San Francisco Frontiers - Germany's Merz meets Xi, announces Chinese Airbus order

Merz's visit comes as Berlin and Beijing seek to build on their decades-old economic ties to weather global uncertainty sparked by US President Donald Trump's tariff blitz and other erratic foreign policy moves.

China, the world's number two economy, overtook the United States last year to become Germany's biggest trade partner. At the same time, Berlin regards the Communist Party-run state as a systemic rival to the West.

Following talks with top Chinese leaders, Merz told reporters that China had agreed to purchase "up to 120" Airbus aircraft, adding that it "demonstrates how worthwhile such trips can be".

Other contracts were in the pipeline, Merz added.

Earlier in the day, Merz and Xi stressed their commitment to developing closer strategic relations, with the German leader saying he saw the trip as a "great opportunity" to boost economic ties.

Xi, in turn, told Merz he was willing to take their ties to "new levels".

Merz said that in his meetings he also touched on the sensitive topic Taiwan, the self-ruled island China claims as part of its territory and which it has not ruled out the use of force to annex.

Any "reunification" must be done peacefully, Merz said.

He also discussed the Ukraine war with Xi, who according to state news agency Xinhua said diplomacy was "key to the issue".

"Xi noted the necessity of ensuring the equal participation of all parties to lay a solid foundation for peace, (and) addressing the legitimate concerns of all sides to strengthen the will for peace," Xinhua added.

Merz is the latest in a string of Western leaders courting Beijing recently, including Britain's Keir Starmer, France's Emmanuel Macron and Canada's Mark Carney, as they recoil from the mercurial policies of Trump, who is also expected to visit from March 31.

Merz said he wished for regular consultations between his government and Beijing -- interrupted by political developments in Berlin and the pandemic -- to resume "very soon".

- 'Fair' cooperation -

Export-dependent Germany needs "economic relations all over the world", Merz said before leaving for Beijing with a large business delegation in tow.

At a meeting with Premier Li Qiang in Beijing's opulent Great Hall of the People, Merz called for "fair" cooperation, and representatives from both sides signed agreements and memorandums -- including on climate change and food security.

In an apparent allusion to the United States, Li noted that "unilateralism and protectionism have gained ground and even become prevalent in some countries and regions".

Flexing its muscle at times of tension, Beijing has restricted exports of critical minerals used in products from microchips and wind turbines to electric-car batteries and weapons systems.

Last year, Beijing temporarily halted the export of Nexperia chips to Europe following a dispute with the Dutch government.

More broadly, European businesses complain that China, with its low domestic demand, is flooding Europe with goods made cheap through state subsidies and an undervalued currency.

Germany's trade deficit with China hit a record 89 billion euros ($105 billion) last year.

- Cars, AI and competition -

As Trump has unsettled allies and rivals alike, China has sought to present itself as a reliable partner and defender of the multilateral order.

China's top diplomat, Wang Yi, told Merz at the Munich Security Conference this month that Beijing wanted Germany to be a "stabilising anchor for strategic relations" in the European Union.

Merz is joined by business leaders including executives of auto giants Volkswagen, BMW and Mercedes.

On Thursday, he is set to visit Beijing's Forbidden City, then a Mercedes plant where autonomous driving vehicles will be presented.

The chancellor will then travel to AI hub Hangzhou to visit the robotics group Unitree and German turbine maker Siemens Energy.

German businesses have given Merz a to-do list on his trip.

"We expect the chancellor to clearly address problems such as overcapacity, distortions of competition, and export controls on critical raw materials," said Wolfgang Niedermark of the Federation of German Industries.

Merz should advocate for "structural reforms to strengthen domestic demand and fairer competitive conditions" in China, he said, warning that without change there will be "new trade conflicts with the EU".

A.Smith--SFF