German Chancellor Olaf Scholz tried to strike a delicate balance during his visit to China this week between promoting business ties with the country's biggest trading partner while raising concerns about a surge in exports to Europe and Russian aid. .
Scholz met with Chinese leader Xi Jinping at Beijing's Diaoyutai Guest House on Tuesday, the culmination of a three-day visit with a delegation of German government officials and business leaders. He also spoke with Premier Li Qiang as the two countries navigate tensions caused by Russia's war in Ukraine and China's standoff with the United States, Germany's most important ally.
During his visit, Scholz promoted the interests of German companies, which are finding it increasingly difficult to compete in China. He also cited growing concerns within the European Union that the region's markets are becoming a dumping ground for Chinese products produced at a loss.
But Scholz chose a conciliatory rather than bellicose tone in his opening remarks Tuesday morning ahead of his meeting with Xi. The meeting lasted more than three hours, including a walk and lunch.
It will be the first visit by a German leader to China since the German government last year adopted a strategy that defines the Asian power as “partners, competitors and systemic rivals” and calls for Germany to reduce its dependence on Chinese products. became.
Germany's economy shrank last year, and its weakness exposed its dependence on China for growth. Energy prices are rising due to the war in Ukraine, which was facilitated by the Chinese government's support of the Kremlin. German companies are pushing for greater access to China and complain they face unfair competition.
The prime minister visited German companies with large investments in China and met with trade representatives and officials in China's vast industrial cities of Chongqing, Shanghai and Beijing in southwest China.
In a meeting with a group of students in Shanghai on Monday, Scholz answered a question from a student planning to study abroad in Germany this year, saying he was “really worried” because the country had partially legalized cannabis. “There is,” he said. “When you study in Berlin, you run around all the time, but you never meet anyone who does that,'' the Chancellor assured him.
But he also used the platform to spread more serious messages about trade. “Competition must be fair,” Scholz told his students. “We want a level playing field,” he said.
Scholz's visit was an example of the difficult dance Germany is trying to perform. The idea is to maintain economic ties with China while addressing U.S. pressure on China to work more closely with the United States.
At the meeting, Scholz emphasized Germany's commitment to trade with China, but also warned of the need to curb the flow of Chinese goods into Europe. At the same time, he balked at a European Union investigation into China's use of subsidies for green technology industries, saying any discussion on trade must be based on fairness.
“This should be done not from a protectionist motive, but from a position of confident competitiveness,” Scholz told reporters on Monday.
China has sparked trade disputes with Europe and the United States as it promotes green manufacturing, such as electric cars and solar panels, which also receive government support. But with 5,000 German companies active in the Chinese market, Germany stands to lose more than many of its European partners if China retaliates against the European Union.
Maximilian Butek, secretary general of the German Chamber of Commerce in China, said: “If the EU takes too hard a stance against China, we can expect countermeasures, which would be a disaster for us.” .
“For us, it is extremely important that the Chinese market remains open,” he said.
In his meeting with Xi, Scholz indicated that Russia's war against Ukraine and military buildup were priorities. “They directly affect our core interests. Indirectly, they damage the entire international order,” he said in opening remarks to the conference provided by Scholz's office.
Although it pressed Mr. Xi on the issue, it appears that Mr. Xi was unable to secure the promise he had sought from the Chinese leader to participate in an international conference for Ukraine scheduled for June. Germany had hoped that China could use its influence over Russia to support efforts toward a peace agreement.
Germany also wants China to stop selling goods to Russia that could be used on the battlefield, and Scholz told reporters he raised the issue during the meeting. “The point is understood,” he said. “There should be no misunderstandings about how we see things.”
By recruiting leaders like Scholz, China hopes to drive a wedge between Europe and the United States. State media reports said his visit would highlight economic ties with Germany and prove the strength of China's ties with Europe.
In his opening remarks to Scholz, Mr. Xi said that cooperation between China and Germany, the second and third largest economies, is beneficial for the world, but this remark was aimed at those who had requested Berlin. It was a remark that could be taken as a compliment. This is to distance itself from Beijing.
Mr. Xi told Mr. Scholz, “Both countries should view and develop bilateral relations from a long-term and strategic perspective, and work together to bring greater stability and certainty to the world.'' He emphasized the importance of exploring “points”.
The Chinese government will no doubt welcome the message that German companies are contributing to China. Asian giants are trying to attract foreign investment to revitalize an economy sluggish due to a housing downturn. Some Western companies and investors are also upset by Mr. Xi's emphasis on national security, believing it increases the risk of doing business in the country.
From China's perspective, Germany may be its best hope for slowing or easing trade restrictions from Europe, said Noah Barkin, senior China advisor at research firm Rhodium Group.
German automakers have invested billions of dollars in China, and much of their revenue comes from there. Many fear German companies will be hit hardest if the European Commission imposes higher tariffs on Chinese exports and Beijing retaliates.
Chinese officials “know that German companies are investing heavily and are using that politically to influence political decision-making in Berlin,” Barkin said.
Germany's biggest companies, such as BMW, Mercedes-Benz and BASF, have large operations in China and have strong and effective lobbying efforts in Berlin, Birkin added. Several executives from these companies visited China with Mr. Scholz.
“China's supply chain is full of German products,” said Jorg Wutke, former president of the EU Chamber of Commerce in China. “If China competes with Germany on price, no one will make any money.”
Scholz was also accompanied by Germany's agriculture, environment and transport ministers, who experts believe are particularly interested in cooperating with China.
“We have set an agenda with these three ministers. There is a general atmosphere of collaboration and these are the areas we want to work on,” said Janka Oertel, director of the Asia Program at the European Council on Foreign Relations.
Chinese authorities dismissed European accusations of unfair trade practices as baseless and a “classic act of protectionism.” They said China was “strongly dissatisfied and firmly opposed” to the European Union's investigation, hinting that it could retaliate against any actions taken by the European Union.
In an interview with German newspaper Handelsblatt, China's ambassador to Germany, Wu Keng, said that the competitiveness of China's electric vehicles “relies on innovation, not subsidies.”
“The challenge facing developed countries lies in the fact that Chinese companies are more efficient,” the ambassador said.
Vivian Wang Contributing to reports from Beijing, prince From Hong Kong.
