Don't expect Trump-style protectionism from Germany

Mon Jan 9, 2017 9:08am EST
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By Paul Carrel, Gernot Heller and Arno Schuetze

BERLIN/FRANKFURT (Reuters) - Germany is reviewing its powers to block foreign acquisitions after a spate of Chinese takeovers, but the government's commitment to free trade beats its concerns about hemorrhaging strategic technologies and will limit any changes.

A more hostile German tone towards Chinese takeovers set in last year when Berlin actively, though unsuccessfully, sought to line up a European offer to counter a Chinese bid for industrial robot maker Kuka (KU2G.DE: Quote).

Chancellor Angela Merkel had held up Kuka as an example of a cutting-edge German industrial company, telling workers on a visit to its Augsburg headquarters in 2015: "We can be proud that in Germany companies like Kuka, for example, are at home."

The takeover of Kuka by Chinese home appliance maker Midea (000333.SZ: Quote) hurt that pride. As a result, Berlin is reviewing its legal means of blocking foreign takeovers, while also pushing for European measures to safeguard key technologies.

The government review is being led by Economy Minister Sigmar Gabriel, whose center-left Social Democrats (SPD) are the junior partner in Merkel's ruling coalition with her conservative bloc. She is ultimately likely to rein him in.

"If they change something, I don't think it will be fundamental," said Mikko Huotari at the Mercator Institute for China Studies (MERICS) in Berlin. "Nothing is going to happen if the chancellery does not push this."

Merkel is deeply committed to free trade, adopting the motto "Shaping an Interconnected World" for Germany's G20 presidency this year, with which she is aiming to resist U.S. President-elect Donald Trump's protectionist instincts.

Even during the Kuka takeover, Merkel stressed that Germany is generally open toward investments from China, though in return she said it expects that China opens up and offers the same investment conditions.   Continued...

FILE PHOTO: A Kuka technician programs a robot arm of German industrial robot maker Kuka at the company's stand during the Hannover Fair in Hanover, Germany April 25, 2016. REUTERS/Wolfgang Rattay/File Photo