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Merkel calls on China to use influence with Iran

Merkel calls on China to use influence with Iran

February 2nd, 2012 by JOE McDONALD, AP Business Writer in News

BEIJING (AP) - German Chancellor Angela Merkel called Thursday on China, the biggest buyer of Iranian oil, to use its influence to persuade Tehran to renounce possible nuclear weapons ambitions.

Appearing at a government think tank, Merkel said she has discussed Iran with Chinese President Hu Jintao but acknowledged Beijing opposes an oil embargo in the dispute over its nuclear intentions.

"The question is more how China can use its influence to make Iran understand that the world should not have another nuclear power," Merkel told an audience at the Chinese Academy of Social Sciences.

China gets more than 10 percent of its oil imports from Iran, and Chinese analysts have warned of potential economic damage if an embargo is imposed because Beijing could not easily get replacement supplies elsewhere.

The European Union imposed an oil embargo on Iran last week and froze the assets of its central bank. In December, the United States said it would bar financial institutions from the U.S. market if they do business with Iran's central bank.

Merkel was due to meet Premier Wen Jiabao later Thursday and Hu on Friday on a visit aimed at reassuring them about Europe's financial health amid its debt crisis.

The German leader said they would discuss how to revive global economic growth and international security arrangements. Merkel gave no details of her message to Chinese leaders during her appearance at the academy but said a treaty on spending limits agreed to this week by European leaders should help to improve the continent's financial stability.

Merkel said "more sensitive topics" including human rights and the rule of law also would be on her agenda but gave no details.

Merkel called for closer commercial cooperation with China, one of her nation's biggest trading partners. But she also pointed to China as a competitor, warning that Europeans will see manufacturing jobs shift here if they fail to boost competitiveness.

The German leader also called for common global standards to regulate banks to prevent risky behavior.

Europe is China's biggest export market and Beijing's stake in its financial health is growing as Chinese companies expand there. China's biggest producer of construction equipment announced this week it was buying Germany's Putzmeister, a maker of concrete pumps.

"China's top concern is the stability of the European banking system, which will have a direct impact on China's trade," said Zhang Bin, a finance specialist at the academy.

Merkel said she planned to raise complaints by German business people about Chinese barriers to foreign companies. Business groups complain Chinese regulators are trying to help local companies by hampering market access and keeping foreign competitors out of promising industries in violation of Beijing's free-trade pledges.

"German businesses sometimes have concerns about whether they can achieve true equal treatment in the Chinese market," she said.

European leaders want China, with $3.2 trillion in foreign reserves, and other global investors to contribute to expanding the continent's bailout fund, the European Financial Stability Facility.

The fund's chief executive, Klaus Regling, said during an October visit to Beijing that China and other Asian investors had bought about 40 percent of the bonds issued by the EFSF since it was created in May 2010.

Chinese leaders including Wen have expressed sympathy for Europe but have refrained from committing to financial aid. Chinese analysts argue that Europe has adequate financial resources.

Merkel is the first of several European leaders to visit China this month for talks expected largely to focus on the economic crisis.

A commentary in the state newspaper China Daily suggested a trade: Chinese economic assistance in return for Europe's lifting of a ban on weapons sales to China that was imposed after Beijing crushed pro-democracy protests in 1989.

"As a Chinese saying goes, one does not visit the temple for nothing," said the commentary by Ouyang Shi, described as a Beijing-based scholar of international relations.

It later said: "If European demands for China are mostly in economic terms, Chinese hopes of Europe are mainly political, namely mutual respect and treating each other as equals."