German factory outfitters warn on break from China

German firms have faced calls to reduce their heavy dependence on the world's number two economy following Russia's invasion of Ukraine, and subsequent move to slash energy exports to Europe.

But the VDMA industry body said that China was an "enormously important market" for its 3,500 members, and warned against moving too hastily.

"The Chinese market cannot be replaced in the short and medium term," VDMA president Karl Haeusgen said. "Exports to China provide well-paid and highly qualified jobs in Germany."

He instead called for Berlin to provide German business support and "help to open up new sales markets", and urged the European Union to seal new free trade agreements in Asia.

Haeusgen did however recognise China's economic policies were having a negative impact on foreign companies and called on Berlin to reassess its relationship with Beijing.

But he also defended flourishing business ties with China over the years, saying "economic openness" had helped to lift "hundreds of millions" of Chinese people out of poverty.

He warned of devastating consequences if China attacks Taiwan, saying the West would likely react in the same way it had after Moscow invaded Ukraine in February.

Russia has faced a barrage of sanctions since the start of the war, with many Western companies shuttering their Russian operations.

"If China attacks Taiwan, we have a whole new game," Haeusgen said.

Beijing views democratic, self-ruled Taiwan as part of its territory to be seized one day, and has been ramping up military, diplomatic and economic pressure on the island.

The VDMA's calls for business to diversify into new markets beyond China chimes with the stance of German Chancellor Olaf Scholz, who has also warned against a sharp "decoupling" from the Asian giant.

In November, Scholz visited China, accompanied by a delegation of top business executives, sparking anger at a time of heightened scrutiny over Germany's close economic ties to authoritarian regimes.