Decoupling from China comes at a Huge Economic Cost | says CEO of Merck

The CEO of German technology group Merck KGaA, Belen Garijo said that unraveling trade ties with China would come at greater economic costs and that she was banking on dialogue to ease tensions between Beijing and Western powers.

The Spanish CEO of the German manufacturer of drugs, lab equipment and semiconductor chemicals, speaking at a journalist club event in Frankfurt said that dependencies between the powers are huge.

Over the weekend, a Chinese warship crossed in front of a U.S. destroyer in the sensitive Taiwan Strait, raising the prospect of future face-offs. Both the sides after Tuesday meetings after the incident between senior U.S. and Chinese officials were described as constructive.

For months, U.S. and German lawmakers have been calling for a reduction in trade to cut dependency on China.

“When I hear politicians say we have to decouple, I don’t think this is feasible … it will take 20 years to decouple, and for what?” said Garijo. “We are risking a global world that has brought well being, more innovation, more collaboration,” she added.

Merck's CFO had announced last month that they would be further investing in China and would be building domestic supply chains there to curb imports of key raw materials that could be disrupted in any possible trade row.

CEO Garijo also mentioned that the company would be watching closely into the “different scenarios on the basis of the potential escalation of the conflict”, however an escalation of such was very unlikely.

Earlier in March German Economy Minister Robert Habeck suggested that Berlin could impose an export restrictions on China, to prevent Germany from losing its technological edge. The government under Chancellor Olaf Scholz’s is also said to have been working on a strategy paper on China to be rolled out this year.

Source: (Reporting by Ludwig Burger and Patricia Weiss; editing by David Evans)