Germany made a strategic misjudgment of epic proportions when they became dependent on Russian gas. Now they are making the same mistake with China. Their only consolation is that they are not alone. The G7 countries will not distance themselves from China, if Chancellor Olaf Scholz is to be believed, neither financially nor industrywise. Large investments will continue.
The USA, Germany and other rich countries must ensure that large investments in China continue, and the countries must also take care of supply links with China and exports to China.
This is what German Prime Minister Olaf Scholz says to the German broadcaster ZDF in Hiroshima on Sunday, where the three-day G7 summit ends later in the day. (NTB-Reuters)
China is therefore not punishing China for its support for Russia even if China will not do as the G7 expects.
The G7 is tightening its grip on Russia, but there are no consequences for China that they refuse to participate. This is a strategic blindness that will cost the West dearly. Russia now exports oil and gas via the East and as long as those opportunities remain open the West is doing self-harm. The other countries find substitutes for western routes.
Volkswagen recently announced that it is pulling out of Russia entirely. A factory with 4,000 employees is handed over to a Russian buyer. At the same time comes the news that China has overtaken Japan to become the world’s largest car manufacturer.
The authorities have approved Volkswagen’s sale of all the group’s sub-uses in Russia to local owners.
As a result, the German car manufacturer has now completely backed out of Russia. The Russian group Avilon takes over all shares in the sale, the VW group reports in a statement on Friday.
The sale includes the large Kaluga factory southwest of Moscow, which has 4,000 employees and can build 225,000 cars a year.
– All activities have now been sold, so we are no longer present in Russia, says a spokesman for the car giant.
Like other major car groups in the West, Volkswagen put its operations in Russia on hold in the wake of the invasion of Ukraine. But the group had to wait a long time for final approval from the Russian authorities before the sale could be finalised.
Russian authorities require approval from a state commission for share sales by companies from what are defined as “unfriendly countries”.
Volkswagen itself has not announced any sales amount. However, the German financial newspaper Handelsblatt reports that it will be around 125 million euros, just under NOK 1.5 billion. This must be far below the real value of the Russian subsidiaries.
However, they were paid better than France’s Renault, which sold all its assets in the country to the Russian authorities for the tidy sum of one rouble. (NTB-AFP) NTB 19 May.
The fact that Western companies are squeezed out of Russia and have to sell at a bargain price is a gift package to Russian interests that they otherwise want to weaken, and a strengthening of industrial cooperation to the east, primarily China. You give up markets and future income.
The sanctions will have lasting consequences for Western industry.