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German industry demands tougher line on "partner and competitor" China

Reuters  |  BERLIN 

By Michael Nienaber

(Reuters) - Germany's influential industry association has called on the to adopt a tougher policy towards and urged companies to reduce their dependence on the Chinese market as concerns mount over price dumping and

The tougher tone is the latest sign that policymakers and business managers in are becoming increasingly worried about as a competitor and its state-driven economic model.

In a paper presented on Thursday, the stressed that German firms need as a market, but sounded the alarm about Beijing's reluctance to open up access and made 54 demands to and to help.

"should in its own interests further open its domestic market and properly implement its long-announced economic reforms," said.

The paper, first reported by in October, called for the EU to create a stronger economic framework for its own internal market to bind firms from non-market economies to its own liberal economic system.

"For the EU, it is more important than ever not only to spell out the importance of its own system and values internally but also to offensively represent them externally," said the BDI.

Among its demands are toughening up EU subsidy rules. Non-European firms that receive state subsidies should not be able to sell their products in the bloc without restrictions. It also called for more EU investment in infrastructure and innovation.

As Germany's main business lobby group, the BDI's views carry weight and feed into government policy decisions.

The welcomed BDI's call to make German and European companies more competitive, but it also said that any differences with China must be solved through dialogue.

"China and have very close and advantageous trade relations that allow us to address unequal rules of competition for our companies in the respective markets in a continuous dialogue process," an spokeswoman said.

"At the same time, we are increasingly looking to better protect and strengthen sensitive German and European business sectors from state-run strategic overseas acquisitions."

last month agreed new rules to lower the threshold for screening and even blocking purchases of stakes in German firms by non-Europeans, in a move to fend off unwanted takeovers by Chinese investors in strategic areas.

PARTNER AND COMPETITOR

Bilateral trade between and China hit a record 187 billion euros in 2017, almost 30 percent of total EU trade with the Asian giant. Some of the country's biggest companies, including and BMW, rely heavily on the rapidly-growing market.

The BDI paper, entitled "Partner and Systemic Competitor - How to cope with China's state-driven economic model?", stresses that China remains an important market.

"Nonetheless, it is generally sensible for the German industry to maintain diversified trade relations and make investment decisions," it said.

"Too much dependence on a single market always involves political and economic risks that must be minimized."

However, not everyone agrees that taking a tougher stance against China is the best strategy.

Germany's of Industry and Commerce, which estimates that some 900,000 jobs in Germany depend on exports to China, cautioned against more confrontation.

"The BDI position paper on China brings another tone into the debate," DIHK said. "But we always have to keep in mind that China is our most important trading partner. So every word should be weighed carefully."

Those close ties were illustrated by Volkswagen's plan to invest billions of dollars in over the next few years, part of a $300 billion surge by global automakers with nearly half of the money targeted at China.

"The future of will be decided in the Chinese market," said Herbert Diess, of VW, which has decades-old joint ventures with two of China's largest automakers.

(Reporting by Michael Nienaber; Additional reporting by and Reinhard Becker; Editing by and Catherine Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 10 2019. 21:44 IST
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