The German foreign ministry plans to tighten rules for companies highly exposed to risks in dealing with China, draft confidential documents show.

The picture shows German Foreign Minister Berberke.

(European News Agency file photo)

(Central News Agency) A confidential draft document seen by Reuters shows that the German Foreign Ministry plans to tighten rules for companies with high exposure to risks of dealing with China, requiring these companies to report more information and possibly based on geopolitical risks. Stress test the company.

The proposed measures are part of a new business strategy for China drawn up by German Chancellor Olaf Scholz's government as it seeks to reduce its reliance on the Asian economic powerhouse, Reuters reported.

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"The aim is to change the incentive structure for German companies with market-economy instruments in order to make the reduction of export dependence more attractive," the draft document said, pointing specifically to the chemical and automotive industries.

The draft document was drawn up by the Foreign Office, led by Green Party foreign minister Annalena Baerbock, and has yet to be agreed by other ministries.

Germany is expected to make a final decision on its China strategy early next year.

China and Germany are the largest economies in Asia and Europe respectively. The two countries have close economic and trade relations, but since Russia invaded Ukraine in February, this relationship has been scrutinized.

The Russian military invasion of Ukraine ended a decade-long energy relationship between Germany and Russia.

"It is the responsibility of politicians and corporations that we must not repeat the mistakes of the past," the draft document said.

Measures outlined in the 65-page document include tightening rules for companies active in China to ensure geopolitical risks are taken into account.