Germany Pledges Support for China in Trade Dispute

Germany agrees with China that its solar panels shouldn’t be kept off the European market.

China's premier Li Keqiang speaks with German chancellor Angela Merkel in Berlin, May 26
China’s premier Li Keqiang speaks with German chancellor Angela Merkel in Berlin, May 26 (Bundesregierung/Guido Bergmann)

German chancellor Angela Merkel on Sunday promised to intervene on China’s behalf in its dispute with the European Union over the import of solar panels, deepening an economic relationship that already accounts for nearly $200 billion in global trade.

“Germany will do what it can so that there are no permanent import duties and we’ll try to clear things up as quickly as possible,” Merkel told reporters after meeting her Chinese counterpart Li Keqiang in Berlin. “We don’t believe that this will help us so we want to use the next six months intensively.”

The European Union accuses China of pricing its solar panels too cheaply at the expense of European competitors, even if they are usually heavily subsidized by their national governments as well. It is considering whether to impose punitive duties after the United States did so last year.

Germany, which set an international record in solar power output last month, resists protectionist measures altogether, Merkel said, although she admitted that the European Commission has the authority to launch a procedure of its own.

Li, for his part, warned that tariffs will endanger both jobs in Germany and the development of the solar industry in the whole of Europe which would be under less pressure from foreign companies to improve efficiency. “That will harm the interests of the European consumers,” he argued, who will be paying more for solar panels made in Europe than in China.

Germany also backed China in late 2010 when other G20 nations, including the United States, called for an effort to “rebalance” global trade in favor of net importers. While the Chinese, heavily dependent on exports to the West, were reluctant to criticize the Americans, Merkel told her counterpart Barack Obama quite bluntly, “In the task ahead, the benchmark has to be the countries that have been most competitive, not to reduce to the lowest common denominator.”

Germany has also found itself on China’s side in recent diplomatic disputes. Both countries opposed NATO’s military intervention in Libya in 2011 and are skeptical of Western powers taking similar action in Syria. While this is more coincidence than a coordinated opposition against Atlantic interventionism, it stems from a similar Chinese and German reluctance to interfere in the affairs of other states.

There has been criticism in Germany to its close ties with China and Merkel’s supposedly unprincipled foreign policy. Former Green party foreign minister Joschka Fischer described Germany’s role in the Libyan intervention in an interview with Der Spiegel magazine as “perhaps the biggest foreign policy debacle since the founding of the Federal Republic of Germany.” He lamented the “the lack of fundamental convictions” on the part of the incumbent government.

So did Social Democrat leader Peer Steinbrück, who will challenge Merkel in September’s election. He criticized the government’s arms sales “to regions in conflict and to areas where human rights aren’t respected” late last year.

German commercial relations with China are nevertheless likely to burgeon. Li’s predecessor Wen Jiabao said during a visit to Germany early last year that the two countries expect to have almost doubled their trade volume by 2015.

Besides cars, Germany sells mainly heavy machinery to China which it uses to manufacture clothes, electronic goods and toys that are exported to Europe and the United States.

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