After eight months in office, German chancellor Olaf Scholz has a theme tune: You’ll Never Walk Alone.
Written by Rogers & Hammerstein for the musical Carousel and popularised by Gerry & the Pacemakers, the song was later embraced by Liverpool football fans.
For the German leader, the title encapsulates his political promise to Germans: his government will not leave you alone this winter with your spiralling grocery, petrol and heating bills.
With an eye on the song lyrics — warning of storms, wind and rain — Berlin is implementing a €30 billion relief package and, on Thursday, Mr Scholz said a second was likely in the autumn.
At his first summer press conference, Scholz insisted Germany was working at high speed to reduce dependencies — on fuel and other resources — that have tipped into vulnerabilities and threaten the prosperity of Europe’s economic powerhouse.
“We are working through the failings of the last years, and they were really quite considerable,” he said, in his harshest swipe yet at his predecessor Angela Merkel.
As an example, he pointed out how Germany shifted away from nuclear energy in the last decade towards renewables but took a disastrous decision to bridge the gap with a growing dependency on Russian gas. Upon taking office last December, Scholz asked his ministries to play through a scenario of what would happen if Russia halted gas deliveries. It was a question, he said, they had never been asked before.
To quote the lyrics of Oscar Hammerstein, Germany’s political and business elite — high on cheap Russian gas and the resulting profits — considered it impossible that their “dreams be tossed and blown”.
After eight blustery months, December’s theoretic scenario is approaching reality. In February Scholz halted one Russian gas pipeline before it could go online while Russia has throttled the other at one-fifth of capacity.
“It’s a basic lesson you hear in the third semester of a business degree, but one sometimes people forget: don’t put all your eggs in one basket,” said Scholz. He insisted his government was working at top speed to diversify the economy — and the country’s heating systems — away from Russian gas.
Even as an uncertain winter looms thanks to Russia, many German eyes are already looking to a far greater dependency-turned-vulnerability: China.
Beijing has been Germany’s most important trading partner for six years running, and a recent survey for the Munich Ifo economic institute revealed that half of all German manufacturing companies are dependent on low-cost input from China.
Few more than Volkswagen. Some 40 years after it opened its first plant there, VW now operates 33 factories, employs more than 100,000 people and enjoys a 16 per cent market share in China. Last year VW earned €12 billion selling 3.3 million vehicles in China — down 17 per cent on the previous year, due to industry-wide chip shortages.
Growing supply chain problems — and outrage in Berlin over Chinese persecution of the Uyghurs — have prompted a radical shift in tone and thinking in Berlin. After years of cheering on German investment in China, with discreet warnings of industrial espionage risks, Berlin’s federal government is now urging greater supply-chain diversification.
Germany’s Green-controlled federal economics ministry has appointed a state secretary to address the dependency question. Franziska Brantner’s mission is to warn German companies — and customers — of the consequences of their obsession with “cheap, cheap, cheap [products] regardless of how things are produced or the resulting dependency”.
Alternatives to China
She argues that even the country’s energy transformation, away from fossil fuels towards renewables, could see Germany fall out of the Russian frying pan and into the Chinese fire.
“You can’t build a solar power cell without silver but there is a 100 per cent dependency on China here,” said Brantner.
Already her economics ministry has launched a programme looking for alternatives to China, from copper-based made-in-Germany solar cell alternatives to new global production partners beyond China.
Together with the foreign ministry, also controlled by the Green Party, the federal economics ministry is working on a new “far-reaching” strategy paper on China. If Berlin can spend more on its military, their thinking goes, they must be more proactive in defending German economic interests and prosperity.
The paper is due early next year but influential German business leaders, with an eye on tensions over Taiwan, are urging a less strident tone towards Beijing.
The key question is whether Germany’s China dependency – as sales market, workbench and source of raw materials – has already crossed the point of no return?
In the first five months of this year, as German firms retreated from Russia, their investment in China jumped 21 per cent.
Asked about China dependency on Thursday, Scholz promised to spend billions on semiconductor production in Germany and broaden their supply chains. Without mentioning China by name, he warned German companies to “always have a foothold in Europe ... even if one supplier or one place is the cheapest”.
