Sigmar Gabriel's delicate China mission

Germany's Economics Minister Sigmar Gabriel, accompanied by a large business delegation, is in China for a five-day visit. The trip has plenty of potential for conflict.

Sigmar Gabriel is no master of diplomacy. The economics minister, deputy chancellor and leader of the Social Democratic Party is famous for his blustering belligerence and for speaking his mind point-blank.

But will his style go down well in China?

 "It's important not to come across as stand-offish, but in China, too - we should appear as self-confident," Gabriel said in a newspaper interview ahead of the Chinese trip. "No one takes cowards or cajolery seriously."

Gabriel holds talks in Beijing, Chengdu and the special economic area of Hong Kong, where the economics minister is scheduled to open the Asia-Pacific Conferenceof German Business(AKP) on Thursday before returning to Germany on Saturday.

China Besuch Merkel in Peking bei Li Keqiang

In June in Beijing, German Chancellor Angela Merkel stressed the importance of continued cooperation with China

With almost 1,000 participants, including the prime minister of Sri Lanka, the New Zealand trade minister and the industry minister of Thailand, it's the largest German business conference outside of Germany. The Hong Kong conference, however, is likely to be much less taxing than the political talks planned for on Tuesday and Wednesday in Beijing and Chengdu respectively. While Chinese Trade Minister Gao Hucheng, the Chairman of the National Reform and Development Commission Xu Shaoshi, the Minister for Industry and Information Technology Miao Wei, and Deputy Prime Minister Ma Kai are all meeting with Gabriel, it is unclear whether Prime Minister Li Keqiang will make time for the guest from Germany.

Ahead of the visit, the Chinese leadership made clear its "great concern" about developments in Germany. Beijing is indignant that Gabriel recently stalled the takeover by Chinese investors of the German Aixtron tech firm. 

Fair market access 

Until then, things had run smoothly for the Chinese side in the first half of 2016: China snapped up 40 German firms, along with six minority-stake investments. The takeover of the Augsburg-based Kuka robot manufacturer  just a few months ago was regarded as a highlight.

Now, it seems the Germans are fed up. Unease at the speed at which China is investing in the German market has turned into outright rejection. These business relations are not mutual after all: German firms find it increasingly difficult to buy or create firms in isolated China.

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Germany seeks to slow Chinese acquisitons

"I fully understand that China doesn't want to be an extended workbench but wants to create its own value, and technology," Gabriel said, adding that can only happen with fair rules.

Rules regulating investment, market access and competition that all parties adhere to are a precondition for trade growth, he argued, "and that is the problem."

Gabriel also said Germans want to know who the buyers are, and what political and business interests they have. "We must protect ourselves from any unfair competition."

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German industry wants to expand

From a German point of view, China has moved from partner to competitor, and the German government will have to find a way to come to terms with that fact. Officially, the China trip aims to promote fair competition and strengthen economic ties - which may prove to be difficult as China is already accusing Germany of protectionism, openly protesting each and every effort to curb Beijing's plans to expand in the European market.

Just hours ahead of Gabriel's arrival on Monday, the Chinese foreign ministry summoned the German envoy in Beijing and handed him an official note of protest. Criticism can hardly be more blatant.

German industry has also been putting pressure on the economics minister - no one can afford to be on the sidelines of the Chinese market. The delegation headed to China with Gabriel includes 60 top managers, heads of medium-sized companies and start-up founders.

There are no plans to sign contracts, and the Aixtron takeover isn't on the agenda, either. "Concrete cases of possible company takeovers in Germany are in no way connected with the visit," the official program concludes. But unofficially, it's bound to play a role.