Amidst escalating trade tensions between the United States, China, and Europe, German Minister of Finance and Vice Chancellor, Lars Klingbeil, is set to embark on a four-day visit to Beijing on Monday, November 17. This marks the first visit to China by a current cabinet minister of the German government.
Klingbeil will participate in the Sino-German financial dialogue on Monday. This mechanism, in existence for a decade, convenes every two years with meetings between the German Finance Minister and senior Chinese financial officials. It is expected that Chinese Vice Premier, He Lifeng, will attend on behalf of China, along with representatives from regulatory bodies and the financial industry. It is believed by observers that this visit…
According to Bloomberg, Klingbeil released a statement via email before his departure, urging Beijing to ensure fair competition in order to establish an “open, rules-based global trade system.”
In his statement, he mentioned, “We do not shy away from competition, but competition must be fair. All parties bear responsibility for establishing an open, rules-based global trade system, as economic uncertainty will ultimately harm everyone.”
Klingbeil specifically emphasized the importance for Germany of securing key raw materials and addressing issues such as overcapacity in areas like steel and electric vehicles in relation to China.
Klingbeil’s agenda includes participating in the German-Chinese financial dialogue, meeting with senior officials of the Chinese Communist Party in Beijing, followed by a visit to Shanghai, and then proceeding to Singapore on Wednesday, November 19.
His visit to China has been coordinated with Prime Minister Friedrich Merz and the European Union, as stated in the release.
Despite escalating international tensions, Klingbeil aims to seek solutions with his Chinese counterparts and drive improvements in market access for German companies. The situation in Ukraine will also be discussed during the meetings, acknowledging Beijing’s crucial role in ending the conflict.
The timing of Klingbeil’s visit to China as German Minister of Finance and Vice Chancellor is sensitive against the backdrop of heightened tensions between China and Europe in recent months. Beijing’s tightening control over exports of key raw materials, especially rare earths, highlights Germany’s significant dependency on the Chinese economy. The German automotive industry has already felt the impacts of shortages of crucial components.
German Foreign Minister Johann Wadephul had initially planned a visit to China at the end of October to pave the way for Prime Minister Merz’s visit but later canceled the trip. This decision was made due to China only scheduling meetings with him and Foreign Minister Wang Yi, while the German side felt more meetings should have been arranged.
Previously, Wadephul had criticized the increasingly aggressive nature of China’s Indo-Pacific policies, whereas the Chinese Ministry of Foreign Affairs had chastised Germany over its stance on Taiwan-related issues.
Before his departure, Klingbeil, in an interview with a German news agency, appeared conciliatory. However, he made it clear regarding Taiwan, saying, “China must always understand that we are closely watching what is happening around Taiwan. If (Beijing) takes military action, it will change our view of China (the Chinese Communist Party).”
According to Deutsche Welle (Germany’s international broadcaster), analysts suggest that the new German government has yet to formulate its own strategy towards China. The government led by former Chancellor Olaf Scholz set the goal of “de-risking,” but progress has been minimal.
The recent “Nexperia supply shock” incident – where the Netherlands took over the Chinese-owned chip manufacturer Nexperia and Beijing subsequently prohibited the export of certain key raw materials – has heightened awareness of Germany’s economic vulnerabilities.
On November 13, the German parliament voted to establish an expert committee comprising political, academic, and business representatives to review “security issues in economic relations between Germany and China” and to scrutinize Chinese investments in crucial infrastructure in Germany.
The outcome of Klingbeil’s visit will ultimately determine whether Chancellor Merz will visit China in the near future. While Merz, in his six months in office, has already visited European allies and the United States, gaining a reputation for active engagement on the international stage, he has yet to make visits to China and India.