By Joseph Horch, International Business Writer
Outspoken German economy minister Sigmar Gabriel has had an interesting week.
A week after his ministry pulled approval for Fujian Grand Cip Investment Fund (FGC) to buy chip equipment maker Aixtron, citing U.S.intelligence officials warning Germany that the sale would give the Chinese technology that could be used for military purposes.
Hours later the minister, accompanied by a political and business delegation of 50, landed in Beijing.
Shortly after landing Mr. Gabriel met with Chinese Commerce Minister Gao Hucheng. However, the two ministers then canceled a joint appearance at a business conference. The canceled meeting has raised questions over whether the deal would cause further strain in German and Chinese relations.
In German daily Frankfurter Allgemeine Zeitung, China’s ambassador to Germany, Shi Mingde, blamed the Germans of “mounting protectionist tendencies…:”
“It is not understandable that China’s investment activity in Germany, which is just beginning, should already be facing barriers,” Mr. Shi wrote, according to extracts of the article released Tuesday, pointing out that Chinese investments in Germany amounted to 0.3 percent of total foreign investments in the country. “Germany is sending the wrong signals to China and to the world.”
Tensions between the two powers have been mounting in recent months, with the attempted Aixtron deal being one of several contested deals.
Berlin’s revocation of approval for the Aixtron deal, which had been granted Sept. 8, came as German regulators are also scrutinizing a takeover of Osram Licht AG’s light bulb and LED business—the world’s No. 2 lighting maker—by China’s Sanan Optoelectronics Co.
Berlin in June tried to head off a $5 billion bid for German robotics firm Kuka AG from Midea Group of China by orchestrating a European counterbid. Despite exhortations from Prime Minister Angela Merkel, no offer emerged and Midea acquired Kuka in August.
It is widely believed that Chinese investors want access to German engineering and manufacturing insights. Although, some in Germany, Europe and America suspect that use of these technologies could be used for military purposes.
The Chinese critique of Germany being over-protective is quite ironic. While Chinese firms, often state owned, can easily invest in private European firms, it is increasingly difficult for outside firms to invest in Chinese firms. Often times in order for an outside firm to invest in a Chinese firm the outside firm must enter in a joint venture with a state owned company.
Beijing has pledged to lift restrictions thus allowing more access to foreign companies.
However, critics are quick to point out that China has failed to meet its promises and point out that Beijing has made it increasingly difficult to access the market.
A version of this article appeared in the Tuesday, November 8th print edition.
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