It must have caused some rolling of eyes in European board rooms when Germany’s chancellor Olaf Scholz last week told companies it was up to them to manage de-risking from China. Multinationals have been deafened for years by a cacophony of conflicting exhortations from EU governments, the European Commission, Joe Biden’s White House and Xi Jinping’s administration — increasingly backed by open-ended subsidies — advising them where to invest.
Scholz’s words, which were strikingly similar to what Li Qiang, China’s premier, told German corporate executives a week earlier, were surely disingenuous. Even in less fraught times, highly politicised trade disputes mean that business and official decisions in certain sectors are intertwined — particularly in Germany, given its powerful government-corporate-trade union nexus.
And these days, national and economic security imperatives are rising. Some parts of German industry in particular are already locked too far in to a model of engagement with China not to expend political capital arguing for trade and investment to be kept open. Reluctantly, we should probably wish them at least some luck. But along with that needs to come a more far-sighted view about building a diverse and competitive economy.