Germany needs to tackle inflation threat, wants transparency from China - Lindner

WASHINGTON, Oct 13 (Reuters) - Germany's finance minister said on Thursday that fighting inflation was the government's biggest priority and demanded reforms that would lift Europe's largest economy out of an imminent downturn.

Speaking on the sidelines of the International Monetary Fund/World Bank meeting, Christian Lindner also called on China to act fairly in global trade and said he had spoken with Beijing about its debt restructuring responsibilities.

In blunt remarks, Lindner said Germany had slipped behind other countries because it was especially vulnerable to Europe's energy crisis and supply chain disruptions, and had complacently believed in its own economic strength.

"Inflation is the biggest danger for our economic foundation. Inflation can bring that foundation to erosion," Lindner said in Washington.

"We are not in a good position compared with other strong industrial nations," he said. "We've been resting on our supposed strengths for too long."

The latest forecasts suggest Germany is on the brink of recession, and the central bank sees inflation staying above 7% next year, pushed up by rocketing gas prices due to an energy standoff between the West and Russia over Ukraine.

Chancellor Olaf Scholz's coalition has prepared a 200-billion-euro package to cushion struggling households from the fallout of the energy crisis.

Speaking alongside Bundesbank President Joachim Nagel, Lindner said Germany has the means to address its weaknesses, including by investing in alternative energy resources.

Lindner also joined the growing criticism of China's lack of timely participation in debt restructuring for lower-income countries. China has argued it would not take part in some cases unless the IMF and World Bank also took a haircut.

Germany is currently reviewing its policies towards China. Berlin fears it has become too economically dependent on China, given concerns about industrial espionage, unfair competition and human rights violations, concerns that Beijing rejects.

"I have used the opportunity again to remind creditors, in particular China, of their own responsibility," Lindner said.

"Not every creditor nation is equally ready to take more of a position of transparency. It's regrettable that China did not accept the invitation to participate in the G7 roundtable with African countries. This will be noted and addressed."

Reporting by Andrea Shalal; writing by Matthias Williams; Editing by Miranda Murray and Andrew Heavens

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