German Economy Chief to Make First Trip to China to Talk Trade

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(Bloomberg) — German Chancellor Friedrich Merz is dispatching his economy minister to China next month as officials in Berlin grow increasingly concerned over a widening trade deficit, access to raw materials and regulation of artificial intelligence. 

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Katherina Reiche, whose portfolio covers economic affairs and energy, plans to make her first trip to China May 26-29 with visits to Beijing and possibly the port city of Guangzhou in the south, according to people familiar with the matter. Details and timing of the trip are subject to change, they said. 

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The stance of Merz’s government with respect to Beijing has come under scrutiny after the chancellor campaigned on taking a tougher position on German industrial exposure and the risk of dependence on China’s economy. But he came off a trip to China in February with a more conciliatory tone, saying he would seek to deepen a strategic partnership. 

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An Economy Ministry spokesperson declined to confirm the visit, adding that any trip would only be announced when it has been officially scheduled. 

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Reiche’s ministry plays a crucial role in Germany’s relations with China, overseeing many of the tools that would be deployed to mitigate supply-chain risks or block Chinese investments in critical sectors. But Reiche, a member of Merz’s conservative Christian Democrats, may not be inclined to use them, according to the people, who spoke on condition of anonymity as deliberations take place behind closed doors. 

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The minister, 52, champions a more market-based and less interventionist approach. A controversial figure in Merz’s coalition, Reiche has embraced that position in attacks on Merz’s Social Democratic coalition partners, drawing a rebuke this month from the chancellor as the government sought to craft a response to soaring fuel prices. 

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Still, Reiche is likely to press China on its widening trade surplus with Germany as well as its industrial overcapacity, according to one of the people. Germany’s export-driven economy has been hit hard by deteriorating trade conditions worldwide and the fallout from geopolitical tensions like the US-led war on Iran, which has driven up energy prices. 

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The dynamics compound concerns by European officials over a flood of Chinese exports, partly driven by a depreciated yuan. With US trade disrupted by President Donald Trump’s administration, the European Union is more vulnerable to cheaper Chinese goods. 

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Should the dates for Reiche’s trip hold, it would follow soon after Trump’s planned visit on May 14-15 for closely-watched talks with President Xi Jinping. 

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Anxiety among European officials is also growing over US efforts to cut deals with China for better access on critical minerals, trade and investment, which would leave Europe on the back foot. That development has sent the continent’s leaders flocking to Beijing to reset ties. 

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