Germany is knocking at China's door to take advantage of the country's increasing opening up under its World Trade Organization (WTO) commitments and a fast-growing market driven by wealthier Chinese.

After France clinched big deals with China in October, Germany China's largest trading partner and No 2 investor from Europe is expected to maintain its leading position in the market with its Chancellor's State visit to China next month. Gerhard Schroeder, accompanied by a number of German entrepreneurs, will launch his sixth tour to China from December 6 to 8, China Daily reported Tuesday.

He will meet President Hu Jintao and Premier Wen Jiabao.

The China visit will also take the chancellor to the northeastern city of Changchun, where the German automobile giant Volkswagen has a joint venture.

Schroeder's visit comes as major European countries are seeking to break into China's markets.

Just two months ago, French President Jacques Chirac visited China for five days, where he celebrated the 40th anniversary of the establishment of Sino-French diplomatic ties and clinched a lengthy list of agreements worth an unprecedented 4 billion euro (US$5.2 billion).

China agreed to purchase a number of French goods that included 700,000 tons of wheat worth US$150 million, six A319 Airbus planes and 36 A330 planes, and an array of equipment and devices valued at more than US$1.4 billion.

French companies signed big deals with Chinese partners during Chirac's visit.

France's leading oil company and China's Sinochem will form a joint venture to build and operate 200 gasoline stations in Northeast China in the next seven years.

Water company Suez won the bid for a sewage treatment project in East China's Qingdao.

Electricite de France and China Huaneng Group established a strategic partnership to focus co-operation on clean energy such as hydropower, nuclear power, wind power and renewable energy.

Analysts say the French move is expected to shorten the nation's distance with Germany in terms of their economic relations with China.

Italian President Carlo Ciampi will also launch a visit to China beginning December 4, just two days before Schroeder's arrival.

"As its European neighbours are catching up, Germany cannot afford any lack of advance in the Chinese market," said Fan Ying, a professor at China's Foreign Affairs College in Beijing.

"A package of agreements covering a variety of economic fields such as trade, energy, chemicals, and transportation will probably be signed during Gerhard Schroeder's visit," she said.

This will secure German exports to China, its largest Asian trading partner, at a time when a strong euro is curbing its exports and employment.

China has become the second largest importer of machinery products made in Germany, only behind the United States.

The German leader's visit will also help promote bilateral economic relations to a new height, as the two nations are expected to double trade volume by 2010 from US$42 billion in 2003.

The visit comes as the fast-growing, increasingly-liberalized Chinese market has become an engine for the German economy.

The Chinese economy witnessed a growth rate of 9.5 per cent in the first nine months of the year, and the increase is expected to be more than 7 per cent during the coming decade.

To sustain its construction-led economic growth, China will need a rising number of equipment and technologies from developed countries, among which Germany may find itself competitive in certain sectors such as chemicals, energy and machinery.

Propelled by wealthier Chinese, the consumption market will also expand rapidly.

Per capita income in China exceeded US$1,000 last year, a landmark indicator that many economists believe will lead to spending sprees.

This means German producers of automobiles and health care goods could attract a wealth of businesses.

In addition, restrictions on foreign investors have been tremendously lifted in the past three years since China joined the WTO.

In 2005, a list of sectors including retail, banking and insurance will be nearly fully open to foreign investors.

Tariff reductions of a stream of imports beginning next year will also benefit German producers.

Import areas include newsprint, automobiles and auto components, in which the Germans are competitive.

German companies cannot afford to lose share in the Chinese market and have expressed intentions to expand.

Volkswagen plans to invest 6 billion euro (US$7.8 billion) in China in the next five years to double its annual production capacity to 1.6 million cars.

Bayer, the Germany-based chemical and health care giant, plans to invest US$3.1 billion in its Integrated Production Site in Shanghai.

Other giants such as Siemens and ThyssenKrupp also have long-term commitments to this market.

Apart from traditional sectors such as machinery, chemicals, pharmaceuticals and auto, German companies are also eyeing new sectors such as environmental protection and public facilities.

Moreover, German small and medium-sized enterprises (SMEs) are gathering momentum to penetrate China.

Germany has already done a good job in the Chinese market. It is China's largest European trading partner, with a trade volume reaching US$39.4 billion in the first nine months of the year, up 32.7 per cent year on year, Ministry of Commerce data show.

Chinese exports increased 35.5 per cent to US$16.3 billion and imports rose 30.9 per cent to US$23.1 billion, resulting in a small deficit for China.

Machines, auto and auto parts and electricity devices dominate China's imports from Germany, while Germany imported a large number of radios and TV sets, computers, jewellery, toys, sports equipment and textile products.

In terms of investment, Germany came slightly after the United Kingdom to be the second largest European investor in China.

By the end of August, it had notched up a cumulative, contractual investment of US$17 billion in more than 3,800 projects.

Actual investment amounted to US$9.55 billion.

In the past four years, Germany has been the largest European investor in China.

Initial estimates predict German investment in China will double by 2010.

Its investment went into such sectors as machinery, electronics, chemicals, pharmaceuticals, automobiles, transportation, energy and optics.

In addition, Germany outperformed other European countries in terms of transferring technologies to China. It sold US$28 billion worth of technologies to China by the end of last August.

Chinese firms have started to invest in Germany, with an investment of US$62 million, according to figures from the German Chamber of Commerce in China.

TCL, China's leading household electric appliance maker, has established a presence in Germany after it bought Germany's Schneider Electronics.

Alfred Wewers, the chamber's chairman, said Chinese firms could choose Germany, the heart of Europe geographically, as a gateway to extend their businesses into the continent.

Source: China Daily