Germany Bolsters China Ties as Trump Policies Raise Concern

By Andrea Thomas Features Dow Jones Newswires

German Chancellor Angela Merkel and China's President Xi Jinping pledged to boost economic cooperation between their countries as they met ahead of what is expected to be an unusually tense international summit on Friday.

Continue Reading Below

"We are very happy to see that thanks to efforts from both sides, Chinese-German relations have entered a new phase," Mr. Xi said Wednesday, according to a German translation of his remarks.

U.S. President Donald Trump's "America First" policies, his threats to crack down on abuse of free trade, and his withdrawal from the Paris climate change accord have brought Germany and China, two of the world's largest exporters and both defenders of the climate agreement, closer together.

This new closeness is expected to feature prominently later this week when Ms. Merkel chairs this year's G-20 summit of the world's largest economies, which will force her into a delicate balancing act between her commitment to the Western alliance and her professed aversion to Mr. Trump's international agenda.

"Economic relations between China and Germany are of course very important," Ms. Merkel told a joint press conference with Mr. Xi. "We don't only exchange goods, but we're also cooperating more and more in technological areas."

If the value of exports and imports are combined, China beat the U.S. and France to become Germany's leading trading partner for the first time last year. Germany exported EUR76.1 billion ($86.4 billion) of goods to China, making the Asian giant its fifth-largest export partner, and imports from China reached EUR93.8 billion, making it Germany's biggest supplier.

Continue Reading Below

The two-day G-20 summit starts Friday in Hamburg. European delegates have said they would confront Mr. Trump on his trade stance and on his decision to withdraw from the Paris accord.

Ms. Merkel said she expected difficult negotiations.

"It's not easy to bring together all 20 countries with all their developments and positions," she said. "I don't know yet what the final result will look like."

Apart from conflicting views on free trade, climate protection is seen as the main stumbling block at the G-20 meeting. China, the world's largest emitter of carbon ahead of the U.S., has said it would stick to its commitments under the Paris deal, which saw more than 190 countries pledge to cut greenhouse-gas emissions.

In separate comments published Wednesday, Ms. Merkel also took direct aim at Mr. Trump's trade policy.

The U.S. view of globalization, she told the Die Zeit weekly, was "not about a win-win situation but about winners and losers... Not just the few should benefit from economic progress. Everybody should participate."

Several commercial deals were signed on Wednesday, timed to the meeting between Ms. Merkel and Mr. Xi. These included an agreement between car maker Daimler AG and BAIC Motor Corp. to develop electric cars; strategic partnerships between industrial conglomerate Siemens AG and Chinese companies; and a Chinese order for 140 aircraft from Airbus SE. No figure was given for the value of the contract.

Ms. Merkel also pledged that Germany would participate in China's planned revival of ancient Silk Road trading routes from China to Europe if the tendering process was transparent. Ms. Merkel didn't elaborate on what form this participation would take.

The project to improve infrastructure along China's main international trade channels is expected to generate more than $900 billion in investments in roads, ports, pipelines and other projects.

Write to Andrea Thomas at andrea.thomas@wsj.com

(END) Dow Jones Newswires

July 05, 2017 10:28 ET (14:28 GMT)