China Trade

Merkel, Li affirm belief in free trade as they sign cooperation ventures

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A friendship made stronger by Trump. Source: Reuters

Chancellor Angela Merkel was happy to proclaim the importance of free trade with visiting Chinese Prime Minister Li Keqiang as both countries face punitive tariffs from the United States. Even German firms are affected in the trade war between the US and China, Ms. Merkel noted. The US has also imposed tariffs on the EU and is threatening more, essentially driving Germany and China closer together.

“We are interested in smooth-functioning trade,” Ms. Merkel said at a joint press conference with Mr. Li during the fifth German-Chinese government consultations. But Ms. Merkel also gently reminded her visitor of German concerns about liberalization of the Chinese market and human rights in China.

China has paid lip service to opening its markets, but has been slow to implement any measures, much to the frustration of German companies seeking to invest and sell in China. German business has been clamoring for quicker action.

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However, the agreement for BASF to invest €10 billion in a chemical complex in China and retain total ownership marked a step forward. Such major projects must usually have a Chinese partner. The investment was one of 22 projects agreed upon at the meeting.

“We have worked intensively,” Ms. Merkel said. She praised the agreements for German automakers to work together with China on autonomous driving as well as China’s investment in a major battery factor in Germany. Other projects approved at the meeting were a strategic cooperation between machine maker Voith and Chinese rail manufacturer CRRC, another between SAP and Suning Holdings, and the joint development of a high performance gas turbine by Siemens and State Power Investment.

Mr. Li’s entourage also hinted that German banks would soon have greater access to China’s financial markets, government sources told Handelsblatt. And German companies and institutions may soon be able to issue Panda bonds — renminbi-denominated bonds from foreign issuers.

The prime minister, however, rejected the charge that observance of human rights has worsened. Rather the opposite, he claimed, despite the German government’s human rights commissioner, Bärbel Kofler, complaining ahead of the meeting about China’s crackdown on its critics in civil society, notably human rights lawyers, journalists and bloggers.

Also prior to the meeting, representatives of the Uighur minority in northwest China called upon the chancellor to intercede with Mr. Li about the country’s persecution of the Turkic Muslim ethnic group. However, it was the two countries’ interest in finding common ground in the wake of the US’ tariffs that took priority over opposing views held by the leaders.

Several Handelsblatt reporters contributed to this article. Darrell Delamaide adapted it into English for Handelsblatt Global. To contact the author: d.delamaide@extern.handelsblatt.com

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