Volkswacht Bodensee - Germany's Merz meets Xi in China, seeking closer ties

Berlin and Beijing want to build on their decades-old economic ties at a time when US President Donald Trump has sparked global chaos with his tariffs blitz and other erratic foreign policy moves.

China, the world's number two economy, overtook the United States last year to become Germany's biggest trade partner, but Berlin also regards the Communist Party-run state as a systemic rival to the West.

The two leaders reaffirmed their commitment to developing closer strategic relations, with Merz saying he saw the trip as a "great opportunity" to boost economic ties.

Xi, in turn, told Merz he was willing to take their ties to "new levels", stressing that he "always attached great importance to Sino-German relations".

Merz also noted that he wished for joint consultations between their two governments, which had been interrupted by a change in Germany's government and the pandemic, to resume "very soon".

But he is also expected to stress German and European interests during his talks with Xi, and urge him to put pressure on China's ally Russia to end the war in Ukraine.

Merz is the latest in a string of Western leaders courting Beijing in recent months, including Britain's Keir Starmer, France's Emmanuel Macron and Canada's Mark Carney, as they recoil from the mercurial policies of Trump, who is also expected from March 31.

- Large business delegation -

Export-dependent Germany needs "economic relations all over the world", Merz said before leaving for Beijing with a large business delegation in tow.

"But we should be under no illusions," he added, pointing out that China, as a rival to the United States, now "claims the right to define a new multilateral order according to its own rules".

Merz earlier met with Premier Li Qiang in Beijing's opulent Great Hall of the People, where he called for "fair" cooperation, and representatives from both sides signed agreements and memorandums -- including on climate change and food security.

In an apparent allusion to the United States, Li noted that "unilateralism and protectionism have gained ground and even become prevalent in some countries and regions".

"Against such a backdrop, China and Germany, as two major economies in the world with significant influence, should... jointly safeguard multilateralism and free trade," Li said.

China under Xi has grown far more assertive on the world stage, built up its military, stressed its claim to self-ruled Taiwan, and pushed back strongly against criticism of its human rights record.

Flexing its muscle at times of tension, Beijing has restricted exports of critical minerals used in products from microchips and wind turbines to electric-car batteries and weapons systems.

Last year, Beijing temporarily halted the export of Nexperia chips to Europe following a dispute with the Dutch government.

More broadly, European businesses complain that China, with its low domestic demand, is flooding Europe with goods made cheap through state subsidies and an undervalued currency.

Germany's trade deficit with China hit a record 89 billion euros ($105 billion) last year.

- 'Systemic competition' -

As Trump has unsettled allies and rivals alike, China has nonetheless also sought to present itself as a reliable partner and defender of the multilateral order.

China's top diplomat, Wang Yi, told Merz at the Munich Security Conference this month that Beijing hoped to bring ties "to a new level" and wanted Germany to be a "stabilising anchor for strategic relations" in the European Union.

Merz, like his predecessors Angela Merkel and Olaf Scholz, is joined by business leaders including executives of auto giants Volkswagen, BMW and Mercedes.

On Thursday, Merz is to visit Beijing's Forbidden City, then a Mercedes plant where autonomous driving vehicles will be presented.

The chancellor then travels to AI hub Hangzhou to visit the robotics group Unitree and German turbine maker Siemens Energy.

German businesses have given Merz a to-do list on his trip.

"We expect the chancellor to clearly address problems such as overcapacity, distortions of competition, and export controls on critical raw materials," said Wolfgang Niedermark of the Federation of German Industries.

German and European companies in China are not only "competing with highly innovative Chinese firms" but are also players in a "state-driven systemic competition".

Merz should advocate for "structural reforms to strengthen domestic demand and fairer competitive conditions" in China, he said, warning that without change there will be "new trade conflicts with the EU".

T.Ziegler--VB