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In international politics, small events can grow into big problems. First, the government of Lithuania underestimated how seriously China takes even small Taiwan provocations. Now, the car industry and the German government are in an uproar. China is refusing to import parts from major supplier Continental if they contain components from Lithuania. The company manufactures electronics for smart vehicles there.
So Beijing is taking revenge on the large EU member Germany for the insult by the small EU member Lithuania. That was to be expected: China does not tolerate any governmental action that might indicate the recognition of Taiwan. Since Lithuania itself has been unimpressed by economic pressure, Beijing has taken the process to another level.
The German government now faces the difficult task of formulating an appropriate response. It cannot simply accept a trade attack on Continental. But it also does not want to rush into a hasty confrontation with China. This will be a first test of skill for the inexperienced heads of the German Ministry of Economy and the Foreign Office.
Despite all the demands for a new, assertive China policy, the goal should now also be to protect the auto industry from the escalation to a regional epic in an already difficult situation. It must use its strength for the transition to new drivetrains – collectively, in all economic areas.
Attack on Continental: the Lithuania dispute has arrived in Germany
What started as a trifle about a Baltic state, is turning into a full-blown trade conflict between Germany and China. The automotive supplier Continental and at least one other German company will soon no longer be allowed to export parts to China that contain primary products from Lithuania. China.Table obtained this information from industry circles. Even if the players are trying to appear calm on the surface, both economy and politics are frantically scrambling behind the scenes to find an adequate reaction. After all, this is the first time that Beijing has dragged the German automotive industry so directly into a trade dispute. The conflict was triggered by the founding of a Taiwan office in Vilnius (China.Table reported).
A crisis meeting is scheduled in Robert Habeck’s Ministry of Economics at the beginning of the week, China.Table has learned from circles in the German capital. Associations and chambers are also currently looking for the right way to criticize China without exposing themselves too much. In the course of the week, a series of letters and announcements can be expected. Officially, neither Continental nor the governments are commenting on the reports at this time. VW told China.Table that they are monitoring the situation very closely.
The German Association of the Automotive Industry (VDA) complained that politics and business were increasingly mixing. “Intergovernmental differences should be resolved through diplomatic channels and not on the backs of business,” said a VDA spokeswoman. The association is committed to international cooperation and rules-based, free trade. “In principle, every trade and investment agreement can prevent isolation and conflict.”
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