Germany to chalk new business strategy to reduce trade deficit, dependence on China

In an attempt to stave off Chinese influence in the country, the German foreign ministry is planning to tighten the rules for companies that are in bed with China, saysa Reuters report. It further states that the Olaf Scholz government, as part of reducing the country’s dependence on China, is chalking up a new proposal.Under the new business strategy, companies will be required to disclose more information andpossibly conduct stress tests for geopolitical risks.

"We aim to oblige companies particularly exposed to China to specify and summarise relevant China-related developments and figures, for example in the form of a separate notification obligation, on the basis of existing disclosure requirements,"read the document accessed by the publication.

WATCH |German Chancellor arrives in China, Scholz's coalition uncertain about its relation with Beijing

Add WION as a Preferred Source

The draft adds that investment in German companies by the Chinese will face greater scrutiny.

"The aim is to change the incentive structure for German companies with market economy instruments so that reducing export dependency is more attractive."

Notably, the drafting of the proposal comes in the backdrop ofChancellor Scholz visiting China and meeting President Xi Jinping.

In September, Scholz's colleague and economy minister Robert Habecksaid in an interview that Germany 'couldn't be allowed to be blackmailed' by other countries.

"We cannot allow ourselves to be blackmailed. If [the Chinese market] were to close, which is not likely at the moment...we would have extreme sales problems," he said.

Read more: Once bitten, twice shy: After Russia lesson, Germany to reconsider trade deal with China

China has been Germany's biggest trade partner for the last six years. The volume of trade between the two nations reached $246 billion in 2021. However, the trade is imbalanced as Germany is much more dependent on China.

Berlin's trade deficit with Beijing has increased to almost $41 billion as of mid-2022. While German imports to China have only increased by 12.4 per cent in the first half of 2022 compared to 3.4 per cent in 2000, the German imports of Chinese goods have leapt an astronomical 45.7 per cent on a year-on-year basis.

While the German government claims it is attempting to decouple itself from China, the actions suggest otherwise. In October, theGerman cabinetapproved China’s Cosco buyinga 24.9 per cent stake in HHLA, a container operator at Germany’s largest Hafen Hamburg port.

Read more:Germany allows Chinese company to buy stakes in container operator at its largest port

(With inputs from agencies)

WATCH WION LIVE HERE: