The chief executives of Germany's Siemens accompanying Chancellor Angela Merkel on her four-day state visit to China have blasted Beijing's policies on foreign investment.
The outburst from chemical giant BASF's chairman Jürgen Hambrecht and engineering conglomerate Siemens chief executive Peter Löscher, came during a weekend meeting with Chinese Premier Wen Jiabao in Xi'an, the capital of Northwest China's Shaanxi province.
Both companies that had combined sales of more than $11 billion in China last year and employ over 36,000 in the country, complained that China is forcing foreign companies to part with their valuable technological know-how to Chinese companies while investing in the country, the Financial Times reported yesterday.
''That does not exactly correspond to our views of a partnership,'' Hambrecht told Wen, said the paper.
Loescher, who is also chairman of the Asia-Pacific Committee of German Business, said foreign companies operating in China expect to find equal conditions in the fields of public tenders and asked Beijing to remove trade and investment restrictions in sectors such as automobiles and financial services.
Wen disputed Hambrecht's opinion and said that his country is an open economy and open to foreign investment. "Currently, there is an allegation that China's investment environment is worsening. I think it is untrue," state-run Xinhua news agency reported citing Wen in response to Hambrecht's statement.
During the meeting, Merkel also raised the issue of China blocking the exports of rare earth minerals, which are used in the making of hybrid cars, wind turbines, catalysts in cars and oil refineries, mobile phone batteries, missiles and aviation engines, lasers, fiber optics, superconductors, and weapons.
China produces about 92 per cent of global rare earth minerals supplies, followed by India, Brazil and Malaysia. Instead of exporting rare earth minerals, China has since the past two years adopted a strategy of forcing overseas companies to put up their manufacturing plants in China in order to gain access to the mineral.
Wen said that China has not blocked the export of the mineral but they should be exported at a reasonable price and volume.
The German executive's comments come at a time when many foreign companies have complained about China forcing companies to part with their valuable intellectual property in order to gain market access.
Jeffrey Immelt, the CEO of General Electric, a long-time supporter of China, had also said at a private dinner in Rome late last month that foreign companies are finding it more difficult to do business in China.
The remarks also come after the World Bank in a July report gave China a low investment environment ranking.
Wen said China welcomes investment from companies that meet its industry policies and the government will make sure that such companies have access to the Chinese market.
Citing the ministry of commerce data for the first half of 2010, which showed that foreign investment in China rose 19.6 per cent year on year, Wen said foreign investments do not come into a country where the investment environment is deteriorating.