Germany's Merkel faces balancing act in Beijing

BEIJING (REUTERS/AP) - German Chancellor Angela Merkel said on Friday (Sept 6) that China-United States trade problems affect the whole world and that she hopes they will be resolved soon.

Dr Merkel made the remarks at the start of formal talks with Chinese Premier Li Keqiang at Beijing's Great Hall of the People during a two-day trip to China.

"We hope that there will be a solution in the trade dispute with the United States since it affects everybody" in the world, she told Mr Li.

Germany's economy contracted on weaker exports in the second quarter, and leading economists say it is facing a recession, as German firms have been caught in the crossfire of a US-China trade war.

But while US President Donald Trump has pressed American companies to look at ways to close their Chinese operations and make more of their products at home, Dr Merkel wants to start a new phase in the European Union's relations with China.

She has pushed for a European investment deal with Beijing, even as Washington resorted to waves of tariffs to counter what it says are China's unfair trade practices. The US' European allies, including Germany, largely share its criticisms of China, but not Mr Trump's choice of tariffs to resolve the issues.

Germany, which traded almost €100 billion (S$152 billion) in goods with China in the first half of 2019, holds the rotating EU presidency in 2020, when Dr Merkel is planning an EU-China summit with a view to achieving a common European stance toward the world's second-largest economy. China was Germany's biggest single trading partner last year. The relationship is important to Europe's largest economy, particularly as Germany is considered likely to enter a technical recession in the current quarter.

That summit would aim to counter what Berlin sees as China's divide-and-rule approach to dealing with the European bloc, as Beijing promotes global infrastructure projects under its Belt and Road development initiative that has made it an influential player in poorer eastern EU countries, such as Hungary and Greece.

Ahead of Dr Merkel's departure for China, prominent Hong Kong activists wrote to the Chancellor urging her to be guided by her memories of life in dictatorial East Germany, and to be on her guard in her talks and business dealings with Beijing.

Hong Kong leader Carrie Lam on Wednesday withdrew an extradition Bill that triggered months of often-violent protests so the Chinese-ruled city can move forward, but some said the move was not enough.