German Chancellor Olaf Scholz instructed Chinese officials to promote free trade and equal business opportunities, one week after the US Treasury Secretary pressed Beijing on the same trade issues. 

“Competition must be fair,” Scholz told an audience of university students on Monday in Shanghai, on the second leg of his four-day trip to the Asian nation. “We want a level playing field, so of course we want our companies to have no restrictions,” he added, identifying dumping, overproduction and copyright infringement as key areas of concerns.

Scholz is in China to deliver a delicate message that if Beijing doesn’t heed European warnings to end discriminatory business practices, Brussels will have no choice but to escalate trade defence mechanisms. He is expected to raise Russia’s war in Ukraine, possibly calling on China to use its influence over Moscow to seek a resolution.

A survey published on Wednesday by the German Chamber of Commerce in China showed that two out of three German companies operating in the world’s second-largest economy say they face unfair competition. The survey results underscored concerns that foreign businesses in China suffer disadvantages compared to their local counterparts.

Scholz kicked off his second visit to China as the chancellor in the southwestern city of Chongqing on Sunday, where the German delegation raised the issue of Chinese overcapacity when meeting with the party secretary general of the municipality.

According to one participant of that meeting, the Chinese side dismissed the German criticisms as “fake questions”, saying they were based on what Communist Party officials regarded as “fake news” or “false information”.

Earlier this month, US Treasury chief Janet Yellen also implored Beijing to scale back its industrial output, saying Chinese factories were producing more than the world could bear, and chided officials over the “unfair” treatment of American firms.

“I’ve been very clear in my discussions with them that this is a concern not only to us, but also to other countries, to Europe, to Japan, and even to emerging markets,” Yellen said in a CNN interview broadcast on Sunday. 

Scholz’s visit to China has been overshadowed somewhat by Iran’s armed drones and missiles attack against Israel. He’s scheduled to meet with Chinese leader Xi Jinping and Premier Li Qiang in Beijing on Tuesday.

  - Bloomberg