Investment guarantees from the federal government are very important for the German economy.

The state uses them to protect companies against political risks abroad, a well-established practice without which some business in Africa or South America would not be possible.

The German tax authorities also act as guarantors for projects in China, but are now tightening their conditions because of the human rights situation in the Xinjiang region.

Christian Muessgens

Business correspondent in Hamburg.

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For the first time, guarantees for a company that is also active in the province of the Uyghurs were not extended, confirmed Federal Minister of Economics Robert Habeck (Greens) on Sunday.

He didn't name names, but one thing is clear: it's about Europe's largest car company, Volkswagen.

According to the ministry in Berlin, four applications for an extension of guarantees have been rejected.

These would have “a connection to a branch in the province of Xinjiang, or the connection could not be ruled out”.

VW has been running a plant there together with its partner SAIC for almost ten years and has long been accused of supporting the oppression of the Uyghur minority in the area, if not even profiting from it, for example through forced labor.

Fueled by human rights abuses

The discussion was recently fueled by revelations in the international media, which had published frightening images from inside so-called re-education camps.

VW emphasizes that it respects "different cultural backgrounds and religious beliefs" in the plant and does not employ any forced laborers.

The same applies to local suppliers.

The matter is tricky for VW, because the group sells around 40 percent of its vehicles in China.

The plant in Xinjiang is just one of many in the country and is also very small, but has a symbolic character.

At the opening, there was speculation that the Wolfsburg-based company was opening the location in the economically weak region primarily under pressure from Beijing.

On Sunday, VW said it had applied for investment guarantees, not for Xinjiang, but for other locations in the country.

So far there has been no response from Berlin.

"Of course, a refusal is also possible." Internally, it is said that after the change of government in Berlin, it has been clear for some time that the guarantee practice could change.

The group will nevertheless make the planned investments in China.

Habeck told the “Welt am Sonntag” that the federal government would continue to make decisions on a case-by-case basis.

"But the guideline that my ministry developed at the end of the last legislative period is: In view of the forced labor and mistreatment of the Uyghurs, we cannot guarantee any projects in the Xinjiang region." 13 further applications for new or extended guarantees for protection in China had recently been decided positively, according to the ministry.

These have no connection to the Autonomous Province of Xinjiang, it says, "neither through direct activities there nor through business relationships with entities operating there".

Around the world, the federal government recently assumed 2.6 billion euros in investment guarantees a year.

In view of growing tensions in many regions, the question increasingly arises as to whether and