Germany Is Taking A Huge Bet With China

( Germany’s Finance Minister this weekend warned against “decoupling” the German economy from China.

Germany’s Welt am Sonntag newspaper reported on Sunday that Finance Minister Christian Lindner said while Germany should try to reduce its economic dependence on China, a complete decoupling of the German economy from the Chinese market “would not be in the interest of jobs in Germany.”

Since 2016, China has been one of Germany’s biggest trading partners. Germany, which is the EU’s largest economy, considers China a significant political and economic ally while China keeps its relationship with Germany close to maintain its economic influence in the EU.

China was Germany’s largest trading partner in 2021, according to the German foreign federal office. Chinese exports to Germany jumped to $115 billion in 2021 from only $85 billion in the previous years. Meanwhile, German exports to China also increased from $110 billion in 2020 to $123 billion in 2021.

Additionally, German chemicals group BASF announced in September that it started production in China’s Zhanjiang province to produce 60,000 tons of engineering plastic compounds a year for the automotive and electronics industries. BASF’s gamble on China is seen by some as a move that might backfire on the company.

In early November, German Chancellor Olaf Scholz traveled to China with a team of the country’s top executives, sending the clear message that Germany plans to continue working with China.

Joining Scholz on the visit were twelve of Germany’s private sector titans, including CEOs from Volkswagen, Deutsche Bank, Siemens, and, of course, BASF, who held closed-door meetings with Chinese companies.

Well, you can understand why Lindner doesn’t think “decoupling” from China is a possibility for Germany.

Lindner also suggested that other countries and markets would have to become more important for German business in the coming years and decades before this “decoupling” could happen.