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Germany faces the dilemma of the trade war between China and the United States

Chronic. The scene dates back to seven years ago, to Monday, February 3, 2014. It says more about the importance of China to Germany than many speeches. A month earlier, a fall in cross-country skiing had forced Angela Merkel to lighten her schedule. The German Chancellor then only travels with crutches and cancels almost all of her meetings.

However, this February 3, Angela Merkel wants to go, hobbling, to the headquarters of German industrial employers, the BDI, to participate in a very modest ceremony – a few dozen people at most – but obviously important in her eyes: the change of president of the Asia-Pacific commission of the employers’ organization.

It is hard to imagine Emmanuel Macron honoring with his presence a transfer of powers at the head of the Medef’s China commission: does he even know who chairs it? In Germany, it is the absence of the Chancellor that would have seemed incongruous. At the time, China was the country’s third largest trading partner, behind France and the Netherlands, while it was only sixth five years earlier. And, since 2016, it has conquered the first place …

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That Angela Merkel has exercised all of her political weight in recent weeks to complete on December 31, 2020, under the German presidency, an investment agreement negotiated since 2013 between the European Union and China is therefore not surprising. For German industrial companies, the “economic dissociation” between the United States – which remains their number one customer – and China is a nightmare. Evidenced by Decoupling Report published Thursday, January 14 by the European Chamber of Commerce in China, chaired by the German Jörg Wuttke, and the Merics Institute, the largest European research center dedicated to China, located in Berlin.

Everyone builds their own wall

While dissociation is often associated with the first steps the Trump administration took against Chinese imports in 2018, this report shows “That in reality,“ decoupling ”is a much longer-term trend that dates back to the early days of opening up and reform in China. Through market access and other barriers, China has a long history of managing its interdependence with the global economy in an extremely strategic and precise manner: by selectively partnering when it needs foreign technologies or competition, as was the case with high-speed rail and the financial sector respectively – and continuing to go it alone in sectors reserved for its national champions, which are often public companies ”.

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