Germany’s economics minister Peter Altmaier laid out his vision of a national industrial policy on Tuesday, proposing the federal government be allowed to take stakes in strategic industries to fend off takeovers by foreign companies, especially ones backed by Beijing.
He also urged a rethink of EU antitrust regulations and the creation of heavyweight business “champions” to rival those in the US and China.
In a 21-page document – entitled National Industrial Strategy 2030 and drawn up by Altmaier personally, according to German government sources – the minister also referred to the limited power of free markets to counter the growing might of mega-corporations abroad.
The paper, which was short on detail, will be discussed in coming months by government and business leaders. It outlined policies to enable Germany to hold its own in the face of growing foreign competition as the country's economy cools.
"Industrial policy strategies are experiencing a renaissance in many parts of the world,” Altmaier wrote in the paper. “There is hardly a successful country that relies exclusively and without exception on market forces to cope with its tasks."
Indeed, governments around the world are intervening in their own markets with increasing regularity, partly in reaction to international trade disputes, Brexit and China’s aggressive plan to become a world technology leader. Beijing’s “Made in China 2025” strategy targets investment and takeovers in key foreign industries to ease the flow of “core components and important materials” to its home market.
Following the UK’s vote to leave the European Union, Britain unveiled an industrial strategy that includes subsidies of 7 billion pounds (€8.0 billion, $9.1 billion) for research projects in cutting-edge technologies such as autonomous driving and artificial intelligence. Meanwhile, US duties on imports of steel, automobiles and other leading industries have fueled a tit-for-tat tariff war with its main trading partners which shows little sign of abating.
Altmeier, a member of Angela Merkel’s Christian Democrats and a close confidant of the chancellor, went on to say that “a German and European policy that suppresses fundamental economic policy challenges and leaves them unanswered would leave its own companies alone and weaken them in a difficult phase."
Repelling the marauders
The minister said Berlin could acquire stakes in core German companies to prevent takeovers by foreign companies, but “only in very important cases” and “for a limited period.” Overall, the level of state-held shareholdings should not increase in the long-term, the paper said. But the minister made clear it is primarily up to companies themselves to prevent such takeovers.
In recent years China, in particular, has acquired a number of German companies in key industries, raising concerns about growing Chinese influence, knowledge transfer and an erosion of Germany's manufacturing base.
To monitor the government's stake-holdings, Altmaier proposed setting up a “national participation facility” which would report regularly to German parliament. New stakes would be offset by the disposal of existing holdings, he said.
Apart from improving the lot of German firms, Altmaier reiterated the need to pave the way for large, world-class “European champions.” He expressed concern that few such powerhouses have emerged in Germany in recent years, while in America and China, numerous global giants have emerged in the last two decades, particularly in telecommunications and digital technology.
To this end, the economics minister argued that European and German competition law should be reviewed and amended if need be, echoing similar remarks last week by Andreas Scheuer, Germany’s transport minister. The comments follow an ongoing standoff between officials in Berlin and Brussels about a planned merger of the rail divisions of France’s Alstom and Germany’s Siemens. The EU Commission will finally veto the merger plans on Wednesday, according to Handelsblatt.
No playing favorites, says EU
EU Commission President Jean-Claude Juncker again ruled out preferential treatment for European companies in the regulator’s competition decisions. "We want European companies that can survive on the world market," Juncker acknowledged in a speech on Tuesday, but added that the Commission would never dole out advantages for political reasons.
Germany’s opposition parties slammed the Altmaier initiative, branding them counter to free-market principles. Katharina Dröge, a competition policy spokeswoman for the Green Party in the Bundestag, told Handelsblatt that the proposals to relax antitrust laws would give "a free ride for mega-mergers and corporate giants." This not only hurt fair competition and innovation, it also damaged the companies concerned in the long term, she said.
Michael Theurer, deputy parliamentary leader of the pro-business Free Democrats, accused the government of “saying goodbye to the market economy” as a panic response to China’s economic rise. Altmaier, he said, had laid out a "dangerous path towards a planned economy."
Dana Heide is a political correspondent for Handelsblatt in Berlin, while Klaus Stratmann covers energy policy and politics from the capital. Jeremy Gray is an editor for Handelsblatt Today. To contact the authors: [email protected], [email protected], [email protected]