German finance minister says government to adopt firmer stance on China

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German Finance Minister and Social Democrat co-leader Lars Klingbeil announced that the government intends to adopt a firmer stance toward China, citing concerns over state subsidies, overcapacity, and joint venture obligations. During an Aug 20 campaign event in Bitterfeld-Wolfen, Klingbeil stated that Germany must protect industrial sectors like steel and automotive to preserve jobs and counter what he described as unfair trade practices. This shift aligns with Chancellor Friedrich Merz’s evolving position and responds to an EU trade deficit with China exceeding €1 billion per day. Authorities in Berlin are currently working to identify Chinese economic vulnerabilities for potential use in the event of a trade war.

Consequences

The German government is expected to pursue new trade defense measures, with EU leaders having already tasked the European Commission with developing such strategies. These actions signal a move away from previous policies of market openness toward a more defensive industrial strategy to address competitive imbalances.

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