BERLIN — The German foreign ministry wants to take a tougher line on China and push companies to reduce their dependence on Beijing, while encouraging EU efforts to negotiate a investment agreement with Taiwan.
The central question now will be whether the ministry’s position will ultimately make a difference to long-established Chinese policy. Germany has long been at the forefront of promoting an accommodative EU policy toward China, largely because its manufacturers have large investments there. Berlin dismissed human rights concerns outright in 2020 when it led the way in trying to secure an EU investment deal with China.
A 61-page draft of Germany’s next strategy for China, due to be adopted early next year, warns that Chinese leaders ‘are willing and able’ to use their market ‘as leverage’ to secure concessions other countries. . The document also criticizes “massive human rights violations” in the Chinese autonomous regions of Tibet and Xinjiang, home to the Uyghur Muslim minority.
POLITICO has obtained a copy of the draft document, dated November 1, which was drafted by the Foreign Office but has yet to be formally adopted after consultations with other ministries and the Chancellery, meaning changes could still happen.
“We aim to use market-based instruments to change the incentive structure for German business diversification so that reducing export dependence becomes more attractive,” the draft text says, adding that businesses “who are particularly exposed to China” should be obliged “to specify and summarize relevant China-related developments and figures” as part of their disclosure requirements.
“We will consider whether affected companies should perform regular stress tests to identify China-specific risks at an early stage and be able to take corrective action,” the document continues.
According to the text, Germany will also “examine” the possibility of creating a legal basis that would allow the government, or the EU, to control “security-critical” foreign investments by German or European companies in China – a measure which could potentially prevent companies from transferring critical infrastructure to the People’s Republic and thereby increase dependencies.
Berlin also wants “a better European overview of Chinese investments and holdings in critical infrastructure” in Europe, such as ports.
In addition, the text also proposes to create cartels of European buyers for the purchase of specific minerals such as rare earths in order to “strengthen the negotiating position of European companies”.
In addition, state-backed investment guarantees should be limited to €3 billion per company and be subject to stricter criteria such as compliance with environmental standards and labor rights and no work. forced into the supply chain. “When issuing export credit guarantees, we will tighten the criteria to prevent unwanted technology transfers,” the draft text says.
The document also calls for “strengthening” relations with Taiwan. “We support the European Parliament’s call for an early and open scoping exercise and impact assessment for a bilateral investment agreement with Taiwan,” he said, adding that, like Taiwan is a member of the World Trade Organization, “such an agreement is consistent with the EU’s one-China policy.”
However, moving towards such an investment deal would likely upset China, which has seen the ratification of its investment deal with the EU stalled due to political tensions. Beijing’s foreign ministry has already reacted angrily to the German draft strategy, criticizing the “German side’s denigration of China” on issues such as human rights.