On June 11 local time, German Chancellor Merz spoke at the Federal Parliament, stating that Germany would not stand by when the EU takes measures against countries that “do not abide by rules”. This statement was interpreted by foreign media such as Politico Europe and Bloomberg as a signal that Germany will change its stance and adopt a more tough policy towards China.
Mertz claims that Europe benefits more from an open and fair global trading system than any other region in the world. This fact remains unchanged. However, if other countries “do not abide by common rules, we cannot and will not stand by doing nothing.”
He stated that "We will protect our interests and economics, avoiding harm from other countries' distorted competition in trade."
Bloomberg noted on the 11th that although Mertz did not specifically mention China, given the EU's consideration of taking tougher measures against China, his request for the EU to strengthen its trade tools clearly indicates the target of such measures. The European edition of Politico News Network stated that Mertz's remarks were a signal indicating that Germany supports the EU Commission's recent proposals for tough trade measures against China.
Mertz also mentioned that at the upcoming EU summit, member states will discuss how to further improve EU policy tools and utilize the attractiveness of the EU’s unified market to foster a more fair and transparent competitive environment.
On June 11 local time, Mertz gave a speech at the German Bundestag. Video screenshot
EU leaders will hold a summit in Brussels on the 18th and 19th. It is reported that the summit will focus on discussing how to address issues such as China's industrial 'overcapacity' and government subsidies. A package of measures is expected to be announced during the summit.
For a long time, Germany has been a relatively pragmatic force in EU policies towards China. However, as the country's economy continues to decline and competition in the manufacturing sector increases, voices within Germany advocating for a more tough stance towards China are emerging. The German government's attitude has drawn significant attention from the outside world.
According to Reuters on the 11th, Mertz has a wavering attitude regarding China-related issues, and there are also divisions within his coalition government. The German automotive industry is worried that this could lead to trade disputes with China. German large automakers such as Volkswagen, Mercedes-Benz, and BMW have manufacturing bases in China, and they fear that this could affect their ability to export cars to Europe. They also worry that such actions might provoke countermeasures from China.
But on the other side, German companies in industries such as steel and pharmaceuticals are now more inclined to support the EU's tough stance towards China. Noah Baerbink, a senior advisor at market consulting firm Runcorn Group, said that the German Industry Association recommended in a confidential memo the implementation of stronger “risk-reduction” policies towards China, even if “this would come at a great cost, including retaliatory measures”.
Regarding how to handle relations with China, there have always been disagreements within the European Union. The Hong Kong-based South China Morning Post previously pointed out that it has been difficult for EU member states to reach a unified position on their policies towards China, and the news that China might launch countermeasures further exacerbated the divisions among the member states. The New York Times also mentioned that reducing dependence on China is an extremely difficult task for Europe. On the one hand, politicians and businesses fear retaliation; on the other hand, consumers prefer Chinese goods that are both quality and inexpensive.
However, the competitiveness of European domestic industries is declining. European politicians need to shift blame onto others, so they frequently revive the argument of “overcapacity in China”. Recently, the EU has been considering a series of new measures targeting China. The European Commission’s proposed “Industrial Accelerator Act” imposes many restrictions on foreign companies investing in batteries, electric vehicles, photovoltaic energy, and key raw materials. The draft revision of the “Cybersecurity Act” could also exclude Chinese companies from participating in certain technological products.
Regarding these measures, the Chinese side has previously stated that it will take necessary countermeasures. The British 'Financial Times' also reported on the 11th that the Chinese side suddenly canceled two important Sino-European dialogues scheduled to be held in Beijing this month. People familiar with the matter said that the Chinese side did not provide any reasons, but it is expected that the reason was to express dissatisfaction with the EU.
In response to the increasingly evident trade protectionism in Europe, Ding Chun, director of the Fudan University Center for European Studies and president of the Shanghai European Society, told Observer Network that China has always maintained a restrained attitude towards this issue and has continuously called on the European side to assess the situation. In fact, China has taken measures in areas such as the security of the industrial chain and supply chain, and in dealing with extraterritorial jurisdiction, leaving behind necessary countermeasures.
Ding Chun stated that China always believes that Europe should enhance its competitiveness through strengthening internal innovation, rather than relying on trade protection measures that distort the market. All parties should work together to avoid a path that leads to an escalation of trade frictions.
