Scholz says G-7 wants to diversify rather than check China rise

Group of Seven nations are seeking to dilute “dangerous dependencies” built up in areas like raw materials rather than trying to check China’s economic rise, according to German Chancellor Olaf Scholz.
Speaking at a business lobby conference in Berlin, Scholz reiterated the G-7’s expectation conveyed at a summit last month in Hiroshima that China “would not forcibly change the status quo” in Taiwan and “would abide by international rules.”As well as the warning on Taiwan, which China views as its own territory, he underscored the need to work with the government Beijing to address global issues like climate change. The German leader’s moderate tone is in line with recent comments and coincides with Chinese Premier Li Qiang’s visit to Berlin for consultations on Tuesday.“The G-7 has no interest in impeding China’s economic rise,” Scholz, who will host Li for dinner later on Monday, told delegates. “And at the same time, we are watching closely to avoid dangerous economic dependencies.”

Scholz’s government last week published Germany’s inaugural national security strategy, which declared that while “elements of rivalry and competition have increased” with China, the world’s second-biggest economy remains a partner “without whom many of the most pressing global challenges cannot be resolved.”

The ruling coalition is also due next month to unveil a new China policy paper, expected to reflect the pragmatic approach adopted by Scholz, a Social Democrat, rather than the more critical stance pushed by Foreign Minister Annalena Baerbock, a member of the Greens.

Germany is still struggling with the consequences of its over-reliance on Russian energy and is determined to reduce its footprint in China and diversify in Asia. While Scholz’s government views the country as an adversary in some areas, it remains a crucial destination for German exports and a vital source of imports.“Decoupling from China would be unrealistic and harmful,” Siegfried Russwurm, president of the BDI business lobby, said Monday at the conference. “What we need is determined derisking.”Scholz said that Germany’s push to scale back economic dependencies will also include “tapping more domestic raw-material deposits again.”

“However, we will not be able to meet our economy’s demand for raw materials such as lithium and cobalt for batteries or iridium and scandium for electrolysis in this way,” he added.

Germany will seek to help companies establish new supply chains via partnerships with nations like Chile and Azerbaijan and also wants to pursue tie-ups with countries including Indonesia, he added.

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