BACKGROUND
Sino-German Relations
1.
Chancellor Kohl will have just returned from a one week trip to China, visiting Peking, Shanghai, Canton and exiting through Hong Kong. The main aim of the trip will be to boost Germany's exports, particularly in the high technology sector, and to encourage German investment in China. The visit will be seen as a success for Chinese diplomacy, but at the same time reflects Kohl's personal commitment (encouraged by Economics Minister, Klaus Kinkel) to building up ties with China and the region in general.
2. On 22 September, the German Federal Cabinet approved a new overall strategy for Asia, based on a paper ordered by Chancellor Kohl following his previous trip to the region. The main points are:
- that Germany needs an active Asia policy to further its political and economic objectives
that Asian cooperation is necessary for world peace and for the achievement of global environmental objectives
- that human rights and pluralism cannot be encouraged against the opposition of the Asians themselves
- that the Germany economy is under-represented and must increase its direct investment in order to act as a counterweight to USA and Japan. Target countries include Japan, China, Korea and Vietnam.
3. Germany has long been the EC's leading trading partner with China, although levels of direct investment have been lower than those for UK. Over the period January-July 1993, German exports to China rose 86% to DM5.6 billion. UK exports rose 95% over the same period to £218 million.
4.
The
Germany has been particularly successful in the power generation, petrochemical and process plant sectors. German bid for the Canton Metro rolling stock contract is the main rival to UK's bid. Following the UK's initiation of aid (at 35% concessionality), the German Government submitted a much higher aid offer (68%) just ahead of Kohl's visit
(probably in the hope that the contract would be awarded to Germany during the visit). UK has now matched the German
offer.
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