Germany’s Leader Walks a Fine Line in China

Chancellor Olaf Scholz of Germany tried to strike a fragile steadiness on a visit to China this week, selling enterprise ties along with his nation’s largest buying and selling companion whereas elevating considerations over its surge of exports to Europe and its assist for Russia.

Mr. Scholz met with China’s high chief, Xi Jinping, on the Diaoyutai State Guesthouse in Beijing on Tuesday, the end result of a three-day go to with a delegation of German officers and enterprise leaders. He additionally met with Premier Li Qiang, as the 2 nations navigate relations strained by Russia’s conflict in Ukraine and China’s rivalry with the US, Germany’s most essential ally.

All through his journey, Mr. Scholz promoted the pursuits of German corporations which might be discovering it more and more laborious to compete in China. And he conveyed rising concern within the European Union that the area’s market is changing into a dumping floor for Chinese language items produced at a loss.

However Mr. Scholz selected a conciliatory tone over a combative one in his opening remarks earlier than he sat down with Mr. Xi on Tuesday morning, in a gathering that stretched for hours and changed into a stroll and lunch.

It was the German chief’s first go to to China since his authorities adopted a method final yr that outlined the Asian energy as a “companion, competitor and systemic rival,” calling on Germany to cut back its dependency on Chinese language items.

Germany’s financial system shrank final yr, and its weaknesses have uncovered a reliance on China for progress. Vitality costs have risen due to the conflict in Ukraine, which has been facilitated by Beijing’s assist for the Kremlin. German corporations have pushed for extra entry to China and complained that they face unfair competitors.

The chancellor visited German corporations with in depth investments in China and met with commerce representatives and officers within the sprawling industrial metropolis of Chongqing in China’s southwest and in Shanghai and Beijing.

At a chat with a gaggle of scholars in Shanghai on Monday, Mr. Scholz fielded a query from a scholar who deliberate to review in Germany this yr, who mentioned he was “actually nervous” as a result of the nation had partially legalized hashish. “Once you research in Berlin, you may run round the entire time and by no means meet anybody who does that,” the chancellor assured him.

However he additionally used the platform to push extra critical messages about commerce. “Competitors should be truthful,” Mr. Scholz informed the scholars. “We would like a degree taking part in area,” he mentioned.

Mr. Scholz’s journey was an instance of the troublesome dance that Germany is attempting to do: sustaining financial ties with China whereas managing U.S. stress to align itself extra intently with Washington in opposition to Beijing.

In his conferences, Mr. Scholz highlighted Germany’s dedication to doing enterprise with China, however he additionally warned that Beijing needed to curb the flood of Chinese language items into Europe. On the similar time, he expressed reservations in regards to the European Union’s investigations into China’s use of subsidies for inexperienced expertise industries, saying that any dialogue about commerce should be based mostly on equity.

“This should be achieved from a place of self-confident competitiveness and never from protectionist motives,” Mr. Scholz informed reporters on Monday.

China’s manufacturing push in inexperienced sectors like electrical automobiles and photo voltaic panels has touched off commerce disputes with Europe and the US, the place such industries have additionally obtained authorities assist. However with 5,000 German corporations energetic within the Chinese language market, Germany stands to lose greater than lots of its European companions would if Beijing have been to retaliate in opposition to the European Union.

“If the E.U. goes too laborious in opposition to China, we might count on countermeasures and this may be a disaster for us,” mentioned Maximilian Butek, the manager director of the German Chamber of Commerce in China.

“For us it’s extraordinarily essential that the Chinese language market stays open,” he mentioned.

In his assembly with Mr. Xi, Mr. Scholz indicated that Russia’s conflict on Ukraine and its arms buildup have been excessive on his agenda. “They straight have an effect on our core pursuits. Not directly, they harm the whole worldwide order,” he mentioned in opening remarks on the assembly, a transcript of which was supplied by Mr. Scholz’s workplace.

However he broached the subject with a nonconfrontational tone, at the least publicly, stopping wanting straight elevating considerations about China’s assist of Moscow’s wartime financial system, particularly its continued sale to Russia of products with potential makes use of on the battlefield. He mentioned he wished to debate “how we are able to contribute extra to a simply peace in Ukraine.”

China is hoping to drive a wedge between Europe and the US by courting leaders comparable to Mr. Scholz. State media studies depicted his go to as demonstrating the energy of China’s relations with Europe, taking part in up its financial ties with Germany.

In his opening remarks to Mr. Scholz, Mr. Xi mentioned cooperation between China and Germany, which have the second- and third-largest economies, was helpful to the world, a comment that may very well be learn as directed at those that have urged Berlin to distance itself from Beijing.

“The 2 nations ought to view and develop bilateral relations from a long-term and strategic perspective and work collectively to inject extra stability and certainty into the world,” Mr. Xi informed Mr. Scholz, emphasizing the significance of looking for “frequent floor.”

Beijing is bound to welcome the message that German companies are dedicated to China. The Asian large is attempting to court docket overseas funding to reinvigorate its financial system, which has faltered due to a housing slowdown. Some Western companies and traders have additionally been rattled by Mr. Xi’s emphasis on nationwide safety, which they regard as making it riskier to function within the nation.

From China’s perspective, Germany could also be its greatest hope of delaying or watering down any commerce restrictions from Europe, mentioned Noah Barkin, a senior adviser within the China apply on the Rhodium Group, a analysis agency.

German carmakers have invested billions of {dollars} in China, and far of their income comes from there. Many fear that if the European Fee imposes greater tariffs on Chinese language exports, and Beijing retaliates, German companies will endure most.

Chinese language officers “know that German corporations are closely invested and so they use that politically to affect political resolution making in Berlin,” Mr. Barkin mentioned.

Germany’s largest corporations, together with BMW, Mercedes-Benz and BASF, have massive operations in China and powerful, efficient lobbies in Berlin, Mr. Barkin added. Executives from these corporations, together with a number of others, traveled with Mr. Scholz to China.

“The availability chain in China is full of German items,” mentioned Joerg Wuttke, a former president of the E.U. Chamber of Commerce in China. “If China has a value conflict with Germany, then nobody will earn a living anymore.”

Mr. Scholz additionally introduced alongside the German ministers for agriculture, the atmosphere and transportation, officers who consultants mentioned could be significantly thinking about working with China.

“You set an agenda with these three ministers, the tonality is total a cooperative one, these are areas that we need to work on,” mentioned Janka Oertel, director of the Asia Program on the European Council on International Relations.

Chinese language officers, for his or her half, have disregarded the European accusations of unfair buying and selling practices, calling them groundless and an act of “typical protectionism.” They’ve hinted that they might retaliate for any actions taken by the E.U., saying that China was “strongly dissatisfied with and firmly opposes” its investigations.

In an interview with the German newspaper Handelsblatt, Wu Ken, China’s ambassador to Germany, mentioned the aggressive fringe of Chinese language electrical automobiles “depends on innovation, not subsidies.”

“The problem confronted by developed nations lies extra in the truth that Chinese language corporations are extra environment friendly,” the ambassador mentioned.

Zixu Wang contributed reporting from Hong Kong.