The US$10 billion German chemical complex that could tip the balance in China’s trade ties
Allowing German chemical giant BASF to build and fully own its plant in China could bring Beijing support from Berlin in the trade war with the US
Beijing’s decision to allow a German firm to build a US$10 billion chemical plant in southern China could help China enlist Berlin’s support against Washington and put up a united front against the trade war launched by US President Donald Trump, analysts said.
The complex would be wholly owned by BASF and, if completed by the proposed date of 2030, would be BASF’s third-biggest production base in the world, according to the company, the world’s largest chemical firm.
The complex, which could employ 2,000 staff plus 1,000 external contractors, is by far the most significant of a raft of deals that came as Premier Li Keqiang and German Chancellor Angela Merkel met in Berlin on Monday.
Besides the memorandum of understanding for the construction of the BASF complex in Zhanjiang, Guangdong province, the parties also signed a number of business pledges involving German companies, including carmakers BMW, Daimler and Volkswagen, industrial conglomerate Siemens and engineering and electronics company Bosch.
Beijing hoped to show it was serious about opening its markets to foreign investors, paving the way for Berlin to join it in backing a multilateral global trade system regulated by the World Trade Organisation, analysts said.
It is also seeking support for its opposition to the unilateralism Trump has promoted with his trade actions not just against China but American allies, including Europe, according to the analysts.
After BASF chief executive Martin Brudermueller and Guangdong vice-governor Lin Shaochun signed the MOU for the chemical plant, Merkel lauded China’s progress in further opening its markets to foreign investment.