Published by: World Tibet Network News, Wednesday, June 26, 1996

The Times - London

June 26, 1996

From Roger Boyes

BONN and Peking were yesterday caught up in a political feud that could harm Germany's position as China's main European trading partner. Contracts worth billions of marks are being negotiated and, although each side claimed yesterday that the row would not hurt commerce, there was anxiety here.

China was angered by a Bundestag resolution last week accusing the Chinese of trying to eradicate Tibet's cultural identity. Peking cancelled an invitation to Klaus Kinkel, Germany's Foreign Minister, who was due next month. After some hesitation, Helmut Kohl, the Chancellor, told other Cabinet members to call off their trips.

Battle lines appeared to harden yesterday. "There is no reason for us to take back anything that we said in the Tibet resolution," a German Foreign Ministry spokeswoman said. "Visits were cancelled and this is clear language."

The ripples have spread through the whole range of Sino-German relations. Senior German army officers cancelled scheduled visits, and President Herzog's November state visit is in doubt. However, the most significant moves concern business. There are signs that the Chinese Embassy is holding up businessmen's visas, and a September conference on small business investment may be cancelled.

Bilateral trade stands at about DM27 billion (about =A312 billion) and new German investment has been flooding in over the past two years. Cumulative German investment in China between 1979 and 1993 was only DM1.5 billion. But in 1994 alone there was investment of DM1.3 billion. So far this year, there have been statements of intent amounting to DM3 billion worth of new investment.

Germany is in a strong position to flex its muscles. Sino-American relations have reached an historic low and at least some of the recent German trade reflects that.

The largest German contract in the offing is the DM6 billion BASF plan to build an integrated petrochemical plant in Nanking, with 50 per cent German participation. The company said yesterday there was "currently no reason to fear a setback".

In November 1995, during a visit to China by Herr Kohl, 12 declarations of intent were signed - hailed as a breakthrough in relations - and defence ties broken after Tiananmen were resumed. The Chinese then assumed human rights issues would take a lower profile.

Bonn, conscious of the need to save China's face, has never called for Tibetan independence. Last week's parliamentary resolution, backed by the Government, came as a shock to China. Moreover, it came after a Tibetan cultural exhibition, a well publicised symposium on Tibet and a renewed invitation to the Dalai Lama. Germany, in the Chinese view, seemed to be moving closer to recognising Tibet.

Heinrich Weiss, chairman of the powerful Asian-Pacific economic lobbying group and an industrialist, claims the large number of German-Chinese ventures forces Peking to listen to Bonn. About 100,000 Chinese are employed because of German investments. However, the confederation of German industry sounded a note of panic yesterday when it declared that "misunderstandings must not be allowed to damage economic relations".

China, on the face of it, has more to lose from a lasting trade war because it is the biggest supplier of toys to Germany and exports clothing and electrical products.