On Saturday, June 22, Robert Habeck, the Vice Chancellor and Minister of Economic Affairs of Germany, met with Chinese officials in Beijing, reiterating Germany’s stance within the EU on tariffs towards China and China’s support for Russia, among other issues. He also pointed out to the Chinese side the main reasons for the deterioration of economic relations between China and Germany.
This marked Habeck’s first visit to China during his term, amidst increasing uncertainty in the China-Germany trade relationship. On Saturday in Beijing, Habeck held separate meetings with officials from the National Development and Reform Commission of China and the Ministry of Commerce of China.
Habeck stated that Beijing’s support for Russia in the Russia-Ukraine conflict is the main cause of the deterioration in economic relations between China and Germany. He also warned of the economic consequences brought about by China’s actions.
“It is important to understand that in supporting Russia in this war, China (Communist Party of China) must realize that Germany and Europe’s security interests have been directly affected by this conflict,” said Habeck.
He made it clear to the Chinese National Development and Reform Commission Director that it is Beijing’s support for Russia in the conflict that has prompted the EU and Germany to seek to reduce their reliance on China in terms of raw materials and key commodities.
Habeck further emphasized that it is crucial to understand that these issues cannot be separated, stating, “Even our direct relationship has been negatively affected.”
The invasion of Ukraine by Russia has been particularly challenging for Germany, which heavily relies on Russian energy imports. Lars Klingbeil, Co-Chairman of the Social Democratic Party, summarised that “Germany needs to significantly reduce its reliance on authoritarian countries,” including China. The conflict also led German President Frank-Walter Steinmeier to urge the country to reduce its dependence on China.
On May 9th, Reuters reported that based on data from the German Federal Statistical Office for the first quarter of this year, the United States surpassed China for the first time in many years to become Germany’s largest trading partner.
The data indicated that from January to March this year, the total import and export trade between Germany and the United States reached 63 billion euros (approximately 68 billion dollars), slightly lower than the total with China of just under 60 billion euros.
Recent data released by the German Federal Statistical Office showed that in May, Germany’s exports to China decreased by 14.0% compared to the same month last year, amounting to 7.5 billion euros. The United States remains the most important buyer of “Made in Germany” goods, with exports to the US reaching 13 billion euros in May, a 4.1% increase year-on-year.
Habeck’s visit to Beijing as the first senior European official following the EU’s announcement of imposing high tariffs on Chinese-made electric vehicles marks a significant development in the ongoing trade tensions.
Before his arrival in Beijing, the Chinese Communist Party warned of escalating trade tensions due to ongoing friction with the EU in the electric vehicle sector.
During the first plenary session on climate change and green transformation dialogue on Saturday, Habeck stated, “It is important to understand that these are not punitive tariffs.”
He mentioned that over nine months, the European Commission has conducted a detailed review to determine if Chinese companies have gained unfair advantages from subsidies. Any anti-subsidy measures resulting from the EU’s review “are not punitive,” he added, explaining that such measures aim to address the advantages granted by Beijing to Chinese companies.
“We should establish common, equal market access standards,” he said.
Habeck expressed to the National Development and Reform Commission Director that the tariffs proposed by the EU aim to create a fair competition environment with China.
Zheng Zhajie denied the accusations of unfair competition due to Chinese subsidies and stated that the EU’s proposal of imposing import tariffs on electric vehicles from China would harm the interests of both sides.
On June 12, the European Commission released the interim results of its anti-subsidy investigation into Chinese electric vehicles. The EU claimed that China’s electric vehicle value chain benefits from unfair subsidies, posing economic threats to European pure electric vehicle manufacturers. The European Commission announced on that day that it would impose additional temporary tariffs on Chinese electric vehicles, effective from July 4. The anti-subsidy investigation by the EU will continue until November 2, when the EU will decide whether to impose a final tariff on Chinese electric vehicles for five years.
Habeck informed the Chinese officials that dialogue or negotiations should be initiated between the EU and China based on the conclusions of the EU report.
Following the meeting with Zheng Zhajie, Habeck held discussions with Wang Wentao, Minister of Commerce of China. Wang stated that he would discuss tariff issues with European Commissioner for Trade Valdis Dombrovskis via video conference on Saturday night.
(Reference to reporting from Reuters and Bloomberg News.)