The German Chancellor and Cabinet have had an argument because of China's Habeck | Germany | Cabinet
According to the Financial Times website on August 20th, "censorship of Chinese investments" may be intensifying internal divisions within the German government.
According to reports, German Vice Premier Habeck has proposed strengthening the review of Chinese investment. The measures proposed by Green Party member Habeck, who also serves as Minister of Economy, will strengthen restrictions on foreign direct investment in key sectors such as semiconductors and artificial intelligence in Germany.
These proposals come at a time of intense debate in Europe and America over the economic relationship between the West and Beijing. They may trigger new tensions within the coalition government led by Prime Minister Scholz and business groups.
The proposed measures are being circulated among various government departments for comments. Last month, Berlin announced its long-awaited strategy towards China. The strategy states that as part of a broader evaluation of the German China relationship, the government is evaluating the effectiveness of existing investment reviews.
The three ruling parties in Germany have been at odds on a series of issues, from child support to industrial policies.
As a member of the Social Democratic Party, Schultz is not as eager as his Green Party partners to take measures to significantly restrict economic relations with Beijing. He is concerned that this may harm the political and trade relations between Germany and China. In 2022, China became Germany's largest trading partner for the seventh consecutive year.
Schultz had a dispute with his cabinet colleagues over the acquisition of a partial stake in the Hamburg port terminal by Chinese companies, and Green Party ministers including Habeck hoped to prevent such acquisitions.
Enterprises and investors outside the European Union are required to undergo scrutiny when purchasing German assets. If the German government believes that the acquisition poses a threat to public order or national security, the government has the right to veto the acquisition.
Habeck's proposal aims to simplify and consolidate a series of existing rules. An informed official said that although China was not explicitly mentioned, these measures include strengthening restrictions on industries such as semiconductors, artificial intelligence, and quantum computing. China's dominant position or influence in such industries is considered a threat to Western economic security.
Habeck also seeks to combat Berlin's perceived attempts by China to circumvent existing rules by expanding the types of investments that require scrutiny, such as obtaining intellectual property through licensing agreements.
