Strengthened China-Germany ties can help counter the world’s stagflation threat, according to Chinese Vice Premier He Lifeng.

“The global macroeconomic picture is colored by slow growth and high inflation,” He Lifeng said, adding Germany and China should cooperate to resolve these problems and boost living standards.

The Chinese official spoke alongside German Finance Minister Christian Lindner in Frankfurt on Sunday at the beginning of the third China-Germany High-Level Financial Dialogue.

The German Finance Ministry said in a posting on X, formerly known as Twitter, that working sessions on international financial topics and a roundtable on improved mutual market access for banks are on the agenda.

The talks, which are also set to cover global macroeconomic developments and international debt, come just weeks after the European Union launched an anti-subsidy investigation into Chinese electric vehicles.

German Chancellor Olaf Scholz on Thursday played down fears of a potential trade war triggered by the EU probe, while making a strong case for globalized markets with a level playing field for all participants.

Germany stands to be the country most affected in the EU in the event of a tit-for-tat tariff dispute with China.

If levies are imposed, Beijing’s most powerful response would be to restrict access to its vast market — something that would hit German automakers including Volkswagen AG and BMW AG hardest as they collectively sold 4.6 million cars there last year.

Since Moscow’s invasion of Ukraine has laid bare the German economy’s exposure to cheap fossil fuels from Russia, the government in Berlin is trying to reduce similar dependencies in its business ties with China.

Scholz and Lindner have been advocating a smart de-risking from China in the sense that companies should diversify their supply chains and sales markets while the chancellor has rejected calls for a hard cut in relations, also described as a de-coupling.

In May, China’s finance ministry on a short notice postponed a meeting scheduled between Lindner and his counterpart in the government in Beijing.