Trade tensions mount between Beijing and Berlin

Germany's Economy Minister Sigmar Gabriel, due to visit China today, has been critical of Chinese trade practices.
Germany's Economy Minister Sigmar Gabriel, due to visit China today, has been critical of Chinese trade practices.

Critics say China is buying up German firms but protects its own from foreign takeovers

BERLIN • Germany welcomes foreign takeovers of its companies, including from China, but needs to ensure that its firms are protected from unfair competition, according to a government spokesman.

Tensions over trade are mounting ahead of a visit to China by Economy Minister Sigmar Gabriel, starting today, during which he is due to meet Premier Li Keqiang.

Mr Gabriel has openly complained that China is strategically buying up key technologies in Germany, while protecting its own companies from foreign takeovers with "discriminatory requirements". Chinese enterprises bought a record number of home- grown tech companies this year, sparking fears of German know-how and intellectual property being sold off to the highest bidder. Chinese buyers spent a record €11 billion (S$16.8 billion) between January and last month, according to accountancy firm EY.

The wave of acquisitions has also stoked grumbles over China's easy access to the country's open markets, while foreign investors there face tight restrictions.

"Germans seem to be growing more and more sceptical about China and, consequently, more willing to pursue a tougher approach to Beijing," said analyst Hans Kundnani from the German Marshall Fund, a United States think-tank.

Yesterday, at a news conference in Berlin, government spokesman Steffen Seibert said: "The whole government is convinced that it is right that the market is open to investments from abroad, including from China." However, he added, "Germany, as an industrial centre, must... be effectively protected from unfair competitive situations".

Mr Gabriel was unable to block a Chinese buyer from taking over renowned robotics firm Kuka, but Berlin has re-opened a probe into a takeover bid for microchip maker Aixtron. US intelligence had warned Berlin that Aixtron's products could have military applications in China's nuclear programme, the daily Handelsblatt reported last week.

China's official Xinhua news agency accused Germany of "delusional 'China threat' paranoia" over the investigation.

A government spokesman said yesterday that China's policy to welcome and attract foreign investment remains unchanged. "China is willing to cultivate a fair and transparent investment environment for investors both at home and abroad, including those from Germany," the spokesman said.

Mr Gabriel's remarks follow a refusal at the weekend from Germany's European Commissioner Guenther Oettinger to take back comments in which he called the Chinese "slitty eyed" and "chisellers" who were unfairly buying up German and EU high-tech firms, while blocking deals in the other direction.

In an article in Die Welt newspaper, Mr Gabriel pointed to China's selling of subsidised steel abroad, a potential new quota system for electric cars, and Chinese acquisitions of German and European high-tech firms as causing concern in Berlin and across the European Union.

Despite an agreement for Beijing to address steel overcapacity reached at September's Group of 20 meeting in Hangzhou, Mr Gabriel argued that China continues to sell the metal at "dumping prices" on global markets in a "blatant infraction" of trade rules.

The European Commission had been forced to slap tariffs on some Chinese steel products in a "measure of last resort", he added.

REUTERS, AGENCE FRANCE-PRESSE, XINHUA

A version of this article appeared in the print edition of The Straits Times on November 01, 2016, with the headline 'Trade tensions mount between Beijing and Berlin'. Print Edition | Subscribe