Germany, China pledge to open markets, deepen financial cooperation

German Finance Minister Olaf Scholz, left, and Chinese Vice Premier Liu He arrive for the China-Germany High Level Financial Dialogue at the Diaoyutai State Guesthouse in Beijing, Friday – Reuters

BEIJING (Reuters): Germany and China on Friday signed agreements to strengthen coordination in banking, finance and capital markets, and pledged to further open market access and deepen cooperation to broaden economic ties.

The agreements were reached after a two-day visit to Beijing by German Finance Minister Olaf Scholz for talks with Vice Premier Liu He, who is President Xi Jinping’s top economic adviser.

Both sides reaffirmed that “they will strengthen macroeconomic policy coordination and pragmatic cooperation in the fiscal and financial fields and expand strategic cooperation,” according to a joint statement after the talks.

Trade between the two nations has softened amid uncertainty caused by the US-China trade war, but both have shown a willingness to demonstrate that the world remains multilateral.

They agreed to work to improve international economic governance, maintain the global multilateral system, fight trade protectionism and support a rule-based multilateral trading system through the World Trade Organization.

“It is important that, contrary to recent trends that we can observe elsewhere, we are seeing progress in our cooperation,” Scholz told reporters before the talks at the Diaoyutai State Guest House in the Chinese capital.

A level playing field in terms of market access for banks and insurers is important, added Scholz.

Liu also noted the importance of strengthening trade ties.

“As the world economy slows, market volatility rises, creating greater risks,” he told reporters.

Berlin has stressed its “close and advantageous” trade ties with China, the world’s second largest economy compared to number four Germany. It wants to protect and strengthen sensitive German and European business sectors as China makes state-backed acquisitions in strategic industries overseas.

“If you work closely together, you learn to appreciate similarities, but also to know differences,” Scholz said.

“And we have a lot of common interests in financial matters, and then we need to bring different perspectives together. I believe that is the very important task of this financial dialogue,” he added.

German-Chinese cooperation benefited their economies, Liu and Scholz said, adding they are committed to ensuring open market access and easing investment barriers in both countries.

“The two sides conducted in-depth, pragmatic, efficient and fruitful discussions, and formed a series of fruitful results and consensus,” Liu told reporters. Both sides recognised the potential for cooperation in the financial sector and are open to financial firms deepening their cooperation in third countries, according to the statement.

German insurers can set up wholly-owned insurance holding firms in China, whose insurers and reinsurers are welcome conduct reinsurance business in Germany, it said.

“China commits to continued granting of national treatment for foreign insurance companies and a level playing field for domestic and foreign insurance companies,” it said.

German banks can apply to become a primary dealer in the open market operations of the People’s Bank of China (PBOC).

The two countries will also support efforts to find areas of cooperation between China’s Belt and Road initiative and the EU’s strategy for linking Europe and Asia, as well as European infrastructure planning.

“I am very happy that we have succeeded in agreeing concrete, very concrete steps today,” Scholz said. “There must be a level playing field, reciprocity is the key.”