Germany will no longer issue promotional loans to China beginning in 2026, according to the Federal Development Ministry (BMZ), in the latest step to lessen Germany’s strategic reliance on China.
In mid-September, the German ministry informed the Chinese Ministry of Finance of the federal government’s intention to discontinue all promotional loans to China.
“We are no longer treating China as a developing country,” stated Svenja Schulze, Germany’s Development Minister.
“China is and will continue to be an important partner without whom we will be unable to successfully overcome global crises,” she continued.
Contracts for promotional credit initiatives between the German state-owned KfW Bank and the Chinese Ministry of Finance are only valid until 2025. “These promotional loan projects must have ambitious impacts in the areas of climate and environment,” claimed the ministry.
The federal government bears obligation for promotional loans but makes no budgetary contributions. As a mature economy, China has access to international credit markets and may refinance itself on favorable terms, according to the ministry.
Promotional loans of 3.451 billion euros were agreed upon with China between 2013 and 2022. In 2023, no promotional loans were provided.
According to Reuters, the volume of investment guarantees offered by the German government to companies investing in China has fallen this year, illustrating the impact of Berlin’s efforts to reduce dependency on the country.
