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Macron and Scholz Call for Re-balancing China Trade

Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File
Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File
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Macron and Scholz Call for Re-balancing China Trade

Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File
Chancellor Scholz will have to balance encouraging words on economic cooperation with the EU's strident message accusing China of unfair subsidies © JOHN THYS / AFP/File

French President Emmanuel Macron and German Chancellor Olaf Scholz called on Friday for a "re-balancing" of trade relations between Europe and China on the eve of the German leader visiting Beijing.

In a video call between the two European leaders, they also discussed the impact of the war in Ukraine on European security, officials in Macron's office said.

Scholz travels to China this weekend for a delicate three-day trip at a time when the West is sharpening its tone towards Beijing, both about its trade practices and its closeness to Moscow, AFP reported.

The European Union has accused China of inundating Europe with subsidised goods sold at below-market prices.

The European Commission on Tuesday opened a probe into Chinese wind turbine suppliers, following investigations into state aid for solar panels, electric cars and trains.

In their call, Macron and Scholz also underlined the need to "spur European competitivity", notably by deepening pan-European capital markets, a project that would require harmonising financial rules across the bloc, but which has been held up by disagreements between Paris and Berlin.

The two also reaffirmed their "unwavering and long-term support for Ukraine" and "discussed European initiatives to provide military support for Ukraine," Macron's office said.

The French president has been expected to visit Ukraine for several weeks, but he has said he will only make the trip when he has something concrete to bring.

Macron and Scholz will meet face-to-face at a joint French-German cabinet meeting May 28 in Meseberg, near Berlin, which will coincide with a state visit to Germany by the French president.

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World Bank Warns that US Tariffs Could Reduce Global Growth Outlook

WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP
WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP
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World Bank Warns that US Tariffs Could Reduce Global Growth Outlook

WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP
WASHINGTON, DC - JANUARY 16: Workers build risers in Freedom Plaza ahead of the Inauguration on January 16, 2025 in Washington, DC. US President-elect Donald Trump and Vice President-elect former Sen. JD Vance (R-OH) will be sworn in on January 20. Kayla Bartkowski/Getty Images/AFP

The World Bank on Thursday warned that US across-the-board tariffs of 10% could reduce already lackluster global economic growth of 2.7% in 2025 by 0.3 percentage point if America's trading partners retaliate with tariffs of their own.
Such tariffs, promised by US President-elect Donald Trump, could cut US growth - forecast to reach 2.3% in 2025 - by 0.9% if retaliatory measures are imposed, the bank said, citing economic simulations. But it noted that US growth could also increase by 0.4 percentage point in 2026 if US tax cuts were extended, it said, with only small global spillovers.
Trump, who takes office Monday, has proposed a 10% tariff on global imports, a 25% punitive duty on imports from Canada and Mexico until they clamp down on drugs and migrants crossing borders into the US, and a 60% tariff on Chinese goods.
The World Bank's latest Global Economic Prospect report, issued twice yearly, forecast flat global economic growth of 2.7% in 2025 and 2026, the same as in 2024, and warned that developing economies now faced their weakest long-term growth outlook since 2000, Reuters said.
The multilateral development bank said foreign direct investment into developing economies was now about half the level seen in the early 2000s and global trade restrictions were five times higher than the 2010-2019 average.
It said growth in developing countries is expected to reach 4% in 2025 and 2026, well below pre-pandemic estimates due to high debt burdens, weak investment and sluggish productivity growth, along with rising costs of climate change.
Overall output in emerging markets and development economies was expected to remain more than 5% below its pre-pandemic trend by 2026, due to the pandemic and subsequent shocks, it said.
"The next 25 years will be a tougher slog for developing economies than the last 25," World Bank chief economist Indermit Gil said in a statement, urging countries to adopt domestic reforms to encourage investment and deepen trade relations.
Economic growth in developing countries dropped from nearly 6% in the 2000s to 5.1% in the 2010s and was averaging about 3.5% in the 2020s, the bank said.
It said the gap between rich and poor countries was also widening, with average per capita growth rates in developing countries, excluding China and India, averaging half a percentage point below those in wealth economies since 2014.
The somber outlook echoed comments made last week by the managing director of the International Monetary Fund, Kristalina Georgieva, ahead of the global lender's own new forecast, to be released on Friday.
"Over the next two years, developing economies could face serious headwinds," the World Bank report said.
"High global policy uncertainty could undercut investor confidence and constrain financing flows. Rising trade tensions could reduce global growth. Persistent inflation could delay expected cuts in interest rates."
The World Bank said it saw more downside risks for the global economy, citing a surge in trade-distorting measures implemented mainly by advanced economies and uncertainty about future policies that was dampening investment and growth.
Global trade in goods and services, which expanded by 2.7% in 2024, is expected to reach an average of about 3.1% in 2025-2026, but to remain below pre-pandemic averages.