German companies – from car giant Volkswagen to SMEs – are making their plants in China independent of bases in Europe. Immunising operations against new Western sanctions raises German investment in China to record levels.
WOLFSBURG/BEIJING (own report) – In the run-up to the EU-China summit, which begins today, the trend towards relocating German corporate activities to the People’s Republic is gaining momentum. A few days ago Volkswagen announced that it would be developing a new platform for electric car models at a new centre in Hefei in eastern China, where the vehicles are then to be manufactured. This departs from VW’s previous practice of keeping vehicle development mainly in Germany. The company also plans to source almost entirely from domestic Chinese suppliers for its electric car manufacture in the People’s Republic. This will, the company claims, mean faster, cheaper and better production. But it also means that operations in Germany will be lost. Moreover, VW China will be in a position to split off from the German headquarters – again, to the detriment of the group’s base in Germany – should the West’s economic war on the People’s Republic escalate. Similar preparations are also being made by medium-sized enterprises operating in China. This is reflected in the recent sharp upturn in German investment in China, where the overall German investment portfolio is at a record level. Economists concede that this is a “paradoxical and unintended consequence” of the West’s economic war. Read more
There is a reflex in Europe that is detrimental to China. It is the downside of the respectful awe at China's vastness, its size, its culture, and statehood. By comparison, Europe appears tiny. The comparison mitigates the error of being incomparable. China is greater.
Lula in Berlin: German industry is calling for better access to Latin America’s natural resources and wants to poach highly skilled workers. The tussle over a free trade agreement with Mercosur continues.
BERLIN/BRASÍLIA (Own report) – Ahead of the German-Brazilian government consultations in Berlin today, Monday, 4 December, German business has been pushing for a rapid expansion of economic relations between the two countries. Germany wants to expedite ratification of the free trade agreement with South America’s Mercosur alliance. Over the past ten years German industry has generally seen itself overtaken in Latin America by competitors, as a recent paper by the Latin America Committee of German Business (LADW) points out. The report says that German exports to the continent increased by just three per cent between 2012 and 2022, while US exports grew over the same period by 38 per cent and Chinese exports by as much as 87 per cent. German companies want this trend to change. It is not only about targeting Brazil as a sales market, but also a question of gaining access to Latin America’s raw materials and skilled human resources for deployment in German companies. This is the background to German industry’s push for the EU’s free trade agreement with Mercosur to be finally ratified after many years of talks. Brazil, on the other hand, has a different perspective, seeing itself as a representative of the Global South and increasingly opposing global Western dominance. Read more
Observers at COP28 in Dubai expect harsh criticism of the EU’s climate measures and warn that Berlin has long since squandered its credibility in climate policy.
BERLIN/DUBAI (Own report) - Observers at the UN Climate Change Conference (COP28) in Dubai, which kicks off tomorrow, expect to see harsh criticism of the EU’s climate measures. They warn that Germany has little international credibility left in the climate policy arena. Some of this criticism is directed at the EU’s new carbon tariff arrangement for the import of energy-intensive products. Under the Carbon Border Adjustment Mechanism (CBAM), special levies will be imposed by Brussels to protect Europe’s energy-intensive industries from foreign competition. The CBAM threatens to deprive African countries of almost one per cent of their GDP. It may also destroy current efforts to industrialise raw material producing countries in Africa. In addition to the criticisms levelled at EU, the German government’s declarations on the need for resolute climate action are increasingly seen as lacking credibility. On the African continent, for example, careful note has been taken of Germany’s response to its decision to stop buying Russian natural gas. African deposits which Berlin, previously, had strongly warned not to exploit are now very much on the table. Moreover, there is also growing international awareness that Germany is set to fall far short of its own climate targets for 2030 and 2045. Read more
According to a report, Washington and Berlin urge negotiations between Kiev and Moscow. US experts call for a shift from warfare to a “strategy of containment” of Russia.
BERLIN/KIEV (Own report) – In Germany and the United States, pressure is mounting on Kiev to stop rejecting ceasefire negotiations with Moscow. As was reported late last week, the governments of both countries are seeking a transition to negotiations, but would like Kiev to take the initiative without being requested to do so publicly. An appeal would make a mockery of the West’s constant assertion that Ukraine is deciding on its own course of action. The plan to initiate talks with Moscow reflects the failure not only of Kiev’s counter-offensive, but also of the Western sanctions against Russia: Already since some time, experts have been recommending a transition to a policy of containment, given the fact that Ukraine’s armed forces are unable to achieve victory on the battlefield and Russia cannot be defeated economically. This should freeze the current military situation without formally ceding Ukrainian territories to Russia and should be accompanied by NATO’s massive rearmament. Experts are calling for a “change of mentality” in Germany and Berlin is insisting on “warfighting capability.” Read more
At an investment conference in Berlin German Chancellor Olaf Scholz urges African countries to produce green hydrogen for Germany. The German economy is increasingly falling behind in Africa.
BERLIN (Own report) – Africa should begin to play a greater role as a supplier for Germany’s energy transition. With this goal in mind, the German government convened an investment conference yesterday, Monday, with several African heads of states and governments. Berlin is anticipating a rapid increase in the German demand for green hydrogen – a demand that also African countries are expected to fulfill. The German government is also considering importing iron produced with green hydrogen as a preliminary product for German industry. Yesterday’s conference had been organized within the framework of “Compact with Africa”, a project developed in Berlin, intended to ensure that African economies are tailored to the requirements of Western investors. Berlin is also seeking to use it, to establish a stronger footing for German industry on the African continent, where recently German companies have been increasingly falling behind. WTO Director-General Ngozi Okonjo-Iweala, a native of Nigeria, points out: “When we speak with China, we get an airport; when we speak with Germany, we get a lecture.” Read more
Ukraine expands its armaments industry with Western help and aims to become a “leading nation” in that sector. Rheinmetall has already concluded a joint venture for tank production.
KIEV/BERLIN (Own report) – Ukraine is pushing ahead with the expansion of its arms industry and is wooing US companies, since concluding a cooperation deal with the German Rheinmetall arms manufacturer. It was announced at the end of last week that at a conference to be held in Washington in about two weeks, Kiev will insist on US arms factories being established in Ukraine. Rheinmetall is already present in Ukraine and is beginning to repair tanks, damaged at the Russian-Ukrainian front, while also planning, in the long run, to produce up to 400 Panther main battle tanks – including for export, given Ukraine’s extremely low wages. The Ukrainian government is seeking joint ventures between Western arms companies and its domestic arms industry, to compensate for the future lack of Western arms deliveries and to establish Ukraine as a central armaments hub. Arms production should become one of the main sectors of the Ukrainian economy in the future. Government members see their country on the road to becoming “the leading nation in the arms industry” by 2040. Read more
EU agrees on law to secure strategic raw materials to reduce vulnerabilities in the West’s economic war against China. China responds to sanctions and restricts exports of important resources.
BERLIN/BEIJING (Own report) – In its power struggle with China, the EU has passed a new law to strengthen its independence from supplies of Chinese raw materials. The Critical Raw Materials Act (CRMA), approved by the relevant bodies on Monday and set to be officially adopted before the end of this year, stipulates that in future only 65 percent of the strategically important raw materials may be purchased from a single country. At the same time mining and processing are to be expanded in Europe. Currently, German companies are purchasing some of their strategic raw materials to a large extent or even almost entirely from the People’s Republic of China. Beijing, which has always been a reliable supplier, is currently beginning to defend itself against the West’s economic war, in which it is coming under increasing attacks with punitive tariffs and sanctions. It is resorting to restrictions on its exports of strategically essential natural resources – including gallium, germanium and soon also graphite. If the West persists in its economic warfare, it will face material shortages in the foreseeable future, for example, in regards to the production of semiconductors and climate change technologies. Read more
New Defense Policy Guidelines call for warfighting capability of the Bundeswehr and orient toward war with Russia. Berlin also hopes to increase its military clout within NATO and the EU.
BERLIN (Own report) – The German government seeks to adapt and upgrade the German army for possible war with Russia, according to the New Defense Policy Guidelines presented by German Defense Minister Boris Pistorius last week. Berlin remains committed to increasing its military strength and declares “deterrence” of Moscow as the Bundeswehr’s core task. In the guidelines, there is no mention of possible negotiated solutions and de-escalation. Ignoring NATO's war of aggression against Yugoslavia in 1999, the authors claim that Russia brought war back to Europe in early 2022. Germany must therefore become “combat-ready” as quickly as possible. The two focal points of the document – the expansion of national military capabilities and the orientation of the Bundeswehr towards war with Russia – do not represent a “Zeitenwende” in German military policy. They have been continuously promoted by German governments for years, throughout several legislative terms. On the basis of new military clout, Berlin is seeking a leading military role in Europe and a “creative power” within NATO. Read more