German Chancellor Scholz said on Thursday (August 11) that China is one of Russia’s last allies and reducing its reliance on imports is part of a national security strategy, reminding German companies to focus on diversifying their supply chains and avoid relying too much on China.
Scholz mentioned at the press conference that Germany firmly supports Ukraine, and the government is providing a lot of weapons to break past practices, emphasizing that the war can only be ended with Ukraine’s consent. A reporter asked that, although Germany uses energy transformation to reduce its dependence on Russian energy, it also has new dependence on China, such as important components of solar and wind power generation, and is worried regarding the escalation of the situation in the Taiwan Strait and whether Germany can withstand China’s sanctions. According to reports, Scholz did not respond positively, but reiterated that the German economic community has made the right decision, whether it is supply chain or export issues, all eggs cannot be put in the same basket.
Scholz continued that the pursuit of independence applies to all sectors. For example, the German government is trying to find lithium, a raw material that can provide high-tech products. Even if a supplier offers a particularly cheap price, companies should find multiple partners. He also mentioned that the government is preparing to invest billions of dollars to support Intel’s construction of a factory in Magdeburg, in order to seek independence in the production of semiconductors.
The German chancellor has a political tradition of holding press conferences every summer. For Scholz’s performance at the regular press conference, German society is divided. Some analysts pointed out that Scholz deliberately avoided the direct use of the word “China”, which was not strong enough. There were also public opinions that the Chancellor’s call for German companies to reduce their dependence on China would have an impact on Sino-German relations.
According to the “Global Times” report, Sun Keqin, a researcher at the China Institute of Contemporary International Relations, said that Germany’s policy shift is wrong. Germany mainly relies on foreign trade to promote economic growth, while China is Germany’s largest trading partner. Sino-German trade is very important to both sides. And mutual benefit and win-win is the ballast stone of bilateral relations.
Sun Keqin believes that since the Biden administration came to power, the United States has adopted an alliance policy to put pressure on China, which has put a lot of pressure on Germany. With the departure of former Chancellor Angela Merkel, coupled with the Russian-Ukrainian war, the political climate in Germany is not as good as it used to be. In such a big environment, even though the Scholz government knows that decoupling from the Chinese economy is unrealistic, it strives to take a stand, reduce its dependence on China, and diversify its investment and industrial chain in China.
Sun Keqin described such a position as having serious consequences: First, Germany should act according to the face of the United States, politicizing Sino-German economic and trade relations, and affecting Germany’s own interests and independence; second, it overemphasizes “dependence and threat” of normal trade with China and restricts German companies. Investing in China will seriously damage the interests of German companies such as BMW and Mercedes-Benz, which have a very high market share in China, and damage Sino-German and Sino-European relations. Finally, because China is the world’s largest manufacturing power with the most complete industrial categories, no one The country can completely replace China, so it is not easy for Germany to shift its industrial chain and supply chain to other countries.
It is worth noting that in the first five months of this year, as German companies pulled out of Russia, their investment in China increased by 21%. China has been Germany’s most important trading partner for six consecutive years, and a recent survey by the Munich Ifo Institute for Economic Research showed that half of German manufacturers rely on low-cost inputs from China.