Germany's Schroeder warns against demonising China

BERLIN -16 Nov 2018: Weighing into Germany's debate about its ties with China, former chancellor Gerhard Schroeder warned Berlin against demonising Beijing, saying the two economic powers should work more closely together in the face of Donald Trump's trade threats.

Known for his close ties to Russia, Schroeder is also a long-time advocate of a closer relationship with China. He visited Beijing frequently as chancellor, championed its entry into the WTO and controversially pressed the EU to lift an arms embargo it imposed after China's Tiananmen Square crackdown.

Speaking to Reuters in his office overlooking the Russian embassy on Unter den Linden avenue in Berlin, Schroeder pushed back against a wave of scepticism towards China sweeping across western capitals.

"We need to think about who our allies are, who has similar interests. And of course I think about China," said Schroeder, whose staunch opposition to the looming U.S. invasion of Iraq helped secure his re-election in 2002.

"Those countries that are affected by conflicts emanating from the United States will have to get closer. We can't become part of an American trade war with China."

Despite booming business for German companies in China, industry here has been unsettled by what it sees as growing state control over the economy under President Xi Jinping and unfair competition from Chinese rivals.

Concern about Chinese takeovers in Europe is rising. Germany is soon expected to lower the threshold at which it can vet foreign investments. In Brussels, EU member states are finalising an agreement to ensure closer scrutiny of such deals.

Schroeder questioned that approach, saying Chinese investors were preferable to American "locusts", a term coined by his party colleague Franz Muentefering to describe U.S. private equity firms and activist hedge funds.

He rejected the exclusion of Chinese firms like Huawei from building Germany's next-generation mobile networks. The United States and Australia have introduced such bans on security grounds, and some in Berlin are pushing for similar action here.

CONTROVERSIAL FIGURE

Schroeder, 74, enacted reforms credited with ending Germany's economic malaise in the early 2000s. But the reforms divided his Social Democrats, where he is now a controversial figure, in part due to his closeness to Russian President Vladimir Putin.

Within months of his defeat to Angela Merkel, he took a job as chairman of Nord Stream AG, a consortium led by Russian state-owned gas giant Gazprom. Last year he was denounced by SPD colleagues when he became chairman of Russia's biggest oil producer Rosneft.

Still, his views on China and Russia are shared by some members of his party and pockets of the German political establishment.

Asked about detentions of China's Uighur minority, Schroeder echoed the language of Chinese officials who have described eye-witness reports of camps as "gossip".

"I'm not sure. I'm very cautious about this discussion because I don't have any information," Schroeder said, rejecting the idea of sanctions against China in response to the camps, an idea being floated in Washington.

"I don't think much of a values-based foreign policy," Schroeder said. "Our interests should drive our foreign policy."