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German Industry Calls for more Support to Diversify Beyond China

BERLIN, Nov 21 (Reuters) - One of Germany's main industry lobby groups called on Monday for more support for industry to diversify trade beyond China, as the government prepares new policies aimed at reducing the economy's dependence on Beijing.

Businesses faced an administrative burden from planned measures such as stress tests and greater scrutiny on investments in China, outlined in a draft document seen by Reuters, the Association of German Chambers of Industry and Commerce (DIHK) said.

"Everything we have heard so far about the German government's China strategy is extremely defensive," said Volker Treier, head of foreign trade at DIHK.

"There is a lack of an encouragement strategy for building out sustainable economic relations, particularly in the wider Asia-Pacific realm, to avoid one-sided dependencies."

Asked about the draft document, the Chinese foreign ministry in Beijing told Reuters it hoped Germany would develop its relations in an "objective and rational manner", adopting a policy benefiting the people of both nations.

Russia's war in Ukraine, which German officials say revealed the economy to be too dependent on Russian energy, has spurred a re-examination of ties with Beijing, which are close among German businesses, especially in manufacturing.

Just four German companies - carmakers Mercedes-Benz, BMW and Volkswagen and the chemicals giant BASF - accounted for a third of all European investment in China in 2018-2021, according to a study by research company Rhodium Group.

The foreign ministry document, which still has to be agreed by other ministries, said key industries including autos and chemicals must avoid the risk to companies and the country of investing too heavily in China.

A spokesperson for Mercedes-Benz declined to comment on the specific policies in the document but said the company sees it "as our task to work on greater diversification of our supply chains".

"We need an active and resilient industrial policy and strategy in Europe with regards to raw materials, batteries or semiconductors."

A BMW spokesperson also declined to comment on the document's details but said the group was as heavily invested in Europe and the Americas as in China, and would "continue to pursue the goal of opening up new sales markets in the future".

Volkswagen and BASF declined to comment.

Diversified group Merck KGaA, whose investments in the region include a production site for lab equipment in Wuxi near the commercial hub of Shanghai, said facilities in China would mainly serve customers in the country.

"We need constructive dialogue with the goal to enhance multi-nationalism in the face of international bloc building," it said, when asked to comment on Germany's plans.

Reporting by Victoria Waldersee, Andreas Rinke, Ludwig Burger; Additional reporting by Martin Pollard in Beijing Editing by Cynthia Osterman and Clarence Fernandez

Source: Reuters

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