On Tuesday, Germany’s economy minister said the government was working on a new trade policy with China to reduce reliance on Chinese raw materials, batteries, and semiconductors, promising “no more naivety” in trade dealings with Beijing.

Last week, sources told the media that the economy ministry was considering a slew of new measures to make doing business with China less appealing. This is the first time the minister has stated that the tougher stance is being translated into policy.

According to Robert Habeck, China is a welcome trading partner, but Germany cannot allow Beijing’s protectionism to distort competition and will not refrain from criticizing human rights violations for fear of losing business.

“We cannot allow ourselves to be blackmailed,” he said in an interview.

Habeck did not detail the new measures in detail, but stated that they would include a closer look at Chinese investments in Europe, such as infrastructure.

For the past six years, China has been Germany’s largest trading partner, with volumes expected to exceed 245 billion euros ($246 billion) in 2021.

But, concerned about Germany’s reliance on Asia’s economic superpower, the center-left government is taking a tougher stance toward Beijing than its center-right predecessor.

According to reports last Thursday, the economy ministry was considering measures such as reducing or even eliminating investment and export guarantees for China, as well as no longer promoting trade fairs.

According to Habeck, Germany must open up to new trading partners and regions because many industries rely heavily on sales to China.

“If it (the Chinese market) were to close, which is not likely at the moment … we would have extreme sales problems,” Habeck said, adding the economy ministry was contributing to the new German-China policy, much of which is already in place.

“And from this you will see that there is no more naivety,” he added.

Berlin also wants to look more closely at Chinese investments in Europe, he says, adding that Europe should not support China’s Silk Road Initiative, which aims to acquire strategic infrastructure in Europe and influence trade policy.

For example, Habeck indicated his opposition to plans by China’s Cosco to acquire a stake in a container operator at Germany’s Hafen Hamburg port, indicating that concerns about Chinese takeovers are spreading beyond the technology sector and into other industry sectors such as logistics.

“I’m leaning towards the fact that we don’t allow that,” he said.

Following Russia’s invasion of Ukraine, China has not joined the West in imposing sweeping sanctions on Moscow, but it has also not endorsed Moscow’s actions because Beijing needs to maintain trade relations with Europe.

(Adapted from CNBC.com)

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