German Chancellor Merkel makes twelfth visit to China in fourteen years

Delegation of 25 high-profile business leaders keen to further deepen ties with China accompanied her as fears mount that Germany is slipping into a technical recession

ANGELA Merkel has made a twelfth visit to China in her fourteen years as German Chancellor, underlining the importance of the economic ties between the two countries.

This was also reflected by the high-profile makeup of the 25 strong delegation of business leaders that she took with her. They included Christian Sewing of Deutsche Bank, Allianz insurance boss Oliver Bäte, Ola Källenius of Daimler, Rudolf Staudigl of Wacker Chemie, Stefan Schulte of Fraport, Oliver Zipse of BMW and Herbert Diess of VW.

The German business sector is keen to further deepen ties with China, especially at a time when the domestic economy is struggling. GDP growth came in at minus 0.1% for the second quarter, and there are fears that Germany is slipping into a technical recession (two negative quarters in a row).

Against this background, German journalists on the trip reported that the business delegation was mindful of not pressing too hard on sensitive issues - though Merkel did address issues of concern, speaking out in support of One Country, Two Systems and the need for dialogue to achieve solutions. She also spoke about the need to combat climate change. 

The visit was overshadowed by the US-China trade war, where Germany is stuck in the middle. It wants to preserve good relationships with both sides, whilst arguing in favour of global free trade.

During a meeting at the Great Hall of the People in Beijing, a succession of agreements were signed between Chinese and German companies, as Chancellor Merkel and Chinese Premier Li Keqiang looked on.

Insurance giant Allianz has plans to cooperate more closely with the Bank of China, while manufacturing company Voith intends to produce electric buses together with the Chinese railway manufacturer CRRC. There was also an agreement between Siemens and State Power Investment Corporation under which they will jointly design gas turbines.

In addition, Airbus reaffirmed its commitment to its long-term strategic partnership with China’s aviation industry, via a new agreement with Aviation Industry Corporation of China (AVIC) to deepen industrial cooperation on Airbus single-aisle plane production.

The cooperation with AVIC will enhance Airbus single-aisle aircraft (A319/A320) fuselage equipping in Tianjin, China. The first delivery of a China-equipped Airbus single-aisle aircraft (A319/A320) fuselage is scheduled in the second quarter of 2021.

Meanwhile Deutsche Post subsidiary Streetscooter signed a basic agreement with Chery Holding Group for the development of electric delivery vans for use in China.

Production is set to start in 2021, with an initial goal to produce 100,000 units. Market forecasts suggest that the number of electric delivery vans in China could rise to more than 900,000 units by 2025.

Chancellor Merkel also met with President Xi Jinping in Beijing before visiting the city of Wuhan in Hubei Province. Wuhan is an important location for German companies, and is twinned with Duisburg, a strategic terminus for freights trains

In Wuhan she attended the opening ceremony for a factory built for auto parts supplier Webasto.

Speaking to students at Huazhong University in Wuhan, Merkel called on the international community to work together to promote climate protection. She added that because of China's size, it will have to make an important contribution.

Other EU countries were skeptical about Merkel’s visit due to concerns that the strong bilateral relationship between Germany and China will undermine efforts to establish common EU positions. These include EU backing to support so called European Champions to take on Chinese state-owned industrial companies globally.

Train manufacturer CRRC recently announced an agreement to buy the Vossloh diesel locomotive factory in Kiel, northern Germany, and it remains unclear whether this investment will be reviewed.

French Minister of the Economy and Finance Bruno Le Maire has already spoken out against the Vossloh deal being allowed to proceed.

And Merkel's trip to Beijing would not have been complete without some sniping from Washington, with Senator Lindsey Graham (South Carolina), an important Congressional ally of President Donald Trump, tweeting his concerns about the makeup and timing of the visit.

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Date

11 Sep 2019

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