Germany's Scholz calls for fair competition and warns against dumping during China visit

BEIJING (AP) — German Chancellor Olaf Scholz called for fair competition in trade relations with China while warning about dumping and overproduction as he spoke to students in Shanghai on Monday.

Scholz is visiting China against the background of looming EU tariffs on Chinese-made electric vehicles and other trade-related tensions. The two countries are also split over how to handle Russia’s invasion of Ukraine.

“The one thing that must always be clear is that competition must be fair,” Scholz told students at Tongji University in Shanghai, according to German news agency dpa.

“Of course we would like our companies to have no restrictions, but conversely we behave exactly how we are demanding here,” he said, adding there must be no dumping or overproduction.

The European Union is mulling tariffs to protect its producers against cheaper Chinese electrical vehicle imports, which some fear will flood the European market.

The head of Germany’s auto industry association, the VDA, expressed opposition to such tariffs ahead of Scholz’s visit. Hildegard Müller told the Welt am Sonntag newspaper in comments published Saturday the tariffs would not help the European and German auto industries and instead “could quickly have a negative effect in a trade conflict.”

“Current business with China secures a large number of jobs here in Germany,” Müller said.

Scholz made comparisons to reservations years ago when Japanese and Korean automakers entered the German market.

“There was great agitation in the newspapers: ‘Now the Japanese cars will come and clean up’ — nonsense,” he told the Tongji University students. He said there are German cars in China that were made with Chinese manufacturers, and at some point there would also be Chinese cars in Germany and Europe.

Scholz began his three-day China trip on Sunday in the industrial hub of Chongqing, where he and his delegation of ministers and business executives visited a partially German-funded company and other sites in the vast city, which is a production base for China’s auto and other industries.

He is set to meet Chinese President Xi Jinping and Premier Li Qiang on Tuesday in Beijing before returning to Berlin later in the day.

Scholz is expected to question Xi about China’s support for Russia’s economy two years into Moscow’s invasion of Ukraine. Prior to his arrival, the German leader posted on social platform X that he had discussed the “massive” Russian air attacks on civilian energy infrastructure with Ukrainian President Volodymyr Zelenskyy on Saturday, and declared that Berlin would “stand unbreakably by Ukraine’s side.”

China has refused to criticize Russia’s aggression. Beijing maintains trade relations with Moscow, and the two nations carry out joint military drills. A U.S. intelligence report last week found China has increased equipment sales to Russia to help in its war effort against Ukraine.

Berlin is also worried about a potential Chinese invasion of Taiwan, a self-ruled island 130 kilometers (80 miles) off of China’s coast that Beijing claims as its own.

Scholz told students in Shanghai that borders “must not be moved by force.”

“We should not be afraid of our neighbors,” he said, emphasizing the importance of international institutions such as the World Trade Organization.

Despite the political and trade frictions, China was Germany’s top trading partner for the eighth straight year in 2023, with 254.1 billion euros ($271 billion) in goods and services exchanged between the sides, slightly more than what Germany traded with the U.S. but a 15.5% contraction from the year before.

This is Scholz’s second trip to China since he became chancellor in late 2021. His previous visit was in November 2022 and essentially was a one-day trip because of the strict COVID restrictions still in place at the time.

It is his first visit since the German government last year presented its China strategy, which met with criticism from Beijing. Premier Li and a delegation of senior officials visited Berlin in June.

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Associated Press writers Simina Mistreanu in Taipei, Taiwan, and Geir Moulson in Berlin contributed to this report.