Merkel tells Chinese solar companies to stop price dumping

German leader rides the high-speed train and then adopts a tough stance during trade talks

PUBLISHED : Saturday, 01 September, 2012, 12:00am
UPDATED : Saturday, 01 September, 2012, 3:40am

German Chancellor Dr Angela Merkel took her first ride on China's high-speed train yesterday, joining Premier Wen Jiabao on a visit to his hometown - the northern Chinese port city of Tianjin - during their second day of trade talks.

Earlier, the leaders toured the Forbidden City's ancient red buildings and cobblestone courtyards. Xinhua reported that it was the chancellor's first trip to the former imperial palace, despite five previous visits to China.

The train ride highlighted past co-operation between China and Germany. The original model for the trains came out of technology-transfer agreements with companies such as Germany's Siemens.

Merkel urged Chinese solar energy companies to stop price dumping. She said if they wanted to compete in Europe, they must respect European Union fairness rules that prohibit subsidies and cheap credit. The issue, though, is still sensitive.

On Thursday, Merkel said that she favoured negotiations over confrontation - comments welcomed by the Chinese premier, though it raised concerns in Europe.

Yesterday, she appeared to back-pedal on her conciliatory tone, saying that Chinese solar firms needed to recognise that subsidies, such as cheap bank loans, distorted competition and violated European law.

"We are not out of the woods yet," she said. "My plea is that everyone be transparent, that they lay their cards on the table about how they produce."

Wen said trade disputes should be resolved through consultations rather than anti-dumping proceedings. "This is an important foundation of our co-operation," Xinhua quoted Wen as saying.

On the issue of rare earths, Wen said China was not restricting exports intentionally. He said the country had and would continue to offer a large portion of rare earths to the global market, Xinhua reported. The minerals are vital to many aspects of hi-tech manufacturing.

Wen also said mining rare earths caused significant environmental degradation in China.

Merkel also visited Tianjin's Airbus airliner assembly plant with Wen to witness the rollout of its 100th A320. It is the only Airbus plant outside Europe.

China confirmed it would buy 50 A320s at a cost of US$3.5 billion.

Additional reporting by Reuters