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German Chancellor Angela Merkel arrives for a conference on Monday in Berlin. Photo: AP

Angela Merkel says German companies should diversify to Asian markets beyond China

  • Singapore and South Korea offer promising opportunities since they regained their economic strength soon after weathering the pandemic, German minister says
  • ‘We naturally want to diversify our supply chains,’ economics minister Peter Altmaier tells German business conference
Germany

Germany has begun a campaign calling for diversification from China, with Chancellor Angela Merkel and her economics minister suggesting that businesses expand their Asian market.

This comes days after Merkel cancelled a meeting with 26 other European Union leaders to discuss future China policies, citing the coronavirus pandemic and the more pressing priority of Brexit.

Germany, the biggest economy in the EU, recently launched its Indo-Pacific policy, which officials said was aimed at encouraging businesses to explore destinations in the region other than China.

Beijing has been eager to keep the EU on its side as its economic and geopolitical contest with the US intensifies. But it remains unclear whether it will agree to further market access demanded by the EU amid talks for an investment treaty, scheduled to be completed this year.

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Other European leaders, including French President Emmanuel Macron, have also called for less reliance on China, but usually in the context of the medical supply chain, rather than an all-out diversification, as Merkel suggested.

Speaking in an event organised by the Asia-Pacific Conference of German Business on Monday, Merkel urged German companies to diversify and win new markets throughout the Asia-Pacific region. The government will continue its efforts to improve the framework conditions, she said.

Currently, about three-quarters of Germany’s Asia exports go to east Asia, and half of them to China alone, Merkel said.

Europeans bemoan ‘promise fatigue’ in faltering China-EU investment talks

Last week, the chancellor announced that the planned Berlin meeting for all 27 EU leaders to discuss China would be cancelled amid fears that such a face-to-face gathering could become a superspreader event.

Economics Minister Peter Altmaier, at the same conference on Monday, said that German companies should diversify to Asian markets beyond China to be less dependent on single supply chains, which the pandemic has shown are vulnerable to interruption.

He alluded to bottlenecks in the supply of medical equipment for the German market in the spring. “We naturally want to diversify our supply chains,” the minister said.

Peter Altmaier is Germany’s minister of economics and energy. Photo: dpa

Singapore and South Korea could offer promising opportunities as they had handled the coronavirus crisis well and regained their economic strength early on, he said.

A German official recently told the Post: “Germany does not aim to decouple with China. Rather, we would like to get a bigger pie in Asia, since we are currently very dependent on China when it comes to the Asian market.”

While China’s economic recovery accelerated in the third quarter to 4.9 per cent, headline growth was weaker than expected, suggesting persistent risks. Still, the International Monetary Fund expects the country to be the only major economy to report economic growth this year.

Germany’s economy is expected to shrink by around 5.4 per cent this year.

Additional reporting by Reuters

This article appeared in the South China Morning Post print edition as: Merkel calls on firms to look beyond mainland
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