“No More Naivety”: Germany Working On New Trade Policy Reducing Dependence On Chinese Raw Materials

“No More Naivety”: Germany Working On New Trade Policy Reducing Dependence On Chinese Raw Materials

It appears that beggars can be choosers.

The beggar in this case is Germany – whose economic prosperity over the past two decades has been largely a function of its close mercantilist relationship with China (and, of course, the PIIGS-crippling euro which allowed Germany to benefit from a cheap, distributed and very much artificial currency instead of the always overvalued DEM) – which according to Reuters has chosen it no longer needs said prosperity, and on Tuesday Germany’s economy minister, Robert Habeck, said the government was working on a new trade policy with China to reduce dependence on Chinese raw materials, batteries and semiconductors, promising “no more naivety” in trade dealings with Beijing.

Sources told Reuters last week the economy ministry was considering a raft of new measures to make business with China less attractive. And today was the first time the minister confirmed the tougher line was being translated into policy measures

Habeck told Reuters that China was a welcome trading partner, but Germany could not allow Beijing’s protectionism to distort competition and would not hold back criticism of human rights violations under threat of losing business.

“We cannot allow ourselves to be blackmailed,” he said in an interview, clearly forgetting that since Germany already lost Russian commodities, it clearly can be blackmailed by China, which together with its sphere of influence – i.e., LatAm and Africa – which remains its last chance at having access to any commodities.

Habeck did not outline new measures in full – for the simple reason that they don’t exist nor will they ever be implemented unless Germany wants an overnight depression – but said they would include closer examination of Chinese investments in Europe, such as infrastructure.

While there are many things about Germany’s tantrum that are delightfully idiotic, what is most laughable is that China has been Germany’s biggest trade partner for the past six years, with volumes reaching over 245 billion euros ($246 billion) in 2021. And guess what happens when you tell your biggest trade partner you will no longer tolerate anything they want you to tolerate?

But the centre-left government – the same geniuses who laughed at Trump, took their energy policies from a Scandinavian teenager, left Germany with almost no nuclear power plants and hostage to Putin’s geopolitical ambitions – is taking a tougher line towards Beijing than its centre-right predecessor, clearly pressured by woke German twitterers and “worried about Germany’s dependence on Asia’s economic superpower” (odd they were not worried about Germany’s dependent on Russia’s energy superpower).

Last Thursday, Reuters reported the economy ministry was considering measures including reducing or even scrapping investment and export guarantees for China and no longer promoting trade fairs. Habeck said Germany must open up to new trading partners and regions as many sectors were heavily dependent on selling to China.

Of course, if Germany is dumb enough to do another huge mistake and extends its blockade of Russia to China, the results will be beyond catastrophic.

“If it (the Chinese market) were to close, which is not likely at the moment … we would have extreme sales problems,” Habeck said, adding the economy ministry was contributing to the new German-China policy, much of which is already in place. “And from this you will see that there is no more naivety,” he added.

Berlin also wants to examine Chinese investments in Europe more critically, he said, adding Europe should not support China’s Silk Road Initiative, which aims to buy up strategic infrastructure in Europe and influence trade policy.

As an example, Habeck signalled he was opposed to plans by China’s Cosco to buy a stake in a container operator at Germany’s Hafen Hamburg port, signalling concerns about Chinese takeover deals are spreading out from the technology arena into other industry sectors, such as logistics.

“I’m leaning towards the fact that we don’t allow that,” he said.

China has not joined the West in imposing sweeping sanctions on Moscow following Russia’s invasion of Ukraine, but has also not endorsed Moscow’s actions as Beijing needs to maintain trade relations with Europe. Of course, the more Europe in general, and Germany in particular, pushes against its biggest trading partner, the faster it will ensure that the strategic union between Russia and China is unbreakable, and leave the west with soaring inflation in everything from commodities to raw materials and all those formerly cheap things people could buy at Walmart.

Tyler Durden
Tue, 09/13/2022 – 23:10


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