German Chancellor Friedrich Merz travelled to Beijing with a delicate brief: vouch for a shrinking slice of big German firms still bullish on China, while defending the growing number being squeezed.
On day one of his first official visit, Merz trod the line carefully – voicing openness to resetting beleaguered bilateral ties, even while gently nudging his hosts on bugbears including subsidies, currency devaluation and Russia.
A day of meetings with Chinese Premier Li Qiang, President Xi Jinping and a business round table yielded a rare joint statement, a flurry of minor deals and – according to Merz – the promise of a large-scale purchase of Airbus planes, with more juicy contracts to come.
The conservative leader said unequivocally that Germany was open to Chinese investment, talked up hi-tech cooperation and made clear that trade barriers would be his last resort.
“Because of the sharp increase in Chinese imports, calls for protection are growing louder in Europe. I want to be frank with you, and I already told you this in our conversation earlier: I want as little protection and safeguarding as possible,” Merz said in comments directed at Li at a business event.
On this front, however, he made clear that the ball was in Beijing’s court.
“We want to continue to benefit from open markets. Stronger Chinese domestic demand, perhaps facilitated by a moderate appreciation of your currency, would make it easier to continue trade without such barriers,” Merz said, adding that it was “important to reduce market-distorting subsidies and achieve market consolidation where we see overcapacity”.
China’s ties with Europe have grown increasingly testy in recent years. In Berlin, Brussels and beyond, there is a firm belief that Russia’s four-year war against Ukraine could not be prosecuted without financial and materiel support from Beijing.
Frustrations on trade, meanwhile, have morphed into a deluge of EU investigations and hatched a fresh appetite for industrial policy. Next week, the bloc will propose an Industrial Accelerator Act that will recommend “buy Europe” provisions to ensure cheaper Chinese goods are muscled out of public contracts.
Merz looks to deepen ties with China, where possible
But little of this exasperation was on show in Beijing, where Merz struck a more diplomatic tone than recent speeches back home. In Munich this month, for instance, Merz accused China of “systematically using dependencies of others, as it redefines the international order in its own favour”.
In Beijing, however, his complaints were couched in cooperative language.
“Today, German companies in China are encountering a top-class innovation ecosystem, and we are learning from it. We are also learning from each other. This mutual learning, this mutual improvement, creates growth, creates jobs and creates prosperity on both sides, in both our countries,” Merz said.
“However, we also face – and this has already been mentioned – a number of challenges that we want to, and certainly can, overcome together with you through cooperation and dialogue.”
At dinner with Xi, Merz was told that Beijing was placing “a significant number of additional aircraft from Airbus” – although it was immediately unclear whether this referred to a deal for the same number of craft reported after French President Emmanuel Macron’s trip in December.
“In total, up to 120 additional aircraft will be ordered from Airbus. This example alone shows you that it’s worthwhile to undertake such trips and to discuss specific topics in detail. There were also several concrete topics discussed with other companies, but these have not yet been finalised. Further contracts are therefore anticipated,” the chancellor said.
Speaking after the dinner meeting with Xi, Merz said he would “set a date soon” for the resumption of government-to-government dialogue, which has been stalled since the pandemic.
“Both sides are aware that we hold differing views on important issues, and at the same time, we recognise that we can cooperate in many areas to our mutual benefit. This requires patience, and above all, dialogue,” Merz said.
China called to help end war in Ukraine
On the thorniest of issues, Merz kept his public remarks cool. Speaking on Ukraine, he said: “China’s voice is heard in the world. Its decisions carry weight. But this also brings with it a responsibility.”
“I therefore asked my interlocutors today to use their influence to end the Russian war of aggression against Ukraine. Beijing can exert influence on this. We also know that signals from China are taken very seriously in Moscow. This applies to both words and deeds,” Merz said.
Differences over Taiwan, meanwhile, boiled over late last year when German Foreign Minister Johann Wadephul scrapped a visit to Beijing, saying his meetings with senior officials had been cancelled. In Berlin, this was thought to stem from remarks he made in Tokyo about the volatile situation in the Taiwan Strait.
Merz made clear that “Germany’s one-China policy remains unchanged”, but said that “any effort towards reunification or unification between China and Taiwan can only be achieved peacefully and not by military means”.
Beijing sees Taiwan as part of China and has never ruled out the use of force to reunite it with the mainland. Most countries, including the United States, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons to defend itself.
“An escalation there would be dangerous for us as well. It would have far-reaching consequences, extending well beyond the region and affecting Europe too,” he said, before departing for the tech hub of Hangzhou to visit cutting-edge robot factories and German car plants.
Ahead of his trip, Merz said his aim was “to try to understand the [Chinese] president ... and vice versa, I will try to explain what our position is”.
In Europe, too, there is eagerness now to understand where the chancellor stands on China upon his return – and where Germany will land on the stormy debate brewing on the continent’s ties with Beijing. -- SOUTH CHINA MORNING POST
