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Germany Not Ready to Let Go of its Chinese Markets, Chancellor Scholz's Visit Suggests

From Beijing, our correspondent reports: Chancellor Olaf Scholz of Germany has arrived in China on an official visit at the invitation of Premier Li Keqiang, and was also received by President Xi Jinping in Beijing today.
This marks Chancellor Scholz's second official visit to China during his tenure, and the composition of his delegation, along with the itinerary, offers some intriguing insights, especially against the backdrop of the impending European Parliamentary elections.

In an event today at the Diaoyutai State Guesthouse, President Xi Jinping welcomed Chancellor Scholz, who is making his first visit to the country since he along with other European Union leaders - began discussing the idea of reducing dependencies on China.

However, the selection of delegates and the sites visited during the trip indicate that Germany's faltering economy is far from ready to relinquish its Chinese markets. Chancellor Scholz commenced his visit in Chongqing, Southwest China, a city known not only for being the most populous in China but also a major industrial hub, and later continued to Shanghai, one of the world's largest financial centers. Notably, this time, the Chancellor was accompanied by the ministers of environment, agriculture, and transportation, as well as the leaders of Siemens, BMW, Mercedes-Benz, Bayer, and Zeiss.

The choice of sites visited and the composition of the delegation reveal that Germany's industrial titans are hardly prepared to let go of China, regardless of any political narratives advocating for risk reduction. The interests of the two automotive giants in the country are well known, as both have manufacturing plants in China and consider it one of their largest markets, where their cars sell in staggering numbers. For Bayer and Zeiss too, losing the Chinese market under the guise of reducing risks would be a massive blow, hence the arrival of these corporate executives sends a significant message.

According to Lin Jian, Chinese Foreign Ministry spokesperson, President Xi and Chancellor Scholz agreed during their meeting that further escalation of the Russia-Ukraine war must be prevented. They also emphasized the importance of addressing international food security concerns, calling for an end to restrictions on food production and exports, and urged adherence to international humanitarian laws, including the release of prisoners of war.

Additionally, President Xi stressed the deep interconnectedness of the two countries' industries and supply chains, highlighting that the economic relations between China and Germany do not pose a risk, but rather serve as a security for maintaining stable relations and future development.

Chancellor Scholz's visit, however, has not been without criticism, especially as European Council President Ursula von der Leyen recently expressed concerns over the European car market potentially being dominated by Chinese manufacturers.

In response, President Xi emphasized China's contributions not just in producing electric vehicles but also batteries and other essential products for the EV industry. This diversification of the global supply chain has mitigated inflationary pressure and significantly contributed to combating global warming.

During his visit to Tongji University in Shanghai, Chancellor Scholz told students that "At some point, Chinese cars will obviously be present not only in Germany but across Europe. The only important thing is that competition remains fair."

As the elections approach, it's clear that Scholz is keen on not jeopardizing one of Germany's largest trading partners and markets, nor alienating his own corporations. For instance, Ola Källenius, the head of Mercedes-Benz, mentioned to the press during the visit that leaving such a large market is not an option for them, a sentiment echoed by BMW's CEO Oliver Zipse, who went as far as to declare that they see opportunities rather than risks in China.

Ultimately, the direction of Chinese-European relations will become clearer after the European Parliamentary elections. However, last year's narrative of reducing dependencies seems unsustainable in the long run as the economic ties with China are important not just for Germany, but for the entire European Union in maintaining economic stability, even if current political narratives seem to counter this.
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