UPDATE 2: China and Germany are optimistic about the investment, as Merkel visits Beijing in the shadow of Trump’s commercial threats



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By Andreas Rinke and Ben Blanchard

BEIJING, May 24 (Reuters) – China welcomes German firms and will protect their investments, Prime Minister Li Keqiang said on Thursday. to meet with German Chancellor Angela Merkel, who said that Germany supported Chinese investment there.

Merkel faces a delicate diplomatic balance in her two-day visit to China, which is clouded by US President Donald Trump's commercial threats and his decision to withdraw from Iran's nuclear agreement.

Germany and China, two exporting nations that have large trade surpluses with the United States, have found themselves in Trump's line of fire and are struggling to preserve the rule-based multilateral order on which their prosperity rests.

But while Merkel's hosts may be willing to send a message of total Chinese-German solidarity in the direction of Washington, German officials have suggested that Merkel should avoid the appearance of moving too far from China in a confrontation with the ally. from Germany for a long time.

Li, in a joint presentation with Merkel at the Great Hall of the People in Beijing, said China and Germany supported global free trade and highlighted the enormous potential for cooperation among them.

Although the two countries had problems, they could be overcome, and increasing cooperation was good for Europe and the world, Li said.

"China's door is open, you can say it will open even more," he said, standing next to Merkel.

China welcomes the German producers of autonomous vehicles to invest in China, Li said, noting that the country had already reduced the entry requirements for new energy vehicles.

The two countries needed to strengthen bidirectional investment in an open and inclusive manner, he said.

"If you encounter any problems during your investment, especially when it comes to legal protection, I can tell you clearly that China is moving towards a country with the rule of law," Li said.

China will protect its interests in accordance with Chinese law and China will adjust its rules as necessary, he added, without giving further details.

Merkel welcomed recent announcements by China that it will further open its financial sector to foreign participation and reduce China's joint venture requirement in sectors such as automobiles, a pillar of German investment in the second largest economy biggest in the world.

In reality, Merkel's government shares many of the Trump administration's concerns about Chinese business practices, including what many Western countries have complained about are state-backed efforts to pressure foreign companies to resign to business secrets.

But Trump's "America First" trade policy, the disdain of his government by the World Trade Organization, as well as his withdrawal from Iran's nuclear agreement, have brought China and Germany into greater alignment, say the German officials.

Merkel went to Washington last month to pressure Trump to remain in Iran's nuclear pact, only to see him withdraw days later and threaten sanctions against European companies that continue to respect him.

The trip is Merkel's eleventh to China since she became chancellor in 2005. Accompanied by an industry delegation of approximately 20 German executives, later in the day she attends a dinner hosted by President Xi Jinping. (Additional reporting by Michael Martina Nick Macfie edition)

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