Germany drawing up new China trade policy, vows 'no more naivety'

Germany's economy minister said on Tuesday 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. This is the first time the minister has made clear the tougher line was being translated into policy measures.

Robert 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.

Habeck did not outline new measures in full, but said they would include closer examination of Chinese investments in Europe, such as infrastructure.

China has been Germany's biggest trade partner for the past six years, with volumes reaching over 245 billion euros ($246 billion) in 2021.

But the centre-left government is taking a tougher line towards Beijing than its centre-right predecessor, worried about Germany's dependence on Asia's economic superpower.

On 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.

"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.

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