German Chancellor Olaf Scholz recently met with Chinese Communist Party leader Xi Jinping and Premier Li Qiang in Beijing to discuss trade and foreign policy. During the visit, Scholz urged China to ensure fairness in the EU market and establish processes to address concerns about Chinese state subsidies impacting trade. He also emphasized the need for better market access and a level playing field for German firms.
Scholz’s visit comes at a time when the European Union is seeking to reduce strategic dependencies on Chinese goods and investigating whether Chinese manufacturers are dumping subsidized goods on its market. The EU Commission President, Ursula von der Leyen, has raised concerns about China’s overproduction of green tech and its impact on European industries.
While Scholz has been cautious about pushing away China, he emphasized the importance of fair competition between the two countries. He pressed China to improve business conditions for German companies, including equal market access, protection of intellectual property, and a reliable legal system.
The visit also highlighted the significance of the Chinese market to Germany’s economy. Scholz traveled to China with senior German executives from companies like Mercedes-Benz and BMW, underlining the importance of expanding economic ties between the two countries. Executives expressed optimism about the opportunities in China and emphasized the need to strengthen their position in the market.
During the visit, China lifted restrictions on imports of beef and apples from Germany, which was seen as a positive outcome. Germany was the largest exporter of goods to China among EU member states in 2023.
The European Commission has been actively investigating Chinese subsidies and their impact on the EU market. The Commission unveiled an economic security strategy focused on diversifying supply chains, addressing economic coercion, energy security, and critical infrastructure risks. It has also launched anti-subsidy investigations into imports of electric cars, wind turbines, solar panels, and trains from China.
Despite the political and trade frictions, Germany continues to invest in China, reaching a record-high direct investment in 2023. China remains Germany’s top trading partner for the eighth consecutive year, though trade volume has contracted.
Critics argue that Scholz’s visit highlighted China’s success in steering the conversation and limiting it to issues that China can deflect or push back against. However, issues such as human rights and cybersecurity are likely to resurface and impact bilateral relations in the future.
Overall, the visit emphasized the need for fairness and equal market access in the EU-China trade relationship. It highlighted the importance of the Chinese market to Germany’s economy and the ongoing challenges faced by the EU in addressing Chinese subsidies. The outcome of the visit and the future of EU-China relations remain uncertain, but it is clear that both sides recognize the need for cooperation and stability in the global economy.
