China and Germany band together against US on trade, but it’s ‘tenuous’

Beijing was keen to portray two export powerhouses standing together against unilateralism and protectionism when Chinese Premier Li Keqiang and German Chancellor Angela Merkel met in Berlin on Monday, but analysts say simmering tensions remain.

Li called for a “new starting point” in relations between the two countries when he arrived in Berlin on Sunday for talks with top officials.

The meetings on Monday come at a time of heightened tensions with the United States for both China and Germany, and the trade conflict will be high on the agenda.

On Friday, China and the US slapped 25 per cent tariffs on US$34 billion of each other’s goods in the opening shots of a trade war. Germany, similarly, has protested over US tariffs imposed on European aluminium and steel, and last week Merkel said Trump’s threatened duties on cars could trigger a new financial crisis.

China’s ambassador to the European Union told Handelsblatt newspaper that China and Europe are prepared to do whatever it takes to retaliate and show the US that a policy of escalating the trade conflict would be harmful.

“China has tried extensively to stop the trade conflict with the United States escalating into a trade war but it takes two hands to clap,” Zhang Ming was quoted as saying, adding that no one would profit from a global trade dispute.