IRIA News

German Chancellor Olaf Scholz arrived in China on a three-day diplomatic mission on the fine lines as Germany struggles to balance relations with its Western partners while sustaining economic ties with Beijing, Berlin’s largest trade ally.

Scholz’s visit to China is centered on sustaining the economic cooperation between the two nations against the backdrop of their contrasting stances regarding the Russia-Ukraine war. This is German Chancellor Olaf Scholz’s second visit to China since taking office.

Visit to Industrial city of Chongqing

Scholz kicked off his three-day China trip on April 14, 2024, in the industrial megacity of Chongqing. Accompanied by a delegation of ministers and business leaders, he toured Bosch Hydrogen Powertrain Systems, a joint venture between Germany and China dedicated to introducing cutting-edge fuel cell powertrain solutions to the Chinese market. They also visited other key sites in the expansive city, known for its role as a major production base for China’s automotive and other industries.

Scholz arrived in Shanghai on the second day of his trip along with Germany’s prominent corporate figures, including Ola Kallenius, the chairman of Mercedes-Benz, and Oliver Zipse, the CEO of BMW, as well as representatives from German companies including Siemens, Zeiss, and Bayer. His trip to Shanghai focused on emphasizing the significance of the Chinese market for Europe’s largest economy. The previous visits of Scholz to Shanghai took place in 2011 and 2015.

German Chancellor Scholz called for “open and fair” competition between European and Chinese automakers and clean energy companies as the officials of the two countries discussed enhancement in the annual US$207 billion trade between the two nations, indicating areas for potential growth and collaboration amid concerns over de-risking calls and political pressures.

Key facts about China-Germany trade

According to the German Federal Statistical Office (Destatis):

• Bilateral annual trade volume between China and Germany surpassed of 253.1 billion euros (US$268 billion) in 2023.
• China was Germany’s most important trading partner in 2023 for the eighth consecutive year in 2023.
• Motor vehicles and trailers are among the most important export and import goods for Germany.

Sino-German economic relations

During his trip, Mr. Scholz advocated for German companies struggling to compete in China and highlighted the EU’s mounting worries about Chinese goods flooding the bloc’s markets.

In Shanghai, Scholz said that competition between China and Germany should be fair – a concern he was expected to discuss with Xi while warning against taking a protectionist stance.

“At some point, there will also be Chinese cars in Germany and Europe. The only thing that must always be clear is that competition must be fair,” Scholz told students at Tongji University in Shanghai. “In other words, that there is no dumping, that there is no overproduction, that copyrights are not infringed,” Scholz said.

During his brief visit to Shanghai, Scholz engaged with students at Tongji University and engaged in a dialogue with approximately 160 students, discussing Germany-China youth exchanges, sustainable development, smart cities, and artificial intelligence (AI).

“The Sino-German economic relationship should not only be cultivated but expanded”, Mercedes-Benz Chairman Kallenius told a German broadcaster during his trip. “Withdrawing from such a large market is not an alternative, but rather strengthening our position,” he said on his company’s strategy in China.

Lately, Western economic leaders have been expressing their criticism toward the Chinese government for excessively subsidizing electric car manufacturers and flooding the market with affordable electric vehicles. The arrival of German leadership and businessmen in China’s big industrial cities gives a strong signal about Germany’s strong trade expectations and economic cooperation with Beijing against the backdrop of increasing political and economic competition between the West and China.

German chancellor meets Chinese leader

On the last day of his trip on April 16, the German Chancellor met with Chinese President Xi Jinping. Scholz met with China’s leader at the Diaoyutai State Guesthouse in Beijing, along with a delegation of German officials and business leaders.

Chinese President Xi Jinping said that the two-way ties with Germany would continue to develop steadily as long as both respected each other and sought “common ground” while reserving differences. “We must view and develop bilateral relations in an all-round way from a long-term and strategic perspective,” Xi told the German Chancellor.

German Chancellor Olaf Scholz meets Chinese President Xi Jinping at the end of three-day visit to China 🇩🇪🇨🇳 pic.twitter.com/nSKkdx9Zxv

— IRIA (@IRIA_Research) April 16, 2024

“As long as both sides adhere to mutual respect, seek common ground while reserving differences, communicate and learn from each other, and achieve win-win cooperation, relations between the two countries will continue to develop steadily,” Xi said during the meeting.

Xi emphasized the deeply intertwined industrial and supply chains between China and Germany, underscoring that the cooperative relationship between the two nations is not a risk but a pillar for bilateral stability and future opportunities. “The two countries have huge potential for win-win cooperation in both traditional fields such as machinery manufacturing and automobiles and emerging fields including green transformation and digital artificial intelligence”, Xi noted.

Xi also addressed the EU’s concerns about the threat to European businesses from Chinese goods, including electric vehicles and other green technologies, flooding its markets. The Chinese president said that China’s exports of electric vehicles, lithium batteries, and solar products have enriched global supply and eased inflationary pressure while contributing to global efforts to address climate change.

Additionally, Scholz is also scheduled to meet with Premier Li Qiang, amidst the backdrop of strained relations between the two nations due to Russia’s conflict in Ukraine and China’s rivalry with the United States, Germany’s key ally.

Peace efforts in Ukraine

The German and Chinese leaders discussed Ukraine among other issues. During his visit, German Chancellor Scholz conveyed to Chinese leader Xi Jinping that Russia’s full-scale invasion of Ukraine poses a significant threat to global security. This was seen as a plea for China to wield more pressure on its neighbor and strategic ally to seek a resolution to the conflict.

Bei meinem Treffen mit Staatspräsident Xi geht es auch darum, wie wir mehr zu einem gerechten Frieden in der Ukraine beitragen können.
Es ist gut, dass es seit meinem letzten China-Besuch einen intensiven Austausch zwischen unseren Regierungen gibt. Wir haben viele Themen. pic.twitter.com/Dij3qAzZuR

— Bundeskanzler Olaf Scholz (@Bundeskanzler) April 16, 2024

The two sides also reportedly discussed compelling Moscow to engage in peace negotiations regarding Ukraine, with German officials aiming for a resolution to the conflict on terms favorable to Kyiv. President Xi laid out what state media described as “four principles to prevent the Ukraine crisis from spiraling out of control and to restore peace” which includes creating “conditions for the restoration of peace and refrain from further exacerbating tensions.”

The Chinese government says they encourage and support all efforts that are conducive to the peaceful resolution of the crisis. “China supports the timely convening of an international conference recognized by both Russia and Ukraine with equal participation of all parties to discuss all peace options in a fair manner,” according to the Chinese media.