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Business calls on Merkel to address Chinese economic fears - analysis

German Chancellor Angela Merkel travels to China and Japan Sunday with industry in Europe’s biggest economy hoping she will use her visit to address the negative picture that has emerged of Chinese business and economic life.

German business has called on the Chancellor to try to lay aside fears about “the threat posed by China,” Friedolin Strack, the coordinator of the Federation of German Industry’s influential Asia-Pacific Committee told Deutsche Presse-Agentur dpa. In particular, Strack said the main theme for industry of the Chancellor’s trip was attempting to overcome the perception of the threat that China’s burgeoning economy represented in terms of cheap labor as well as product safety. At the same time, Strack stressed the business possibilities that have opened up for German industry in Japan as the Japanese economic growth rate picks up. “There is enormous potential in Japan,” said Strack, who saw opportunities emerging for German companies in the world's second biggest economy in areas such as mechanical engineering, technology, cars as well as research and development. While German exports to China grew by 11.8% during the Q1, German exports to Japan sank 6.7%.

Apart from concerns about the transfer of jobs to China and other low-cost economies, Strack’s comments follow a round of reports which have raised questions about the safety of products manufactured in China, including the dramatic withdrawal from the US market of toys made in China. “We profit from (China’s) growth rate,” said Strack with China’s economy continuing to chalk up growth rates of about 10%. German industry hopes that Merkel will be able to address the concerns about China's business and economic life as part of her attempts to promote the fight against global warming. Merkel’s visit to what are Germany’s two leading trading partners in the Asian-Pacific region also comes as China emerges as a key pillar of the world economy and Japan’s economic growth continues to gain strength after a protracted period of stagnation.

Germany and China are now the world’s top two export nations with China having replaced the US in the number two spot earlier this year. China is tipped to dethrone Germany as the world’s export champion in the next two years. With this in mind, Merkel is to hold a series of meetings with top level industry leaders in both countries with the Chancellor accompanied on her trip by a 25-member German business delegation which includes a broad cross-section of companies from Europe’s biggest economy. Three key business contracts are to be signed during Merkel’s trip including the establishment by German truckmaker MAN AG of a new joint business in China.

In addition to seeking to intensify Germany’s economic ties with both Japan and China, Merkel also plans to raise with officials in Beijing the delicate issues of copyright piracy and intellectual- property rights. German industry has been pressing Berlin for some time about their concerns surrounding intellectual property rights in China and has been campaigning for more legal protection to guard against product piracy and to help promote innovation. That said, however, German officials said they believed China had made progress in terms of product safety adding that many Chinese companies now saw it as in their interests to make improvements. (monstersandcritics.com)