German National Bank: The Merz Government Should Adjust Policies, Partly Because of China
According to the "Frankfurter Rundschau": Given Germany's weak economy and increasing international pressure, the German state development bank KfW urges the government to take action and adjust several key policies.
KfW said on Thursday that it is necessary to give German industry "a breather." Unlike previous adjustment phases, "numerous geopolitical factors are significantly increasing downward pressure" at present. Therefore, Germany must "do everything possible to adjust the policy levers we can control," said KfW's chief economist Dirk Schumacher. Tariffs should also be part of the "economic policy toolbox."
A analysis report from KfW pointed out that the headwinds currently faced by German industry are largely due to "government interventions in other countries, especially - but not limited to - China." The rapid success of Chinese industry has also been supported by "massive government support for Chinese enterprises."
To be able to compete with Chinese competitors, it is necessary to enhance the competitiveness of German companies. "However, in particularly affected industries, other government measures, such as tariffs, may also be necessary to ensure fair competition at least in the EU market," the report states.
If a purely "laissez-faire" policy is adopted, i.e., the state does not intervene in economic activities, Germany would "effectively allow other countries' economic policies to influence German industry." Schumacher said: "As long as China continues its mercantilist policies, and the United States pursues an unpredictable 'America First' policy, tariffs should be part of Germany's economic policy toolbox."
In addition, Germany must reduce its high economic dependence on individual countries, for example, in the supply chain of important raw materials. KfW believes that reforms are also needed in areas such as high labor costs, cumbersome bureaucratic procedures, and relatively high corporate tax burdens compared to other countries. In addition, Germany is "affected by clearly excessive energy costs and insufficient energy infrastructure." At this stage, it may be necessary for the state to subsidize energy prices.
In another study, KfW also proposed that it is necessary to strengthen Germany's appeal as a location for entrepreneurship. Schumacher said: "Germany should provide startups with a better framework in terms of regulation and taxation to prevent innovative companies from leaving."
Source: rfi
Original: www.toutiao.com/article/1850267132781580/
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