BERLIN (Reuters) – The volume of investment guarantees provided by the German government to companies investing in China has collapsed this year, a government document showed, highlighting the impact of Berlin’s efforts to end over-reliance on the country.
Only 51.9 million euros ($56.26 million) in guarantees have been issued so far this year, a document seen by Reuters showed, less than a tenth of the 745.9 million euros in guarantees issued over the whole of last year.
Last November, Berlin introduced caps on the size of guarantees, offered by the government to protect investors from political risks such as expropriation, that could be given to investors in a single country.
The measure was designed to diversify the portfolio of risks carried by the government and encourage companies to invest in a broader range of countries.
Germany flourished over two decades on the back of close trade ties with China, but slowing growth, fierce competition from ever-higher-value Chinese manufacturers, along with shock at the impact of Russia’s invasion of Ukraine on Germany’s energy supplies, has changed the mood in Berlin.
Companies are free to invest without a government guarantee, meaning the fall in the volume of guarantees issued does not necessarily reflect the real changes in actual investment volumes.
($1 = 0.9225 euros)
(Reporting by Andreas Rinke, writing by Thomas Escritt, editing by Rachel Armstrong, Kirsti Knolle)