Published by Global Banking & Finance Review®
Posted on November 18, 2025
2 min readLast updated: January 21, 2026
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German Finance Minister Lars Klingbeil warns EU may protect its market if overcapacity issues in China aren't resolved, emphasizing EU coordination.
By Maria Martinez
BEIJING (Reuters) -German Finance Minister Lars Klingbeil discussed overcapacity in China on Tuesday during his visit to Beijing and stressed that the Europen Union would act if a solution was not found.
"I made it clear that, if necessary, decisions will be made at the European level to better protect our markets," Klingbeil said. "I’d like to avoid that, but in the end, Europeans — and we Germans — must not be the ones left behind."
On his second day in China, Klingbeil discussed overcapacity, German-Chinese cooperation in multilateral organizations and the war in Ukraine at the Party Dialogue in Beijing.
Asked about EU divisions on relations with China, Klingbeil said coordination among Europen countries was key, and that he had liaised with his colleagues in the bloc before his trip.
"It’s crucial that Europe, where we have a lot of common ground, doesn’t present different voices and positions in China," Klingbeil said.
Ties between the two industrial powerhouses have been strained, in particular over Chinese export curbs on chips and rare earths that have caused major disruption for German firms.
Germany must diversify its supply chains to avoid disruption in the sourcing of rare earth minerals, he said, although he said the Chinese side gave him clear assurances about reliable access on Monday.
"Still, I want to stress: We need to do our homework in Germany," said Klingbeil.
(Reporting by Maria MartinezEditing by Madeline Chambers)
Overcapacity refers to a situation where production capacity exceeds the demand for goods or services, leading to inefficiencies and potential financial losses for businesses.
Rare earth minerals are a group of 17 chemical elements that are critical in the manufacturing of high-tech devices, electric vehicles, and renewable energy technologies.
Supply chain diversification is a strategy used by companies to reduce risk by sourcing materials and products from multiple suppliers or regions, rather than relying on a single source.
Multilateral cooperation involves multiple countries or organizations working together towards common goals, often through international agreements or organizations, to address global issues.
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