Germany hosts talks with China on setting up a new trade lifeline between. It may well be needed: shares in Europe sink to multi-month lows on global growth and geopolitical worries. David Pollard reports.
When things aren't good at home, it's time to look elsewhere - in this case, east. Berlin played host to Chinese premier Li Keqiang - the focus very squarely on trade ties. The EU agreed in March during a visit by the Chinese president to consider a free trade deal. German economy minister Sigmar Gabriel says that will be a big step forward - though barriers do remain. SOUNDBITE (German) GERMAN ECONOMY MINISTER, SIGMAR GABRIEL: "Foreign companies in China are still facing extensive restrictive measures in the year 2014. Companies are telling us about problems such as the joint venture enforcement." For Germany, there's a clear logic to such a deal. Bilateral trade has increased over the last few years. But the commerce boom between them has been under threat. James Shugg of Westpac. SOUNDBITE (English) JAMES SHUGG, SENIOR ECONOMIST, WESTPAC: ''There might also be just discussion about what the Chinese economy is doing in terms of growth. I mean the Westpac MNI Chinese Consumer Confidence Index is telling us that there's a lot of weakness in prospect.'' Even so, Germany and Europe may well pray for a new trade lifeline. The visit came on a day that saw European shares slump. The Dax hit a near one-year low. Oil prices are down to levels not seen in nearly four years. Robert Halver of Baader Bank listed the top worries. SOUNDBITE (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING (on FED): "The EU is close to collapse, there's only one solution: to make new debt. That could stabilise the markets but if Ebola continues to spread - and in Europe - and if there's no clarity over what's happening with IS in the Middle East and in the Ukraine-Russia conflict, it will be very difficult to see a year-end boom happening." And with negative data following on from negative Q2 growth in a number of economies, William De Vijlder of BNP Paribas says investors are making major reassessments. SOUNDBITE (English) WILLIAM DE VIJLDER, GROUP CHIEF ECONOMIST, BNP PARIBAS: ''You now have the feeling of 'Is this now a short-term slowdown, or can this go beyond this short-term slowdown?'. And what's even more unnerving for investors of course is that if this would go further is what kind of policy room for manoeuvre is there - and there people understand that there is significantly less room for manoeuvre than we had, for instance, one year ago.'' It's a grim prognosis. And Germany is at the centre of it. After the IMF and leading institutes revised down their GDP forecasts this week, latest reports are that the German government itself is on the cusp of doing the same.