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German Defense Sector Calls for Government Aid to Cut Dependence on Chinese Raw Materials

Hans Christoph Atzpodien, the head of the Bundesverband der Deutschen Sicherheits- und Verteidigungsindustrie (BDSV), has stated that the German military industry is urging the government to intervene in order to reduce its reliance on Chinese raw materials. This action is perceived as vital for preserving competition with American corporations and bolstering national security.

The U.S. defense sector has substantially decreased its dependence on components sourced from China, primarily due to government directives. Atzpodien highlighted that although German companies have not been forced to make comparable modifications yet, the demand to do so is increasing. He proposed that if Germany does not adhere to the guidance of the United States, its defense sector may have difficulties in dealing with future geopolitical challenges.

The demand for reform arises in the context of wider apprehensions regarding economic stability and the strategic vulnerabilities associated with reliance on Chinese imports. In its inaugural China strategy statement last year, the German government explicitly recognized these concerns, particularly emphasizing the imperative to diminish dependence on Chinese commodities as a result of “unfair practices” and political divergences.

Atzpodien suggested the establishment of national reserves in Germany specifically for crucial resources, mirroring the already existent reserves for oil and gas. In addition, he suggested the possibility of using public monies to encourage the manufacturing of defense materials that do not rely on Chinese raw materials, similar to measures implemented in the United States.

The head of the BDSV also emphasized the strategic weaknesses that are linked to existing dependence. In the hypothetical scenario of a conflict arising between China and Taiwan, German enterprises would have substantial obstacles. This situation has the potential to result in sanctions being imposed on Beijing, which would have an impact on the availability of crucial raw resources such as rare earths, graphite, wolfram, and magnesium. These commodities are mostly obtained from China. German producers would be at a disadvantage compared to their U.S. counterparts, as the U.S. companies are less reliant on Chinese suppliers and could continue their operations without being affected by sanctions.

Germany heavily depends on China for certain crucial resources. China is responsible for mining 69% of the world’s rare earths and processing 86% of them. Additionally, China dominates the mining of graphite (74%) and wolfram (78%), and processes over 90% of the worldwide magnesium supply.

In the face of intricate geopolitical and economic challenges, the German military industry’s future resilience and competitiveness on the world arena may depend on the crucial assistance it receives from the government. The incident highlights the complex interaction between global trade, national security, and economic policy in the modern interconnected globe.

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