Germany's Schroeder Cements China Ties with Deals

BEIJING (Reuters) - German Chancellor Gerhard Schroeder beefed up political and economic ties with China on Thursday, praising President Jiang Zemin (news - web sites) for his stand against terrorism and watching the signing of a slew of business deals.

Schroeder then left Beijing for an unprecedented private trip with Premier Zhu Rongji to the northeastern city of Dalian in another sign of the increasingly warm relationship between Europe's largest economy and Asia's fastest growing.

Schroeder kicked off his three-day visit to China, the last leg of a week-long Asian tour, by presiding with Zhu over the signing of agreements worth a potential $4 billion between German and Chinese firms.

The largest were a deal with petrochemical giant BASF AG to move ahead with a $1 billion joint venture and an investment by Bayer AG in a chemical park near Shanghai.

On Thursday, Chinese and German business leaders signed another 29 agreements, including at least $350 million worth of equipment sales by telecommunications gear maker Siemens, at a high-tech forum attended by Schroeder.

The deals were designed to help Germany position itself for access to China's potentially huge market after its entry to the World Trade Organization (news - web sites), expected late this year, analysts said.

For its part, China sees Germany as a key source of foreign investment and technology transfers, but also as an important political counterbalance to the United States.

The official Xinhua news agency said Jiang and Schroeder discussed issues including the international war on terrorism, the Euro, global economic slowdown and Taiwan.

Jiang repeated China's position that it was opposed to all forms of terrorism and supported action against terrorism under the principles of the United Nations (news - web sites) charter.

``No matter who uses terrorism, they should all be punished, and we should comprehensively strike against terrorist activities,'' it quoted Schroeder as saying.

But Xinhua did not mention the U.S.-led assault on Afghanistan (news - web sites), for which Schroeder sought support during his stops in Pakistan and India.

German Defense Minister Rudolf Scharping said on Thursday he was in favor of the United States continuing limited attacks on Afghanistan through the Muslim fasting month of Ramadan that begins in two weeks.

Schroeder also avoided mentioning the attacks in a speech at Peking University earlier on Thursday.

He said Germany had refused to supply engines for submarines which the United States offered to sell to Taiwan, the island Beijing regards as a rebel province and a supremely sensitive issue.

But he steered clear of other sensitive issues, such as China's call for international support for its campaign against ethnic Uighur Islamic separatists in its northwestern region of Xinjiang.

The China Daily, the official English-language newspaper, carried a front-page story quoting Zhu telling Schroeder Uighur separatists should also be targets of the war on terrorism.

Several Uighur independence activists are based in Germany after migrating there from Turkey, which has strong historical links with the Turkic-speaking Uighurs.

A spokesman for Siemens said the company had signed a deal to sell power transmission equipment to China's giant State Power Corp worth more than $300 million.

China Unicom, the country's second-largest cellular carrier, had agreed to buy Dense Wave Division Multiplexing (DWDM) fiber optic transmission equipment worth $50 million, he said.

The German company had also signed a cooperation agreement to develop a third generation (3G) cellular technology called TD-SCDMA with Chinese telecoms gear maker Datang Telecom Technology, he said.

Siemens and Chinese telecommunications regulators have billed the technology as a homegrown standard Chinese cellular carriers may use for 3G upgrades -- expected in 2003 or later.

Schroeder was due to fly to Shanghai on Friday after spending the night in Dalian on an intimate getaway reciprocating a dinner the Schroeders hosted for Zhu and his wife at their home in Hanover, Germany in July 2000.

Germany puts its trade with China last year at more $25 billion, up about 35 percent from 1999.

In the first seven months of this year, Germany's imports from China, its second biggest trading partner in Asia, rose 11.1 percent year-on-year to 21 billion marks, while exports to China jumped 40 percent to 13 billion marks, the German embassy said.

Stronger trade relations with Germany could not come at a better time for China, whose resilient economy is beginning to feel the effects of the global economic slowdown in the wake of the September 11 attacks on the United States.

Xinhua quoted Schroeder praising China's stand against terrorism.

``No matter who uses terrorism, they should all be punished, and we should comprehensively strike against terrorist activities,'' it quoted Schroeder as saying.

Reminds me of an ancient Chinese Sun Tzu text which talked about getting your enemies to fight, creating a diversionary situation, and then closing financial, economic and political deals while everyone one is looking the other way. It's the old story about the "Japanese Fighting Fish," how one waits for two to fight, and then attacks the victor, and creams it when it gets tired.

What with the multi-billion dollar Boeing deals, ad nauseaum, it looks like China's the only one benefiting from this mess. I mean, the U.S. is in chaos, the Mid-East is in turmoil, Pakistan has it's nuts on the guillotine, India is being eyeballed by both Pakistan and China, Afghanistan is getting pounded. Communist China however, is making out like a bunch of Communist bandits. Heaven help us.

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