The German economy ministry sent a warning to China today over its widening trade deficit with Europe's biggest economy.
Economy Minister Michael Glos told a newspaper that he was more concerned about global imbalances, such as China's rising trade deficit with major overseas markets such as the United States and Germany, than he was about commodity prices.
The Chinese government should not only concentrate on building up strong positions in foreign markets, but also invest in education, infrastructure, healthcare and consumption at home, he said.
He argued Beijing must also consider a full decoupling of the renminbi from the US dollar. "One can't develop such economic potential and leave the exchange rate fixed on a long term basis," he said.
China's exports to Germany rose 32.4 per cent in the first five months of the year to around €19 billion, while German exports rose 28.2 per cent to around €10 billion, and junior Economy Minister Hartmut Schauerte warned against allowing this deficit to widen further.
"This development should be watched closely," Mr Schauerte said, adding that it would be better if China were to spend more at home in order to avoid the trade imbalance.
