Xi tells Germany's Scholz co-operation not a risk amid EU trade tension

Chinese President Xi Jinping applauds at the closing session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China March 11, 2024. /Tingshu Wang/File Photo

BEIJING -Chinese President Xi Jinping said German-Chinese co-operation was an opportunity not a risk, even as German Chancellor Olaf Scholz on Tuesday urged better market access and a level playing field for German firms.

Scholz's three-day visit to Germany's largest trade partner comes at a tricky time as the European Union is seeking to reduce strategic dependencies - dubbed "de-risking" - and probing whether Chinese manufacturers are dumping subsidized goods on its market.

Both Scholz and Xi, who met for more than three hours in Beijing, highlighted the scope to intensify economic exchange between Asia and Europe's largest economies.

"We must view and develop bilateral relations in an all-round way from a long-term and strategic perspective," Xi said.

Xi pushed back against complaints by EU Commission President Ursula von der Leyen about China's overproduction of green tech such as electric vehicles being unfairly supported by "massive" state subsidies.

"China's exports of electric vehicles, lithium batteries and photovoltaic products have not only enriched global supply and alleviated inflationary pressure, but also contributed greatly to the response to climate change and green and low-carbon transformation," Xi told Scholz.

"(Germany and China) should be vigilant against rising protectionism, look at the issue of production capacity objectively and dialectically from a market-oriented and global perspective," Xi said.

Scholz, who is travelling with a raft of CEOs, has been cautious about pushing away China, an important market for Germany, saying the EU should not act out of protectionist self-interest. Still, competition between ought to be fair, he said in Shanghai on Monday.

"In other words, that there is no dumping, that there is no overproduction, that copyrights are not infringed," he said.

On Tuesday, when he also met China's Premier Li Qiang, he pressed the case for China to improve business conditions for German companies, guaranteeing equal market access, the protection of intellectual property and a reliable legal system.

"I expressed my concern ... that unilateral economic policy decisions in China are creating major structural difficulties for companies in Germany and Europe," he said.

'LARGE MARKET'

The China trip has taken Scholz to big cities such as southwestern Chongqing, where he visited German auto supplier Bosch's hydrogen fuel cell plant.

He was joined by senior German executives, such as Ola Kallenius, chairman of Mercedes-Benz, and Oliver Zipse, chief executive of BMW, underlining the importance of the Chinese market to Europe's largest economy.

Sino-German economic ties should not only be cultivated but expanded, Kallenius told German broadcaster ARD in Beijing on Tuesday.

"Withdrawing from such a large market is not an alternative, but rather strengthening our position," he said about the company's strategy in China.

BMW's Zipse expressed a similar view on China, Germany's biggest trading partner.

"We actually see more opportunities than risks," he told the ARD news programme Tagesschau.

China and Germany have "huge potential" for co-operation in both traditional fields such as machinery manufacturing and automobiles and emerging fields including green transformation and digital artificial intelligence, Xi told Scholz.

On the Ukraine crisis, Xi called for all parties to work together to restore peace as soon as possible and keep the conflict from spiralling out of control.

China supports all efforts towards peaceful resolution, as well as holding an international peace conference recognised by both Russia and Ukraine with equal participation by all parties, Xi told Scholz.

Scholz said he had asked Xi "to exert pressure on Russia so that (President Vladimir) Putin finally calls off his insane campaign, withdraws his troops and ends this terrible war".

He said the leaders had both agreed they rejected attacks on nuclear facilities such as nuclear power plants.

On the Middle Eastern conflict, Scholz said he and Xi agreed the two-state solution was the only way to achieve long-term security and peace for Israelis and Palestinians.

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(Reporting by Andreas Rinke and Matthias Williams; Writing by Ryan Woo and Sarah Marsh; Editing by Miral Fahmy, Clarence Fernandez and Alex Richardson)