We can’t decouple from China: German Vice Chancellor Dr Robert Habeck

German Vice Chancellor Habeck visits India to discuss trade, China relations. He states decoupling from China not supported, diversification and de-risking is of highest importance. India-E.U. FTA negotiations "complicated" due to differing expectations.

Germany does not support “decoupling” from China and only wants to “diversify and derisk”, said the German Vice Chancellor and Federal Minister for Economic Affairs and Climate Action Dr. Robert Habeck here on July 20. Speaking to the media on the sideline of the Indo-German Business Forum, the visiting German leader said negotiation for India-E.U. free trade agreement is “complicated” as both side is bringing differing expectations to the negotiating table.

“Partnership with China is a complicated one. China is our biggest trading partner. So, a lot of companies, German, European companies have invested in China. It’s a huge market. ..and this means that we can’t decouple from China, and nobody wants that, but de-risking, diversification is of the highest importance,” said Mr. Habeck arguing that over-dependence on a single market increases risk. Vice-Chancellor Habeck is on a three-day visit to India during which he will meet External Affairs Minister Dr. S Jaishankar and Minister of Commerce and Industry Piyush Goyal.

In his speech at the event, Mr. Habeck dwelt on India’s current state of relation with China and said, “We can’t do without China. But we shouldn’t be naïve. India has strong relations with China, but I think that China is also a challenging neighbour for India.”

After inaugurating an Indo-German Business Forum titled “Inviting Innovation: Transforming the Economy for a shared sustainable future”, Mr. Habeck dealt with the conflict in Ukraine and urged democracies to abide by the sanctions imposed on Russia, and said, “The Russian aggression on Ukraine is unprecedented. ..We answered with sanctions against it and also with military support for Ukraine. The sanction system means that we have not bent the trade of oil but there is a price cap on it. That means that you are allowed to buy crude oil and recognise that it’s okay. But making money out of it, bringing more money to Russia using this sanction system to benefit from it is not the idea of it.”

In his speech, Mr. Habeck spoke about the ongoing negotiation between India and E.U. and described it as “difficult”. “India-E.U. free trade agreement is so hard to negotiate because our economic traditions are so different and expectations are so different. One side is expecting more openness and intellectual property and the other side is expecting more market access,” said Mr. Habeck while arguing that the difficult negotiation should not discourage both sides from going ahead with the FTA.

“The world has changed. That things are complicated is not an excuse anymore that we can not solve problems,” said Minister Habeck.