In every country, the government of the day tries to help business export goods and services to generate export dollars. In every embassy there are people which help business explore opportunities and access government supports. For most people that do not deal with exports, many do not realize the full extent of the supports.

In an article by Andreas Rinke of Reuters, the volume of investment guarantees provided by the German government to companies investing in China has decreased dramatically. This year $76.3 million in guarantees have been issued according to a document seen by Reuters, this is less than 10% of the $950 million in guarantees issued over the whole of last year.

China became Germany’s biggest trading partner in 2016 and both countries prospered from Germany selling the precision machinery that let China become the main supplier of manufacturing goods to a globalized world.

Due to competitive pressures and the war in the Ukraine, Germany changed its policy on China. The trade between the 2 countries was $320 billion in 2022.

Last November, Berlin introduced caps on the size of guarantees, offered by the government to protect investors from political risks such as expropriation, that could be given to investors in a single country. The measure was designed to diversify the portfolio of risks carried by the government and encourage companies to invest in a broader range of countries.

Linking to dividend paying stocks, these types of companies that often have export business to diversify themselves from their home country. You may have thought that the companies were using private insurance to protect themselves, but in some countries it is the governments providing the protection and limiting risks. In many ways the home country benefits from jobs but whether the government should be providing the risk insurance is up to them, however if a government program exists, companies would be foolish not to look at them and use them.

There are more questions than answers, till the next time – to raising questions.