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Germany said it will continue supporting a Chinese state-backed development bank despite G7 partner Canada’s decision to freeze ties due to Beijing’s influence.
After meeting China’s Vice-Premier He Lifeng in Frankfurt on Sunday, German Finance Minister Christian Lindner pledged to support the Beijing-based Asia Infrastructure Investment Bank (AIIB), the world’s second-largest multilateral development bank, after the World Bank.
The backing comes at a crucial time as Lindner’s Canadian counterpart, Chrystia Freeland, announced in June that all ties with the bank were to be frozen pending a government review over claims made by a former Canadian top executive at the bank, who reported widespread “communist dominance” within the institution since its foundation in 2016 — allegations that AIIB denies.
Lindner indicated Berlin would “continue strengthening coordination” with Beijing on the AIIB, according to a German-Chinese joint statement released following the Frankfurt meeting. Germany is one of the AIIB’s founding members.
“Both sides will continue strengthening coordination and comprehensive cooperation under the framework of AIIB, jointly supporting AIIB to operate in a sustainable and robust way along international standards and as an institution that is integrated into the international architecture so as to better serve its members’ needs for sustainable development,” according to the statement.
The Frankfurt visit is part of the first Europe tour by He, a long-time confidant of Chinese President Xi Jinping, since he succeeded the influential Liu He as the Chinese leader’s top economic aide in March. It comes amid a deepening economic crisis facing China, most recently seeing the police detention of the boss of one of the country’s biggest real estate developers, Evergrande.
“For the first time, we have established a financial roundtable with representatives from important financial institutions and private companies,” Lindner wrote on social media. “Both sides are determined to expand market access opportunities and open them up to ensure fair competitive conditions.”
EV in the background
He’s trip to Germany comes hot on the heels of an EU-China split over electric vehicles, as Brussels looks set to launch an anti-subsidy probe into made-in-China EVs.
Indeed, He delivered a personal warning to the EU’s trade commissioner, Valdis Dombrovskis, in Beijing only last week, saying that Beijing has “strong concern and dissatisfaction” over the move. Chinese Foreign Minister Wang Yi, a fellow senior Chinese politician who’s part of the Politburo, echoed the sentiment, saying the probe “violates the fundamental principles of international trade and could potentially disrupt the global automotive industry supply chain.”
German car manufacturers have been on the front line defending their Chinese counterparts, out of fear of Beijing’s retaliation to their lucrative business in China as a result of punitive measures from the EU.
While the EV issue is not covered in the joint statement, Germany scored a few wins in other areas, such as Beijing’s agreement to “have active communication” on the signing of a memorandum of understanding on insurance supervision between the Chinese and Germany authorities. German insurance giants are hoping to compete with American ones in the Chinese market.
Berlin, for its part, agreed to establish a dialogue “around the necessary conditions” for exempting subsidiary requirements for Chinese bank branches in Germany.
While China agreed to “re-emphasize the importance of addressing debt vulnerabilities in low and middle-income countries,” the talks on Sunday yielded no concrete result on that thorny issue.
The two sides announced a Sino-German Dialogue Forum on Financial Cooperation to be held in Beijing next year.
