By Andreas Rinke, Liz Lee and Colleen Howe BEIJING, Feb 25 (Reuters) - German Chancellor Friedrich Merz urged Chinese firms on Wednesday to step up investment in Germany but also called on Beijing to reduce market distortions as he began a visit aimed at resetting relations between the world's second- and third-largest economies.

During talks in Beijing, Friedrich Merz and Xi Jinping pledged closer cooperation even as Germany presses China on fair competition, raw material exports and its ties with Russia.

German Chancellor Friedrich Merz on Wednesday called for closer cooperation with China while pressing for fairer trade rules and urging Beijing to use.

Chancellor Friedrich Merz’s trip will test his ability to address tensions between the countries, at a time of strain between Europe and Washington.

BEIJING - China and Germany want to deepen co-operation, German Chancellor Friedrich Merz and Chinese Premier Li Qiang said in Beijing on Wednesday (Feb 25), as Merz began a visit aimed at resetting ties against the backdrop of a widening trade imbalance.

Before boarding his plane in Germany, Merz said he would seek to forge a “balanced, reliable, regulated and fair” partnership with Xi, adding that he would address China’s “export restrictions” and competitive “distortions”.