Will Germany let China have its chips?
Should Germany sell its chips and ports to China? What about cars and advanced manufacturing tools? German companies and politicians all face some very uncomfortable choices.
Berlin is expected to block the sale of a chip factory to a Chinese-owned company, highlighting the widening divisions within the German government about China just days after Chancellor Olaf Scholz returned from a controversial trip to Beijing.
Dortmund-based chipmaker Elmos Semiconductor said that Germany’s economic ministry is likely to block the sale of its semiconductor plant to Silex Microsystems, a Swedish subsidiary of China’s Sai MicroElectronics, after previous reports indicated that the deal would be approved.
- The company announced back in December that the deal was worth about €85 million ($85 million), including a long-term supply agreement until at least 2027.
- A spokesperson for the economic ministry said that the decision will be made in the cabinet on Wednesday.
Robert Habeck, Germany’s economy minister, also said today that the country’s semiconductor industry faces “higher hurdles,” including the aforementioned takeover, amid growing domestic concerns about foreign influence on its critical technologies and supply chains.
- “We must recognize that China is not only a place to do business, but also a systemic rival. Therefore, we must protect our critical infrastructure and intellectual property,” German Finance Minister Christian Lindner told local newspaper Welt am Sonntag per Reuters last Friday.
- Scholz’s meeting with Chinese President Xí Jìnpíng 习近平 on Friday, in addition to earlier reports that he had pushed through a deal to sell a reduced stake in Hamburg’s biggest port to Chinese shipping giant Cosco, has drawn fierce backlash from some officials in Berlin.
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Scholz’s attitudes toward China have also fueled concerns that Germany — China’s most important trading partner in Europe since 2012 — will divide the rest of the EU: “If Germany is seen to be pursuing its own economic interests with China, others will have little incentive to make sacrifices of their own,” Noah Barkin, who spoke with The China Project last month, wrote for the German Marshall Fund.
- However, Chinese state media People’s Daily today praised Scholz, stating that Germany “opposes bloc confrontation” and will “play its role in furthering Europe-China relations.”
But links between the two nations’ economies continue to flourish, with bilateral trade hitting $191.3 billion in the first 10 months of this year, according to data from China’s General Administration of Customs (GAC) per state tabloid Global Times.
- China approved the use of COVID-19 vaccines from Mainz-based BioNTech on German expats residing in the country, the first mRNA shot approved for use under Beijing’s COVID-zero policy.
- Germany’s BASF, the biggest foreign chemical investor in China, recently announced a $10 billion investment in a factory in Zhanjiang, Guangdong Province. CEO Martin Brudermüller had accompanied Scholz on the trip to Beijing.
- However, some have cautioned against buying into dominant narratives that flout such close economic ties: “Germany is not dependent on China. It is rather a select group of German multinationals that push this narrative,” Luke Patey, a senior researcher at the Danish Institute for International Studies, wrote for Foreign Policy. (See his Twitter thread here.)
Meanwhile, Germany’s President Frank-Walter Steinmeier, who has much less power than the chancellor of the country, was busy reinforcing ties with Japanese Prime Minister Kishida Fumio in Tokyo and Korean President Yoon Suk-yeol in Seoul during Scholz’s trip to Beijing. News of the meetings was mostly drowned out in all the Scholz-in-China uproar.
