NEWSLETTER
Sunday, July 6, 2025
The Novum Times
No Result
View All Result
  • Home
  • World
    • USA
    • United Kingdom
    • India
    • China
    • Europe
    • Africa
    • Middle East
    • Asia Pacific
    • Canada
    • Australia
  • Politics
  • Business
  • Health
  • Economy
  • Sports
  • Entertainment
  • Technology
  • Cryptocurrency
  • Gossips
  • Travel
  • Lifestyle
  • Home
  • World
    • USA
    • United Kingdom
    • India
    • China
    • Europe
    • Africa
    • Middle East
    • Asia Pacific
    • Canada
    • Australia
  • Politics
  • Business
  • Health
  • Economy
  • Sports
  • Entertainment
  • Technology
  • Cryptocurrency
  • Gossips
  • Travel
  • Lifestyle
No Result
View All Result
The Novum Times
No Result
View All Result

De-risking trade with China is intrinsically political

by The Novum Times
6 July 2023
in China
Reading Time: 4 mins read
A A
Home News China
Share on FacebookShare on TwitterShare on Whatsapp


Receive free EU-China relations updates

We’ll send you a myFT Daily Digest email rounding up the latest EU-China relations news every morning.

It must have caused some rolling of eyes in European board rooms when Germany’s chancellor Olaf Scholz last week told companies it was up to them to manage de-risking from China. Multinationals have been deafened for years by a cacophony of conflicting exhortations from EU governments, the European Commission, Joe Biden’s White House and Xi Jinping’s administration — increasingly backed by open-ended subsidies — advising them where to invest.

Scholz’s words, which were strikingly similar to what Li Qiang, China’s premier, told German corporate executives a week earlier, were surely disingenuous. Even in less fraught times, highly politicised trade disputes mean that business and official decisions in certain sectors are intertwined — particularly in Germany, given its powerful government-corporate-trade union nexus.

And these days, national and economic security imperatives are rising. Some parts of German industry in particular are already locked too far in to a model of engagement with China not to expend political capital arguing for trade and investment to be kept open. Reluctantly, we should probably wish them at least some luck. But along with that needs to come a more far-sighted view about building a diverse and competitive economy.

Companies operating in sensitive areas like high-end semiconductors may not like disengaging from China — the American chip company Nvidia warned recently about the cost of decoupling — but those exposed to the coercive powers of the US administration, even those in Europe, don’t have much choice. Last week, the Dutch government announced the new export control regime for semiconductor equipment that Washington has bullied it into creating. By creating a case-by-case licensing requirement, it essentially forces every export deal by the Dutch chip machine manufacturer ASML with a Chinese entity to run the gauntlet of the US government, which may deem the sale a national security threat.

There is more corporate room for manoeuvre in less sensitive technologies such as, say, electric vehicles. But here too it’s going to be impossible to take business decisions without heavy input from the political process.

Indeed, there’s currently an escalating debate within the EU over what role to allow China in Europe’s expanding electric vehicle market. Thierry Breton, the French internal markets commissioner, recently threatened an antidumping investigation into Chinese EV manufacturers exporting to Europe, which could in theory also hit European companies selling into the EU from their Chinese plants. And if the commission is really hell-bent on decoupling, it could use its new regulation against state-subsidised companies to deter Chinese car businesses from building plants in the EU. 

But German (and especially Volkswagen) investment in China’s car sector, both for sales in China and exports elsewhere, mean the traditional German instinct for avoiding trade disputes and remaining open to China persists — even though Scholz’s coalition government is tacking away from his predecessor Angela Merkel’s alignment with Beijing.

Grudgingly, we should concede that German industry probably has a point here. China has established such a strong global lead in EV technology and production capability that trying to exclude it from the EU market is counterproductive. As my colleague Martin Sandbu has written, if the EU wants to build its own green tech industry, then encouraging domestic take-up (as did China with EV purchase as well as production incentives) is a better route than trying to disengage from China. In any case, the “distance effect” in trade for EVs seems to be rising: the cars are likely to be built close to where they’re bought, a good sign for the prospects of expanding production inside the EU.

I say grudgingly because here we’re in a world of corporatist mercantilism rather than a competitive market, and the European business-government nexus has shown a woeful lack of foresight in shifting towards EVs. German car manufacturers and their friends in government have spent far too long trying to extend the use of conventional engines, including failing to clamp down on the faking of emissions tests in the Dieselgate scandal, rather than embracing change and encouraging the take-up of EVs.

For all Scholz’s talk of a clear division between government and business, the idea of a company like VW making decisions divorced from official influence is absurd. VW is a part publicly-owned enterprise (the state of Lower Saxony holds a stake and has important veto rights) with a powerful trade union presence and longstanding influence on German trade and investment policy. There’s a strong argument for weakening those links, but for the moment it’s pointless to pretend they don’t exist.

Some sectors will always come under more government influence than others, but companies operating in an increasingly politicised environment need sharper awareness of the potential for official interference. Taking EVs as an example, the extent of interference remains uncertain, while companies’ own reactions to technological and market developments have been dilatory and reactive. De-risking trade with China has to proceed from a realistic appraisal of what governments can and should be doing, not promulgating the illusion that they have no role to play at all.

alan.beattie@ft.com



Source link

Tags: ChinaDeRiskingintrinsicallyPoliticaltrade

Related Posts

Douyin racks up 4 billion in e-commerce sales in the first ten months of 2023 · TechNode

Douyin racks up $274 billion in e-commerce sales in the first ten months of 2023 · TechNode

by The Novum Times
10 November 2023
0

TikTok sibling Douyin has reportedly sold nearly RMB 2 trillion ($274.2 billion) worth of goods in the e-commerce business in...

Taipei Pride celebrates queer diversity despite its challenges – The China Project

Taipei Pride celebrates queer diversity despite its challenges – The China Project

by The Novum Times
9 November 2023
0

Taipei Pride celebrates queer diversity despite its challenges – The China Project Skip to the content Close account dialog window...

China Warns Against Maritime ‘Bloc Confrontations’ as Region Swells With Military Activity

China Warns Against Maritime ‘Bloc Confrontations’ as Region Swells With Military Activity

by The Novum Times
9 November 2023
0

Chinese Foreign Minister Wang Yi said maritime disputes should be settled through dialogue and warned against “bloc confrontations” just hours...

Platform Cancels Controversial Sales Star Xinba |

Platform Cancels Controversial Sales Star Xinba |

by The Novum Times
9 November 2023
0

Popular livestream anchor Xinba was banned in the middle of his live broadcast on Douyin for conveying false information and...

Chinese phonemakers Oppo and Transsion seek growth in south-east Asia

Chinese phonemakers Oppo and Transsion seek growth in south-east Asia

by The Novum Times
9 November 2023
0

Some of China’s leading smartphone makers are betting that a push into south-east Asia will pave the way for a...

Next Post
‘I never know what to do’

'I never know what to do'

31 FUN Facts About Japan You Should Know

31 FUN Facts About Japan You Should Know

CATEGORIES

  • Africa
  • Asia Pacific
  • Australia
  • Business
  • Canada
  • China
  • Cryptocurrency
  • Economy
  • Entertainment
  • Europe
  • Gossips
  • Health
  • India
  • Lifestyle
  • Mental Health
  • Middle East
  • News
  • Opinions
  • Politics
  • Sports
  • Technology
  • Travel
  • United Kingdom
  • USA

CATEGORIES

  • Africa
  • Asia Pacific
  • Australia
  • Business
  • Canada
  • China
  • Cryptocurrency
  • Economy
  • Entertainment
  • Europe
  • Gossips
  • Health
  • India
  • Lifestyle
  • Mental Health
  • Middle East
  • News
  • Opinions
  • Politics
  • Sports
  • Technology
  • Travel
  • United Kingdom
  • USA

Browse by Tag

Biden Bitcoin Business Canada case Channel China court Cup day dead deal Death Diplomat free global Health Home India Jammu Kashmir killed latest Life Live man National News NPR people Police POLITICO Russia South Time Times Top Tourism Trump U.S UAE Ukraine war world Years
  • About Us
  • Advertise With Us
  • Disclaimer
  • Privacy Policy
  • DMCA
  • Cookie Privacy Policy
  • Terms and Conditions
  • Contact Us

Copyright © 2023 Novum Times.
Novum Times is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • World
    • USA
    • United Kingdom
    • India
    • China
    • Europe
    • Africa
    • Middle East
    • Asia Pacific
    • Canada
    • Australia
  • Politics
  • Business
  • Health
  • Economy
  • Sports
  • Entertainment
  • Technology
  • Cryptocurrency
  • Gossips
  • Travel
  • Lifestyle

Copyright © 2023 Novum Times.
Novum Times is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In