German industry group criticises China over new sanctions law

BERLIN, June 15 (Reuters) - Germany's powerful BDI industry association has criticised China for passing a law to counter foreign sanctions, saying it sent a worrying signal to investors and companies abroad.

China is one of the most important export markets for German companies outside the European Union's single market, but concerns over human rights abuses and a crackdown in Hong Kong are putting a strain on political as well as economic ties.

Beijing passed a wide-ranging law last week to counter foreign sanctions, in an apparent move to legalise its tit-for-tat retaliation. read more

"Instead of relying on a de-escalation, the Chinese government is creating new uncertainties. This is damaging China's reputation as an investment location and trading partner," BDI board member Wolfgang Niedermark said.

The law was very different from similar laws in the EU as it undermined legal clarity and created a grey area which from now on would hang over any company doing business in China, he said.

A spokesperson of the Chinese foreign ministry said on Wednesday the new legal framework created a business environment marked by the rule of law, stability and predictability.

"Countries which abuse unilateral sanctions are the ones creating the uncertainty, not China," the spokesperson added.

"We welcome foreign companies to invest in China, engage in mutually beneficial cooperation and jointly seize the opportunities brought about by China's development."

INVESTMENT PACT FROZEN

Senior German government officials and business leaders have openly called for a diversification of trade relations in Asia to become less dependent on China in the coming years.

BDI's Niedermark said Chinese sanctions against members of the European Parliament and think-tanks had already frozen the ratification of the EU-Chinese investment agreement.

"Instead of reacting with threatening gestures, the Chinese government would be well advised to introduce more constructive elements into the dialogue with its trading partners," he said.

The new law, effective immediately, builds upon previous administrative counter-measures against foreign sanctions issued by the Chinese foreign and commerce ministries. It also lays out the scope of China's counter-sanctions.

Reporting by Michael Nienaber; Editing by Alexander Smith

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