Merkel to host Li for export power summit

BERLIN (AFP) ― China’s Premier Li Keqiang will hold talks with German Chancellor Angela Merkel on Sunday as the close economic partners seek to weather a brewing trade spat between Beijing and the EU and forge deeper ties.

The new premier’s three-day visit to Germany, by far China’s biggest European trading partner, indicates Beijing’s wish to continue its special partnership with Europe’s biggest economy, analysts say.

After visiting Switzerland to ink an accord paving the way for a landmark free trade deal with the Alpine nation, Germany is the only stop among EU member states on Li’s maiden foreign tour, which last week also took in India and Pakistan.

Li, in a speech to business and financial leaders in Switzerland on Friday, slammed the EU for plans to probe China’s telecom products and impose taxes on its solar panels, Chinese state media reported Saturday.

Cited by Xinhua news agency, Li said the planned measures would “not only cause serious damage to related industries, enterprises and employment in China, but will also hurt the personal interests of users and consumers in Europe.”

Merkel will greet Li with military honors at her Berlin chancellery and afterwards hold talks set to cover the “whole breadth of our very intensive relations,” including trade, her spokesman said.

“We must try for Europe and China to find ways for amicable agreements, fair agreements on these (trade) issues which both sides can live with,”

Steffen Seibert told a regular government news conference Friday.

The German-Chinese trade relationship is an “almost perfect symbiosis,” based on mutual need but is set to change, according to Germany expert Hans Kundnani, of the European Council on Foreign Relations.

While German motor vehicles and auto parts, machinery and electrical goods find a vast export market in the world’s second-largest economy, China needs technology from Germany.

German exports to China amounted to 66.6 billion euros ($86 billion) last year, according to official German data.

“German manufacturers are increasingly going to be squeezed, I think, by competition from China, and you are starting to see that already,” the London-based expert said.

As both the EU and China suffer the knock-on effects of a sharp economic slowdown, a slew of looming trade disputes ― over telecoms, solar panels and steel tubes ― has turned up the heat.

Germany’s Handelsblatt business daily pointed to the impact that poor Chinese manufacturing data wreaked on world stock markets this week, including a more than seven-percent drop in Tokyo, a major trade partner.

“When an economic indicator can already trigger such a tremor on the stock markets, what’s lurking for the world economy if there’s a trade war between China and Europe?” the paper fretted.

Punitive tariffs being mulled by the EU on imports of Chinese solar panels would be “a wrong political signal, a new step towards protectionism,” China’s ambassador to Berlin Shi Mingde told the paper.

But Kundnani said he did not expect the solar panel spat to cast too big a shadow over the talks.

“I think both sides are trying to avoid conflict at almost any cost because their economic stake and other stakes are pretty high,” he said, highlighting Economy Minister Philipp Roesler’s criticism of the threat to impose an anti-dumping levy due to concerns for the German economy.

Germany may fear the consequences of a trade war on other sectors.

Volkswagen, Europe’s biggest carmaker, announced in March that it planned to open seven more factories in China, VW’s single biggest market where last year it delivered 2.81 million vehicles.

For China, Germany’s importance extends beyond economic ties as it warily eyes the U.S.

“The Chinese are thinking about whether a ‘German Europe’ is emerging from the euro crisis just as we are,” Jonas Parello-Plesner, also of the European Council on Foreign Relations, said.

“They increasingly see Berlin as the place to go to get things done.”

After Merkel visited the Forbidden City on her second visit to Beijing within seven months last year, Li’s two-day program begins with a trip to the Cecilienhof palace in Potsdam, where Soviet, US and British leaders met in 1945 to help shape post-war Europe and Asia.

Chinese dissident artist Ai Weiwei, who was detained for 81 days in 2011, hopes Merkel will push for better treatment in China of critical intellectuals in her talks with Li, according to the German DPA news agency.

“At German-Chinese meetings, human rights issues are in fact, regardless of the level, always also an important component,” Seibert told reporters.