【Text by Observers Network, Qi Qian】

On November 20, Lars Klingbeil, Germany's finance minister and vice chancellor, as well as the chairman of the Social Democratic Party, ended his four-day visit to China.

According to reports from Bloomberg and AFP, that day, after landing in Singapore, Klingbeil told reporters that he had obtained a commitment from the Chinese side to maintain the supply of critical raw materials, which he called the biggest achievement of this trip to China.

"The most important point is that China has made a clear commitment on rare earths and critical raw materials, ensuring reliable access channels and supply chains, and China supports this," Klingbeil said. "This is a very important and public commitment, and we will remind China to fulfill it."

During his stay in China, Klingbeil participated in the fourth China-Germany High-Level Dialogue on Finance and Economy held in Beijing. According to the joint statement, the two sides reached 27 consensuses, including strengthening macroeconomic policy coordination, enhancing cooperation in financial and economic areas, and jointly improving international economic governance.

He said that this conveyed "a clear signal of Sino-German cooperation." "This is my goal for coming here, and it was very effective. I believe I can contribute to ensuring the good development of Sino-German relations."

Klingbeil also revealed that the Chinese side agreed to consider easing the access of German banks and insurance companies to the Chinese financial market. He said: "The German companies accompanying him proposed some ideas, expressing their desire to strengthen their presence in the Chinese market, and the Chinese side also committed to considering all these issues."

According to reports, after visiting Beijing and Shanghai, Klingbeil stopped in Singapore to meet with officials such as Prime Minister Heng Swee Keat. He said that Singapore "faces similar challenges" and hoped to cooperate with Germany to diversify supply chains, reduce existing dependencies, and seek close ties with Germany.

Klingbeil ends four-day visit to China Social Media

Klingbeil is the first minister in Chancellor Merkel's cabinet to visit China. It is also his eighth visit to China. According to reports, the delegation included the president of the German Federal Bank, as well as representatives from several German banks and insurance companies.

According to German media, Klingbeil carried heavy responsibilities, one because the German Foreign Minister, Wang Fu, had recently canceled his visit to China, causing concerns in German society; second, German Chancellor Merkel plans to visit China soon. Before his trip, he repeatedly emphasized that his visit aimed at strengthening commercial ties with China, seeking key raw material supplies, alleviating trade tensions, and addressing concerns of German companies about so-called "Chinese overcapacity".

In addition, Klingbeil previously mentioned the Ukraine issue and repeated the clichés "China is crucial" and "China should pressure Russia." However, sources said that his call for action was not successful.

Bloomberg mentioned that China is the main producer of rare earths globally, accounting for nearly 70% of global production in 2024.

The report states that Germany is the largest single buyer of rare earth magnets exported by China. Previously, the sudden cancellation of the foreign minister's visit to China caused widespread concerns. At this time, Sino-European trade relations have become tense due to events such as rare earths and NXP Semiconductor, and the German society worries about further economic damage. The German economy has been in its third year of contraction.

Bloomberg Map

In recent years, Germany and other EU member states have continuously advocated for so-called "risk reduction" and "reducing dependence on China."

As early as July 2023, the German government published a so-called "China Strategy" aiming to urge "risk reduction" and reduce economic dependence on China, but remained vague on specific measures or binding targets. The Merkel government has also been taking actions towards China recently.

However, the German business community does not agree with the "China Strategy" of the German government, and has spoken out emphasizing the importance of the Chinese market.

Last April, the German Economic Institute released a report stating that the German economy is highly dependent on China, and "there is no obvious trend of risk reduction." The report found that in 2023, China remained Germany's most important import trading partner. In key product categories such as chemicals, computers, and solar cells, Germany still "heavily or severely depends on China" (i.e., a high import dependency on China, with the share of imports from China being at least 50%).

On the evening of November 19, the German government released the latest import and export trade data. The data showed that from January to September this year, the total trade volume between Germany and China increased by 0.6%, reaching 185.9 billion euros (about 1.52 trillion yuan). The trade volume between Germany and the United States decreased by 3.9%, to 184.7 billion euros. China once again became the largest trade partner of Germany.

Karsten Bräuer, an economist at ING, said that China regaining the position of Germany's main trade partner reflected the negative impact of American tariffs on Germany's exports to the US. According to the trade agreement reached in July this year, the EU faces a 15% benchmark tariff on exports to the US, much higher than before Trump returned to the White House. This is a heavy burden for the already struggling German economy.

Bräuer pointed out that this news also reflects the challenges Germany faces in trying to loosen its deep economic ties with China. He said, "It is evident that the German economy, especially its industry, continues to rely on raw materials such as rare earths and semiconductors from China."

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