With the European Union announcing additional tariffs on electric cars from China, German Vice Chancellor and Minister of Economic Affairs, Robert Habeck, is set to lead a delegation to visit South Korea and China starting from June 19. German media highlighted the awkward timing of the visit to China, as Germany is unsure of the reception they will receive from the Chinese authorities amid the ongoing trade tensions. Regardless, Germany is committed to pushing for “fairer trade conditions” during the visit.
According to reports from German media, Robert Habeck’s office announced that he would engage in a 5-day working visit to South Korea and China, focusing on discussions related to trade, climate protection, and energy policies with officials from both countries. This marks Habeck’s first visit to China.
The European Commission announced on June 12 that an additional tariff of up to 38.1% will be imposed on electric cars imported from China, with the temporary tariffs set to take effect from July 4. Concerns within the German business community in China revolve around how the tariff dispute may overshadow Habeck’s visit, with hopes that the Vice Chancellor will advocate for fair competition for German enterprises in China.
Maximilian Butek, the Managing Director of the German Chamber of Commerce in Shanghai, expressed the desire for discussions between the two countries to go beyond tariffs. He emphasized the pressing need for German companies to have fair competition in the Chinese market, including equal opportunities for market access, public tenders, regulatory equality, and fair treatment compared to local competitors.
Ulrich Ackermann, responsible for foreign trade at the German Engineering Federation VDMA, suggested that Habeck should address the issue of overcapacity during his talks in China, as the Chinese government is using its economic strength to distort the European market.
Habeck is anticipated to meet with Chinese Premier Li Keqiang during his visit on Friday, with uncertainties looming over the discussions given the car tariff dispute. There is speculation that the meetings could be canceled or delayed intentionally by the Chinese government, leaving the German delegation in suspense.
Expectations run high within the German business community for Habeck’s negotiations in China, given his critical stance towards the Chinese government. Calls for administrative intervention by the German government to reduce economic dependence on China are growing louder.
On the other hand, the majority of German businesses operating in China plan to increase their investments in the country over the next two years, as indicated by a recent survey conducted by the German Chamber of Commerce in China. While some optimism exists about the future development of the Chinese economy, concerns about stagnating or decreasing sales and profits persist among surveyed enterprises.
The pessimistic outlook is largely attributed to the issue of overcapacity in the Chinese market, with three-quarters of German companies reporting excess production capacity within their industries. Rising price pressures and weak domestic demand in China pose significant challenges for these companies.
Habeck is likely to seek support from the accompanying business delegation in his criticism of China’s practices. Notably, representatives from automotive supplier Voss, metal processing company Schoder, and solar energy startup Enpal will accompany Habeck during the visit.
Consciously choosing not to include prominent industry leaders within the delegation, Habeck aims to insulate himself from potential pressures exerted by major company executives while keeping avenues open for engagement with relevant companies. As part of Germany’s China strategy, the Federal Ministry of Economic Affairs has even discussed the possibility of no longer bringing business delegations on visits to China.
Nevertheless, the leaders of the business delegation are confident that Habeck will not stray from his critical approach towards China. During his tenure as Minister of Economic Affairs, the Green Party politician has reduced national guarantees for German investments in China and tightened standards for export credits. He is currently working on legislation to increase the difficulty for Chinese investors to acquire German companies.