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Brüderle warns of trade war on China visit

German Economy Minister Rainer Brüderle cautioned upon arriving in China Tuesday that a global trade war was brewing, amid wide differences between key trading nations on currency policy.

Brüderle warns of trade war on China visit
Photo: DPA

“The danger of a trade war has appeared on the horizon,” Brüderle told reporters travelling with him on his two-day trip to China, which was to include stops in Beijing and Shanghai.

“The danger is that complaints about currency undervaluing lead to retaliatory measures, which could eventually turn into a trade war,” the minister said, without naming a specific country.

Beijing has come under increasing pressure from its trading partners in the United States and Europe to allow the yuan to appreciate at a faster pace. Critics say the unit could be undervalued by as much as 40 percent.

The US House of Representatives last month passed a bill that would expand the Commerce Department’s powers to slap tariffs on China for currency manipulation, rather than just outright subsidies.

The legislation must still go through the Senate and eventually be signed by President Barack Obama in order to pass into law.

The spectre of a global currency war dominated the annual meeting of the International Monetary Fund in Washington over the weekend, but no agreements were reached.

“We must not allow the situation to get out of hand, or turn our backs on free trade,” Brüderle said, adding that he saw himself as an “ambassador, perhaps even a missionary, for the fight against protectionism.”

Brüderle will replace ailing German Finance Minister Wolfgang Schäuble at upcoming Group of 20 meetings in South Korea, where he said he hoped the world’s major economies would come up with “reasonable solutions.”

After his stop in China, which will include meetings with key officials in Beijing and a stop at the World Expo in Shanghai, Brüderle will head to Japan.

AFP/ka

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EXPORTS

‘Trade has collapsed’: Germany sees business with UK slump after Brexit

Germany's exports ticked up in January on robust trade with China, but trade with another key trade partner, Great Britain, plummeted after the Britain left the EU.

'Trade has collapsed': Germany sees business with UK slump after Brexit
Southampton harbour. Photo:Andrew Matthews/DPA

The Brexit fallout has continued to hurt commerce with the United Kingdom, with federal statistics office Destatis recording a 29 percent plunge in German exports across the Channel.

Meanwhile, demand for UK goods in Germany collapsed by more than 56 percent, official data showed Tuesday.

Cross-Channel exporters have had to adapt to new customs requirements from January 1, following Britain’s 2016 decision to leave the European Union.

Firms on both sides have since complained of increased bureaucracy and shipment delays as they grapple with the new rules.

BREXIT: What changes in Germany from January 2021?

“Foreign trade with Britain has collapsed,” said LBBW bank economist Jens-Oliver Niklasch.

Overall, German exports rose 1.4 percent month-on-month in seasonally adjusted figures, Destatis said.

But imports sank as coronavirus shutdowns sapped consumer demand in Europe’s top economy.

Imports slumped 4.7 percent, widening Germany’s closely-watched trade surplus to 22.2 billion euros.

Compared with a year ago, before the pandemic ravaged the global economy, exports fell 8.0 percent in January and imports almost 10 percent.

“Consumer demand fell sharply in January due to a lack of opportunities” as the government kept non-essential shops, leisure and cultural centres closed to rein in the coronavirus,  Niklasch.

But demand for “made in Germany” goods was powered by vital trade partner China, which has recovered faster from the virus shock.

Exports to European Union countries plunged six percent year-on-year, while demand for EU goods within Germany was down by almost the same.

Combined with Germany’s struggles to bring down Covid-19 infections despite months of shutdowns, “the January reading is not an indication of renewed German export strength, but rather an alarm bell for the first quarter.”

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