Li presses for market status; Merkel calls for more talks

Dr Merkel's visit to Beijing included talks with President Xi Jinping.
Dr Merkel's visit to Beijing included talks with President Xi Jinping.PHOTO: EUROPEAN PRESSPHOTO AGENCY

Both leaders spar over trade and investment, but still ink hefty business deals worth $20b

Chinese Premier Li Keqiang sparred openly with visiting German Chancellor Angela Merkel over trade and investment, in a rare public display of differences as both sides inked hefty business deals.

Top of the agenda for Dr Merkel's three-day visit from Sunday was the issue of whether the European Union should grant China the market economy status. This would make it harder under World Trade Organisation (WTO) rules for the 28-state bloc to impose the anti-dumping tax on Chinese imports.

At the two leaders' joint press briefing after their meeting yesterday, Mr Li said China has fulfilled its obligations under the WTO and "what is needed now is for the other parties to fulfil the matching obligations they had promised".

"We don't want to fight a trade war because this will benefit nobody," he added.

China had agreed to be treated as an "economy under transition" for 15 years when it joined the WTO in 2001. This allows WTO members to use third-market comparisons to decide if Chinese products are being "dumped" at below production costs, through state subsidies.

Beijing believes the EU should grant it market status upon the expiry of the provision at the end of this year. But there has been widespread reluctance to do so among EU members, fearing the impact of low-priced Chinese imports such as steel and solar panels on their industries and jobs.

China views Germany - its largest trading partner in the EU - as its most influential ally in the bloc and its strongest advocate when the EU debates the market status issue in late June or July.

Dr Merkel, who is making her ninth visit to China since taking office in 2005, yesterday called for calm and more talks on this issue.

"It does not help us to emotionalise the whole subject. I am convinced that we can find a solution on the lines of what was promised 15 years ago," she said.

The two leaders also exchanged words on how open the Chinese market has been towards foreign companies.

"Germany has always presented itself as an open investment market," she said, adding that "we expect reciprocity also from the Chinese side".

But Mr Li said "the facts prove that China's market is open".

"We will be even more open. We will take even more steps based on the principles of treating everyone equally, (with) fairness and transparency," he added.

Dr Merkel also commented on the South China Sea territorial spats between Beijing and several Asean states, reiterating her past calls for resolution through arbitration in international courts.

The German leader's visit included a joint Cabinet meeting and talks with Chinese President Xi Jinping.

China and Germany deepened business ties yesterday, inking 96 deals worth US$15 billion (S$20 billion), including one where German carmaker Daimler AG and Chinese partner BAIC Motor will jointly invest 4 billion yuan (S$823 million) to expand engine production.

A version of this article appeared in the print edition of The Straits Times on June 14, 2016, with the headline 'Li presses for market status; Merkel calls for more talks'. Print Edition | Subscribe