Analysis: Europe’s energy policy drives German industry toward China — The Nordic Times
Norwegian political scientist Glenn Diesen argues that German industrial companies are turning to China after Berlin broke with the cheap Russian energy that long underpinned the country’s competitiveness. He. . .
Norwegian political scientist Glenn Diesen argues that German industrial companies are turning to China after Berlin broke with the cheap Russian energy that long underpinned the country’s competitiveness. He sees the development as a sign that Europe’s former position of power is rapidly weakening in a more multipolar world order. Diesen is a professor at the University of South-Eastern Norway (Universitetet i Sørøst-Norge), specializing in geopolitics, Russian foreign policy and geoeconomics. In a new commentary, he uses increased German industrial investment in China as the starting point for a broader critique of Europe’s relations with Russia, the US and China. “German companies are moving to China to follow the cheap Russian gas that the German government denied them,” Diesen wrote. The formulation summarizes his geoeconomic interpretation: when energy flows move, the conditions for production and investment also change. Europe is giving up a former competitive advantage, while China is strengthening its position as both an industrial market and a buyer of Russian raw materials. His criticism is not directed at China or at companies choosing to invest there. On the contrary, China emerges in Diesen’s argument as a state acting rationally in pursuit of its own economic interests: it secures energy, builds industry and uses its growing market power. The criticism is aimed at European leaders who, in his view, have weakened their own countries’ position while continuing to treat other powers as though Europe could still dictate the terms. Industry squeezed by energy costsThe background is the sustained pressure on Germany’s energy-intensive industries. Before the escalation of the war in Ukraine in 2022, Russia supplied about 55 percent of Germany’s gas imports. When those deliveries disappeared, costs rose sharply as Berlin replaced Russian pipeline gas with sources including Norwegian gas and seaborne LNG. A 2024 survey by the German Chamber of Commerce and Industry (DIHK) found that 37 percent of about 3,300 companies were considering reducing production or relocating operations abroad. Among energy-intensive industrial companies, the share was 45 percent. Two-thirds said their competitiveness was under threat, according to Reuters. German industrial production also fell by 1. 1 percent in 2025, according to theGerman Federal Statistical Office (Destatis). The chemical, metal, glass and paper industries have been particularly vulnerable to higher gas and electricity prices. One prominent example is the chemical giant BASF, which has cut costs and capacity in Germany while building its largest investment project to date in Zhanjiang, China. The facility is expected to cost about €9 billion and be completed in 2028. The project began before the 2022 energy break and is also motivated by proximity to China’s large chemical market, but Diesen sees it as illustrating the broader eastward shift in industrial gravity. Russian gas finds a new directionRussia’s energy exports did not disappear because of European sanctions but were largely redirected to other markets. China has increased its purchases of Russian oil and gas while negotiating from a stronger position as Moscow was left with fewer major customers to choose from. A Russian government document reviewed by Reuters in 2023 estimated the price of Russian pipeline gas to China at $271. 60 per 1,000 cubic meters in 2024. The corresponding forecast for Europe and Turkey was $481. 70. The figures covered different contracts and delivery routes, but the difference illustrates the price pressure that followed as Russia’s energy trade shifted toward Asia. In Diesen’s analysis, this represents a double loss for Europe. Its own industry faces more expensive inputs, while competitors in China gain access to the energy that previously contributed to Germany’s export model. Corporate decisions need not be political statements; they follow the markets where costs, demand and security of supply appear most favorable. Criticism aimed at Europe’s leadersDiesen also places Germany’s industrial crisis within a broader shift in power. His criticism is directed at European governments that still act as though the continent can set the terms for both Russia and China while counting on stable US support. In his view, that order is dissolving. “European leaders do not seem to recognise that interests change profoundly in a multipolar world: Europe is no longer as relevant, Europe cannot rely on the US to the same extent, Europe cannot afford to make an enemy of Russia, and China can no longer be bullied or lectured,” he wrote. Alongside the commentary, Diesen published an edited excerpt from ZDF’s summer interview with German Chancellor Friedrich Merz. Merz spoke of a changed environment shaped by uncertainty surrounding Donald Trump, China’s growing importance and new demands for German action. In Diesen’s framing, the remarks amount to an indirect acknowledgment that Europe’s external circumstances have changed faster than its political strategy. Diesen summarized his argument in the post below. German companies are moving to China to follow the cheap Russian gas that the German government denied them. European leaders do not seem to recognise that interests change profoundly in a multipolar world: Europe is no longer as relevant, Europe cannot rely on the US to the same…pic. twitter. com/KmQ7YAqkzq— Glenn Diesen (@Glenn_Diesen)July 21, 2026The core of the argument is therefore not merely that individual factories are being built in China. Diesen describes a geoeconomic cycle in which energy, capital and industry follow one another. If Europe simultaneously damages its relations with Russia, becomes more dependent on expensive imported energy and chooses confrontation with China over cooperation on new terms, he argues that the continent risks losing both economic competitiveness and strategic independence. TNT is truly independent!We don’t have a billionaire owner, and our unique reader-funded model keeps us free from political or corporate influence. This means we can fearlessly report the facts and shine a light on the misdeeds of those in power. Consider a donation to keep our independent journalism running…