Robert Habeck is taking part in the Asia-Pacific Conference of German Business in Singapore for the first time. In an interview with ntv.de, the Green Federal Economics Minister explains why and how he wants to reduce the German economy’s dependence on China. With a view to the agreement reached on Friday on the trade agreement with Canada, CETA, Habeck praises the fact that the traffic light was “a trade-political liberation”.
ntv.de: Mr. Habeck, we are speaking on the flight to the 17th Asia-Pacific Conference of German Business in Singapore. You basically said this week that there are no non-political trade relations. Against this background: What goals and expectations do you associate with this trip?
Robert Habeck: The trip was planned a long time ago. My flight here is therefore not a reaction to the events of the last few weeks. However, the importance of the trip has increased significantly. She sheds a spotlight on the importance of foreign trade policy under different circumstances: Instead of a nice exchange about what else can be done besides doing business with China, the word diversification is at the center of the debate. For us, it’s about aligning foreign trade policy in such a way that we become more resilient and avoid cluster risks in the national economic budget. It’s also about finding out from my Asian interlocutors how they view conflicts in the region, be it China and Taiwan or tensions in the South Pacific. So the trip is politically significant.
The diversification mentioned is meant in contrast to the economic giant China. How dangerous do you rate the dependency of the German economy on China?
Germany’s economic dependence on China is too great. In certain areas, such as critical raw materials, this dependency is almost one hundred percent. If China were to disappear as a sales market, some German industries would not be able to cope. This is the result of an orientation that has shaped decades: For too long, people considered the low production costs to be the only salvation. In addition, China has thrown huge deposits of raw materials onto the market at low prices.
How do you intend to mitigate the resulting risks?
By working against this previous logic, even if it won’t be easy and means a change. We need to create rules and incentives that change the way companies make investment decisions. This is not without conflict. We are designing a process that will take many years and should not be abrupt at all. It’s not about decoupling from China, but at the end of the day the German economy should be more robust.
As Federal Minister of Economics, you are making a specific intervention: with the investment guarantees, which are intended to protect German companies abroad against expropriation, for example. What expectations do you associate with this decision?
At the moment, almost 40 percent of the total volume of state investment guarantees for investments in China is still being spent. We want to overcome this one-sided orientation so that the companies position themselves more broadly – in their interest and in the interest of the economy as a whole. We are therefore capping the investment guarantee per company and per country at three billion euros. There are further state safeguards only for investments that the respective company makes in another country. In this way, we want to prevent all of a company’s foreign investments from flowing into a single country. Companies can continue to invest there, but the German state will no longer guarantee it. In addition, we increase the cost price for investment guarantees if many such guarantees have already been issued for the selected country. On the other hand, we create more favorable guarantee conditions for other selected countries, where there are not yet so many investments. This is a strong incentive to look for other markets.
These decisions affect the investment behavior of the German economy. A much-noticed topic over the past two weeks was how to deal with Chinese investments in Germany, which you viewed very critically in the case of the Port of Hamburg and the chip manufacturer Elmos. What are you afraid of?
Due to its innovative and technological power, Germany is an attractive destination for foreign investments. Most of these investments are welcome and important for our economy. That is why we are an open investment location, but open does not mean blind. Chinese investments are not welcome in areas where we have concerns that they endanger public security and order and are against the interests of the nation. When the investments concern essential products, security of energy supply, infrastructure, we cannot remain indifferent. Developing influence in these sectors is a declared strategy of the Chinese leadership. So it’s not just about making money.
The Greens and FDP parliamentary groups propose that critical investment decisions in Germany require the active approval of all departments in the future. Under these conditions, the decision to enter the port of Hamburg with Cosco would have been different, wouldn’t it?
That would have changed something, but I’m not a fan of it. A cabinet must reach consensus. What we must do above all is to sharpen our instruments. We have to look at how we can increase protection for sensitive areas and we will certainly take a closer look at the concept of critical infrastructure here. We will discuss this in the departmental group.
Diversification is not only an issue with a view to Asia. The traffic light factions have agreed, even after a long resistance, in particular from the Greens, that they now want to implement the CETA trade agreement with Canada. How do you classify the decision?
This is a solution that only the traffic light could find after the German economy had to wait a long time in vain for an agreement under the grand coalition. In order to get CETA on track after all, it was necessary to talk to the parliamentary group, the EU and the Canadians at the same time. It was important to clarify once again that CETA’s investment protection cannot be played off against climate protection. This clarity should also be brought into the free trade agreements that have already been negotiated with Mexico and Chile. Another part of the package is the coalition decision to withdraw from the Energy Charter because it also protects investments in fossil fuels. Taken together, this is a trade-political liberation for the Federal Republic.
Does that set the direction for further trade policy?
Yes, this will give Germany a voice in global trade policy again. It’s a common line that says “yes” to global trade and that makes societal goods like sustainability an essential foundation. Commerce and cheapness are no longer the only principles, but a trade policy that anchors the goal of social justice and climate protection. This also makes Germany and Europe attractive for countries in the Global South, which rightly feel exploited by neoliberal trade policies.
However, a value-based trade policy quickly reaches its limits in the future-opportunity region of the Indo-Pacific. Singapore is not a democracy, economically promising partner countries like Thailand and Vietnam are dictatorships.
The world is complicated and contradictory, that’s the way it is. But human rights violations should not be overlooked in trade policy either. You then have to take a concrete look at whether you can still build relationships, under what conditions and how you can shape these conditions. It is a struggle for protection standards, for improvements, often in small steps.
Read tomorrow in the second part of the interview why Robert Habeck thinks the gas price brake is right despite the shortcomings and why he thinks imperfect solutions to the energy crisis are better than none at all.
Sebastian Huld spoke to Robert Habeck
