German business leaders warn against pulling out of China

Nov 10, 2022, 1:04 AM | Updated: 1:30 am

BERLIN (AP) — A group of top German business executives is warning against withdrawing from China, while acknowledging that it’s right for Germany to redefine its relationship with Beijing.

The intervention by eight chief executives in an article Thursday for the daily Frankfurter Allgemeine Zeitung comes as Germany grapples with its future relationship business and political relationship with China. The authors included the CEOs of industrial conglomerate Siemens, chemicals manufacturer BASF, technology company Bosch, auto parts supplier Schaeffler and the port of Hamburg.

They said German companies’ sites in China and elsewhere in the world contribute significantly to their competitiveness, and that China has become the world’s second-biggest and most dynamic market — “so our presence there is particularly important in the interest of German economic strength.”

The potential of the Chinese market offers an opportunity to scale up faster and to be more successful in other markets, securing jobs in Germany, the authors argued.

They said that, given China’s increasingly assertive behavior and the human rights situation in Xinjiang province, “it is right for Germany today to define its relationship with China in a more nuanced way, in the three dimensions of competition, cooperation and systemic rivalry.” But, they added, “in the current public discussion, we perceive an almost exclusive emphasis on systemic rivalry, in words and concrete measures.”

“Despite all the challenges of China and with China, we are convinced that its fundamental growth dynamic will remain,” the authors wrote. “A withdrawal from China would cut us off from these opportunities.”

In recent weeks, Chinese investments in Germany have been in focus as officials seek to balance strong business relations with a desire to avoid repeating mistakes made with Russia, which once supplied more than half of Germany’s natural gas and now supplies none.

Last month, Chancellor Olaf Scholz’s governing coalition argued about whether to allow Chinese shipping company COSCO to take a 35% stake in a container terminal at the Hamburg port. The Cabinet eventually cleared COSCO to take a stake below 25%, ensuring that it wouldn’t gain the ability to block company decisions.

On Wednesday, the Cabinet blocked the sale of a chip factory in Germany to a Swedish subsidiary of a Chinese company and a second planned investment, which the government didn’t detail.

In between, Scholz visited Beijing last week.

Scholz is encouraging companies to diversify but not discouraging business with China. He said before his trip that “we don’t want decoupling from China” but that “we will reduce one-sided dependencies in the spirit of smart diversification.”

In Thursday’s article, the CEOs concurred that “we must diversify risks,” for example in chips, batteries and raw materials.

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German business leaders warn against pulling out of China