with the business community and another meeting has been arranged for the first quarter next year, the two people said.<\/p>\n<p>\u201cHe has a steep learning curve, he is very open,\u201d one of them said. \u201cThe problem is that he is starting right at the bottom.\u201d<\/p>\n<p>The economy ministry declined to comment when asked about a meeting next year, or the remarks about Habeck.<\/p>\n<p>Some of the measures Berlin has said it wants to pursue to reduce its dependency on China are uncontroversial, like seeking new sources of some key commodities such as rare earth metals.<\/p>\n<p>But other proposals have raised alarm bells in the business community as it fears the measures would put them at a competitive disadvantage in what is still the world\u2019s fastest growing major economy, despite an expected slowdown next year.<\/p>\n<p>Reuters reported last month that the economy ministry was considering curbing export and investment guarantees as part of its new China strategy.<\/p>\n<p>Germany\u2019s Mittelstand companies warn this would hit them hard \u2013 and much harder than the corporate giants with more financial firepower.<\/p>\n<p>\u201cIf governmental support for exports were to be cancelled, then I estimate that 50% to 70% of our members would probably no longer be bold enough to enter the market,\u201d the Mittelstand Association\u2019s Jerger said.<\/p>\n<p>Business leaders said Berlin should liaise more closely with them on any China measures and they were relieved to finally discuss the matter in person with Habeck. <\/p>\n<p>Some executives said they were lobbying Berlin to encourage firms to find new markets, for example through new free trade deals, rather than seeking to curb their business in China.<\/p>\n<p>\u201cInstead of punishing companies for doing business with China, the right approach would be to incentivise business with other countries,\u201d said Ulrich Ackermann, head of the trade department at Germany\u2019s VDMA engineering association.<\/p>\n<p>REPUTATIONAL RISK<\/p>\n<p>Business leaders told Reuters they were concerned that even the debate about possible policy changes was already affecting their relations with China, which has urged Berlin not to politicise trade.<\/p>\n<p>Agatha Kratz at Rhodium said German companies may also be underestimating the reputational risk of doubling down in China, particularly in terms of how their actions were perceived in the United States, which is now Germany\u2019s biggest export market. <\/p>\n<p>\u201cThey are still a little too hopeful about being able to resist Chinese pressure, but also U.S. pressures in terms of barriers to trade,\u201d Kratz said.<\/p>\n<p>China became Germany\u2019s biggest single trading partner in 2016 and accounted for nearly 10% of the country\u2019s 2.6 trillion euros ($2.5 trillion) in trade last year.<\/p>\n<p>But even under former Chancellor Angela Merkel, who took big business delegations on her many trips to China, the honeymoon was fading as the ruling Communist Party tightened its grip over society and the economy under President Xi Jinping.<\/p>\n<p>The surge in Sino-U.S. tension over Taiwan has been another wake-up call for Berlin this year.<\/p>\n<p>While government officials say Germany\u2019s economic ties with Russia did not stop Berlin pushing for sanctions over Ukraine, some lawmakers fear it might be harder to get tough with Beijing in the event of any conflict over Taiwan.<\/p>\n<p>\u201cIf the unthinkable were to happen, right now, we would not be able to impose sanctions, we would only be able to wag a finger and say, \u2018you can\u2019t do that\u2019,\u201d said SPD lawmaker Markus Toens. <\/p>\n<p>($1 = 1.0245 euros)<\/p>\n<p> (Reporting by Andreas Rinke, Victoria Waldersee and Sarah Marsh in Berlin; Additional Reporting by Ludwig Burger in Frankfurt, Alexander Huebner in Munich and Eduardo Baptista in Beijing; Editing by David Clarke)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/german-business-chiefs-clash\/attachment\/file-photo-german-and-chinese-national-flags-fly-in-tiananmen\/\"><img decoding=\"async\" src=\"https:\/\/c3.oann.com\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2022binary_LYNXMPEI9C0JH-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI9C0JH-BASEIMAGE\" \/><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/german-business-chiefs-clash\/attachment\/file-photo-employees-work-on-assembly-line-of-saic-volkswagen\/\"><img decoding=\"async\" src=\"https:\/\/c3.oann.com\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2022binary_LYNXMPEI9C0JI-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI9C0JI-BASEIMAGE\" \/><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/german-business-chiefs-clash\/attachment\/file-photo-weekly-german-cabinet-meeting-in-berlin\/\"><img decoding=\"async\" src=\"https:\/\/c3.oann.com\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2022binary_LYNXMPEI9C0JF-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI9C0JF-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Andreas Rinke, Victoria Waldersee and Sarah Marsh BERLIN (Reuters) \u2013 When German business chiefs got wind last month of an economy ministry proposal to screen all company investment going<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1687533","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1687533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1687533"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1687533\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1687533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1687533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1687533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}