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German leaders are doing well in China

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German Chancellor Olaf Scholz is trying to strike a delicate balance on a trip to China this week, promoting commercial ties with Germany’s largest trading partner while criticizing China’s surge in exports to Europe and its support for Russia.

Mr Schulz met China’s top leader Xi Jinping at the Diaoyutai State Guesthouse in Beijing on Tuesday, the culmination of a three-day visit by a delegation of German officials and business leaders. He is also expected to meet Prime Minister Li Qiang, whose relations are currently strained by Russia’s war in Ukraine and China’s competition with Germany’s most important ally, the United States.

Throughout the trip, Mr. Schulz promoted the interests of German companies, which are finding it increasingly difficult to compete in China. He also expressed growing concern to the EU that the region’s markets are becoming dumping grounds for waste. Chinese goods produced at a loss.

This is Schultz’s first visit to China since the administration adopted a strategy last year that defined Asian powers as “partners, competitors and associates.” systemic competitors”, calling on Germany to reduce its dependence on Chinese goods.

german economy shrunk Last year, its weaknesses exposed its dependence on China for growth. Energy prices have risen due to the war in Ukraine, a trend fueled by Beijing’s support for the Kremlin.German companies strive for greater access to the Chinese market and complain they face unfair competition.

The prime minister’s trip began in Chongqing, a sprawling industrial metropolis in southwest China, and continued to Shanghai and Beijing, where he visited German companies with extensive investments in China, met with trade representatives and spoke with university students.

“The competition must be fair,” Scholz told a group of German-language students in Shanghai on Monday. “We want a level playing field,” he said.

Scholz’s trip is an example of the difficult dance Germany is trying to perform: maintaining economic ties with China while dealing with U.S. pressure to align more closely with Washington to counter Beijing. He is also expected to convey to China the geopolitical and trade concerns of European leaders.

Scholz stressed Germany’s commitment to doing business with China during the meeting, but he also warned that Beijing must curb the influx of Chinese goods into Europe. At the same time, he expressed reservations about the EU’s investigation into China’s subsidies to the green technology industry, saying that any discussion on trade must be based on fairness.

“This has to be motivated by confident competitiveness, not protectionism,” Scholz told reporters on Monday.

China’s manufacturing push into green industries such as electric vehicles and solar panels, which also receive government support, have sparked trade disputes with Europe and the United States. But with 5,000 German companies active in the Chinese market, Germany stands to lose more than many of its European partners if Beijing retaliates against the EU.

“If the EU takes too tough a stance against China, we may take countermeasures, which would be a disaster for us,” said Maximilian Butek, executive director of the German Chamber of Commerce in China.

“It is extremely important for us that the Chinese market remains open,” he said.

In meetings with Chinese leaders, Scholz is also expected to express concern about Beijing’s support for Moscow’s wartime economy, particularly as Beijing continues to sell goods to Russia that could be used on the battlefield.

In discussions with students in Shanghai, Scholz brought up Russia’s war in Ukraine and said the world works best when all countries accept some basic common principles.

“One of them is that people don’t have to be afraid of their neighbors,” Mr. Scholz said, without naming any country. “Borders cannot be changed by force.”

China hopes to drive a wedge between Europe and the United States by currying favor with leaders such as Scholz. State media reported that his visit demonstrated the strength of China’s ties with Europe and highlighted China’s economic ties with Germany.

Beijing would certainly welcome the message that German companies are committed to China. The Asian giant is trying to attract foreign investment to revive an economy reeling from a slowdown in the property market. Some Western businesses and investors are also uneasy about Xi Jinping’s emphasis on national security, which they say makes doing business in the country riskier.

From China’s perspective, Germany may be its best hope for delaying or watering down European trade restrictions, said Noah Barkin, senior adviser for China at research firm Rhodium Group.

German automakers have invested billions of dollars in China, where they generate most of their revenue. Many fear that if the European Commission imposes higher tariffs on Chinese exports and Beijing retaliates, German companies will suffer the most.

Chinese officials “know that German companies are investing heavily, and they are using this politically to influence political decisions in Berlin,” Barkin said.

Barkin added that Germany’s largest companies, including BMW, Mercedes-Benz and BASF, have significant investments in China and have strong and effective lobby groups in Berlin. Executives from those companies and several others traveled to China with Mr. Scholz.

“China’s supply chain is flooded with German goods,” said Joerg Wuttke, former president of the European Union Chamber of Commerce in China. “If China and Germany enter into a price war, no one will make money.”

Chinese officials have dismissed European accusations of unfair trade practices, saying they are baseless and “typical protectionism“. They hinted at possible retaliation against any action taken by the EU, saying China was “strongly dissatisfied and firmly opposed” to its investigation.

Chinese Commerce Minister Wang Wentao traveled to Europe last week to express Beijing’s support for Chinese companies and refute accusations that China is dumping goods into the region and posing risks to global markets.

in a interview Chinese Ambassador to Germany Wu Ken said in an interview with Germany’s Handelsblatt that the competitiveness of China’s electric vehicles “depends on innovation, not subsidies.”

“The challenge facing developed countries is more that Chinese companies are more efficient,” the ambassador said.

Wang Zixu Reporting from Hong Kong.

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