Merkel Says Germany Open to Chinese Business as Stance Hardens

(Bloomberg) --

German Chancellor Angela Merkel told Chinese Premier Li Keqiang that Germany remained open to business even as her government raises barriers to investments in sensitive areas.

Germany’s tightened investment rules are meant to vet outside investors in strategic sectors, Merkel told reporters at a joint press conference with her Chinese counterpart in Beijing on Friday at the start of a two-day visit to China. Li pledged that China would further open its economy.

“Not every assessment means that every investment is blocked, rather in strategic or sensitive areas that have to be looked after -- still, Chinese investors are welcome,” Merkel said. She also urged an end to the China-U.S. trade war to return calm to global markets.

The chancellor faces a delicate set of policy objectives during the visit, in which she’s being accompanied by a delegation of some 25 business leaders, including executives from Volkswagen AG, Deutsche Bank AG and Siemens AG. The German leader is seeking to maintain a tougher stance with Beijing while urging a resolution of the trade war and continuing to press for reciprocal access to China’s lucrative market.

Germany is toughening its policy toward China on matters such as investment and intellectual property, joining governments from Japan to Canada and Australia taking a harder line on China as President Donald Trump steps up his trade war. But it’s an especially high-risk strategy for Berlin at a time when its export-dependent economy is flirting with recession.

The German leader said her goal is for trade relations with China to be an example for multilateral trade amid tensions in the global order. She cited the “urgency” of clenching an investment accord by the second half of 2020. That’s when Germany plans to host a an EU-Chinese leaders’ summit.

Indicative of Merkel’s balancing act is her approach to the unrest in Hong Kong. While her administration urged Beijing to engage in dialog and respect the rule of law, Merkel has declined an invitation to meet with protesters.

Hong Kong citizens’ “rights and freedoms must of course be guaranteed,” Merkel said alongside Li on Friday.

The visit got off to a bumpy start when Chinese authorities initially blocked German media based in Beijing from attending the Merkel-Li press conference, a government spokeswoman in Berlin confirmed. Only after the German government intervened were four local journalists allowed in, she said.

Adding to the awkwardness was the protocol during the military ceremony in front of the Great Hall of the People. While Merkel sat during the playing of the Chinese anthem, Li rose from his seat.

After a series of shivering fits during the summer, Merkel has resorted to sitting during military parades. All other leaders she has received since then, including U.K. Prime Minister Boris Johnson, had also remained seated.

Chinese state media advocated more open markets between Germany and China, stressing opportunities for cooperation ahead of Merkel’s visit, including areas such as climate change and trade.

“There is an urgent need for Germany and China to safeguard an open global economy and ensure that normal international trade should not be disrupted by protectionist tariffs,” the official Xinhua News Agency said in a commentary.

Merkel later met with Chinese President Xi Jinping, who hosted a dinner for the German leader. Xi told Merkel that China would continue to open its economy in sectors including manufacturing, services and finance, according to Xinhua.

--With assistance from Jihye Lee.

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net;Dandan Li in Beijing at dli395@bloomberg.net;Arne Delfs in Berlin at adelfs@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Raymond Colitt

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