German state to take stakes in marquee domestic companies

Germany’s government could take stakes in companies deemed at risk of foreign takeover, the country’s ecomony minister has said, in a dramatic shift in industrial strategy aimed at safeguarding prosperity.

Peter Altmaier said the survival of marquee German companies such as Siemens, Deutsche Bank and Germany’s carmakers was of national importance.

Hinting at the creation of a state investment fund, he said this was not the same as nationalising industries, but “to prevent key technologies being sold off and leaving the country”.

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Reuters reports that “the pivot to a more defensive industrial policy is driven by German concerns about foreign - particularly Chinese - companies acquiring its know-how and eroding the manufacturing base on which much of its wealth is built”.

The move comes amid a global economic slowdown and a stagnating German economy, which has been hit hard by a drop in Chinese imports and protectionist polices from Beijing and Washington.

German suspicions over China’s true motives have grown since the emergence of “Made in China 2025”, President Xi Jinping’s 10-year plan to transform his country into a high-tech power, dominant in 10 advanced industries.

“If key technological competencies and, as a result, our position in the global economy were to be lost, this would have dramatic consequences for our way of life, for the capacity of the state to act and for its ability to shape almost all policy areas. And at some point also for the democratic legitimacy of its institutions,” says Altmaier.

However, “the new 'dirigiste' industrial policy has raised eyebrows in Berlin, even among Altmaier’s fellow Christian Democrats, some of whom have accused him of betraying the party’s free-market principles” says the Financial Times.

University of Mannheim professor Hans Peter Gruner told Deutsche Welle that a strategy “based on the Chinese model” of state support was “not an option” because it would reduce domestic competition and lead to higher prices for consumers.

“If all the references to economic sovereignty sounds surprisingly French, that’s not a false impression: Altmaier has found a like-minded thinker in his counterpart Bruno Le Maire,” says Bloomberg.

“Where Germany was previously somewhat cool about France’s more protectionist instincts, two of the EU’s biggest economies now appear to be in harmony about the need to fight off US and Chinese advances,” says the financial news bureau.