[Skybird]

Focus:
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USA takes Germany to task - and Habeck our industry

The Americans are shaking up the international market for new technologies with billions in subsidies. The German economy is also suffering as a result. Minister Robert Habeck announces that politics will now interfere more in the free market.

The German economy is caught in a dangerous pincer movement. The crazy thing is that both arms of the pincers are not being moved by Russians or Chinese, but by Americans who are apparently determined to organize their future prosperity at the expense of Chinese and Europeans.

Trump left, his motto remained: America First

Because one does not want to celebrate this exaltation of one's own nation - especially under a Democratic president - so clearly, American security interests on the one hand and the fight against inflation on the other are cited as reasons for going it alone.

The pincers consist of two very different legs:

1. the American Inflation Reduction Act (IRA) is ostensibly aimed at lowering inflation in the United States. In reality, however, it is a gigantic subsidy program in favor of new technologies.

The legislative package provides for spending of $369 billion over the next ten years on energy security and climate change programs, putting European industry under pressure. Leave or stay? According to France's Finance Minister Bruno Le Maire, in some cases the subsidies offered by the U.S. government are four to ten times the maximum government support allowed by the EU Commission.

We are learning: It says inflation control on it, but there is industrial policy inside. The USA wants to strengthen its industrial base again.

On the one hand, the sanctions imposed by the U.S. government on China's semiconductor industry are putting pressure on the Middle Kingdom. Since the beginning of October, Washington has been restricting the export of production technologies that are needed to build up China's own chip production. US manufacturers Nvidia and AMD must now obtain government approval for exports of selected semiconductors.

Research and development and maintenance of existing Chinese semiconductor production are also being hampered. In a big way, this is about slowing down China's technological catch-up in self-driving cars, 5G Internet to cloud services and artificial intelligence.

Americans put Europe's industry under pressure

Not entirely coincidentally, German industry is also suffering from the restrictions. Chinese manufacturers account for one-fifth of the global semiconductor industry, and their customers and suppliers from Europe are being urged to follow U.S. policy. Holland-based ASML, for example, has been pressured "by U.S. officials," according to Bloomberg, to stop selling selected chip-making machinery to China. Alan Estevez, the undersecretary of state for industry and security, among others, will travel to the Netherlands later this month to discuss export controls with the government there, according to Bloomberg.

Meanwhile, the U.S. is positioning itself as a friendly alternative: the export freeze came two months after U.S. President Joe Biden signed the so-called CHIPS Act. 280 billion US dollars will be invested from the treasury to boost semiconductor production on American soil. European companies are also invited to invest.

And how are business and politics in Germany reacting to this?

Scholz announces changes in China policy

Contradictory.

In the case of U.S. billions in subsidies under the IRA, Economics Minister Robert Habeck has woken up with a time lag.

"Protectionism paralyzes innovation. It's not so much about losing our industrial heart, but about the risk that the next wave of technological innovation will not take place in Europe. Because the IRA takes care of the cool new stuff."

In the U.S. push against China, however, German industry stands alone. Habeck and Scholz are pursuing a so-called de-risking strategy. For the chancellor, business as usual is no longer an option vis-à-vis China. He clarifies, "If China changes, our dealings with China must also change. "

The head of the Federation of German Industries (BDI), Siegfried Russwurm, vigorously rejects considerations of turning away from the Chinese market. "I see no reason why we should sell less to China. "
The head of the industry association BDI, Siegfried Russwurm, vigorously rejects considerations for turning away from the Chinese market.
dpa The head of the industry association BDI, Siegfried Russwurm, vigorously rejects the considerations for a turn away from the Chinese market.

VW and BASF are splurging on investments in China

His member companies are putting pressure on him to dare to dance with the Americans and, if necessary, with his own hitherto intransigent government:

- Volkswagen subsidiary Traton, for example, is expanding its business in China regardless of U.S. policy on China. A truck plant is currently being built in Rugao near Shanghai, which will start production as early as 2025. The SPD and IG Metall sides on the supervisory board have agreed.

- BASF CEO Martin Brudermüller also defends his €10 billion investment in Zhanjiang. The plant is to produce 60,000 metric tons of engineering plastics annually for customers in China. He advises realism: "I think it's urgent that we get away from China-bashing and take a somewhat self-critical look at ourselves."

- Overall, German companies invested more than ten billion euros in China in the first half of 2022, according to the German Institute for Economic Research - a record high.

- After the U.S., China is the second-largest export market for the German economy. German industry mainly sells cars and industrial equipment there. German mechanical and plant engineering from Baden-Württemberg is particularly affected.
Habeck announces greater political interference in free market

With the U.S. - its economic interests and its representation in the White House - the German economy has a powerful, because assertive opponent before its chest this time. The concept of "managed trade," which has been propagated by left-wing U.S. Democrats for years, has replaced the old free trade doctrine in Washington.

German business cannot count unconditionally on the Green Minister of Economics in its fight for open markets. As Habeck explained yesterday in Paris, the politicization of trade relations is exactly in line with his ideas: "The phase in which many thought that markets should rule and politics should stay out of it is definitely over. That idea was already wrong before."
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Thats why I said before that Biden is better - for America and Amerians - than many want to give him credit for. Like Trump, in economics he is quite adamant on "America first". Europe dreamt of a good and well-meaning "uncle" - what it got instead was an economic powerplayer not any less determined to push american goals even at European costs than his predecessor pushed his personal interests. For many European governments and the EU, this came quite unexpected - and unwelcomed.

Not that it would stop the Germans from maximising further the challenges they load on their shoulders needlessly all by themselves, of course. As long as Germany still exist as a national entity, many in Berlin will not be satisfied, especially in the Green and left parties.

Mind you, German economy minister Habeck said one or two years before he became minister, that he has no use for any kind of national pride, and that he finds "patriotism pretty much to vomit" (original quote). That such a person knows no hesitation even when his political actions lead to serious damage to the country's livelihood is thus no longer a miracle, but downright logical. When Habeck took the oath of office, he basically committed perjury, as did a number of other ministers besides him. In the meantime, a whole series of his lies have been documented, and he has also been convicted of lying when he claimed that he had the continued operation of the remaining three nuclear power plants examined impartially and openly in his ministry. There are about 160 documents proving that he did exactly the opposite and gave the instruction on day one that any analysis work had to come to the conclusion that the three power plants were not needed. The wanted results of the ministry's "assessment" were already commanded from beginning on.