Germany Expands Investment Guarantees to Boost Business Opportunities in China

Germany Expands Investment Guarantees to Boost Business Opportunities in China

28 Nov, 2024

In 2023, Germany's total investment guarantees amounted to €71 million, marking a significant drop compared to previous years. In 2022, the new guarantee sum reached €745.9 million, while in 2021, it was a substantial €1.952 billion. This notable decline stems from a stricter German government policy towards China and the challenges posed by a sluggish Chinese economy.

On the other hand, export credit guarantees showed an upward trend. By November 1, 2023, the German Economy Ministry reported that guarantees worth €696.2 million had been issued for China, surpassing the total figure of €650 million for the entire year of 2023.

State guarantees play a crucial role in safeguarding companies against business losses. Companies pay fees for these protections, and if no losses occur, the state benefits financially from the arrangement. This system ensures businesses can operate with reduced financial risk while the state potentially profits from fees collected.

As of November 2023, the exchange rate stood at $1 to €0.9511, reflecting the economic context in which these guarantees were issued. Germany's evolving approach to investment and export credit guarantees highlights its shifting relationship with China amidst changing global economic dynamics.

 


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