German Chancellor Friedrich Merz seeks to reset relations with China, highlighting the need for partnership and dialogue to address a widening trade deficit. Merz's visit to Beijing, accompanied by a large business delegation, aims to deepen the 'comprehensive strategic partnership' with China, Germany's largest trading partner. President Xi Jinping welcomes the comments, acknowledging the challenges of redefining an economic relationship that is increasingly unfavorable to Germany but remains crucial for its industrial interests.
Merz emphasizes the importance of strategic communication and mutual trust between China and Germany, especially in a turbulent and interconnected world. The visit follows similar trips by French President Emmanuel Macron and British Prime Minister Keir Starmer, as European leaders strive to strengthen ties with China after a rift with the Trump administration in Washington. This underlines the significance of China's vast consumer market and advanced manufacturing capabilities for Germany's economy, which is still recovering from a recession.
However, German businesses are concerned about 'derisking' strategies to reduce strategic dependence on China. Merz encourages Chinese companies to invest in Germany while urging both sides to remain vigilant. He highlights supply chain issues, particularly the impact of China's export controls on basic chips and rare earths, which affected German manufacturers last year. These concerns stem from long-standing German worries about China's undervalued yuan, market-distorting subsidies, and overcapacity among Chinese exporters, leading to massive trade surpluses with Germany.
Despite these challenges, the visit is seen as a positive step. A joint statement issued by Xinhua, China's state-run news agency, highlights the signing of agreements on climate change, animal disease prevention, and sports collaboration. Premier Li Qiang expresses China's willingness to cooperate in areas like automobiles, chemicals, artificial intelligence, and biomedicine, while also encouraging German foreign-invested enterprises to address their demands. Merz, accompanied by top German executives, including carmakers Volkswagen and BMW, aims to balance economic interests with the need for a reset in relations with China.
