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Asia markets tentative ahead of Opec meeting

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

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Categorized | Economy

Merkel to court Chinese investors

Posted on January 31, 2012

Angela Merkel, the German chancellor, flies to China on Wednesday to explain Europe’s crisis management in the eurozone, and woo Beijing and Chinese financial institutions to invest in Germany and the wider common currency area.

“The chancellor will be seeking to gain the confidence of financial investors,” a senior German official said on the eve of her departure for an official visit to Beijing and Guangzhou. “China also has an interest in seeing confidence growing in the European economy.”

High on the agenda of the chancellor will be to spell out the decisions taken by European Union leaders at a summit on Monday to lay down strict budget rules for the 17 eurozone partners in a formal treaty, and commit themselves to structural reforms to boost growth and competitiveness in Europe’s sluggish economies.

At talks with both Hu Jintao, the Chinese president and Communist party leader, and Wen Jiabao, the prime minister, Ms Merkel will seek Beijing’s support for boosting the resources of the International Monetary Fund to cope with the global financial crisis and invest in eurozone government bonds and bloc rescue funds, Berlin officials said.

“It is not the job of the chancellor to be an investment banker,” the official said. Her role was to restore confidence in Europe’s crisis management.

The German chancellor is also looking for the “constructive co-operation” of the Chinese government to curb any nuclear weapon ambitions that Iran may have and end violence in Syria.

She wants a reassurance that China will not increase its own oil imports from Iran to replace sales lost after the EU imposed sanctions on buying oil from Tehran.

“It is in Germany’s interest that China, an important importer of Iranian oil, should under no circumstances increase its imports,” another senior official said. “It would naturally be nice if China would even join the oil embargo or, alternatively, reduce its purchases.”

Although Ms Merkel will raise some longstanding complaints of German investors and exporters to China about forced technology transfers, lack of equal participation in public tenders and other market access issues, she is not expected to make a big issue of such questions. The chancellor will also raise concerns about the treatment of minorities in China.

“We don’t want to have a wailing wall this time but more of a dialogue on questions of substance,” one diplomat said.

The two-day trip, including meetings with Chinese bankers and businessmen as well as the Communist party leaders, is the fifth such visit by Ms Merkel to China in the past five years, underlining the increasingly close trade ties between the world’s two most successful exporting nations.

Her party will include some 20 business leaders as well as members of the German Bundestag and civil society.

The total volume of trade between the two countries reached €145bn in 2011, according to preliminary estimates, and China is now Germany’s second largest source of imports with sales of some €80bn. German exports to China increased 22 per cent last year, to €65bn, with booming sales of cars, chemicals, machine tools and electronic goods.

Ms Merkel will meet financial investors in Beijing, and deliver a speech on the eurozone crisis, before flying south to Guangzhou to meet investors, accompanied by Mr Wen. She is expected to meet some political critics, including artists and writers at a reception at the German embassy in Beijing.