Beijing and Berlin ‘exchanged opinions’ amid reported plan to shut China out of EU market

Chinese Commerce Minister Wang Wentao held a video call with German Economy Minister Katherina Reiche on Monday, just over a week before the next round of trade talks between Beijing and Brussels, amid reports that Germany and France are pushing for a new tool that would enable the EU to swiftly shut China out of the European market.

Wang and Reiche “exchanged opinions on the Sino-German and Sino-European economic and trade relations”, according to a short statement published by the Chinese side on Monday.

The German side has yet to release a statement, and did not reply to the South China Morning Post’s request for comment.

The call came 10 days before Wang was expected to meet with his European counterpart Maros Sefcovic in Beijing on October 8 for the second round of China-EU trade talks.

Sources from the Chinese side have described discussions as “difficult” and the team is likely to forfeit its national day holiday, which runs from October 1 to 7, in preparation for the talks, a source familiar with the matter told the SCMP.

The call also came during reportedly intensifying preparation from the European side as well. Spanish media outlet Dossier Bruselas reported on Monday that Paris and Berlin were finishing a plan to reform the EU’s Anti-Coercion Instrument (ACI).

The ACI, also known as the “trade bazooka”, would enable Brussels to apply a wide range of retaliatory measures, including tariffs, quotas, export controls and market exclusions. The instrument needs a qualified majority of the bloc’s member states states to be triggered.

The proposed reform will flip that requirement on its head: the European Commission would be able to activate the tool unless member states opposed to the measure could assemble a qualified majority to block it, according to Dossier Bruselas.

The outlet also reported that Paris and Berlin planned to send it to EU Commission President Ursula von der Leyen before the EU summit on October 15.

The Elysee Palace and the German Federal Press and Information Office did not immediately reply to the SCMP’s request for confirmation.

While their government was reportedly sharpening its tools for the talks, some German businesses have reportedly been preparing for the worst-case scenario.

Politico reported last week that some German companies were “panicking” and “stockpiling” rare earths ahead of the second round of China-EU trade talks, citing a German industry official, in case the negotiation broke down and Brussels’ push to rebalance trade would trigger retaliation from Beijing.

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The German ministry of economic affairs declined to comment on the report.