German Vice Chancellor Says China’s Russia Support Hurt Ties

(Bloomberg) -- China’s support for Russia in the war against Ukraine is the main reason for the deterioration in economic relations between Berlin and Beijing, Germany Vice Chancellor Robert Habeck said Saturday.

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“It is also important for China, which is supporting Russia in this war, to understand that German and European security interests are already directly affected by this conflict,” Habeck said at the opening of the German-Chinese cooperation dialog on climate change and green transformation in Beijing.

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Europe and Germany wouldn’t be reducing their dependency on China for raw materials and critical goods if Beijing didn’t support Russia’s war, Habeck told Zheng Shanije, chairman of the National Development and Reform Commission. Zheng delivered the opening remarks at the event.

It’s important to understand that you can’t separate the issues and “even our direct relationship is already negatively affected,” said Habeck, who is also Germany’s economy and climate minister.

Habeck reiterated Europe’s willingness to talk to China about the tariffs imposed by the EU on imports of Chinese electric vehicles. He emphasized that — in contrast to ones imposed by the US, Turkey and Brazil — these are not “blanket” punitive charges but differentiated compensatory tariffs that have been examined carefully for nine months.

“It’s not a punishment, it’s a compensation for the advantages granted,” Habeck said.

This measure is not comparable with targeting specific companies and blocking their access to the markets, the vice chancellor said, criticizing the “wrong and dangerous” tendency toward increasing protectionism, tariffs and restrictions being imposed by some countries.

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Zheng said China would safeguard its automakers’ interests, Xinhua News Agency reported. The EU’s imposition of tariffs on China-made EVs will not benefit anyone and the growth of the local industry is due to competition rather than government subsidies, he said, according to the report.

Zheng welcomed the vice chancellor’s earlier comment, made before he departed for the trip, that Germany didn’t want to decouple from China. The Chinese official said the good relationship between Germany and China should serve as a role model and the focus should continue to be on similarities rather than differences.

The NDRC would encourage domestic companies to tap the German market, Zheng said. He emphasized foreign companies invest in China not because of its subsidies but because they are provided with “mature value chains” and sufficient skilled labor.

Zheng called on Germany to “show its leadership in the EU” and make the bloc move to “correct wrong practices.”

Habeck will meet with Commerce Minister Wang Wentao and other officials during his three-day trip to China. He is the first senior European official to visit the Asian country since the bloc announced its plan this month for levies as high as 48% on EVs shipped from there.

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--With assistance from Tian Ying.

(Updates with China official’s comments from eighth paragraph.)

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