Germany’s foreign ministry plans to tighten rules for companies heavily dependent on China, forcing them to disclose more information and possibly conduct stress tests on geopolitical risks, according to a confidential draft document seen by Reuters.

The proposed measures are part of a new business strategy for China by Chancellor Olaf Scholz’s government as it seeks to reduce its dependence on Asia’s economic superpower.

“The aim is to change the incentive structure for German companies using market economy tools to make it more attractive to reduce dependence on exports,” the document said, singling out the chemical and automotive industries.

The representative of the Ministry of Foreign Affairs refused to comment.

The draft, developed by the Ministry of Foreign Affairs, led by Annalena Burbock of the Green Party, still needs to be approved by other ministries. A final decision on China strategy is expected early next year.

Close trade ties link the largest economies of Asia and Europe, with China’s rapid growth and Germany’s demand for engineering fueling its own growth over the past two decades.

In 2016, China became Germany’s largest trading partner.

However, the relationship has come under the spotlight since Russia’s invasion of Ukraine in February, which ended a decade-long energy relationship with Moscow and prompted many companies to pull out of business with the Russians.

“We must not repeat this mistake. This is the responsibility of politicians and companies,” the document says.

Among the steps outlined in the 65-page document, some of which have already been made public, are strengthening regulations for firms operating in China to ensure geopolitical risks are taken into account. (News.ro)