Germany’s trade, tech diversification ‘not China decoupling’, Chancellor Olaf Scholz says

Diversification plan was part of a national security strategy that Scholz’s ruling coalition was formulating, he said at a conference in Singapore
Scholz also suggested that it was unlikely the Bali G20 meeting would lead to a clear consensus on issues such as Russia’s war on Ukraine

Singapore

Kimberly Limin Singapore

Published: 9:52pm, 14 Nov 2022

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German Chancellor Olaf Scholz said his government’s plan to scale back “one-sided dependencies” on raw materials and critical technologies was aimed at making domestic industries “less vulnerable” and was not indicative of a decoupling from China.

Scholz told a business conference in Singapore that the diversification plan was part of a national security strategy that his ruling coalition was formulating.

“Diversification makes your businesses less vulnerable – and our economies more stable and secure,” Scholz told executives and policymakers at the Asia-Pacific Conference of German Business in Singapore.

The German leader was in the city state for a two-day visit – his first since taking office last December – and will attend the G20 Summit in Bali on Tuesday.

German Chancellor Olaf Scholz speaks with Singapore Prime Minister Lee Hsien Loong during their meeting. Like Scholz, Lee does not expect much progress to be made at this week’s G20 summit. Photo: dpa

“Diversification however doesn’t mean decoupling,” Scholz said. “That difference matters at a time when concepts such as near-shoring, deglobalisation and self-sufficiency are gaining traction.”

While China remains an important business and trading partner, the German chancellor underscored that the “Asia-Pacific region encompasses far more than China”.

“I think it’s obvious that the world will change and Southeast Asia will play a very important role in the world to come, and so we are working hard to cooperate, to develop our already good relations, and also to prepare our cooperation and our relations with the whole region for the future,” he said.

In a joint press conference with Singapore’s Prime Minister Lee Hsien Loong, Scholz suggested it was unlikely that the G20 meeting in Bali would lead to a clear consensus on issues such as Russia’s war in Ukraine.

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“We are working very hard to ensure that we not only make clear, important statements on all the issues that affect the world together … but also on the issues of peace and the consequences of the Russian war of aggression on Ukraine,” he said.

“That’s going to be a tough ride, and I think it’s going to take up a lot of our time and efforts in Bali.”

Singapore’s Lee described Monday’s face-to-face talks between Chinese President Xi Jinping and his counterpart Joe Biden as “more consequential than anything we can settle in the G20”.

Like Scholz, Lee suggested there was not likely to be major progress on the various issues facing the G20, from climate change to the state of the global economy and security.

He said the current moment was not the same as 2008, when the G20 grouping made “dramatic moves and saved the financial system and saved the world”.

While the G20 grouping of the world’s largest economies has formally existed since 1999, it was only in November 2008 when top leaders formally gathered in Washington in a bid to contain the fallout from the global financial crisis.

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“I do not expect any breakthrough on any of [the key issues]. I hope that there will be a consensus on most of them, on the general direction to move ahead,” Lee said, of the Bali meeting.

The opportunity for the Chinese and US leaders to get together – the first time they are meeting in person since Biden became president in 2021 – will “help us grapple with the issues, and I hope make progress”, Lee said.

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