China’s Premier pitches to German Chancellor closer collaboration in strategic industries

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BEIJING (Reuters) -China’s Premier Li Qiang pitched closer collaboration to German Chancellor Friedrich Merz in new energy, smart manufacturing, biomedicine and intelligent driving during a meeting on Sunday on the sidelines of the G20 summit, Xinhua reported.

Relations between the world’s second- and third-largest economies have improved significantly over the past month, after Chinese export curbs on chips and rare earths caused major disruptions for German firms and German Foreign Minister Johann Wadephul to cancel a visit to Beijing last month due to China rejecting all but one of his meetings.

German Finance Minister Lars Klingbeil made the first official visit of Merz’s premiership last week, stabilising ties by meeting China’s top economic official Vice Premier He Lifeng, as U.S. President Donald Trump’s tariffs weigh on the two major exporters.

Merz is also expected to visit China soon.

Li said he “hoped Germany would maintain a rational and pragmatic policy toward China, eliminate interference and pressure, focus on shared interests, and consolidate the foundation for cooperation,” a state media readout released late on Sunday quoted China’s second-ranking official as saying.

For all the friction over Beijing’s support for Russia and its actions in the Indo-Pacific, and Berlin’s vocal criticism of China’s human rights record and state-subsidised industrial policy, the two countries remain bound by a vast and mutually advantageous commercial relationship.

“China is willing to work with Germany to seize future development opportunities … in emerging fields such as new energy, smart manufacturing, biomedicine, hydrogen energy technology, and intelligent driving, Li said in Johannesburg, South Africa, which is hosting the first G20 summit on the continent.

China bought $95 billion worth of German goods last year, around 12% of which were cars, Chinese data shows, putting it among the $19 trillion economy’s top 10 trading partners. Germany purchased $107 billion of Chinese goods, mostly chips and other electronic components.

But Berlin stands out for China as an investment partner, having injected $6.6 billion in fresh capital in 2024, according to data from the Mercator Institute for China Studies, accounting for 45% of all foreign direct investment into China from the European Union and the United Kingdom.

For Germany, China represents a practically irreplaceable auto market, and is responsible for almost a third of German automakers’ sales. German chemicals and pharmaceuticals firms also have a large presence in the country, although they are facing increasing pressure from domestic competitors.

(Reporting by Joe Cash; Editing by Richard Chang)