Germany's Gabriel, in Beijing, squares up to China over trade policy

November 1, 2016 3:56 AM EDT

State Secretary at the German Ministry for Economic Affairs Matthias Machnig attends a meeting with Chinese counterparts after German Economy Minister Sigmar Gabriel canceled his attendance in Beijing, China, November 1, 2016. REUTERS/Thomas Peter


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By Gernot Heller

BEIJING (Reuters) - Germany's outspoken economy minister Sigmar Gabriel made plain his concerns about Beijing's trade policies in talks with Chinese government officials on Tuesday marked by tensions over corporate takeovers.

"We didn't mince our words - on either side," Gabriel told reporters after meeting Chinese Trade Minister Gao Hucheng.

Germany is particularly concerned about China dumping its excess steel overseas at cut prices, and about restricted access to the Chinese market for German firms, he added.

Gabriel ratcheted up tensions with Beijing ahead of the trip with 60 business executives by putting the brakes on the latest Chinese takeovers of German technology companies.

The German minister, who leads the left-leaning Social Democrats (SPD) and is also vice chancellor, was forced to dismiss speculation of a row with the Chinese after cancelling an engagement after his meeting with Gao.

The two men had been due to give the opening speeches at a German-Chinese Economic Committee after their meeting but canceled at the last minute.

Gabriel said this was because their meeting overran and he did not want to jeopardize his following appointment, with Chinese Premier Li Keqiang. "I suggested that myself," he said of the schedule changes, which saw German state secretary Matthias Machnig step in for Gabriel.

"I don't see that as an affront," Machnig added of Gabriel's no-show for his speech. "That won't put too much of a burden on German-Chinese relations."

Gabriel's trip comes a week after his ministry withdrew approval for Fujian Grand Chip Investment Fund (FGC) to buy chip equipment maker Aixtron, citing new security concerns.

"The process with Aixtron has no political motive," Machnig said. Asked if the Chinese raised the Aixtron issue in Tuesday's talks, Gabriel replied: "No".

The German government is also scrutinizing the sale of Osram's general lighting lamps business Ledvance to a consortium of Chinese buyers.

Adding to the awkwardness in Berlin's relations with Beijing, Germany's EU commissioner was forced into playing down remarks he made about the Chinese ahead of Gabriel's visit.

In a speech he gave in Hamburg last month, Guenther Oettinger, a senior member of Chancellor Angela Merkel's conservatives, used the derogatory term 'Schlitzaugen' - slit eyes - to describe people from China and other Asian descent.

Germany has benefited from China's rapid expansion - its automakers, in particular, enjoy access to the world's largest car market. But they complain they are only allowed to manufacture cars domestically in China through joint ventures with local partners.

While Beijing has repeatedly pledged to increase market access for foreign firms, critics accuse it of not following through on its reform agenda and introducing new regulations that are restricting market access even further.

(Writing by Paul Carrel; Editing by Tom Heneghan)



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