Germany warns of overreliance on trade with China

FRANKFURT (Reuters) – German Finance Minister Christian Lindner on Wednesday (April 6th) expressed concern about his country’s heavy reliance on trade with China, saying Europe’s biggest economy needed to “diversify” its export destinations .

“My concern is that…we have a strong economic interconnection with China,” Lindner said in an interview with the weekly Die Zeit.

“We need to diversify international relations, including with regard to our exports,” he said.

Tensions between China and the West are rising over Beijing’s refusal to condemn the Russian invasion of Ukraine, while the European Union and the United States have imposed sweeping sanctions on Moscow.

Germany’s centre-left-led government came to power in December promising ‘dialogue and toughness’ in dealing with China, emphasizing human rights after administrations’ trade-focused pragmatism previous ones.

“Perhaps the time has come when we should preferentially do business with those who are not just business partners, but also want to be value partners,” Lindner said.

China was again Germany’s biggest trading partner in 2021, with the countries trading goods worth 245 billion euros ($268 billion).

A survey by the economic institute Ifo published late last month found that 46% of German manufacturers source their “key inputs” from China. Among these companies, “almost one in two” plans to reduce these imports in the future, he added.

Even before the Ukraine conflict, EU relations with Beijing had been rocked by a series of disagreements, including over China’s treatment of the Uyghur minority and EU member Lithuania’s trade coercion over Taiwan. .

Experts say, however, the bloc remains reluctant to go too far to pressure Beijing at a time when soaring energy prices and inflation are already causing major economic hardship.

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