Criticism of the Federal Government’s change of course in China policy

Criticism of the Federal Government's change of course in China policy

Volkswagen factory in Shanghai

The federal government has currently issued guarantees amounting to 29.1 billion euros – 11.3 billion euros of which are attributable to China.

(Photo: Bloomberg)

Berlin the FDP brakes at the Plans by the Federal Ministry of Economics to tighten the conditions for government investment guarantees for business abroad. “Without a doubt, many German companies need to reduce their dependence on the Chinese market,” said the spokesman for economic policy FDP-Reinhard Houben parliamentary group in the Handelsblatt. “However, this cannot mean limiting government guarantees for foreign investments altogether,” he warned.

Rather, it must be a matter of finding more attractive regulations for regions of the world in which German companies have so far been less well represented. “It is also clear that there must be grandfathering for guarantees,” says Houben. The federal government should also refrain from controlling investments on foreign soil, he warned.

According to statements by more than half a dozen high-ranking members of the government, the officials want Minister of Economy Robert Habeck (Greens) significantly tighten the rules for state guarantees for investments by German companies abroad. The background is the increasing dependence of German companies on the Chinese market at a time of increasing geopolitical tensions.

So far it has worked like this: companies invest abroad and are reimbursed proportionately by the state if a guarantee has been issued beforehand. The Ministry of Economic Affairs now wants to generally limit these guarantees.

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Specifically, the officials in the Federal Ministry of Economics are considering setting binding upper limits for investment guarantees. The consideration: Such upper limits would prevent the economic dependence of individual sectors and companies on one country from becoming too great. There is also the idea of ​​creating an instrument for investment controls on foreign soil.

>> Read here: Federal government initiates change of course in China policy

The Federal Ministry of Economics confirmed to the Handelsblatt on Friday that the house is currently looking at the instrument of investment guarantees. “We are in discussion about this in the federal government, also and especially with a view to broader diversification,” said the Ministry of Economic Affairs.


The economy warned of the negative consequences for German companies. “A tightening of the conditions for investment guarantees and Hermes guarantees would weaken the German economy in terms of its position in global competition,” said Jens Hildebrandt, executive board member of the German Chamber of Commerce in China (AHK), the Handelsblatt.

With export guarantees, or Hermes guarantees, the federal government secures exports to countries with a higher risk on request. Investment projects by German companies abroad are secured with investment guarantees.

The opposition fundamentally supported the push to put the foreign trade instruments to the test – albeit under conditions. “It is right that we act vigilantly with a view to China,” said the economic policy spokeswoman for the CDU/CSU parliamentary group, Julia Kloeckner, the Handelsblatt. “However, it is also clear that many German companies are active in the Chinese market,” says Klöckner.

In view of the current economic situation, they also need planning security. “If adjustments are made, they must be practicable and give the company a planning horizon,” demanded Klöckner. Ultimately, it is also about trust and reliability in the export location Germany.

The federal government has currently issued guarantees amounting to 29.1 billion euros – 11.3 billion euros of which are attributable to China. For months now, the federal government has not only been sending warning words, but also clear signals to German companies that are heavily dependent on China.

Only recently did Federal Economics Minister Habeck extend federal guarantees for Volkswagen denied on human rights grounds. The automaker has a plant with its Chinese joint venture partner SAIC in the western Chinese province of Xinjiang, where Beijing has been accused of serious human rights abuses.

More: New shock for German companies in China – drought triggers power shortages

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