Chinese Premier Li Keqiang holds a joint press conference with German Chancellor Angela Merkel in Beijing. (Photo : Getty Images)
China wants to resolve all trade disputes with Europe the “proper way” as Premier Li Keqiang tells German Chancellor Angela Merkel that the Chinese government is doing its best to eradicate steel overproduction.
In a joint press conference in Beijing covered by the South China Morning Post, Li told Merkel that China vows to phase out cheap and low-quality steel, which has been one of Germany's major concerns.
"We don't want to fight a trade war because this will benefit nobody, particularly when the global economy is undergoing a sluggish recovery," Li said per a video from Reuters U.K..
Merkel also made a similar statement on Sunday but called on China to make good on their word.
"It does not help us to emotionalize the whole subject. I am convinced that we can find a solution on the lines of what was promised 15 years ago," she said.
Germany's Dilemma
Germany has been having problems with China's industries that have overcapacity, particularly in steel.
The SCMP's sources explained that the recent exchange from the leaders from the biggest economies in Asia and Europe bring to light disputes over trade and foreign investment as well as overcapacity.
"Sources said talks over China's steel overcapacity--widely blamed for a surge in cheap exports, which have caused the closure of steel mills in European nations, including Germany--were 'tough,'" the report read.
According to the outlet's unnamed source, China's market economy status is highly unlikely to push through "without a steel deal."
Furthermore, the SCMP noted that tensions between the two nations have escalated following the European Union lawmakers' decision to vote against giving China the market economy status in May.
Trade Issues
While steel overcapacity is a big problem, Germany has more issues against China's trade sector, per a Reuters report posted on Yahoo Finance.
One is the lack of reciprocity to the financial sector where the playing field had been largely dominated by domestic banks.
"We will certainly pay even more heed to reciprocity in the financial sector than in classic industry," Merkel explained. "Germany has always presented itself as an open investment market. We expect reciprocity also from the Chinese side."
She noted that German banks were given a 20-percent limit on the number of stakes they can buy in their Chinese counterparts and urged a beginning of cooperation between the nations in the banking industry.
However, Li noted that Chinese banks also faced informal hindrances in Europe and were at a disadvantage there, further calling for more talks on the matter.
