German Machine Builders Oppose De-Risking Policy toward China

German Foreign Minister Annalena Baerbock has done it again. During her just-concluded trip to Australia and New Zealand, she again talked up the importance of economic warfare against China, while announcing an increased military presence of the German Navy in the Pacific and the Taiwan Strait.

In this context, the table.media China newsletter published an interview May 6, with a leading official of the German Machine Builders Association, Gerald Pörschmann, who heads the “Future Alliance Machine Building”. Rather than the punitive tariffs against Chinese companies envisaged by the EU Commission, he endorses a dynamic response from German companies engaged in China,

Pörschmann acknowledges that the Chinese leadership’s concentrated investment strategy does pose a challenge because “the communist government’s political goal is not just to enter certain key markets, but to take over the market”, but says that it should not be viewed as a threat: “If I put myself in the shoes of a politician in China, I would do the same. You can’t be dependent in the long term as a third-class supplier, you have to see that you make it into the premium sector and thus develop the entire economy.”

All in all, business is going relatively well due to the economic situation in China, he points out, but what worries German companies is the global economy and the geopolitical situation. This is causing uncertainty and delaying important decisions. As for the German government’s view that there has to be “de-risking”, i.e., decreasing the dependence on China, Pörschmann points out that “value creation in Germany and Europe depends on whether we get certain key products from China”. Therefore, the Mittelstand is in the process of reorganizing the way to operate. “One way is to create value in China for China. We either do this with Chinese suppliers or we tell our German partners to come to China with us. Large companies often take their suppliers with them and help them get started on the Chinese market.”

As for the German government’s and the EU Commission’s claims that the huge German investments in China are going in the wrong direction, Gerald Pörschmann disagrees: “This criticism misjudges the reality. For German companies, investing in China is part of de-risking.” the comments by this business professional make clear that whatever interests Annalena Baerbock was representing during her trip were definitely not those of the German machine builders.