[Text/Observer Network Qi Qian] The German Business Daily recently quoted news that the German Federal Ministry of Economic Affairs is planning to significantly tighten relevant regulations on guarantees for foreign investment by German companies. Given that the guaranteed expenditure for investment in China accounts for the highest proportion, this move is also seen as the German government's intention to change its policy toward China. In recent years, the German government has urged German companies to reduce their dependence on the Chinese market.
The German Ministry of Economic Affairs later confirmed that the department is indeed conducting research on investment guarantee regulations. The news of
has caused controversy within the German government. Some senior government officials questioned that many German companies are very active in the Chinese market and that sharp tightening of guarantee regulations may bring more uncertainty to companies. The business community responded fiercely, and the executive board of directors of German Chamber of Commerce in China, representing companies in China, said bluntly that the behavior of the Ministry of Economic Affairs "will weaken the German economy's position in global competition."
Business Daily: The German federal government plans to change its policy toward China
According to the Business Daily on August 26, several senior German government officials revealed in a statement that the Ministry of Economic Affairs hopes to significantly tighten the government's regulations on the guarantee and scale of foreign investment in German enterprises, and put forward specific plans, including setting the upper limit of the guarantee amount for each enterprise and each investment country.
In order to support the international operation of domestic enterprises, the German government formulated the "Regulations on Foreign Investment Guarantees" in 1993 to provide risk guarantees for overseas direct investment of German enterprises that need support. According to regulations, investment and loss of income caused by political events or policy measures in the country are all within the scope of German government investment guarantee. Generally speaking, when the damage occurs, the guaranteed enterprise can jointly bear the investment loss with the government in accordance with the principle of sharing the proportion of .
Since enterprises can apply for an extension of the guarantee period after the expiration of the period, if the German Ministry of Economic Affairs changes the guarantee regulations, it will not only affect the new investment guarantee, but also the existing investment guarantee.
official data said that the federal government has issued a guarantee of 29.1 billion euros to German companies, of which the guaranteed country of 11.3 billion euros is China. The Business Daily believes that as the tensions in geopolitical are intensifying, German companies are increasingly relying on the Chinese market, which means that the German government intends to change its policy toward China. The German Ministry of Economic Affairs' plan far exceeds the amendment of the guarantee regulations. German Economy Minister Habek also plans to create a tool that hopes to have the right to control German capital's overseas activities, like the US government.
Later on the 26th, the German Ministry of Economic Affairs confirmed to the Business Daily that the department is indeed conducting research on investment guarantee regulations. A spokesperson said: "We are discussing this matter with the federal government, especially considering the wider diversity of (foreign investment guarantees)."
Business Daily quoted official data: Among the guarantee funds issued by the German government in 2021, investment expenditures in China were the largest.
German companies' direct investment in China soared in 2022
After the news came out, it immediately caused controversy within the German government.
According to the Business Daily, the Federal Prime Minister's Office and the Federal Ministry of Finance are skeptical of the above plan. One of the government officials said: "We are in the midst of the energy crisis. We should carefully consider whether such measures will cause more uncertainty." Reinhard Houben, spokesperson for the economic policy of German Liberal Democratic Party, agreed that German companies need to reduce their dependence on the Chinese market, but also reminded that this does not mean that the government's guarantees for German companies' foreign investment are completely restricted. German CDU Economic Policy spokesperson said, "It is obvious that many German companies are very active in the Chinese market." Given the current economic situation, companies need the government to make safe and feasible plans.
German business community issued a warning, pointing out that the federal Ministry of Economic Affairs' plan will have a negative impact on German companies' foreign investment and operations. Jens Hildebrandt, an executive board member of the German Chamber of Commerce in China, said bluntly that if the government tightens foreign investment guarantees and "Helmez guarantees", it will "weak the German economy's position in global competition."
In order to enable domestic enterprises to avoid and reduce the payment risks caused by political or economic factors that may be encountered in export trade, the German government has launched the "Helmes Guarantee" to provide German enterprises with national export credit risk guarantees, which are mainly applicable to exports to so-called high-risk countries.
It is worth noting that as early as the Merkel government period, the German government has been urging German companies to reduce their dependence on the Chinese market. The Business Daily said that in recent months, the current German government has "sent a clear signal" to German companies that rely heavily on the Chinese market.
In May this year, the German Ministry of Economic Affairs decided not to provide guarantees for a German company's projects in China under the guise of so-called "forced labor" and "massive detention" in Xinjiang. It is reported that this company is Volkswagen , which has a factory in Urumqi with the Chinese joint venture SAIC Group. Volkswagen later confirmed the matter and said it would continue to maintain production and operation of its factory in Xinjiang.
htmlOn June 30, Volkswagen CEO Herbert Diess emphasized in an interview with German media that in Germany, people have seriously underestimated the contribution China has brought to Germany's prosperity. He noted that if decoupled from China, the situation in Germany "will look completely different" and that economic growth, prosperity and jobs will all be affected.This article is an exclusive article of Observer.com and may not be reproduced without authorization.
