EU Commission unable to push through the controls on European corporate investment in China demanded by the US. Strong objections voiced by German industry.
BEIJING/BRUSSELS/BERLIN (own report) - European Commission President Ursula von der Leyen and German Economics Minister Robert Habeck have failed in their attempt to introduce the investment controls into EU legislation demanded by the United States. Both politicians campaigned last year for regulations to screen, control and, if necessary, ban investments by EU companies in specified third countries, above all China. Washington adopted such rules last year and urged its allies to do the same. The European Commission has now come up with watered-down proposals. In its 2023 EU “Strategy for Economic Security”, presented on 24 January 2024, Brussel’s calls for “data” on investments in China and elsewhere to be collected, but is no longer seeking to impose actual controls. The transatlantic plan has failed due to resistance from the European business community, not least German companies. They see this move as a direct threat to their strategically crucial trade with, and operations in, China. As for foreign inward investment into the EU, the existing controls will however be tightened. In addition, there will be stricter regulations governing research cooperation between EU-based universities and partner organisations, especially Chinese institutions. Read more
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
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
Berlin and Brussels renew efforts to ban Huawei Technology and EU investments in China. Sequoia is the first US company to split into Chinese and Western enterprises. German companies could follow.
BERLIN/BEIJING (Own report) – Germany and the EU’s new political-economic measures against China are overshadowing today’s German-Chinese government consultations. While numerous ministers from Germany and the People's Republic of China are meeting today in Berlin, to reinforce bilateral cooperation, the German government is drafting a China strategy, that promises a significant toughening of the course against China. As was announced yesterday morning, the Minister of the Interior claims to have found “indications” that the use of Huawei technology in German 5G networks, “would pose a threat to the German public order or security.” This categorization implies an eventual Huawei ban. In addition, it is reported that the EU Commission is preparing a new strategy for “economic security,” based on US measures and providing for bans on exports and investments. Decoupling begins. At the beginning of the month, the US venture capital giant Sequoia became the first company to split up into a Western and a Chinese enterprise. Other enterprises are considering splitting off their branches in China. This includes German companies – VW and BASF have been named. Read more
Borrell calls for navy patrols in Taiwan Strait, Baerbock avoids saying “No” to war against China. Experts in Australia predict most severe consequences of a war for their own population.
BERLIN/CANBERRA/BEIJING (Own report) – The EU Foreign Affairs Commissioner, Josep Borrell, calls on European navies to patrol the Taiwan Strait, thus challenging once again China’s red lines. The Taiwan Strait is an “absolutely crucial area,” where “ freedom of navigation” must be guaranteed, Borrell alleged in an op-ed article over the weekend. When Foreign Minister Annalena Baerbock was asked, whether she meant to announce a possible “German participation in a war against China” with her aggressive comments on Taiwan, she gave an evasive answer avoiding a “No.” In the meantime, the risk of war in East Asia has reached such a level that the public radio ABC in Australia – where the German Bundeswehr is regularly engaged in war exercises – has begun to openly discuss the concrete consequences of a war for the Australian population. Speaking to ABC radio, the military experts agreed that the West could not win such a war, but Australia would have to suffer tremendous losses, be plunged into poverty and even risk nuclear annihilation. They urgently call for preventing a war against China. Read more
China gains new influence at the Persian Gulf with its successful mediation in the Saudi-Iranian conflict. Decline of US domination could also weaken Germany's position in the region.
RIYADH/TEHRAN/BEIJING (Own report) – With China gaining influence at the Persian Gulf through its successful mediation in the conflict between Saudi Arabia and Iran is not only calling into question US domination, but also Germany's position in that region. Beijing has achieved initial success in bringing about rapprochement between Riyadh and Tehran. Both are now intending to resume diplomatic relations and are negotiating far-reaching cooperation. It they succeed, US efforts at establishing a sort of Arab NATO against Iran, are about to fail. For decades, the Federal Republic of Germany has also been benefitting from US domination in the Middle East, as it could always procure crude oil and natural gas from the region, whenever needed and engage in profitable business deals. Most recently, a former Siemens CEO temporarily served as economic advisor to Saudi Crown Prince Muhammad bin Salman, the actual ruler of the country. It is uncertain whether the receptiveness to Berlin's interests in the Middle East will continue despite the loss of U.S. influence. The close alliance between Saudi Arabia and the United States has been in a crisis for some time. Read more
China and Russia negotiate an end to the war in Ukraine. West rejects attempt at solutions, because of its efforts to defend global domination.
MOSCOW/BEIJING/BERLIN (Own report) – Politicians around the world had widely diverging reactions to the talks that just ended in Moscow between the presidents of China and Russia and their negotiations on ending of the war in Ukrainian. Officials of the Ukrainian government indicate openness toward talks with Beijing. Brazil’s President Luiz Inácio Lula da Silva called the reports on the meeting “good news,” and will follow up on the negotiations next week in China. Negative reactions are coming from the West, including from Germany’s Foreign Minister Annalena Baerbock, who alleges that Beijing’s initiative in pursuit of peace talks is utterly inadequate. This is in response to the fact that in Moscow, Xi Jinping and Vladimir Putin have not only explored possibilities for terminating the war in Ukraine, but have also initiated an expansion of their cooperation, which puts into question the prevailing Western global domination. Due to the fact that particularly China has “both the intent” as well as the power to “reshape the international order,” the National Security Strategy of the United States calls for Washington to “outcompete” the People’s Republic of China. Read more
The German Foreign Ministry presents its draft strategy for escalation of the power struggle against China, planing Taiwan’s integration and economic coercion measures – such as boycotts of entire regions.
BERLIN/BEIJING (Own report) – In the midst of a power struggle against Russia, the German Ministry of Foreign Affairs under Foreign Minister Annalena Baerbock is preparing another escalation in the power struggle against China. This has been confirmed by excerpts from the draft of a new German strategy toward China currently circulating in media reports. According to these, the foreign ministry is pushing for steps, intended (officially) to merely prevent dependence on the People's Republic of China, but aimed, in fact, at reducing German industry’s business with China. It also provides for the option of imposing import bans if desired on products from entire regions, for example from Xinjiang or Hong Kong. The paper simultaneously calls for steps to be taken in relationship to Taiwan that would be likely to test Beijing’s red lines. Moreover, the foreign ministry is making cooperation with China dependent on the extent that Beijing submits to German foreign policy and ceases all cooperation with Russia – a hint also in the direction of India or South Africa, showing what they too can expect in terms of cooperation with Germany. The consequences of an escalation of the conflict with China would considerably exceed those of the economic warfare waged against Russia. Read more
Conflict escalates between the German Foreign Ministry and Chancellery over Germany’s new China strategy: Baerbock opts for aggressive political attacks. Washington sabotages Germany’s business relations with China.
BERLIN/BEIJING/WASHINGTON (Own report) – While Germany’s new China strategy is being drafted, the dispute between the German foreign ministry and the chancellery is escalating over the intensity of the confrontation policy toward Beijing. Chancellor Olaf Scholz is pushing for maintaining a certain degree of economic cooperation despite the growing rivalry with the People’s Republic – in the interests of important branches of the German industry, which depend on China as a sales market and a research and development site. Foreign Minister Annalena Baerbock is pushing for aggressive political attacks against Beijing – under the pretext of fighting for human rights. She does not even hesitate to publicly attack the chancellor, himself, while abroad. At the same, time, the USA is intensifying pressure in Berlin to scale back its economic cooperation with Beijing, interfering directly in concrete German-Chinese business deals. US President Biden sees a “decisive decade” ahead in the competition with China. In this context Berlin announced a new China strategy for the first quarter of 2023. Read more
In the runup to Scholz’s visit to China, the dispute over Chinese investments in Germany persists. With continued growth, China’s industry could outpace its German competitors.
HAMBURG/BEIJING (Own report) – In the runup to German Chancellor Scholz’s visit to China this week, the dispute over Chinese investments in Germany persists. The Chinese shipping company COSCO’s acquisition of a stake in a terminal in the port of Hamburg, agreed upon last year, was approved last week only with certain restrictions. Federal ministers from the FDP and Greens had done their best to prevent it. The dispute must be seen in the context of the contradictions in Germany’s economic development. While numerous German companies, and even entire industrial branches, continue to profit massively from their close cooperation with the People’s Republic, the intense cooperation is, in turn, also strengthening Chinese industry – at the expense of their German competitors. COSCO, for example, with a global market share of eleven percent of container shipping, has already bypassed Hamburg’s Hapag-Lloyd shipping company and threatens to outpace it in the long run. A recent study by the Berlin-based MERICS think tank illustrates similar developments pertaining to German automotive companies’ involvement with China. Read more