Chancellor Olaf Scholz of Germany tried to strike a delicate balance on a trip to China this week, promoting business ties with his country's biggest trading partner while criticizing the exports to Europe and its support for Russia.
Mr. Scholz met China's top leader, Xi Jinping, at the Diaoyu State Guest House in Beijing on Tuesday, the culmination of a three-day visit with a delegation of officials and business leaders. German industry. He is also expected to meet Premier Li Qiang, as the two countries navigate strained relations over Russia's war in Ukraine and China's rivalry with the United States, Germany's most important ally.
Throughout his trip, Mr. Scholz promoted the interests of German companies that are finding it increasingly difficult to compete in China. And he conveyed growing concerns in the European Union that markets in the region are becoming dumping grounds for Chinese goods produced at a loss.
This is Mr. Scholz's first visit to China since his government adopted a strategy last year that identified the Asian powerhouse as a “partner, competitor and systemic opponents”, calling on Germany to reduce its dependence on Chinese goods.
German economy shrink last year, and its weaknesses exposed its dependence on China for growth. Energy prices rose due to the war in Ukraine, aided by Beijing's support for the Kremlin. German companies have pushed for greater access to China and complained they have to contend with it Unfair competition.
During the trip, which started in the sprawling industrial city of Chongqing in southwest China and continued to Shanghai and Beijing, the prime minister visited German companies with extensive investments in China, met Meet with trade representatives and talk to university students.
“Competition must be fair,” Mr. Scholz told a group of German-speaking students in Shanghai on Monday. “We want a level playing field,” he said.
Mr. Scholz's trip is an example of the difficult dance Germany is trying to perform: maintaining economic ties with China while managing American pressure to align more closely with Washington to counter Beijing. He is also expected to convey the geopolitical and trade concerns of European leaders to China.
During the meetings, Mr. Scholz emphasized Germany's commitment to doing business with China, but he also warned that Beijing must limit the influx of Chinese goods into Europe. At the same time, he expressed reservations about the European Union's investigations into China's use of subsidies for green technology industries, saying that any discussion on trade must be based on on fairness.
“This must be done with confidence in competitiveness and not out of protectionist motives,” Mr. Scholz told reporters on Monday.
China's manufacturing push in green sectors such as electric cars and solar panels has sparked trade disputes with Europe and the United States, where such industries also receive government support . But with 5,000 German companies operating in the Chinese market, Germany could lose many more European partners if Beijing retaliates against the European Union.
“If the EU gets too tough on China, we can expect countermeasures and this will be a disaster for us,” said Maximilian Butek, executive director of the German Chamber of Commerce in China. ”.
“For us, it is extremely important that the Chinese market remains open,” he said.
In meetings with Chinese leaders, Mr. Scholz is also expected to raise concerns about Beijing's support for Moscow's wartime economy, especially its continued sale to Russia of potentially dangerous goods. usability on the battlefield.
In a discussion with students in Shanghai, Mr. Scholz alluded to Russia's war in Ukraine, saying the world works best when all countries follow some basic common principles.
“One of them is that people don't need to be afraid of their neighbors,” Mr. Scholz said, without naming any countries. “Borders cannot be changed by force.”
China is hoping to drive a wedge between Europe and the US by courting leaders like Mr. Scholz. State media portrayed his visit as demonstrating the strength of China's ties with Europe, while strengthening economic ties with Germany.
Beijing will certainly welcome the message that German businesses are committed to China. The Asian giant is trying to attract foreign investment to revive its economy, which is in recession because of the downturn in the housing market. Some Western businesses and investors are also worried by Xi's emphasis on national security, which they see as making operations in the country riskier.
From China's perspective, Germany may be its best hope in delaying or easing any trade restrictions from Europe, said Noah Barkin, senior adviser on China operations at Rhodium Group, a research firm said.
German automakers have invested billions of dollars in China and most of their revenue comes from there. Many worry that if the European Commission imposes higher tariffs on Chinese exports and Beijing retaliates, German businesses will suffer the most.
Chinese officials “know that German companies are heavily invested, and they use that politically to influence political decision-making in Berlin,” Mr. Barkin said.
Mr. Barkin added that Germany's largest companies, including BMW, Mercedes-Benz and BASF, are investing heavily in China and have strong and effective lobbying activities in Berlin. Executives from those companies, along with several others, joined Mr. Scholz in China.
“Supply chains in China are full of German goods,” said Joerg Wuttke, former president of the EU Chamber of Commerce in China. “If China has a price war with Germany, no one will make money anymore.”
For their part, Chinese officials have dismissed European accusations of unfair trade practices, calling them baseless and an act of “unfair trade practices.”typical protectionism.” They hinted that they could retaliate against any EU action, saying China was “very dissatisfied and resolutely opposed” to the EU investigations.
Wang Wentao, China's commerce minister, traveled to Europe last week to show Beijing's support for Chinese companies and reject accusations that China dumps goods in the region and pose risks to the global market.
in one interview To the German newspaper Handelsblatt, Wu Ken, China's ambassador to Germany, said the competitiveness of Chinese electric vehicles “relies on innovation, not subsidies.”
“The challenge that developed countries face lies in Chinese companies operating more efficiently,” the Ambassador said.
Purple Void King Contributed reporting from Hong Kong.
