German Chancellor Friedrich Merz vowed Wednesday that the EU would defend itself against what he called “unfair” Chinese trade practices that could threaten German industry.
The leader of Europe’s biggest economy, who is set to travel next week to Singapore, Japan and South Korea, criticised Chinese industrial overcapacities, subsidies for products and export advantages that he said came from an artificially cheap currency.
“We want to have fair trade with China in our joint and mutual interest. That is our goal,” Merz said at a Berlin conference.
“But at the same time, we have to be ready to defend ourselves, to defend our industry.”
Germany – home to industrial giants in the auto, chemicals and electronics sectors – long prided itself on a massive trade surplus with the rest of the world, including booming sales to China.
That has turned in recent years, however, as Chinese firms have become increasingly competitive and German exporters have been hit by rising production costs and US tariffs.
In recent months, EU leaders including Merz and French President Emmanuel Macron have seriously weighed new policy moves to protect EU-based industry from Chinese competition.
Merz said recent talks by EU officials with China had made some progress, including an agreement to reduce the number of cars exported to the European market.
He said the moves “are not the beginning of a trade war with China”.
“But we will also protect our industry with a new set of EU trade defence instruments, because in sustainable trade relations, one side shouldn’t profit at the expense of the other,” Merz said.
“Germany, France and the entire EU (have) now come to the point where they are ready to defend their interests and that’s what we are doing,” he said.
Merz noted that China’s total trade surplus with the EU was well over €300 billion (US$337 billion) each year.
He said some of China’s success was due to strong new companies and excellent research, adding that “we have to respect that”.
He also acknowledged that structural problems in Europe had created problems for the German economy and weighed on exports.
“But this is also due to overcapacities, high subsidies on the automotive sector and others and… an artificially under-valued currency” in China, Merz added. “This has to be addressed.”
While Merz is travelling elsewhere in Asia next week, German President Frank-Walter Steinmeier, who holds a largely ceremonial post, will visit China next week.
Steinmeier’s office said he plans to meet with Chinese President Xi Jinping during the first visit to China by a German president since 2018.
