Germany Plans to Tighten Rules for Firms Highly Dependent on China

Germany's foreign ministry plans to tighten the rules for companies deeply exposed to China, making them disclose more information and possibly conduct stress tests for geopolitical risks, a confidential draft document seen by Reuters said. The proposed measures are part of a new business strategy towards China being drawn up by Chancellor Olaf Scholz's government as it seeks to reduce its dependency on Asia's economic superpower. "The aim is to change the incentive structure for German companies with market economy instruments so that reducing export dependency is more attractive," said the document, singling out the chemicals and car industries. The draft, drawn up by the foreign ministry led by the Greens' Annalena Baerbock, still has to be agreed by other ministries. A final decision on the China strategy is expected early next year. Deep trade ties bind Asia and Europe's biggest economies, with rapid Chinese expansion and demand for Germany's cars and machinery fuelling its own growth over the past two decades. China became Germany's single biggest trade partner in 2016. However, the relationship has come under close scrutiny since Russia's invasion of Ukraine in February, which led to the end of a decade-long energy relationship with Moscow and caused numerous companies to ditch their local businesses. Read more.