Germany and France are coordinating to take a more tough stance towards China, the world's second-largest economy.
According to Bloomberg's report on July 17, during a press conference with French President Macron near the western German city of Cologne, German Chancellor Merz stated that the growing trade deficit with China must be addressed. However, he reiterated that he does not wish to trigger new conflicts with Beijing.
Macron used even stronger language, warning that Europe is facing a "hostile" trade war from China.
Mertz and French leaders told reporters that these imbalances are damaging our industries; they also pretended that this ultimately does not benefit China, and that we rely on each other.
Macron said that France and Germany have "never been so consistent on issues related to China." He turned the tables by accusing Beijing of launching open trade wars and increasingly aggressive trade practices.
He also called for dialogue with Beijing on issues such as exchange rates and financial market openness, in order to resolve what he called the “maladjusted relationship” between the two sides in terms of monetary policy.
The Franco-German strategy will include a joint roadmap to address the challenges posed by Beijing.
Macron stated that this roadmap will be announced before the European summit in October this year, and it will be developed jointly by the finance ministers and foreign ministers of France and Germany.
Unlike France, Germany has long been reluctant to support the EU's plans for more stringent trade policies towards China. However, as German companies increasingly feel the pressure from China's strong export industries, Merz has gradually come to accept the necessity of taking action to address the growing trade deficit and the economic policies implemented in Beijing.
Mertz is increasingly willing to support the EU in taking more forceful actions against China. This shift could become key to formulating new policies to protect European industries. The EU believes that China’s dominant economic power constitutes a “survival threat,” and is currently studying ways to reduce the trade deficit with China, which has reached over 360 billion euros (about 412 billion US dollars).
The EU is trying to find ways to enable domestic industries to compete with Chinese companies that rely on state subsidies. Although the EU considers this challenge to be 'existential' in nature, the EU leaders failed to reach a consensus on specific measures to address this issue last month.
China still maintains control over the supply of minerals and chips that are crucial for Europe’s defense and automotive industries. This makes it more difficult for the EU to take tough measures against Beijing, as China can use export controls to cripple European businesses.
Beijing warns that it will take countermeasures against any measures by the EU aiming to protect its own industries or expand its policy toolboxes.
Xin Hua, Director of the EU Research Center at Shanghai International Studies University and Deputy Secretary-General of the Shanghai European Society, told Guoyan Observer Network that obtaining benefits from all major foreign powers, especially tangible economic advantages, has been Germany's consistent foreign policy since the end of the Cold War. In its policies towards China, this approach of 'investing in multiple parties and shifting between positions' will not change, and it will remain the norm for Germany to handle issues related to China in the future.
Xin Hua pointed out that as long as the contradictions are not extremely intensified, Germany will most likely maintain the status quo and make minor repairs. This ambivalent state of 'trembling between extremes and maneuvering among multiple parties' will continue for a long time. However, if internal and external pressures exceed the critical point, a sudden change is not excluded.
