German minister reassured over access to Chinese car market

November 2, 2016 9:00 AM EDT

German Economy Minister Sigmar Gabriel shakes hands with Chinese Premier Li Keqiang ahead of their meeting at the Great Hall of the People in Beijing, China, 01 November 2016. REUTERS/Wu Hong/Pool


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By Gernot Heller

BEIJING (Reuters) - Germany has received assurances that its car makers will not be discriminated against in China, its economy minister said in Beijing on Wednesday, a positive signal in a visit conducted amid strains in trade ties.

In talks with Chinese Industry Minister Miao Wei, Sigmar Gabriel discussed China's plans to set quotas for electric cars from 2018.

The German newspaper Sueddeutsche Zeitung cited a draft Chinese law as saying that manufacturers will have to produce a certain proportion of zero- or low-emission emission vehicles, starting in 2018, or else be forced to buy credits from other producers.

Some German firms have expressed fears that the quotas would restrict their market share and pose an extra hurdle for European firms in China.

Volkswagen and Daimler have been taking steps to expand capacity in China, where strong demand has helped to offset falling sales elsewhere - but their electric-vehicle production remains at a fledgling stage.

Gabriel said Miao had indicated that German fears of being excluded were unfounded, and said Miao had promised that any German car maker producing in China, the world's biggest auto market, would be treated on an equal basis with Chinese companies.

Gabriel also told reporters that German companies were not obliged to use Chinese suppliers.

JOINT VENTURES

Foreign auto brands are only allowed to manufacture cars in China through joint ventures with local partners, and typically are limited to two partners. VW already has joint ventures with SAIC Motor and China FAW Group.

VW, Europe's biggest car maker and one of the first global automakers to set up production facilities in China during the 1980s, signed a preliminary deal with China's Anhui Jianghuai Automobile (JAC Motor) only two months ago to explore making electric cars in a joint venture.

Before his trip with 60 German business executives, Gabriel had called for a more level playing field for foreign firms in China, but also pushed for EU-wide rules to block Chinese takeovers of key technologies.

Last month, his ministry withdrew approval for Fujian Grand Chip Investment Fund (FGC) to buy chip equipment maker Aixtron, citing new security concerns.

It has also reportedly blocked a Chinese takeover of Osram's light bulb unit Ledvance pending a review.

Thilo Ketterer, an M&A adviser at consulting and auditing firm Roedl & Partner who is currently in China, said the moves had unsettled Chinese investors he had met.

"They're not cancelling the deals but they wait. Because now, if they have a target, they know exactly that the German government will check it very carefully."

"SIGNAL NEEDED"

Chinese investments in Germany in the first half of the year were up 200 percent, according to a Bertelsmann Stiftung study published on Wednesday.

Chinese Premier Li Keqiang said both countries should "send out clear signals that both sides oppose protectionism", according to a statement posted on the cabinet website.

Separately, China said on Wednesday that German EU commissioner Guenther Oettinger's use of the derogatory term "Schlitzaugen" - "slit eyes" - to refer to Asians reflected a "baffling sense of superiority" among some Western politicians.

"We hope these people can learn ... mutual respect and equal treatment," Foreign Ministry spokeswoman Hua Chunying told a regular press briefing.

Oettinger, a senior member of Chancellor Angela Merkel's conservative party, had used the term in a speech to business leaders in Hamburg.

Oettinger said his remarks were "somewhat sloppy", but stopped short of apologizing, and rejected accusations of racism.

The news website Politico reported Oettinger as saying "There is nothing to apologize for" after being stopped on the street by a journalist in Brussels.

German government spokesman Steffen Seibert criticized Oettinger's remark indirectly.

"There were some passages in what was heard that were certainly not the chancellor's language or the way she chooses to express herself," he said. "Everyone must take care not to offend anyone with their language."

(Additional reporting by Sue-Lin Wong in Beiking and Georgina Prodhan in Frankfurt; Writing by Madeline Chambers, Andreas Cremer and Caroline Copley; Editing by Kevin Liffey)



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