德国总理访华与中德贸易的新挑战

Speaking of recent big news in international economics, Germany's new Chancellor Merz has just arrived in Beijing.

This is a very important visit, especially for people doing business.

He met with Chinese Premier Li Qiang at the Great Hall of the People in Beijing, and the two even shook hands.

Although it looks very friendly on the surface, the background of this meeting is actually a bit complex.

Why do I say that?

Because now, some problems have appeared in the trade relationship between Germany and China.

Let's first look at what a trade relationship is.

Simply put, it is two countries buying things from each other and selling things to each other.

Previously, the relationship between Germany and China was very good, and everyone could make money.

But now, many German companies have started to worry.

They even issued a warning, saying the current situation is a bit dangerous.

The main problem is that Germany buys too many things from China, but sells fewer things to China.

This unbalanced situation makes Germans feel a lot of pressure.

Let's look at some specific numbers so everyone will be clearer.

According to last year's statistical data, the value of things Germany imported from China was very high.

Importing is buying things from other countries and bringing them in.

The value of these imported goods is more than twice the value of goods Germany exports to China.

Exporting is selling one's own things to other countries.

In other words, for every one dollar of goods Germany sells to China, it has to buy two dollars of goods from China.

The difference in between is too big.

Chancellor Merz specifically talked about this matter before going to Beijing.

He said that Germany wants a new kind of cooperative relationship.

This relationship should be balanced, fair, and rule-based.

This shows that the German government is not very satisfied with the current situation.

This time, Merz did not go to China alone.

He brought a very large delegation.

There are many managers and bosses of big German companies in this delegation.

What does this show?

It shows that the focus of this visit is to discuss how to do business and how to solve economic problems.

Besides business, Merz has another task.

That is regarding the war between Russia and Ukraine.

Everyone knows that the impact of this war on Europe is very significant.

Merz hopes China can use its influence to persuade Russia to end this war.

However, economic issues are still the focus of these talks.

Because this huge trade gap is like a large dark cloud hanging over the heads of both countries.

Let's analyze more deeply why the Germans are so worried.

Germany is the largest economy in Europe.

That is to say, Germany is the wealthiest and industrially strongest country in Europe.

But now, this imbalance is hurting the core of German industry.

What is Germany's most powerful industry?

Everyone surely knows, it is cars, machinery, and chemical products.

Whether it's Mercedes-Benz or BMW, they are both the pride of Germany.

But now, these industries have all encountered difficulties.

An expert from the German Institute for Economic Research, named Jürgen, is very worried about this.

He warned that this trade imbalance is slowly destroying these important industries in Germany.

So, why has this situation appeared?

Why do Chinese goods sell so well, while German goods can't sell?

This expert believes there are mainly two reasons.

The first reason is that he feels the Chinese government has given Chinese companies a lot of subsidies.

What does subsidy mean?

It means the government directly gives money to companies, or gives companies many benefits.

If companies get money from the government, their cost of producing things becomes lower.

With lower costs, the selling price can be very cheap.

This way, companies from other countries find it hard to compete with Chinese companies.

The second reason is the currency issue.

The expert believes that Chinese money, which is the Renminbi, is priced relatively low.

This also makes Chinese goods cheaper in the international market.

This expert told reporters that the price advantage of Chinese goods is not just because they are smart or highly efficient.

He feels this is unfair competition.

However, the Chinese side does not accept these claims.

Beijing has stated before that China's subsidy policy is transparent.

That is to say, everyone can see it, and it complies with international regulations.

Regarding the currency issue, China has also explained.

They said that the price of the Renminbi is determined according to market conditions.

If needed, the government will manage it, but this is all normal.

No matter what the reason is, the result is obvious.

This trade deficit is now being called the latest "China Shock".

A deficit means buying more than selling.

This not only affects Germany but also affects the whole of Europe.

Actually, there are other reasons causing this phenomenon.

For example, the previous pandemic, and the war between Russia and Ukraine.

These two events made production costs in Europe very high.

In Germany, electricity and natural gas have both become expensive.

If factories want to produce things, they have to spend more money.

So, the price of German-made goods naturally became higher.

At the same time, China's situation is different.

Economists analyze that China has invested a lot of money in manufacturing.

This has led to "overcapacity".

What does overcapacity mean?

It means factories produce too many things, and people in their own country cannot buy them all.

Since they can't buy it all themselves, they have to sell it to other countries.

And because there are too many things, the price becomes very cheap.

This gives European leaders a headache.

They are thinking about what methods should be used to deal with these cheap Chinese goods.

This is indeed a very difficult problem.

Especially now, the international environment is very complex.

The US President-elect Trump, his policy is also a big problem.

Trump likes to increase tariffs.

Tariffs mean that when other countries' goods come in, they have to pay more tax.

For Europe, this is also bad news.

An expert working at the German Marshall Fund, named Noah, analyzed the current situation.

He said that no European wants to fight two trade wars at the same time.

That is to say, Europe doesn't want to quarrel with the US on one side and quarrel with China on the other.

Because the US and China are the two largest countries in the world.

If there are conflicts with both of them at the same time, Europe's economy won't be able to bear it.

This expert also said that actually Europe also has cards in hand.

Why?

Because China needs places to sell things.

If Chinese goods cannot be sold, their factories will also have trouble.

Therefore, the European market is very important to China.

This is Europe's opportunity for negotiation.

But, the actual situation now is that Germans are really anxious.

Anxiety means being very worried and feeling uneasy inside.

Germany used to be the "engine" of the European economy.

The engine is the most important part of a car, allowing the car to run.

Germany is like this engine, pulling the entire European economy forward.

But in recent years, this engine seems to have malfunctioned and isn't running fast anymore.

The most obvious example is the German automotive industry.

Previously, German cars were number one in the world.

But now, the whole world is switching to electric cars.

In the field of electric cars, China has developed too fast.

China has a lot of technology, especially in batteries, that is stronger than Germany.

German car companies are now working hard to transform.

Transformation means changing the direction of development.

But this process is very painful and also very slow.

Many German car factories have started laying off employees, which means sending workers home and not giving them work anymore.

This makes many Germans feel afraid.

Therefore, German business groups have all made requests to Chancellor Merz.

They hope that Merz can speak clearly during his trip to China this time.

They demand to solve the problem of "distorted competition".

They also want to talk about the rare earth issue.

Rare earth is a very special material; making phones, computers, and electric cars cannot be done without it.

China has a lot of rare earth and controls exports.

German industry hopes China can relax restrictions.

Chancellor Merz himself is actually a person who supports free trade.

Free trade means everyone does business freely and the government manages less.

He also values the relationship with the US very much.

However, the world is changing too fast now.

His ideas contradict the reality a bit.

Expert Noah analyzed that the attitudes of France and Germany are also not quite the same.

France prefers to protect its own industry and doesn't want foreign things to come in freely.

But Germany is more hesitant.

Because Germany has many big companies that have a lot of business in China.

If the relationship is ruined, these big companies will also lose a lot of money.

The EU has already started to act.

The EU is an organization of European countries.

They have started investigating China's price issues.

Some people also suggest that Europe should produce more things itself and rely less on foreign countries.

However, this is hard to do.

Experts believe that when the EU uses the tool of tariffs, it is quite troublesome.

Unlike the US, where the US can increase taxes whenever it wants, very flexibly.

For the German government, this is really a headache of a problem.

This shows that Germany's previous strategy has failed.

Previously, Germany's idea was "change through trade".

The meaning is, as long as we do more business, the relationship will get better, and the other side will also change.

Germany's former Chancellor Merkel did exactly this.

She served as Chancellor for many years.

At that time, many people criticized her.

Saying she only cared about making money and didn't care about human rights issues.

But, at that time, Germany indeed made a lot of money.

Because of this long-term cooperation, the economic ties between Germany and China are very deep.

Like two trees, their roots are tangled together.

Now wanting to separate is very difficult.

This is also why Merz said a very important sentence.

Before he got on the plane, he said that Germany would continue the policy of "de-risking".

What does "de-risking" mean?

It means don't put all your eggs in one basket.

You need to find a few more friends to do business with, so it's safer.

However, he also emphasized one point.

He said that if Germany wants to completely "decouple" from China, that would be a mistake.

"Decoupling" means completely losing contact and not doing business anymore.

Merz believes that doing this is wrong.

Because China is too big and too important.

If they don't do business with China at all, Germany's economy will also collapse.

Therefore, this visit is about finding a balance point.

It is necessary to both protect German industry and continue doing business with China.

This is like walking a tightrope, very difficult and requiring high skill.

We don't know what the final result of this conversation will be.

But what we can be sure of is that the relationship between China and Germany is entering a new stage.

This stage is full of challenges and also full of uncertainty.

For ordinary German people, what they care about most is still their own jobs and lives.

If factories close down, or things become expensive, their lives will be affected.

So, everyone is watching Merz to see if he can bring back good news.

This is the analysis regarding the German Chancellor's visit to China and Sino-German trade issues.

This problem is very complex, involving economics, politics, and international relations.

We will continue to pay attention to news in this area and see what changes will happen in the future.