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Beijing and Berlin taking friendship to next level

China has long seen itself as being confronted by a dominant global power, either as enemy No 1 or chief competitor. Today, that role is played by the United States.

And under its united front strategy, Beijing is seeking friendly relationships with other powers to check and balance that dominant power and seek to build a multi-polar world.

That is why China has cemented harmonious relations with Germany, Europe's largest economy, in recent years. When German Chancellor Dr Angela Merkel arrives in Beijing today for a two-day visit it will be her fifth trip to China in five years.

'Among China's relations with major powers, the Sino-German one is the best,' said Professor Zhang Xiaojin, a European affairs expert at Tsinghua University.

Feng Zhongping, director of European studies at the China Institute of Contemporary International Relations, said: 'Germany under Merkel has adopted a very pragmatic approach towards China, particularly since her second term as head of government beginning in 2009.'

Merkel, who came to office in 2005, angered China's leadership when she welcomed Tibet's spiritual leader, the Dalai Lama, in 2007. But relations have improved in recent years, as economic co-operation between the world's second- and fourth-largest economies outweighed tensions over long-standing political issues, such as human rights and Tibet, that were once prominent obstacles to improved ties.

In her previous visit, in July 2010, the two nations issued a communique to declare a strategic partnership, the first between China and a Western power.

Besides her talks with President Hu Jintao and Premier Wen Jiabao, Merkel will deliver a speech on 'financial and currency policy issues' at the Chinese Academy of Social Sciences before heading to Guangzhou tomorrow, where she is scheduled to visit companies and attend an economic forum in an effort to help establish a stronger foothold for German business.

This year also marks the 40th year of diplomatic relations between the two countries. Germany and China, the world's top two exporters, enjoy vibrant trade relations. China is Germany's largest Asian trading partner, and Germany is China's top trade partner within the European Union, with business equivalent to its trade with Britain, France and Italy combined. Germany's imports from China reached Euro77.27 billion (HK$788 billion) in 2010, while it exported Euro53.79 billion worth of goods to China in the same year.

Neither Beijing nor Berlin has detailed the issues that will be discussed between Merkel and Chinese leaders, but analysts expect the euro-zone crisis, climate change, Iran's nuclear ambitions and the ongoing unrest in Syria to top the list, along with trade and investment.

Germany's top concerns include China's moves to make the yuan more flexible, intellectual property rights - with many of its firms involved in hi-tech areas ranging from cars to chemicals - market access and rule of law. China wants the European Union to accord it market economy status and end an embargo on arms sales imposed after the military crackdown on the pro-democracy movement on June 4, 1989.

With EU leaders having reached a deal to tackle the debt crisis, many are looking at China as a potential saviour, thanks to its US$3.2 trillion in exchange reserves.

'With all developed economies in debt crises, the EU is looking at the cash-rich emerging economies and China is the first among them,' said Hu Yifan, chief economist with Haitong International Research.

Zhang said Merkel's chief mission was to explain the EU rescue plan to Chinese leaders and lobby for Beijing's participation because Beijing was still suspicious about the effectiveness of the plan and worried about the safety of any investment.

He said China would rather seek investment opportunities as an indirect way to help the struggling continent. Europe's financial crisis has created buying opportunities for cash-rich investors, and China is leading the charge. Beijing has provided billions of dollars in state financing for key public works projects in Europe.

Exchange rates have been a big issue between the US and the euro zone on the one side and China on the other, with critics saying an undervalued yuan gives Chinese exporters an unfair competitive edge.

Analysts said China's increased trade and investment with Germany would ease economic disputes and encourage Berlin to support China's position on issues where it was at odds with the US, such as the value of the yuan and trade disputes at the World Trade Organisation. Beijing is also looking to Germany to take the first step to recognising China as a market economy.

With the EU adopting its harshest sanctions yet against Iran, Merkel is eager to secure Beijing's co-operation. China is the largest importer of Iranian oil and has openly dismissed US sanctions. China also has almost US$120 billion in investments in Iran.

1954

Year Angela Merkel was born

- Entered politics in 1989

- Elected to Bundestag in 1990

- Has been chancellor since 2005

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