Table.Briefing: Europe

Gas exemptions for chemical industry + Rethinking business with China + Anja Weisgerber

  • Saving gas with exceptions for the chemical industry
  • Dependencies cause rethinking of China business
  • Wheat prices rise again after missile attack on Odesa
  • Commission allows Germany to subsidize rail companies
  • Federal Constitutional Court examines EU recovery fund
  • Saudi Crown Prince Mohammed travels to Athens
  • Heads: Anja Weisgerber – a jurist for the environment
Dear reader,

Some more bad news came from Moscow yesterday regarding the gas crisis. Gazprom is once again throttling gas flows through Nord Stream 1 on Wednesday. The EU energy ministers plan to decide on countermeasures today. According to information obtained by Europe.Table, the Permanent Representatives agreed yesterday, for now, on extensive exemptions for the chemical industry. Manuel Berkel has the details.

It is no secret that European and especially German companies are heavily dependent on China. The People’s Republic has long since grown to be Germany’s largest trading partner. There are even critical dependencies on rare earth elements, magnesium and other raw materials. But now a change in thinking is apparently taking place in the business community: According to a survey by the EU Chamber of Commerce in China, the country has become less attractive as an investment destination for 77 percent of the companies surveyed. But unbundling will be anything but easy, as Nico Beckert analyzes.

Anja Weisgerber is the spokeswoman for environmental and consumer protection for the German CDU/CSU parliamentary group in the Bundestag and currently heads the group’s climate group with her colleague Andreas Jung. The EU’s Green Deal, she says, is not a nuisance even in difficult times, “but rather part of the solution”. Read more about Weisgerber’s career and her convictions in today’s Profile by Janna Degener-Storr.

Your
Sarah Schaefer
Image of Sarah  Schaefer

Feature

Gas saving with exceptions for the chemical industry

While transit through the Nord Stream 1 gas pipeline is disrupted, at least the strategic gamble between Moscow and Brussels worked on Monday. Russian media were closely monitoring the negotiations between the EU ambassadors and were trying hard to portray today’s meeting of energy ministers as a failure early, a high-ranking EU official said yesterday.

For the Union, it is now all the more urgent to display unity. Several countries have recently called for changes to the winter emergency plan presented by the Commission last Wednesday. But Moscow again tried to dominate the headlines in the international community on Monday.

Last week, Kremlin leader Vladimir Putin already threatened that gas supplies could be further reduced around July 26, citing a second turbine allegedly in need of repair as the reason.

Gas price climbs after Nord Stream announcement

Accompanied by this justification was Gazprom’s announcement yesterday that gas deliveries would be cut by half to 20 percent of the pipeline’s capacity, or 33 million cubic meters of gas per day. Only since last Thursday, when maintenance work had been completed, did 40 percent of the maximum possible volume flow through Nord Stream 1 again. Gas prices have already reacted to the new announcement, rising yesterday by ten percent to €177 per megawatt hour.

The German Ministry of Economics Affairs stated yesterday, as with previous cutbacks, that according to its own information there was no technical reason for a reduction in gas flows.

It was precisely this kind of scenario that prompted Commission President Ursula von der Leyen and the College to present a proposal on gas-saving solidarity, a Commission spokesman said in Brussels last night. This development would confirm the Commission’s own analysis, and the hope is that the Council will decide on an appropriate response this Tuesday.

‘There is no plan B

Starting at 9:30 AM today, EU energy ministers plan to discuss changes to the Commission’s proposal and, if somehow possible, also adopt an emergency Council regulation. “There is no plan B,” the EU official said Monday about a possible failure. The outcome will be announced at 1 PM, with another press conference scheduled for 4 PM with Ukrainian Minister of Energy German Galushchenko.

The Czech presidency definitely wants to enforce the savings target of 15 percent, the statement continued. Prague also wants to uphold the reference period of the past five years. Greece only wanted to use 2021 as the base period instead. Otherwise, the Commission’s methodology would mean that Greece has to cut gas by 24 percent, a government spokesman told Europe.Table.

However, Greece has already managed to get the ministers of energy to discuss another issue today: Decoupling the price of electricity from the determining high costs of gas-fired power generation. The government in Athens would prefer to expand the options for transferring unused money from the recovery fund to its citizens. The commission is already exploring options for price caps and a new electricity market design. However, nothing more than a report on the current status of the examinations can probably be expected at today’s meeting.

Council wants to limit the power of the Commission

Regarding the gas issue, the Council has already agreed that it should be given greater weight in declaring a Union-wide emergency. Before the Commission declares an emergency, either five instead of only three member states will have to request the Commission to do so – or the Council will decide on a state of emergency itself by a qualified majority.

It is also quite certain that the regulation will be limited to one year instead of two, although according to the Commission’s calculations, the winter of 2023/24 is likely to be even more severe than the upcoming one. After all, member states are already struggling to fill up the storage facilities.

Still disputed are possible exceptions to the savings target. It is widely accepted that poor or no connection to the European gas network must be taken into account. The Commission has already noted this in its draft. In addition to the island states, this mainly affects Spain and Portugal, but France, Denmark and Poland also expressed concerns.

Among other things, Poland wants to avoid having to supply other member states with gas from domestic stocks and reserves, Europe.Table has learned from Polish government circles.

Households and businesses could bear higher burden

To prevent each country from enforcing its own exemption rules, the Czech Council Presidency is pursuing a strategy of enforcing exemptions for individual economic sectors. However, this also led to entire wish lists in some cases. Poland wanted to exempt several industries from the savings obligations, such as refineries, ceramics, steel, and nitrogen producers like fertilizer producers.

Instead of spelling out a catalog of critical industries, the Permanent Representatives agreed last night on a blanket solution. Member states are to be given the option of excluding any industry from the savings target in which gas is used as a material, Europe.Table was told by an EU official. As a feedstock, gas could only be replaced by other carbon-based feedstocks, which is more difficult than for heating or power generation.

However, should the energy ministers decide on this today, there is a risk that the burden will be shifted further onto households and businesses. But the chemical industry will probably rejoice. The agreement today will also determine which rules apply to the metal industry, which needs the gas for its furnaces but not as feedstock. With dpa, rtr

  • Energy
  • Industry
  • Natural gas

Dependencies lead to turning point for China business

For years, China was considered one of the preferred partners of German politics and business. The People’s Republic was a guarantor of German growth and has long since risen to become Germany’s largest trading partner. Automobile and mechanical engineering companies make huge profits in the People’s Republic.

However, there are many indications that Germany’s economic involvement in China is facing a turning point. The Covid lockdowns and the Chinese focus on their own competitiveness are making the country increasingly unattractive.

Added to this is the new fear of becoming too dependent: Germany’s massive reliance on Russian gas for years is likely to take its revenge in the form of a recession this winter. Against this backdrop, Germany’s dependence on China is also being reassessed. Foreign Minister Annalena Baerbock recently said she was “very serious” about reducing dependencies on China.

Global market share of 30 percent

It won’t be easy. “Europe’s economic ties with China are much more complex” than those with Russia “and involve sectors with a deeply ramified value chain,” Max Zenglein, Chief Economist at China think tank Merics, tells China.Table.

There are even critical dependencies on rare earth elements, magnesium, and other raw materials (China.Table reported). Dependencies have also increased sharply for industrial goods. According to Merics, EU states are in a “critical strategic dependence” on China in 103 product categories. This means that EU members import at least 50 percent of a given product from China, and the People’s Republic also has a global market share of at least 30 percent. These include, for example, pharmaceutical products, chemicals, and electronic parts such as specific circuit boards, small transformers, and battery cells. Numerous industries rely on intermediate inputs from China.

Finding other suppliers for all these products at short notice would be problematic. The German economy could hardly cope with a supply stoppage. Zenglein, therefore, recommends: “It would be quite helpful if politics and business were to adopt mechanisms to identify dependencies and reduce them in critical areas – for example, renewable energies, basic pharmaceutical materials or electronic components.”

China reduces dependence on the West

China is already doing that. Beijing aims to become the world’s technological leader and overtake Western suppliers. China’s companies are to become more innovative and establish tech dominance, which will ensure future growth. “In the event of geopolitical escalations,” China would then be better equipped, says Zenglein.

To catch up technologically, China is also using foreign corporations. As a result, some researchers warn that the German industry should not act too naively. “Foreign investors must realize that they are supposed to serve this goal,” Rolf Langhammer of the Kiel Institute for the World Economy (IfW Kiel) tells China.Table. The automotive industry would serve as a cautionary example. German companies “have supplied Chinese companies with the necessary know-how to be replaced by them in the future,” explains the trade expert.

A study by the Institute of the German Economy in Cologne (IW) shows the consequences: “Germany is much more dependent on China, especially on the export side, but also on the import side than vice versa.” And China’s imports will continue to decline in the future, the prognosis shows. The reason can be found in Beijing. “The Chinese government wants to further reduce its dependencies on foreign countries through the dual-circulation strategy,” writes the study’s author, Juergen Matthes.

People’s Republic loses its attractiveness

However, not all developments are the result of an active decision by Beijing. China has recently become less attractive as a sales market and in day-to-day business. Companies and associations complain about the strict zero-Covid policy and numerous lockdowns. According to a survey by the EU Chamber of Commerce in China, an increasingly large number of companies consider withdrawing investments from China (China.Table reported). For 77 percent of the companies surveyed, China has lost its appeal as an investment target.

And German companies also want to reduce their dependence on China. Almost every second industrial company that purchases intermediate inputs from the People’s Republic wants to reduce its imports from the country, as an Ifo study from April shows. Whether this change in sentiment will also “trigger a fundamental change in strategy among European companies remains to be seen,” says Zenglein.

But globally, the signs are pointing toward disentanglement. “Globalization is at the beginning of a realignment,” says Zenglein. Risk factors will have to play an increasing role in companies’ calculations in the future. However, the idea is not to decouple. Rather, Zenglein advocates diversification. It “will take time and, above all, money.”

Rolf Langhammer points out that the Chinese market is still too vital at present. “Companies will only be able to reduce their focus on the Chinese market very slowly, if at all,” says the IfW researcher. But against the backdrop of the new geopolitical realities, “it may become even more costly not to react,” says Zenglein.

Competitors could fill the gap

This could be the biggest challenge. Companies prefer to focus on short-term profits rather than long-term security. After all, they compete with each other. It’s the classic prisoner’s dilemma: If a company gives up sales in China, opportunities open up for competitors, who then can fill the gap and take market share from the company. The same applies to purchasing low-cost primary products and raw materials from China. But whether this approach will bring significant benefits in the long term is questionable, especially since the Russia debacle.

Will German politics and business learn the right lessons and adapt to the new globalization? A new China strategy by the Foreign Ministry could soon shed light on this. Foreign Minister Baerbock recently said that because China is a system rival, “we have to make clear that nobody can blackmail us, as we were with our gas dependency on Russia.” And Robert Habeck also wants to chart a new course. “We are diversifying more and reducing our dependencies, including on China,” the Economic Affairs Minister said recently. The government will have to be measured against these statements.

  • Digitization
  • Economy
  • Energy
  • Raw materials

News

Wheat prices rise as missile strike threatens Ukraine export pact

Wheat prices rose sharply on Monday as a missile strike on the Ukrainian port of Odesa over the weekend raised doubts about whether it will be possible to implement last week’s agreement to open a corridor for grain exports from the war-torn country.

Russia, Ukraine, the United Nations and Turkey signed the deal on Friday to reopen three Ukrainian Black Sea ports for grain exports. The deal is valid for 120 days and targets monthly exports of 5 million tonnes.

Wheat futures on the Chicago Board of Trade Wv1 rose nearly 4 percent to $7.86 a bushel on Monday, regaining much of the ground lost on Friday as prices fell nearly 6 percent after the pact was announced.

UN: First ships will be ready soon

“A restart of Ukrainian exports will not only need a safe shipping channel, but also safe ports. The Russians have created doubt about the safety of ports hardly before the ink was dry on the shipping agreement. Doubt is there again,” one European trader said.

The first ships to export Ukraine grain from the country’s Black Sea ports may move within a few days under a deal agreed on Friday by Ukraine, Russia, Turkey and the United Nations, a UN spokesperson said on Monday.

A Joint Coordination Center will liaise with the shipping industry and will publish detailed procedures for ships in the near future, said deputy UN spokesperson Farhan Haq.

Ukraine pressed ahead on Sunday with efforts to restart grain exports from its Black Sea ports under the new deal but warned that deliveries would suffer if a Russian missile strike on Odesa was a sign of more to come. rtr

  • Cereals
  • Wheat

Commission allows Germany to aid rail companies

According to a decision by the EU Commission, Germany is allowed to once again support rail companies with millions of euros. This time the amount is €313 million to help rail companies overcome the consequences of COVID, as the Brussels-based authority announced on Monday. The measure reportedly follows a regulation on billion-euro aid that expired in May.

The aid is intended to reduce fees that companies in the long-distance passenger transport sector have to pay to be allowed to use the rail network. The financial boost is also intended to help ensure that rail transport remains competitive with cars, for example, in order to achieve European environmental and climate protection targets.

The EU Commission argues that the measure is necessary to shift traffic from the roads to railways. German COVID aid for Deutsche Bahn has already been approved by the EU Commission several times in the past. dpa

  • Coronavirus
  • Financial policy
  • Germany
  • Mobility

German Constitutional Court examines EU recovery fund

The German Constitutional Court is taking a close look at the EU’s hundreds of billions of the COVID-19 recovery fund. The judges in Karlsruhe will hear two lawsuits on Tuesday and Wednesday concerning Germany’s participation.

The aid agreed in the summer of 2020 is intended to help the 27 EU countries get back on their feet after the pandemic. For the first time, debt is being jointly taken on a grand scale. The total volume in question is €750 billion at 2018 exchange rates – just under €807 billion today. Part of the money is in the form of grants, some as loans.

One of the constitutional complaints comes from a plaintiffs’ alliance with almost 2,300 supporters surrounding former AfD founder Bernd Lucke. According to the critics, the fund has no basis in the European treaties. They also warn of incalculable liability risks for the German budget. The ruling will be announced in a few months at the earliest. dpa

  • Coronavirus
  • Financial policy
  • Germany

Saudi Arabian Crown Prince Mohammed travels to Athens

Just over a week after US President Joe Biden visited Saudi Arabia, Crown Prince Mohammed bin Salman plans to travel to Greece. A meeting with Greek Prime Minister Kyriakos Mitsotakis is planned for Tuesday evening, a Greek government spokesman told dpa on Monday. It is the crown prince’s first visit to the EU since the murder of journalist Jamal Khashoggi nearly four years ago.

There was initially no confirmation of the visit from the Saudi side. It also remained unclear at first whether the crown prince plans to make further stops in other EU countries during his trip.

According to government circles in Athens, the visit mainly focuses on economic and military cooperation between the two countries. Last year, Greece provided Saudi Arabia with a battery of Patriot air defense missiles and more than 100 soldiers. Saudi Arabia is fighting in neighboring Yemen against Houthi insurgents, who repeatedly launch attacks with drones and missiles against the kingdom.

Internationally isolated after Khashoggi murder

Khashoggi, who was a columnist for the “Washington Post,” was brutally killed in the Saudi consulate in Istanbul in the fall of 2018. US intelligence agencies see the crown prince and de facto ruler of Saudi Arabia as directly responsible. The latter has denied having ordered the killing.

In the years since the murder, the crown prince has been severely internationally isolated. He usually met Western heads of state and government only at summit meetings, such as those of the G20 group. Just over a week ago, however, US President Joe Biden traveled to the kingdom, where he met the crown prince in person in the coastal city of Jeddah and, in his own words, also addressed the Khashoggi case directly.

French President Emmanuel Macron also traveled to Jeddah last year. Macron assured at the time that he had spoken “about everything” with the crown prince “without any taboo”. Macron did not say whether Khashoggi’s murder was directly addressed. dpa

  • European policy
  • Greece
  • Saudi Arabia

Heads

Anja Weisgerber – a jurist for the environment

Anja Weisgerber is the spokeswoman for environmental and consumer protection for the CDU/CSU parliamentary group in the Bundestag.

As a child, Anja Weisgerber wanted to become a teacher. That things turned out differently is largely owed to the influence of many people: A German teacher convinced her as a student that it was important to stand up for democracy. Her great uncle Wilhelm Baumann, who was himself a member of the state parliament, took her to the CSU’s New Year’s reception when she was 19 – whereupon she joined the party’s youth organization and two years later joined the CSU.

A friend who had begun studying law before her offered to accompany her to lectures. Former Minister of the German state of Bavaria, Edmund Stoiber, supported her when she ran for the European elections at the age of 28 – at the request of the party’s Young Union. She was a member of the European Parliament from 2004 to 2013. Michael Glos eventually convinced her to succeed him in the Bundestag. And Angela Merkel has always been a big role model: “Particularly in difficult times, the other EU countries have also looked to her for guidance,” she says – but she misses that in Germany’s current leadership.

Nature conservation out of Christian conviction

Anja Weisgerber rolls the “R” when she talks about the integrity of creation. Although she doesn’t make it to church regularly, she is very religious, says the 46-year-old politician from Schweinfurt in Lower Franconia. Her commitment to environmental protection and nature conservation is also based on her Christian faith: “Even at home, I learned that we have a responsibility to nature and to future generations.

During her law studies, Anja Weisgerber focused on environmental law. As an environmental politician in the Young Union, in the CSU, in the European Parliament and in the Bundestag, she has campaigned for the protection of resources, the advancement of the circular economy, climate protection and the preservation of biodiversity: “Bavaria was the first federal state to create an environment ministry,” she emphasizes.

Today, it is above all her children – 9 and 11 years old – who motivate her every day anew: “Both of them are huge nature and animal lovers. When they see an amphibian or a lizard on a family trip, they celebrate. Naturally, such animals need to be protected.”

Anja Weisgerber counts her work for the EU’s Renewable Energy Directive and the German government’s 2019 climate package amongst her political successes. She currently heads the CDU/CSU parliamentary group’s climate group with her colleague in the Bundestag, Andreas Jung. “First and foremost, we need to reduce carbon emissions and apply the control mechanism provided for in the Climate Law.” But preparations must also be made for renewed heavy rainfall and flooding, Weisgerber said. “Climate adaptation is as important as avoiding emissions.”

Endurance like on the tennis court

Even in times of crisis like now, politicians should not think about undermining climate and energy laws, she says. “The EU’s Green Deal is not a momentary nuisance in difficult times, but rather part of the solution by reducing our dependence through the expansion of renewables and efficiency.”

Weisgerber also works on strengthening the circular economy, reducing and reusing plastic, sustainability in product design, and accelerating the planning of infrastructure projects in the energy sector.

In her day-to-day political work, Anja Weisgerber also benefits from her experience as a competitive athlete. As the Bavarian tennis champion, she was often on the tennis court while preparing for her finals in school. There she learned to perform at her best when it counts and to get back up after defeats. When she ran for the municipal council for the first time at the age of 18, she was not elected. Six years later, she ran again – this time with success. Janna Degener-Storr

  • Climate & Environment
  • Climate protection
  • Environmental protection

Europe.Table Editorial Office

EUROPE.TABLE EDITORS

Licenses:
    • Saving gas with exceptions for the chemical industry
    • Dependencies cause rethinking of China business
    • Wheat prices rise again after missile attack on Odesa
    • Commission allows Germany to subsidize rail companies
    • Federal Constitutional Court examines EU recovery fund
    • Saudi Crown Prince Mohammed travels to Athens
    • Heads: Anja Weisgerber – a jurist for the environment
    Dear reader,

    Some more bad news came from Moscow yesterday regarding the gas crisis. Gazprom is once again throttling gas flows through Nord Stream 1 on Wednesday. The EU energy ministers plan to decide on countermeasures today. According to information obtained by Europe.Table, the Permanent Representatives agreed yesterday, for now, on extensive exemptions for the chemical industry. Manuel Berkel has the details.

    It is no secret that European and especially German companies are heavily dependent on China. The People’s Republic has long since grown to be Germany’s largest trading partner. There are even critical dependencies on rare earth elements, magnesium and other raw materials. But now a change in thinking is apparently taking place in the business community: According to a survey by the EU Chamber of Commerce in China, the country has become less attractive as an investment destination for 77 percent of the companies surveyed. But unbundling will be anything but easy, as Nico Beckert analyzes.

    Anja Weisgerber is the spokeswoman for environmental and consumer protection for the German CDU/CSU parliamentary group in the Bundestag and currently heads the group’s climate group with her colleague Andreas Jung. The EU’s Green Deal, she says, is not a nuisance even in difficult times, “but rather part of the solution”. Read more about Weisgerber’s career and her convictions in today’s Profile by Janna Degener-Storr.

    Your
    Sarah Schaefer
    Image of Sarah  Schaefer

    Feature

    Gas saving with exceptions for the chemical industry

    While transit through the Nord Stream 1 gas pipeline is disrupted, at least the strategic gamble between Moscow and Brussels worked on Monday. Russian media were closely monitoring the negotiations between the EU ambassadors and were trying hard to portray today’s meeting of energy ministers as a failure early, a high-ranking EU official said yesterday.

    For the Union, it is now all the more urgent to display unity. Several countries have recently called for changes to the winter emergency plan presented by the Commission last Wednesday. But Moscow again tried to dominate the headlines in the international community on Monday.

    Last week, Kremlin leader Vladimir Putin already threatened that gas supplies could be further reduced around July 26, citing a second turbine allegedly in need of repair as the reason.

    Gas price climbs after Nord Stream announcement

    Accompanied by this justification was Gazprom’s announcement yesterday that gas deliveries would be cut by half to 20 percent of the pipeline’s capacity, or 33 million cubic meters of gas per day. Only since last Thursday, when maintenance work had been completed, did 40 percent of the maximum possible volume flow through Nord Stream 1 again. Gas prices have already reacted to the new announcement, rising yesterday by ten percent to €177 per megawatt hour.

    The German Ministry of Economics Affairs stated yesterday, as with previous cutbacks, that according to its own information there was no technical reason for a reduction in gas flows.

    It was precisely this kind of scenario that prompted Commission President Ursula von der Leyen and the College to present a proposal on gas-saving solidarity, a Commission spokesman said in Brussels last night. This development would confirm the Commission’s own analysis, and the hope is that the Council will decide on an appropriate response this Tuesday.

    ‘There is no plan B

    Starting at 9:30 AM today, EU energy ministers plan to discuss changes to the Commission’s proposal and, if somehow possible, also adopt an emergency Council regulation. “There is no plan B,” the EU official said Monday about a possible failure. The outcome will be announced at 1 PM, with another press conference scheduled for 4 PM with Ukrainian Minister of Energy German Galushchenko.

    The Czech presidency definitely wants to enforce the savings target of 15 percent, the statement continued. Prague also wants to uphold the reference period of the past five years. Greece only wanted to use 2021 as the base period instead. Otherwise, the Commission’s methodology would mean that Greece has to cut gas by 24 percent, a government spokesman told Europe.Table.

    However, Greece has already managed to get the ministers of energy to discuss another issue today: Decoupling the price of electricity from the determining high costs of gas-fired power generation. The government in Athens would prefer to expand the options for transferring unused money from the recovery fund to its citizens. The commission is already exploring options for price caps and a new electricity market design. However, nothing more than a report on the current status of the examinations can probably be expected at today’s meeting.

    Council wants to limit the power of the Commission

    Regarding the gas issue, the Council has already agreed that it should be given greater weight in declaring a Union-wide emergency. Before the Commission declares an emergency, either five instead of only three member states will have to request the Commission to do so – or the Council will decide on a state of emergency itself by a qualified majority.

    It is also quite certain that the regulation will be limited to one year instead of two, although according to the Commission’s calculations, the winter of 2023/24 is likely to be even more severe than the upcoming one. After all, member states are already struggling to fill up the storage facilities.

    Still disputed are possible exceptions to the savings target. It is widely accepted that poor or no connection to the European gas network must be taken into account. The Commission has already noted this in its draft. In addition to the island states, this mainly affects Spain and Portugal, but France, Denmark and Poland also expressed concerns.

    Among other things, Poland wants to avoid having to supply other member states with gas from domestic stocks and reserves, Europe.Table has learned from Polish government circles.

    Households and businesses could bear higher burden

    To prevent each country from enforcing its own exemption rules, the Czech Council Presidency is pursuing a strategy of enforcing exemptions for individual economic sectors. However, this also led to entire wish lists in some cases. Poland wanted to exempt several industries from the savings obligations, such as refineries, ceramics, steel, and nitrogen producers like fertilizer producers.

    Instead of spelling out a catalog of critical industries, the Permanent Representatives agreed last night on a blanket solution. Member states are to be given the option of excluding any industry from the savings target in which gas is used as a material, Europe.Table was told by an EU official. As a feedstock, gas could only be replaced by other carbon-based feedstocks, which is more difficult than for heating or power generation.

    However, should the energy ministers decide on this today, there is a risk that the burden will be shifted further onto households and businesses. But the chemical industry will probably rejoice. The agreement today will also determine which rules apply to the metal industry, which needs the gas for its furnaces but not as feedstock. With dpa, rtr

    • Energy
    • Industry
    • Natural gas

    Dependencies lead to turning point for China business

    For years, China was considered one of the preferred partners of German politics and business. The People’s Republic was a guarantor of German growth and has long since risen to become Germany’s largest trading partner. Automobile and mechanical engineering companies make huge profits in the People’s Republic.

    However, there are many indications that Germany’s economic involvement in China is facing a turning point. The Covid lockdowns and the Chinese focus on their own competitiveness are making the country increasingly unattractive.

    Added to this is the new fear of becoming too dependent: Germany’s massive reliance on Russian gas for years is likely to take its revenge in the form of a recession this winter. Against this backdrop, Germany’s dependence on China is also being reassessed. Foreign Minister Annalena Baerbock recently said she was “very serious” about reducing dependencies on China.

    Global market share of 30 percent

    It won’t be easy. “Europe’s economic ties with China are much more complex” than those with Russia “and involve sectors with a deeply ramified value chain,” Max Zenglein, Chief Economist at China think tank Merics, tells China.Table.

    There are even critical dependencies on rare earth elements, magnesium, and other raw materials (China.Table reported). Dependencies have also increased sharply for industrial goods. According to Merics, EU states are in a “critical strategic dependence” on China in 103 product categories. This means that EU members import at least 50 percent of a given product from China, and the People’s Republic also has a global market share of at least 30 percent. These include, for example, pharmaceutical products, chemicals, and electronic parts such as specific circuit boards, small transformers, and battery cells. Numerous industries rely on intermediate inputs from China.

    Finding other suppliers for all these products at short notice would be problematic. The German economy could hardly cope with a supply stoppage. Zenglein, therefore, recommends: “It would be quite helpful if politics and business were to adopt mechanisms to identify dependencies and reduce them in critical areas – for example, renewable energies, basic pharmaceutical materials or electronic components.”

    China reduces dependence on the West

    China is already doing that. Beijing aims to become the world’s technological leader and overtake Western suppliers. China’s companies are to become more innovative and establish tech dominance, which will ensure future growth. “In the event of geopolitical escalations,” China would then be better equipped, says Zenglein.

    To catch up technologically, China is also using foreign corporations. As a result, some researchers warn that the German industry should not act too naively. “Foreign investors must realize that they are supposed to serve this goal,” Rolf Langhammer of the Kiel Institute for the World Economy (IfW Kiel) tells China.Table. The automotive industry would serve as a cautionary example. German companies “have supplied Chinese companies with the necessary know-how to be replaced by them in the future,” explains the trade expert.

    A study by the Institute of the German Economy in Cologne (IW) shows the consequences: “Germany is much more dependent on China, especially on the export side, but also on the import side than vice versa.” And China’s imports will continue to decline in the future, the prognosis shows. The reason can be found in Beijing. “The Chinese government wants to further reduce its dependencies on foreign countries through the dual-circulation strategy,” writes the study’s author, Juergen Matthes.

    People’s Republic loses its attractiveness

    However, not all developments are the result of an active decision by Beijing. China has recently become less attractive as a sales market and in day-to-day business. Companies and associations complain about the strict zero-Covid policy and numerous lockdowns. According to a survey by the EU Chamber of Commerce in China, an increasingly large number of companies consider withdrawing investments from China (China.Table reported). For 77 percent of the companies surveyed, China has lost its appeal as an investment target.

    And German companies also want to reduce their dependence on China. Almost every second industrial company that purchases intermediate inputs from the People’s Republic wants to reduce its imports from the country, as an Ifo study from April shows. Whether this change in sentiment will also “trigger a fundamental change in strategy among European companies remains to be seen,” says Zenglein.

    But globally, the signs are pointing toward disentanglement. “Globalization is at the beginning of a realignment,” says Zenglein. Risk factors will have to play an increasing role in companies’ calculations in the future. However, the idea is not to decouple. Rather, Zenglein advocates diversification. It “will take time and, above all, money.”

    Rolf Langhammer points out that the Chinese market is still too vital at present. “Companies will only be able to reduce their focus on the Chinese market very slowly, if at all,” says the IfW researcher. But against the backdrop of the new geopolitical realities, “it may become even more costly not to react,” says Zenglein.

    Competitors could fill the gap

    This could be the biggest challenge. Companies prefer to focus on short-term profits rather than long-term security. After all, they compete with each other. It’s the classic prisoner’s dilemma: If a company gives up sales in China, opportunities open up for competitors, who then can fill the gap and take market share from the company. The same applies to purchasing low-cost primary products and raw materials from China. But whether this approach will bring significant benefits in the long term is questionable, especially since the Russia debacle.

    Will German politics and business learn the right lessons and adapt to the new globalization? A new China strategy by the Foreign Ministry could soon shed light on this. Foreign Minister Baerbock recently said that because China is a system rival, “we have to make clear that nobody can blackmail us, as we were with our gas dependency on Russia.” And Robert Habeck also wants to chart a new course. “We are diversifying more and reducing our dependencies, including on China,” the Economic Affairs Minister said recently. The government will have to be measured against these statements.

    • Digitization
    • Economy
    • Energy
    • Raw materials

    News

    Wheat prices rise as missile strike threatens Ukraine export pact

    Wheat prices rose sharply on Monday as a missile strike on the Ukrainian port of Odesa over the weekend raised doubts about whether it will be possible to implement last week’s agreement to open a corridor for grain exports from the war-torn country.

    Russia, Ukraine, the United Nations and Turkey signed the deal on Friday to reopen three Ukrainian Black Sea ports for grain exports. The deal is valid for 120 days and targets monthly exports of 5 million tonnes.

    Wheat futures on the Chicago Board of Trade Wv1 rose nearly 4 percent to $7.86 a bushel on Monday, regaining much of the ground lost on Friday as prices fell nearly 6 percent after the pact was announced.

    UN: First ships will be ready soon

    “A restart of Ukrainian exports will not only need a safe shipping channel, but also safe ports. The Russians have created doubt about the safety of ports hardly before the ink was dry on the shipping agreement. Doubt is there again,” one European trader said.

    The first ships to export Ukraine grain from the country’s Black Sea ports may move within a few days under a deal agreed on Friday by Ukraine, Russia, Turkey and the United Nations, a UN spokesperson said on Monday.

    A Joint Coordination Center will liaise with the shipping industry and will publish detailed procedures for ships in the near future, said deputy UN spokesperson Farhan Haq.

    Ukraine pressed ahead on Sunday with efforts to restart grain exports from its Black Sea ports under the new deal but warned that deliveries would suffer if a Russian missile strike on Odesa was a sign of more to come. rtr

    • Cereals
    • Wheat

    Commission allows Germany to aid rail companies

    According to a decision by the EU Commission, Germany is allowed to once again support rail companies with millions of euros. This time the amount is €313 million to help rail companies overcome the consequences of COVID, as the Brussels-based authority announced on Monday. The measure reportedly follows a regulation on billion-euro aid that expired in May.

    The aid is intended to reduce fees that companies in the long-distance passenger transport sector have to pay to be allowed to use the rail network. The financial boost is also intended to help ensure that rail transport remains competitive with cars, for example, in order to achieve European environmental and climate protection targets.

    The EU Commission argues that the measure is necessary to shift traffic from the roads to railways. German COVID aid for Deutsche Bahn has already been approved by the EU Commission several times in the past. dpa

    • Coronavirus
    • Financial policy
    • Germany
    • Mobility

    German Constitutional Court examines EU recovery fund

    The German Constitutional Court is taking a close look at the EU’s hundreds of billions of the COVID-19 recovery fund. The judges in Karlsruhe will hear two lawsuits on Tuesday and Wednesday concerning Germany’s participation.

    The aid agreed in the summer of 2020 is intended to help the 27 EU countries get back on their feet after the pandemic. For the first time, debt is being jointly taken on a grand scale. The total volume in question is €750 billion at 2018 exchange rates – just under €807 billion today. Part of the money is in the form of grants, some as loans.

    One of the constitutional complaints comes from a plaintiffs’ alliance with almost 2,300 supporters surrounding former AfD founder Bernd Lucke. According to the critics, the fund has no basis in the European treaties. They also warn of incalculable liability risks for the German budget. The ruling will be announced in a few months at the earliest. dpa

    • Coronavirus
    • Financial policy
    • Germany

    Saudi Arabian Crown Prince Mohammed travels to Athens

    Just over a week after US President Joe Biden visited Saudi Arabia, Crown Prince Mohammed bin Salman plans to travel to Greece. A meeting with Greek Prime Minister Kyriakos Mitsotakis is planned for Tuesday evening, a Greek government spokesman told dpa on Monday. It is the crown prince’s first visit to the EU since the murder of journalist Jamal Khashoggi nearly four years ago.

    There was initially no confirmation of the visit from the Saudi side. It also remained unclear at first whether the crown prince plans to make further stops in other EU countries during his trip.

    According to government circles in Athens, the visit mainly focuses on economic and military cooperation between the two countries. Last year, Greece provided Saudi Arabia with a battery of Patriot air defense missiles and more than 100 soldiers. Saudi Arabia is fighting in neighboring Yemen against Houthi insurgents, who repeatedly launch attacks with drones and missiles against the kingdom.

    Internationally isolated after Khashoggi murder

    Khashoggi, who was a columnist for the “Washington Post,” was brutally killed in the Saudi consulate in Istanbul in the fall of 2018. US intelligence agencies see the crown prince and de facto ruler of Saudi Arabia as directly responsible. The latter has denied having ordered the killing.

    In the years since the murder, the crown prince has been severely internationally isolated. He usually met Western heads of state and government only at summit meetings, such as those of the G20 group. Just over a week ago, however, US President Joe Biden traveled to the kingdom, where he met the crown prince in person in the coastal city of Jeddah and, in his own words, also addressed the Khashoggi case directly.

    French President Emmanuel Macron also traveled to Jeddah last year. Macron assured at the time that he had spoken “about everything” with the crown prince “without any taboo”. Macron did not say whether Khashoggi’s murder was directly addressed. dpa

    • European policy
    • Greece
    • Saudi Arabia

    Heads

    Anja Weisgerber – a jurist for the environment

    Anja Weisgerber is the spokeswoman for environmental and consumer protection for the CDU/CSU parliamentary group in the Bundestag.

    As a child, Anja Weisgerber wanted to become a teacher. That things turned out differently is largely owed to the influence of many people: A German teacher convinced her as a student that it was important to stand up for democracy. Her great uncle Wilhelm Baumann, who was himself a member of the state parliament, took her to the CSU’s New Year’s reception when she was 19 – whereupon she joined the party’s youth organization and two years later joined the CSU.

    A friend who had begun studying law before her offered to accompany her to lectures. Former Minister of the German state of Bavaria, Edmund Stoiber, supported her when she ran for the European elections at the age of 28 – at the request of the party’s Young Union. She was a member of the European Parliament from 2004 to 2013. Michael Glos eventually convinced her to succeed him in the Bundestag. And Angela Merkel has always been a big role model: “Particularly in difficult times, the other EU countries have also looked to her for guidance,” she says – but she misses that in Germany’s current leadership.

    Nature conservation out of Christian conviction

    Anja Weisgerber rolls the “R” when she talks about the integrity of creation. Although she doesn’t make it to church regularly, she is very religious, says the 46-year-old politician from Schweinfurt in Lower Franconia. Her commitment to environmental protection and nature conservation is also based on her Christian faith: “Even at home, I learned that we have a responsibility to nature and to future generations.

    During her law studies, Anja Weisgerber focused on environmental law. As an environmental politician in the Young Union, in the CSU, in the European Parliament and in the Bundestag, she has campaigned for the protection of resources, the advancement of the circular economy, climate protection and the preservation of biodiversity: “Bavaria was the first federal state to create an environment ministry,” she emphasizes.

    Today, it is above all her children – 9 and 11 years old – who motivate her every day anew: “Both of them are huge nature and animal lovers. When they see an amphibian or a lizard on a family trip, they celebrate. Naturally, such animals need to be protected.”

    Anja Weisgerber counts her work for the EU’s Renewable Energy Directive and the German government’s 2019 climate package amongst her political successes. She currently heads the CDU/CSU parliamentary group’s climate group with her colleague in the Bundestag, Andreas Jung. “First and foremost, we need to reduce carbon emissions and apply the control mechanism provided for in the Climate Law.” But preparations must also be made for renewed heavy rainfall and flooding, Weisgerber said. “Climate adaptation is as important as avoiding emissions.”

    Endurance like on the tennis court

    Even in times of crisis like now, politicians should not think about undermining climate and energy laws, she says. “The EU’s Green Deal is not a momentary nuisance in difficult times, but rather part of the solution by reducing our dependence through the expansion of renewables and efficiency.”

    Weisgerber also works on strengthening the circular economy, reducing and reusing plastic, sustainability in product design, and accelerating the planning of infrastructure projects in the energy sector.

    In her day-to-day political work, Anja Weisgerber also benefits from her experience as a competitive athlete. As the Bavarian tennis champion, she was often on the tennis court while preparing for her finals in school. There she learned to perform at her best when it counts and to get back up after defeats. When she ran for the municipal council for the first time at the age of 18, she was not elected. Six years later, she ran again – this time with success. Janna Degener-Storr

    • Climate & Environment
    • Climate protection
    • Environmental protection

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