Leaked German draft of new China protectionist strategy raises concern

By Al Mayadeen English
Source: Agencies
22 Nov 2022 20:49

German Chancellor Olaf Scholz says that Berlin will not fall for the same mistake regarding China that it did with Russia previously and that the country will diversify trade with other economies.

German Chancellor Olaf Scholz (L) with Chinese President Xi Jinping during the Chancellor's visit to China earlier this month.

German Chancellor Olaf Scholz said that his country will not make the same mistake with China that it did with Russia adding that Germany is already bringing variety to its trade.

Scholz's statement came during an address at an economic forum organized by Sueddeutsche Zeitung newspaper on Tuesday.

"The mistake of dependence as with Russia will not happen again," the Chancellor said.

Sholz's statement came after representatives of German industry criticized a leaked document discussing the country's new China policy stating the need for increased political support for diversified trade with other countries.

The document pushes in favor of creating stronger trade ties with other countries and increased control over trade with China.

The document also advocated for increased dependency on 'stress tests' on raw material and monitoring for implications of the German investments on the environment and human rights issues.

A big German business that is strongly present in China, despite agreeing on the sentiment of diversification of resources, however, raised concern that this strategy might affect the business's ties with Chinese trade partners.

"The framing is the problem," said a representative of the business, adding that the "mistrust towards China and market participants like us is clear in every line of that text."

"Stress tests would be another bureaucratic hurdle which only we would face, not our competitors from other countries. What's the point?" the representative added

"Of course we want more open trade with China, but every world region has its problems."

The Foreign Ministry of China, in response to the document, warned Berlin that adopting trade protectionism might damage supply chains.

"politicizing normal economic trade... is contrary to the principles of market economy," said the ministry in a statement on Tuesday.

The CEO of Volkswagen China Ralf Brandstaetter told the German business newspaper Handelsblatt on Tuesday that the company was "not closing ourselves off to reality and adjusting our strategy... but that does not mean we cannot make use of the market opportunities China offers."

During the forum address, Sholz also underlined the threats of a possible escalation in Ukraine.

"In view of the development of the war and Russia's visible and growing failures, we must be ready for an escalation," including massive damage to infrastructure, he added.

The Chancellor also stated that the importance of his recent visit to China was that both countries condemned the use of nuclear weapons, adding that Germany placed the new $100 billion euro budget into its defense industry after it saw it's vital that the country must build a strong military stock after the beginning of the war in Ukraine.

The German Chancellor visited China earlier this month, marking the first visit by an EU leader to China since the COVID-19 breakout of 2019, making it also the first time Scholz visits China since he assumed office.