Germany must not be “na?ve” about the “very real” risk of China invading Taiwan, one of Berlin’s top economic advisers has warned.
Monika Schnitzer, who leads the Council of Economic Experts, said the country must reduce economic ties with the world’s second biggest economy to avoid “a real moment of conflict” if Xi Jinping sends troops onto the island.
Ms Schnitzer also told the Telegraph that the German economy must also wean itself off an over-reliance on car making as consumers shun pricey electric vehicles.
Germany risks a prolonged period of decline unless politicians are willing to “let go” of some of the country’s prized energy-intensive industries, Ms Schnitzer said, such as ammonia production.
Ms Schnitzer has led the German Council of Economic Experts since 2022.
The group is an independent body that advises policymakers, including the government. The five-member panel has previously been dubbed Germany’s Wise Men – though it currently comprises three women and two men.
Ms Schnitzer said Germany must learn lessons from the invasion of Ukraine, which triggered an economic shock from the loss of cheap Russian oil and gas.
Many companies, including the Mittelstand of small and medium-sized enterprises that dominate the economy, have been plunged into crisis as a result and the economy has only just pulled out of recession.
Ms Schnitzer said the West was entering a “phase of more tension” with Beijing as President Xi ramps up rhetoric over the invasion of Taiwan.
“The whole way Xi changed politics over the last couple of years makes me worry,” she said. The economist urged Berlin to cut ties with China in “security relevant places”.
She said: “I think that is something that we need to reckon with. You don’t want to be caught in a real moment of conflict with very sensitive technology that is controlled by a country where there may be a conflict, and I see this potential conflict coming up with Taiwan as something very real.
“That is not to say you shouldn’t co-operate. But one should be more alert and more aware and not be na?ve.”
German Chancellor Olaf Scholz has made clear Germany is not seeking to fully ‘decouple’ from Xi Jining’s China
Credit: KAY NIETFELD/AFP
Berlin outlined a plan to “de-risk” the relationship with China last month. While the government stressed it was not seeking a “decoupling”, Germany announced it would pare back its dependence on China in a number of “critical sectors,” including medicine and chipmaking.
A 64-page report published by the government warned that Germany had built “dependencies in numerous areas” including veterinary drugs, solar panels and lithium batteries.
“China has changed,” the report warned. “As a result of this and China’s political decisions, we need to change our approach to China.”
Olaf Scholz, Germany’s Chancellor, has insisted that companies must take the lead. However, doing so will be challenging. Industry has deep-running ties with the country.
Trade between Germany and China rose to a fresh record of almost EUR300bn (?256bn) in 2022, making the world’s second biggest economy Berlin’s most important trading partner for the seventh straight year.
The country’s large car making industry is dependent on China for rare earth minerals necessary for electric car battery manufacture.
China currently accounts for 85pc of all rare earth processing worldwide, and supplies about 98pc of the EU’s demand for the rare earth magnets used in electric vehicles.
