Germany's China strategy needs updating, economy minister says

FILE PHOTO: German Economy and Climate Minister Habeck holds a press conference about the spring economic forecasts, in Berlin

By Maria Martinez

BEIJING (Reuters) -Germany's strategy on China needs to be updated to include a longer-term plan and take account of Europe's approach, German Economy Minister Robert Habeck said on Friday on the first day of a visit to Beijing.

Europe's largest economy has long faced accusations by some European analysts of taking an overly bilateral approach towards China, its top trade partner for eight years until 2024, motivated by its own short-term commercial interests.

That started to shift slightly when Berlin last year agreed its first ever strategy on China, which urged a de-risking of the two countries' economic relationship, calling Beijing a "partner, competitor and systemic rival".

The 64-page document urged German firms to reduce their dependence on China – the country's most important trade partner - but was light on any binding targets and requirements.

"Sooner or later the China strategy needs an update," Habeck said at a reception at the German embassy in Beijing.

Habeck said the China strategy lacks direction on how Germany sees the medium-term relationship between the two countries.

"I am saying this because I am sure the Chinese have it (a medium-term plan)," Habeck said.

The German government did not immediately reply to a request for comment.

The economy minister said specific areas should be tackled in politics, trade and climate action.

"A strategy means you have to look in the future and to describe at least a path to the future, even when it will never happen as it is described," Habeck said.

The second problem was that it was the German government's China strategy and missed the European approach, he said.

"That would be an even bigger challenge because honestly we would have very easily 27 China strategies," he said, instead of a single strategy.

Critics say that infighting within Germany's ideologically heterogeneous three-way coalition of Chancellor Olaf Scholz's centre-left Social Democrats (SPD), Habeck's Greens and the pro-business Free Democrats (FDP) - the first of its kind at a national level - has complicated reaching agreements at an EU level.

The three parties have disagreed over key issues in the relationship with China, such as the decision to allow the sale of a stake in a terminal at Hamburg's port to China's Cosco, with the Greens and FDP typically arguing for a tougher line than the SPD.

Beijing warned on Friday that escalating frictions with the European Union over electric vehicle imports could trigger a trade war, and the proposed tariffs were high on Habeck's agenda for his three-day visit to the country.

Straight after landing in Beijing, Habeck went to his first meeting of the trip, with EU ambassadors.

Despite the challenges, he called for a European approach, which he said was needed in a complex world.

"Europe matters and we have to stand together," Habeck said.

(Reporting by Maria Martinez; Additional reporting by Sarah MarshEditing by Miranda Murray, Matthias Williams and Susan Fenton)