Germany urges firms to diversify out of China 

European giant takes risk as it asks business to shun nation’s biggest trading partner and look elsewhere to avoid supply-chain disruptions  

Germany urges firms to diversify out of China 
"We hope our supply chains can be diversified.” German Economic Minister Peter Altmaier. Photo: Wikimedia Commons

(ATF) German companies have been told they should diversify into Asian markets outside of China to reduce their dependence on a single source of supplies.

Economic Minister Peter Altmaier said on Monday that disruptions caused by the coronavirus pandemic had demonstrated that relying on too few source nations could imperil international trade.

Altmaier, a lawyer and politician who has been serving as Federal Minister for Economic Affairs and Energy since March 2018, told a business meeting that the pandemic had revealed that supply chains were “too one-way”.

"We naturally hope that our supply chains can be diversified,” he said, making special reference to the tight shipments of medical equipment into Germany.

CHINA TRADE: China's economic recovery continues but Covid risk remains

The China Observer reported that Chancellor Angela Merkel stated that about three-quarters of Germany's exports to Asia go to East Asia, half of which go to China. She also urged German companies to diversify and strive for new markets in the Asia-Pacific region to benefit from the growing global economy.

Germany has been slow to take a stance on various sensitive Chinese issues due, it is reported, to economic concerns. But now Germany has turned its attitude to be more in line with the US and other allies.

The China Observer reported that this is not the first time Germany has emphasised its "dependence" on China.

German media claim that from April to June this year, the nation’s total exports to China totalled 23 billion euros ($27bn). For the first time, Germany’s quarterly exports to China surpassed quarterly exports to the United States and other countries. 

“German exporters’ business to China is more dependent than ever,” the Observer wrote.

In response, Gao Feng, a spokesperson for the Ministry of Commerce said on October 17 that China and Germany have long been each other's most important trading partners in their respective regions. China has been Germany's largest trading partner since 2016, German statistics show. In the second quarter of this year, China became alsoGermany's largest export market.

It’s unclear if Germany will offer firms financial incentives to transfer from China. South Korea and Japan have offered their firms financial rewards for moving out of the country.