Under the scythe, who will save Germany?

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Source: a bad potato (ID: iamhtd)

Today is the weekend. I’ll write a brief

Gazprom issued a notice on the 2nd that due to the discovery of multiple equipment failures, the gas transmission of Beixi No. 1 natural gas pipeline will be completely stopped until the faults are eliminated.

Let’s look at some information first.

From January to June 2022, Germany’s investment in China was about 10 billion euros, far exceeding the peak value of 6.2 billion euros recorded in the first half of 2000.

That is to say, it increased by 61%.

German Chancellor Schultz, as the “agent of the United States”, has been worried about this data. In his speech on August 11, he also said that German enterprises should not “rely too much” on the Chinese market, but should find multiple partners.

However, German enterprises are still swarming, with the focus on automobile, machinery manufacturing, chemical industry and other industries.

Let’s take a few recent examples:

In July, BASF, one of the world’s largest chemical groups, announced that it would continue to promote the construction of large-scale production bases in Guangdong, China, with a total investment of 10 billion euros by 2030;

In June 2022, BMW started construction of its third factory in Shenyang, with a total value of more than 2 billion euros;

Volkswagen has listed a new investment plan to invest about 15 billion euros in electric vehicles in China by the end of 2024, and will employ thousands of software engineers;

Haila, an auto parts supplier, announced to expand the production capacity of its Changzhou production base;

Aldi plans to build hundreds of new stores in China;

………

Unlike the Japanese who often sing bad about China’s economy, German capital voted for China with money. Of course, it is not Germany. From January to July 2022, the total foreign investment in China increased by more than 17% year-on-year, with the largest increase in Korea, the United States, Japan and Germany.

But our focus today is on Germany.

Our conventional understanding is that after the outbreak of the Russian Ukrainian war, capital will go to the United States to avoid risks, and the United States will reap Europe.

Because the United States has an excellent geographical environment and attaches great importance to capital interests, it should be the first choice of capital.

This sentence is only half right. For financial capital, of course, it is the safest to choose the United States, or to put assets in the United States to avoid risks.

But for European enterprises, especially industrial enterprises, this is not the case.

Now industrial enterprises in Europe are fleeing in a large scale. A very important reason is that the energy price is too high, resulting in no competitive advantage in production costs. They either stop working or lose money.

In Germany, the electricity price has increased five times compared with last year;

The price of natural gas has increased 8 times;

Der Spiegel surveyed 500 enterprises in July, and found that almost all of them were losing profits. One quarter of them were already reducing production, and two-thirds believed that rising energy costs would lead to a decline in competitiveness. More than one-fifth of the companies wanted to transfer production abroad, or were already doing so.

Germany seems to think of many ways, such as giving energy subsidies to enterprises, but they are just a drop in the bucket.

Up to now, Germany has begun to give up carbon neutrality, but it is useless to give up

Because even if it burns coal, Germany still needs to import from abroad, and Russia provides at least 35% of German coal;

Although Germany is a big industrial country, it is sad that it really has nothing in energy, not only oil and natural gas.

Germany’s coal reserves seem to be large, accounting for 3.5% of the world’s total, but they are useless. After the 1950s, Germany’s coal wells have been dug deeper and deeper, requiring 1500 meters underground. The mining cost is frighteningly high, 250 euros per ton, while the international market price is only 80 euros, because many countries are open-pit coal mines

Since the 1980s, the coal industry in Germany has been unable to operate, relying entirely on subsidies from government departments. After the 21st century, it finally gave up the coal industry and began to call for so-called clean energy, but now clean energy can not continue.

Even for wood burning, German firewood also needs to be imported. Unfortunately, Russia ranks first in the world in terms of firewood content.

The German government’s back and forth operation, let’s put it this way:

In April 2022, the price of natural gas soared, and the people snapped up wood, but the cheapest supply place was in Russia, and Germany continued to insist on sanctions against Russia.

Then, the EU announced that it wanted to rebuild the solar manufacturing industry at all costs, but the whole industrial chain of photovoltaic production was in China.

In June, Germany reversed its commitment to completely abandon coal by 2038 and announced that it would restart coal power generation. However, Russia is Germany’s largest coal exporter.

In July, Germany announced that it would give up carbon neutrality, but it didn’t understand what to do next.

Now Germany still has a card, that is, with lignite, the output can reach the first in the world, which is the only energy that Germany can be self-sufficient.

However, lignite is extremely destructive to the environment. When burned, there will be a large amount of black ash and harmful gases floating in the air, and it will seriously affect the health of residents. Even third world countries hardly use it.

If Germany is reduced to using lignite, it will be very funny. This big environmental protection country will become the world’s largest environmental killer. At that time, the German Green Party will become the biggest joke.

The poor environment does not affect eating, and the rise of key energy prices has directly destroyed many basic industries in Germany. A more obvious example is Heinz glas, the largest glass manufacturer in Germany. Under normal circumstances, the annual cost of electricity and natural gas is 11 million euros. Up to this year, the estimated cost is more than 30 million euros. At present, it is not tenable

For example, aluminum industry, the basic industry in Germany, is a major consumer of electricity. After the rise of electricity, the production capacity dropped by 23% compared with the same period last year. The key is to reduce the production capacity in the state of loss. The chairman of the German Aluminum Association said that if this situation continues, there will be no aluminum smelters in Germany soon.

Oil, natural gas and electricity are the blood of industry. The rise in cost will raise the price of basic raw materials, forming a series of chain reactions, and the cost of end consumer goods will increase by at least 20%.

However, it is obvious that the German government does not care about the fleeing of German enterprises.

On August 31, German Foreign Minister Burke threatened in a public speech that it is more important to support Ukraine than Germany’s winter energy crisis. Even if Germans take to the streets to protest against energy prices, Germany must continue to sanction Russia to support Ukraine.

I promise the Ukrainian people that I will support them as long as they need me. I will honor my promise. No matter how German voters evaluate me, I will fulfill my promise to the Ukrainian people!

Look, the foreign minister of a country openly said that Ukraine’s interests are more important than Germany’s interests. That’s all.

Seeing this, especially Germany’s continuous assistance to Ukraine, Poland was very upset. It said that it was better to be kind to others than to me. How much disaster did you bring to me during World War II? So it claimed $1.3 trillion from Germany, equivalent to 1 / 3 of Germany’s GDP.

On the other hand, the operating conditions of German enterprises have been extremely deteriorated, and the key is still not seen. The government still says that it will continue to sanction Russia, which in fact means that it will continue to sanction itself.

Russia was also angry when it saw that Germany was using its own energy while standing on the moral high ground to kill all kinds of people, so it began to cut off Germany’s gas at every turn.

In August 2022, Russia announced that beixi-1 would stop gas maintenance for three days from August 31.

In September 2022, Russia announced the indefinite closure of beixi-1.

Now, Germany is completely out of natural gas, resulting in a large energy gap.

It used to be that the cost increased by 15%, which could make up for the loss at least. Now there is no energy at all, and the factory can only stop work and make up for the loss.

Let me stress that if the natural gas pipeline is broken, it can not be solved by any supplier. It concerns a series of problems such as terminals, LNG ships and production capacity. If Germany could buy natural gas outside Russia, it would have bought it long ago. The problem is that it has been tossing around for half a year, and there is no solution at all.

Therefore, when the German government repeatedly tossed and turned and politicians said that Ukraine had the greatest interests, German enterprises of course chose to flee.

Where are you going to escape?

Are you going to America? It’s impossible. The United States is a big financial country, but not an industrial country long ago. Its supply chain is incomplete. It’s no better than Brazil. In the United States, the cost is higher.

Therefore, it is normal for German financial capital to flee to the United States, but the answer is very clear where industrial capital will choose.

As the world’s largest single market with full supply chain, China is of course the first choice for German enterprises.

Brad Miller, boss of BASF, said: China is the fastest-growing chemical market and will account for half of the world market by 2030. It’s hard not to participate.

His words basically represent what German enterprises want to say

Looking back at the conflict between Russia and Ukraine for half a year now, this scene is very dramatic. China has always hoped that Russia and Ukraine can solve the problem peacefully. The three island countries, the United States, Britain and Japan, are fighting endlessly. The European government represented by Germany, fearing that it will not stimulate the war enough, has continuously provided assistance and war fuel, and finally made the global energy crisis worse.

In June, the United States became more and more unhappy with it. I directed the Russian Ukrainian war. Why should China pick up the leaks and enterprises go to China?

China said that I advised them not to fight every day and told you not to arch fire. You didn’t listen to me

China has become Germany’s largest trading partner for six consecutive years, and German investment in China has increased every year. German Chancellor Schultz once again called on German enterprises not to put all their eggs in China’s basket.

It is estimated that German enterprises have already turned their heads when they heard this.

In recent years, the fastest-growing investment in China has been made by American enterprises. Would you not allow us German enterprises to invest?

If you don’t invest in China, where will you go? Are you going to Ukraine? Open a factory under the fire of Damao?

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