By Thomas Escritt and Michelle Martin
BERLIN (Reuters)

Germany and China signed a raft of commercial accords worth some 20 billion euros (£17.8 billion) on Monday, with their leaders reiterating commitments to a multilateral global trade order despite a looming trade war with the United States

The deals, involving German industrial giants such as Siemens, Volkswagen and BASF, come with the two leading exporting powerhouses being forced into an unlikely alliance in defence of the open global trade on which both their economies depend.

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang shake hands at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang shake hands at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Fabrizio Bensch

 

Speaking at a news conference alongside Chinese Premier Li Keqiang, Chancellor Angela Merkel said: “We both want to sustain the system of World Trade Organization rules.”

Li stressed the need to fight protectionism, saying China needed a stable and peaceful framework so it could develop further, and that was only possible with free trade: “We are against unilateralism – we are in favour of free trade.”

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang attend the plenary session at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang attend the plenary session at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

German Finance Minister Olaf Scholz agreed with Chinese central bank chief Yi Gang that German banks would promptly get market access in the financial sector in China, newspaper Handelsblatt cited sources involved in their meeting as saying. No one at the German Finance Ministry was immediately available to comment when contacted by Reuters.

Handelsblatt also cited the sources as saying China’s government had said that German companies and institutions would soon be able to issue bonds in renminbi in China.

 

German Chancellor Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

Merkel said she hoped a Sino-European summit on July 16-17 would bring about progress on protecting investments and added: “I also hope that Germany and China can make a contribution towards ensuring that the world does not end up blundering into a spiral of trade conflicts.”

European officials have said China is putting pressure on the EU to issue a strong joint statement against President Donald Trump’s trade policies at that meeting.

 

QUALITY DEALS

Merkel said the deals reached with China were of a “new quality” and while China was a developing country, it was also a “really tough and very ambitious competitor” for Germany.

 

German Chancellor Angela Merkel shakes hands with Chinese Prime Minister Li Keqiang at the chancellery in Berlin
German Chancellor Angela Merkel shakes hands with Chinese Prime Minister Li Keqiang at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

Li said China is prepared to open up its insurance and bond markets to foreign investors and has in place intellectual property guarantees to ensure that German companies need not fear losing proprietary technologies if they operate there.

German companies and politicians have complained that Germany has been more open to Chinese firms than the other way around. Merkel welcomed the opening of China’s financial markets but called for Beijing to open its markets further.

 

 

The deals agreed on Monday included BMW planning to source 4 billion euros’ ($4.7 billion) worth of battery cells from Chinese battery maker Contemporary Amperex Technology Ltd 300750.SZ (CATL) over the next few years.

That comes at a time when there have been warnings that Europe’s lack of its own production capabilities for the cells that power electric cars could leave its car industry exposed and too reliant on others.

The two leaders also expressed continuing support for the 2015 nuclear non-proliferation deal with Iran that was rejected by U.S. President Donald Trump, with Li warning of “unforeseeable consequences” if the agreement falls apart.

 

(Additional reporting by Paul Carrel, Riham Alkousaa and Andreas Rinke; Writing by Thomas Escritt and Michelle Martin; Editing by Mark Heinrich and Peter Graff)

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang and members of German and Chinese cabinets pose for a family photo at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang and members of German and Chinese cabinets pose for a family photo at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Fabrizio Bensch

 

Chinese Prime Minister Li Keqiang gestures before signing the treaties with German Chancellor Angela Merkel at the chancellery in Berlin
Chinese Prime Minister Li Keqiang gestures before signing the treaties with German Chancellor Angela Merkel (not pictured) at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang hold a news conference at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang hold a news conference at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang attend the plenary session at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang attend the plenary session at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang shake hands at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang shake hands at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Fabrizio Bensch

 

German Chancellor Angela Merkel shakes hands with Chinese Prime Minister Li Keqiang at the chancellery in Berlin
German Chancellor Angela Merkel shakes hands with Chinese Prime Minister Li Keqiang at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Fabrizio Bensch

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang wave as they review the guard of honour at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke

 

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin
German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang review the guard of honour at the chancellery in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke