The German economy is pushing to take action against unfair international competition, but at the same time warns against plans by Federal Minister of Economics Robert Habeck (Greens) to slow down companies' business in China.

"The state funding and safeguarding of German companies' business in China must be maintained in principle," said the chief executive of the Asia-Pacific Committee (APA) of German industry, Friedolin Strack.

The background to this is the displeasure of many companies that the Ministry of Economic Affairs, led by the Green politician Habeck, is considering reducing instruments such as state investment and export guarantees or trade fair subsidies for China.

"An appropriate presence in the central growth market of China is important - not only for individual companies, but also from an overall economic perspective."

The APA general manager pointed out that the federal government itself repeatedly emphasizes that a broad economic decoupling from China is not in Germany's interest.

Chancellor Olaf Scholz said this several times recently.

The APA also supports a diversification of sales and procurement markets in Asia.

"However, the goal must not be a withdrawal from China, but rather the additional development of further growth markets in Asia and other regions of the world," said Strack.

This would rather require an expansion of foreign trade promotion.

"In particular, the export-oriented German SMEs depend on effective foreign trade instruments such as investment guarantees and Hermes guarantees."

What is Washington doing?

At the same time, the German economy is insisting on concrete progress before the meeting of trade ministers from the seven leading industrial nations.

“We have agreed common goals at G-7 level.

Now it's about making progress with the concrete implementation," said Volker Treier, head of foreign trade at the Association of German Chambers of Industry and Commerce (DIHK).

As an example, he named the planned climate club, which should set common standards for environmental protection in order to avoid distortions of competition.

“The G7 must show that they are pulling in the same direction.

This also applies to the British, who can now go it alone much more easily after leaving the EU.”

The G-7 trade ministers will be meeting on Thursday at Neuhardenberg Castle in Brandenburg.

Treier called for a more committed trade policy - after years of trade disputes.

According to Treier, the main concern here is the further development of the World Trade Organization (WTO).

"The tone has improved again with the USA, but they are not pushing ahead with WTO reform either." There have at least been minor repairs recently.

The energy costs, which have skyrocketed in the course of the Russian attack on Ukraine, are also likely to determine the G7 meeting.

Germany is currently feverishly trying to reduce its strong dependence on Russia, for example with liquefied natural gas (LNG) from the USA.

"When it comes to energy, it remains to be seen whether the Americans will take market prices for LNG supplies or make concessions to Europe in order to mitigate a severe recession in their most important ally," said Treier.

Economists are assuming a recession - i.e. a shrinking economy - in the second half of the year, in winter at the latest.

More free trade agreements

The economy is also pushing for the implementation of agreed free trade agreements with Canada, for example.

In addition, new agreements are to be tackled.

"But we need them not only with friendly countries like Canada or New Zealand, but also with other important partners," said Treier.

He cited the Mercosur agreement with Brazil, Argentina, Paraguay and Uruguay as an example.

"It's already been negotiated.

That's why we should finally make progress there.

Agreements with countries like India or Indonesia are just as important, even if it might take longer here.” Strict sustainability criteria could make deals more difficult.

Economics Minister Robert Habeck (Greens) recently said that he absolutely wanted to anchor this in free trade agreements.

Dealing with China will also be a topic at the G-7 meeting.

Habeck announced in a Reuters interview on Tuesday that he wanted to take a tougher stance against China in trade policy.

The People's Republic is a welcome trading partner.

“But if there is state protectionism, then countermeasures must be taken to combat it.

We cannot allow ourselves to be blackmailed.” The time of naivety must be over.

"All G-7 countries are heavily dependent on China for raw materials, for example silicon or rare earths," said DIHK trade expert Treier.

In order to position oneself more broadly, agreements are needed with countries from which raw materials come.

“Up to now, China in particular has been doing business there, which often does not correspond to our ideas of sustainability and fairness.

But we are then dependent on the raw materials obtained in this way.”

But there are also dividing lines within the G-7 group.

"A new trade conflict is looming with the USA because their concept for promoting e-mobility discriminates against the car manufacturers from the EU, Japan and South Korea who are also active locally," says Treier.

“We hope that such conflicts can also be resolved or at least eased at the G7 level.

It is best if the industrialized countries follow a common path with less protectionism.”