Diversification is underway, Scholz says as German business warns against hurting China ties

Germany will not repeat its mistakes with Russia in China and was already diversifying its trade, Chancellor Olaf Scholz said on Tuesday, as a major industrial player warned against damaging ties to the country's biggest trading partner. Speaking at an economic forum hosted by Sueddeutsche Zeitung, Scholz expressed a conviction after talks with German industry that businesses were building ties with other markets and preparing for a more multi-polar world.

Germany will not repeat its mistakes with Russia in China and was already diversifying its trade, Chancellor Olaf Scholz said on Tuesday, as a major industrial player warned against damaging ties to the country's biggest trading partner.

Speaking at an economic forum hosted by Sueddeutsche Zeitung, Scholz expressed a conviction after talks with German industry that businesses were building ties with other markets and preparing for a more multi-polar world. "The mistake of dependence as with Russia will not happen again," he said, referring to Germany's decades-long reliance on Russian energy supplies.

His comments came after representatives of German industry reacted critically to a leaked draft of Berlin's new China strategy and called for more political support in diversifying trade and securing key raw materials. A large German business with a strong presence in China said on Tuesday it feared the tone of the strategy would hurt its relationship with Chinese partners.

"The mistrust towards China and market participants like us is clear in every line of that text," the business representative, who declined to be named because of the sensitivity of the matter, said. "The framing is the problem." The draft foreign ministry document advocates building stronger trade ties to other economies along with more controls on German trade with China, including 'stress tests' on raw material dependency and screenings for environmental and human rights implications of German investments.

"Stress tests would be another bureaucratic hurdle which only we would face, not our competitors from other countries. What's the point?" the business representative said. "Of course we want more open trade with China... but every world region has its problems."

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