Falling Confidence

Trade Concerns Cloud Merkel's China Visit

china_dpa
This weekend's visit will be Ms. Merkel's ninth to China.
  • Why it matters

    Why it matters

    There are dangers that a trade war could develop between the European Union and China if trust between the two sides is not restored.

  • Facts

    Facts

    • Angela Merkel is due to visit Beijing this weekend.
    • A new poll suggests about 70 percent of E.U. companies feel less welcome in China than 10 years ago.
    • Last year, European direct investments in China fell by 9 percent compared with 2014.
  • Audio

    Audio

  • Pdf

When Chancellor Angela Merkel visits Beijing at the weekend, it’s supposed to be a friendly affair. Both countries are celebrating the peak of their relations. Ms. Merkel is bringing along half her cabinet for a round of intergovernmental consultations. The Chinese hold their guests from Germany in high esteem, and Ms. Merkel has already visited the country eight times.

The mood among people in the business world, however, is subdued. And the reason isn’t just the current controversy over the planned takeover of German robot-maker Kuka by the Chinese appliance maker Midea, which has raised concerns about the transfer of commercial knowledge. On Wednesday, a proposal to block such foreign firms from taking over German companies that are seen as economically and strategically important was revealed by Die Zeit newspaper, citing government sources familiar with the matter.

The key reason could be that many European firms say they aren’t satisfied with the business climate in the Asian superpower, according to a new poll. And now China’s official news agency is warning about a “trade war” should the European Union not classify China as a market economy. Such a designation is a coveted status that means a particular economy is based on supply and demand and a free price system.

“We have never experienced so much pessimism,” Jörg Wuttke, president of the European Union Chamber of Commerce in China, said.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.