German chancellor Olaf Scholz has pushed new Chinese premier Li Qiang to ensure western companies have a “level playing field” in China, while stressing his opposition to any economic decoupling from Beijing.
At a joint press appearance in Berlin with Li, who is making his first overseas visit since becoming premier in March, Scholz voiced concerns about “access to the Chinese market and fair competitive conditions” for German companies.
But Scholz also insisted Germany — which in 2022 counted China as its most important trade partner for the seventh year running — wanted economic co-operation to continue.
The visit by Li comes amid intense debate within Scholz’s three-way ruling coalition, and among German businesses and Berlin’s international allies, about how to manage Europe’s economic dependence on China.
Scholz, who is more dovish on China than ministers from the Green party in particular, said it had been “important” for him to explain to Li recent talk of encouraging diversification by German companies.
“We do not want to close ourselves off to one partner, but rather to establish and expand balanced partnerships throughout Asia and beyond,” the chancellor added.
Li’s visit is part of a charm offensive by Beijing aimed at retaining foreign investment at a time when China’s economy is struggling to recover from pandemic lockdowns and turmoil in its real estate sector.
“Protecting against risk and co-operation are not opposites. Not working together is the biggest risk; lack of development is the biggest insecurity,” Li told German businesses in Berlin on Monday, according to the Chinese foreign ministry.
In its annual report published on Tuesday, Germany’s domestic intelligence agency, the Bundesamt für Verfassungsschutz, accused China of seeking to buy German companies with cutting-edge technology as a “gateway to political influence, espionage and sabotage”.
Scholz also called on Beijing to step up its pressure on Russia over its “brutal” war in Ukraine and pledged to increase German-Chinese co-operation on climate change.
The European Commission has been urging EU capitals to consider a new outbound investment regime that would scrutinise companies’ involvement in China, and a better-co-ordinated system of controls on exports of highly sensitive technology.
But the commission has faced opposition from member states including Germany and France. Speaking on Monday, Scholz underlined that he was against subjecting “the entire export process” to investigation by authorities.
Opposition politicians on Tuesday criticised the German chancellor for not allowing questions at his joint “press conference” with Li, even as he called for greater freedom for German journalists to operate in China.
Noah Barkin, an expert on Europe-China relations at research firm Rhodium Group, said Scholz had also “steered clear of the controversial themes”, making no mention of Taiwan, Hong Kong or human rights abuses in China’s north-western Xinjiang region.
“It looked very much like the kind of press conference that [former chancellor] Angela Merkel might have given years ago when relations were in a better place,” Barkin added. “The only difference is that she insisted that journalists be allowed to ask questions.”
While the US and EU have agreed on the need for “de-risking” of economic ties with China, interpretations of what this means vary widely.
During Li’s meeting with executives from some of Germany’s most powerful companies — including industrial conglomerate Siemens, carmakers Volkswagen, Mercedes-Benz and BMW and chemicals producer BASF — the Chinese premier said decisions on “de-risking” should be taken by businesses rather than governments.
Li encouraged German businesses to continue to work with Chinese ones, particularly on renewable energy and low-carbon technologies.
