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

New Delhi

Learning the lesson of being overtly dependent on a single country for its needs in the backdrop of the Russia-Ukraine conflict, Germany is looking to make amends. The European country is now mulling plans to reduce its dependence on Chinese raw materials by chalking up a new trade deal. 

Reportedly, Economy Minister Robert Habeck stated 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," said Habeck.

The minister also noted that 'there is no more naivety' regarding the country's policy while dealing with trade partners. Habeck added that he was against China’s Cosco buying a stake in a container operator at Germany’s Hafen Hamburg port.

“I’m leaning towards the fact that we don’t allow that." said Habeck.  

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It is pertinent to note that China is 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. 

According to a Reuters report, 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.

As reported extensively by WION, ever since the Russia-Ukraine war broke out, Germany has been one of the biggest economies in Europe to face the financial brunt of it. Russia has stopped gas supply through the Nord Stream 1 pipeline which was Germany's lifeline.

Consequently, Berlin has been trying to hurriedly fill its reserves ahead of the winter season. Years after Donald Trump advised Germany to reduce its dependence on Russian gas, the country is finally waking up to reality and smelling the coffee. 

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China has been known to use its advantageous position in trade imbalances to coerce sovereign governments by bending them to its will. Berlin understands the problem at hand but letting go of Chinese products without a proper supply chain at home will not be a small challenge. 

(With inputs from agencies)

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