things straightened out, but it's still actually about mill join us as we travel around your, facing the history of every day of that. and that's something right around the world. no need to talk to you back. just as subscriber id. listen to paul. gosh, that will take you along to the right. the germany and china are sprinkling ties, but the german chancellor is high level and high stakes visit to beijing will be a diplomatic and economic challenge. both countries can't seem to get a grip on their economic wolves. china is trying to export masses of subsidized goods to europe and america, but that creates new problems. the us and it's treasury secretary john galen, are already threatening further. terrorist asked the trade warner. meanwhile, germany is trying a new china strategy oscillates between co operation, an isolation on to the point we ask us china trade war, which side is germany on the

welcome to this weeks to the point i'm have, you know, yes, it's good to have you with us let's meet this week, i guess mentally informed plato is the senior germany correspondent for the economist based in berlin. felix lee is a journalist, a long time correspondent in china, and currently works for this specialist. german use outland, china tape and mass new car niche. nick is a journalist and correspondent with political timberly to all 3 of you. thank you very much for being with us mentally. i'd like to start with you. china and germany . 2 of the world's top economies are both struggling right now. how did we get here? how well they both have the problems related to demography. they have that's the same slowing economic rows. of course, china, from

a very high level and german 4 most likely lilla level and gemini, specifically had an energy price problem which is sort of a bated now. but oldest to explain that both economically in dire straits, felix china got the world used to very impressive growth figures. and a rhetoric that seemed to suggest that it would become the world's number one power in the mid term. was that all just an illusion then? no, it's not an illusion. i mean china has become the 2nd world biggest economy in the world and, and despite huge problems at the moment, uh, the property crisis. uh, the housing uh, price is dropping tremendously and people are not consuming much anymore. and despite all these problems, we shouldn't, as under estimate the technology wise, china is still developing very, very fast. and this aiming to be the top of the water in not all technologies,

but in quite a number of technologies. we'll talk about what the future of his texas are there for china. but 1st, matthew, there used to be a huge rush in all the western economies to engage with china, to sell to china, to do business with china. why all of a sudden so much caution and fear it seems as well. i think initially, the hope was that by engaging with china, by investing in china through big blue chip, firms like general electric in the united states. siemens in germany or fort barton, which went into china in a big way already in the 1980s that, that would liberalize china eventually. and it would turn into a western style democracy that was basically the theory. and i think already several years ago in the united states and more recently in europe, people have realized that that's not going to happen. that china is going to remain for all intents and purposes and all storage area and system. and because the united states feels threatened by,

what they see is china's attempts to improve it, standing globally improve it's, it's power based globally, you know, they need to counter that. so they're trying to withdraw a little bit. the risk is the united states cause that and they feel that particular at the moment threatened by what they see is china is attempts to possibly take over tie want. you mentioned the risk and that seems to be a concept germany is following too, because for germany, trade with china is a delicate balancing act. it needs china as a market for some of its main products, but at the same time wants to free itself from what is already a great dependency. a construction site with a promising future. the swedish north vault group is building a truck can take factory in northern germany, up to a 1000000 batteries for electric cars will soon be produced here annually and invest its own investments like the north was,

are strategically important for our country and for europe. gotcha. and germany was, is, and remains a strong industrial nation. for this, we need battery sales made in germany made in europe and making sure with projects like this. germany hopes to not only drive innovation and create jobs, but to become more independent, especially from china. but the price will be high, hundreds of millions of bureaus of tax revenue are pouring into this factory alone . e commerce computer chips, space travel, germany has failed to invest in new technologies. but to keep up with china, germany needs to do even more upgrade its infrastructure, of skilled workers and streamlined bureaucratic processes. how can germany compete with china in the technology base? felix, the most pessimistic voice to say that china already has

a new reversible advantage over germany. for example, when it comes to critical technologies is it came over then terms while it came over yet. but it's very hard for the germans now to compete with this. and not only with china, but also especially with the u, as in all these very important future technologies. yeah, a, i a see my conductors, a jeremy slacking far behind all know the germans, the scientists to used to used to be very advanced. and all this of the industry or went to east asia and to the us. and this was very hard to catch up now and, and especially with the rapid and i'm not only talking there on this, on china, but also on a lot of other east asian countries. um, you know, how fast this is? the technology is advancing there. i think it is very hard and especially if you

want to keep up if the germans want to keep up, they have to spend a lot of money on that. but yet, when reading research is still made in germany to a large extent, the packets are being registered in germany for large extent. what's going, what's, what's missing, what's, i think it's really the, the, the, the state that's not supportive enough. us and we have in, in america we have the, are a, china is pulling billions into promoting exactly this kind of technology. and we are clinging to our debt break. we being gemini, which is in this day and age when basing the futures decide the future of the might of the german economy. it's, it's not the right thing and, and we, the economy, is this as august now for why is that? that's the, the, that breaks should be dropped from the constitution. so i think that's, that's one problem. problem the, to a said america, i'm trying to big palos and europe doesn't see, it says get to be, that's a big problem. doesn't behave like that. and countries like germany upfront,

often don't work together enough, certainly with the economic o industrial policies, but rather against each other and promote their own small goals farther than the common european goals. so that's those 2 problems. i think it's certainly a matter of systems as well. matthew, germany is having a rough time with the coalition government that tries to find common ground between different parties. how difficult is it in the 1st place for a liberal democracy to implement changes or to make a huge investments as opposed to a one party system like the one in china present? well, it's obviously easier in china than in a liberal democracy. but as the united states shows, it is possible to have a successful economy in the democratic maintained a democratic system. i think the problem in germany and in europe in general is that these problems go back much further than the current government. this has been going on for decades, really. if you look back at the trajectory, germany's engagement in china, i was in china with the vin, ceo of siemens in the early 2, thousands. and he could see, even then he said,

what he was most worried about was that china was turning out hundreds of thousands of engineers at the time. whereas in germany, there were only tens of, of thousands. and he said, you know, over time, this is going to be a huge disadvantage for us because they are going to catch up in terms of innovation, which is exactly what we're seeing now. i think there was a lot of, uh, you know, i think we can just call it arrogance in europe for a long time, thinking that the chinese were where they, they lacked the engineering capability. and the sophistication to make the kinds of products that the europeans were in terms of air bus or in terms of the, the high end cars and so forth. people didn't take it seriously. and now they're taking it seriously because it's because it's because it's happening. and i think that the, the system here is the political system makes it, it didn't even maybe a little bit more difficult to pivot. pivot quickly. certainly, you seem to put it like they woke up and saw the reality. now china is there, it is a very important power. germany is now impaling this so called china strategy,

which focuses on the risk as we just mentioned. and then what do you make of that a concept and how difficult does it make it for german businesses to succeed? well, so the german kind of started it was and that last year so, so, but they've been working on it for much longer than they had intended that they kept delaying the publication because they were so complex because they had to basically tow a fine line between the risking but not the coupling and you know, how exactly do you define it? and that's very hard. but essentially that it's, it's some big german companies that really depends on china and for, for whom the chinese market is very, very important. the vast majority of small, medium size companies, you know, they don't have that much business in china. but these are very important. and probably, you know, they, they cons fade. they determine germany's china police is, but it's really b s f for big com makers and maybe see minutes and that's it. but of course they do

weigh a lot um meanwhile, felix, when we took a look at what voices we can here in china, some of the business people that work in china say that the german government is over reacting that it is not really capable of understanding that it doesn't have sufficient knowledge of china's potential ambitions and goals. what do you make of that for this one? it also depends on like, oh hi, lo, i'm like, oh, you describe that who you're talking to. i mean, if you talk to these big 5 companies, watts, so involved in china and so depended on the chinese market. and of course, the, the criticized the china strategy and that the german government is to, to critical, into skeptical if you talk to a smaller companies who are also engaged in china for quite a long times. they feel that it's the market. it's getting much harder that it's the play not on the same level with chinese competitors is the government is not

the chinese government, it's not treating them well. so they do you hear these complaints and they, i think the very true, could you explain a little bit more what exactly they feel is not the level playing. for example, when a provincial government, a sort of thing. okay. oh, we want to build, built this a road or a that are usually in the free market. all companies can are allowed to apply for it. but of course, in china they, they prioritize their own chinese companies and that's why the drum companies are not playing on the same level. it used to be different. that's how they came to china. and all of the sudden the chinese side shows them, we don't do any more and this is hard for them. of course. uh, the other problem is, uh and i think this is a big topic. also on trots trip in china. no. but not only because, and uh, it concerns the whole world is over capacity. china, china,

economy has created and business. i mean, china itself is suffering from this. but this is a part of the system of the chinese system. and if china is not a free market and has never been, and when the central government is saying, okay, we want to be head in, for example, e electronic cars. and then all the provincial government, all local government build up or create their own e car companies. and now we have over a 100 e car companies and not even the federal government is saying these are a 100 too much when the whole market can only hold 5 of them. the problem is that it's not the only question inside of china, but there is over capacities. now i'm gonna try the chinese companies of flooding the world with their products. and that means it's not only a question if from these 105 e car companies in china, if oil,

which of the chinese companies i'm not surviving, but the don't whole world. if folks lock up the surviving this over capacity proved problem which china has created. there's certainly an economic aspect to this china strategy, but of course, also a political one. matthew, one of the fears is that germany could become politically susceptible to a storage and a lesson learned from russia and the dependency on oil and gas. do you see parallels there? this is there, absolutely parallel is because, you know, the german export economy is very dependent on china and i would push back on the idea a little bit that it's, that it's just these, these big 5. i think that there is a long tail behind them. they all have suppliers, there are a lot of little companies that supply mercedes bmw, etc. they've also set up shop in china. a china is now the biggest market for v w, for example, which is why there's, you know, as their discussions as we speak here in brussels with, in the you about introducing tariffs on chinese,

electric cars. you're hearing from the german car makers. well, you know, we don't, we don't support that. where you would think when actually they what supported? well, why don't they support it because they're afraid of retaliation in, in china, which is a, the key market for them. so i think that it is too late for germany to do anything about it. and i think that is what hasn't really dawned on people here in berlin. and i think that is also the story really behind this trip of well, you know, salts going there. this isn't his 1st trip recently. he was there also in 2022. in fact, he was the 1st major world leader to go and visitation ping after he was basically anointed president for life then. so that had a, you know, a symbolism as well. and even then he took along some ceos with him, not the massive delegation that we saw during the medical years. but she also went every year pretty much to, to, to china with a big business delegation and schoultz again this weekend is going for it for 3

days, i believe. and he's taking a fairly sizeable delegation with them, despite all of these political fears, despite all of the tensions with the, between the united states and china, etc. so you can see that i think germany doesn't have a choice, but to engage with china. but it also doesn't have a choice but to engage with the us and the rivalry between china and the us is about far more than you can nomic issues. it's about a status as the world's number one power, which is another reason to us is taking a much more confrontational approach when it comes to its many trade issues with china. the china's economy is we can tell tale signs include empty buildings instead of boom, towns, the construction sector, suffering from a real estate bubble and top companies drowning and that people in china are also holding onto their money. sticking many manufacturers with left over merchandise, a surplus of goods made in china is now flooding global markets at subsidize dumping prices,

including electric cars and solar panels. this is threatening to further strain the already tense relationship between china and the u. s. and when the global market is flooded by artificially cheap chinese products, the viability of american and other foreign firms is put into question subsidies protective parents important bands. despite these contentious issues, the us and china recently health talks to trying to address the problems is fair trade with china, even possible phoenix, you described extensively and why it is considered unfair. uh, can it become fair to see that? i don't see it with this system. i mean, as i mentioned, the over capacity, it's a problem for the chinese before the chinese economy to but it's cost by the system because in utah, a free market economy with so many cock companies,

for example. uh they would uh they would go back to go bankrupt, but this is not happening in china. so in all these provincial uh government they keep up them holding up to these companies. and that's why we have these. and it's not only because it's about we, we have those in the past, but still we have have that with solar panels, we have that dispatcher, we will have that even with seam, i couldn't doctors, so i think europe the u. s. has already reacting jeff and how to be exercised. career reactive. i think there is no choice for the your pains also to react on this. i don't know which is the would be, would be the right the measurements, but it cannot do as a to just let that it has as usual because otherwise, a lot of you to companies would get bankrupt to because of these offered capacity from china. the us seems to be leading the way when it comes to reacting to that of

indian. however, the us economy stories are better than the chinese economy. so why this obsession? it seems to keep trying to pay it, is it doing much better? but of course, there was over the summer, a hard to travel in 2018 when donald trump was president. and a, you know, the is the danger that the from will win again and see over the says he will. he will shopping thomas again and he will sort of turn up the heat on china. i think it's a lot about who else who said, who is the biggest problem in the world, so it's not only the economy, the economy is doing much better in america. poppy because of the are a positive because lots of reasons. but by this move, i'm not, it's, it's, you know, who is the, what's number one and, and that's related to the economy and to trade. and so i think that is the danger that if anything the truth will will be ignited come back by the end of this year. and where does that leave germany? as you do say this, does it have to make a choice between china in the us?

i think if it has to make a choice, it would choose the us because it's still depends on the us for its security. but i don't think that it will have to make a choice just as the united states isn't really making a choice. i mean, you know, the dirty little secret about all of this is that the united states has massive trade with china as well. and that's the problem with this, with this phrase, the risk it's, it's basically it's meaningless. i mean, it's a slogan that you can project on to anything, but what does it really mean? it, you know, that the germans are saying, well that they are willing to the risk. but if you look over the past couple of years and there the recent economic studies out on this, it shows that the germans, having the risk that all there they remain just isn't gauged. and all of the major sectors as they were before there was a lot of talk about qual away the, the chinese network equipment suppliers for, for mobile networks and so forth. in the united states didn't want european countries, particularly german, germany to install the gear from hallway 4 or 5 g,

uh, mobile mobile phone networks and, and the germans looked at this for years and said they came up with a law and they said, okay, well you know under certain circumstances, we don't do it well, what, what does happen? germany is continuing to use while we geared towards telecom as it installed all over the place here in berlin. so there's a lot of sort of shadow boxing here, this thing, oh yes, we'll take this seriously. but because of the economic realities and let's not forget that germany is not doing very well economically at the moment, it is again, the weakest or one of the weakest major economy. and you're at the end in any case, at the moment. and this is a, a major problem for, for all of schultz. and i think again, one of the reasons why he's traveling to china with this big delegation because he's trying to look for some good news on the economic front end. because china has been a source of, uh, economic growth for germany for such a long time. they're trying to reignite that. but the realities have changed. also in china, china is not blooming like it used to. and yet, you know, jeremy doesn't have very many other places to go. so i think jeremy is going to

remain in this kind of purgatory, if you will. and the united states, i don't think is going to, you know, a, you know, maybe a truck comes back, he will, he has the very important to make some kind of ultimatum there. but the reality is, is that he can't, because the united states is also quite intertwined with the german economy, with the european economy. and nobody wants to, you know, risk, all of these, all of these relationships feel experienced, see the same for china that it will continue to play with everyone if you, well, as we barely know exactly what the plan is, sometimes you have the impression, okay, i'm down i am just trying to over wants to keep up all these relations equal economy relations because i mean, china is a very globalized economy. and on the other hand, we would talking a few years ago, started to talking about the company in china, is the company quite a while already and not on everything but on specific technology square. they say

we want to big get independent and from west of technologies and this is already happening. we still discussing about it and china, it is already happening. so we do have, in total, we do have some sort of a d globalization. and this of course hurts the chinese economy, but probably this hurt even more the drum and economists can i just jump interest in. like i said it's, it's not really happening. i agree with germany, right? they haven't really davis. i think america has the bas, possibly because you know, the, the, from a terrace west, so straight and, you know, hit all these measures. so i think that is, that is a little bit of a re balancing. and, you know, those countries like mexico have faded, the boyd, i mean, maybe not, not enough, and not as much as it, as it's a real deal risk. but something has happened. i mean, an overall trade flows in certain sectors, obviously that you know, in, in a lot of what the united states considers to be 6 sensitive areas. you're, you're certainly seeing that. but in the overall trade flows, the,

the trade relationship between the united states and china remains essential for, for, for both countries, which i think it will be difficult for china to kind of just financing the us government. exactly. so china is doing what it has to do, the us seems to be doing what it has to do. and the question is, and that's the closing question. where, where does this leave germany? we also already said it's going to be in the middle. do you see more of a risk or more of an opportunity and this confrontation between china into us for germany? i think on balance, there is more of a risk because it's, i'm, i think germany would like to be a mediator. right. they, they, of course, the, the most important relation of germany has, is with america for security reasons, fall, hit fest are confusing that because both that democracies but, but because the chinese economy is so important for jeremy jeremy would like to be the, you know, the honest broker in between ken, germany play that role. i think that's the big question. what about you, matthew, risk or opportunity? i think it's a, make it a major risk because germany is dependent on both of these markets. and we're not

really seeing the kind of innovation that we were described discussing earlier. call a comp time coming out of coming out of germany or, or europe, quite frankly. so i think germany is going to be in a very difficult position, especially in, in the auto industry which is, which is the core of the economy. you feel like the drum you have to do its homework. i think it's not enough blaming china and it's not enough blaming america for our a germany, it has to invest more in future technologies and uh, this has to happen. otherwise, drummond will not play a major role in the economy anymore. the outlook is not the best, but we'll see how it goes. thank you. all 3 of you for being with us. and of course you for watching. remember, you can always comment and watch our shows on youtube. just search for dw and use, i'm call you, i guess, until next time. take care by the

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