German Finance Minister Travels to Beijing As Supply Chain Stresses Increase and Trade Gap Widens
Germany wants its relations with China to remain stable as the growing trade imbalance and brittle supply chains increase political and economic pressure.
The first member of Germany’s new coalition government to travel to China was the country’s finance minister, who landed in Beijing on Monday. Amid a growing trade disparity and expanding supply chain worries, Berlin is under increasing pressure to show control over its China policy.
Following Foreign Minister Johann Wadephul’s postponed travel last month due to China rejecting the majority of the talks on his intended agenda, Lars Klingbeil’s journey takes place almost six months after the conservative-led coalition assumed government.
Chinese limits on rare earths are among the major trade issues that will be the focus of Klingbeil’s negotiations, according to German officials. German stances have been coordinated with European Union authorities in charge of the bloc’s trade policy, according to a source in the finance ministry.
“It is crucial for the German economy and jobs to have access to essential raw materials and to reduce Chinese overcapacity in industries like steel and electric mobility,” Klingbeil stated in Berlin prior to his trip to Beijing.
Additionally, there is political pressure on the coalition to demonstrate that it can manage a relationship that has grown more complex and gain significant participation in Beijing.
The trade battle led by US President Donald Trump has made German exports weaker and exposed Berlin to a spike in redirected Chinese imports, increasing supply chain vulnerabilities. Access issues to automotive semiconductors and rare earth metals have become more pressing.
On the agenda, Klingbeil will meet with Vice Premier He Lifeng for the German-Chinese financial dialogue, which was established in 2015. A small group from German banks and insurance companies is accompanying him, along with Joachim Nagel, president of the Bundesbank.
“The connection between Europe and China is highly ambiguous. We have to have them, but we are also worried about security,” stated Denis Depoux, worldwide managing director at Roland Berger.
After meeting with executives from mid-sized German businesses in Shanghai on Wednesday, Klingbeil will go to Singapore.
