Risking Beijing's ire, Germany gets tough on Chinese

takeovers
FRANKFURT, Oct. 30 (AFP)
Alarmed by a raft of Chinese takeovers, Germany is putting the brakes on the Asian giant's
shopping spree as it sends out the message that not everything is for sale -- at the risk of
antagonising Beijing.
The more assertive noises coming out of Berlin are likely to dominate Economy Minister
Sigmar Gabriel's trip to China in the coming days, putting to the test the oft-vaunted "special
relationship" between the top export powers.
Germans have watched with unease as Chinese enterprises have swallowed up a record
number of homegrown tech companies this year, sparking fears of German knowhow and
intellectual property being sold off to the highest bidder.
The wave of acquisitions has also stoked grumbles over China's easy access to the country's
open markets, often through state-backed companies, while foreign investors there face tight
restrictions. "Germans seem to be growing more and more sceptical about China, and
consequently more willing to pursue a tougher approach to Beijing," said analyst Hans Kundnani
from the German Marshall Fund.
In the clearest sign yet that Berlin could be squaring up for a battle, the German economy
ministry this week said it was taking a closer look at two planned Chinese takeovers -effectively stalling both deals. The moves have not gone unnoticed in Beijing and Gabriel will
likely face some prickly questions when he leads a 60-strong business delegation on a five-day
trip to China and Hong Kong from Tuesday.
- 'Paranoia' Germany's first punch came last Monday when the ministry said it had withdrawn its
approval for Grand Chip Investment's 670-million-euro ($730-million) purchase of chip
equipment maker Aixtron, citing security concerns.
German daily Handelsblatt said the surprise reversal came after US intelligence services
warned that Aixtron products could be used for military purposes. The deal is now back under
review, a process that could last three months.
Days later, the economy ministry said it was also reviewing the mooted sale of German firm
Osram's general lighting unit to a Chinese buyer. So far there has been little official reaction
from Beijing.

Euro zone growth still slow, October core inflation dips

BRUSSELS, Oct. 31 (Reuters)

The euro zone economy grew at the same slow pace in the third quarter as the second and
core inflation dipped in October, reinforcing expectations that the European Central Bank will
decide to extend its asset-buying program in December.
The European Union's statistics office Eurostat said gross domestic product in the 19
countries sharing the euro rose 0.3 percent quarter-on-quarter in the July-September period and
by 1.6 percent year-on-year. Both figures were the same as in the second quarter and matched
expectations of economists polled by Reuters.
Consumer prices rose 0.5 percent year-on-year in October, Eurostat estimated, picking up
from 0.4 percent in September and 0.2 percent in August as the drag on the index from energy
diminished. Energy prices were only 0.9 percent lower in October than 12 months earlier,
compared to 3.0 percent down in September.
However, excluding the most volatile prices for unprocessed food and energy, inflation was
just 0.7 percent year-on-year, down from 0.8 percent in the previous five months. The figure is
the one the ECB uses as core inflation. The European Central Bank wants a higher rate of overall
inflation -- close to 2 percent over the medium term -- and has been buying euro zone
government bonds to inject cash into the banking system and make banks lend to the real
economy.
The ECB meets in December and will have to decide then whether it extends its bond-buying
beyond an initial target date in March. To do otherwise would essentially subject markets and
banks to a cold turkey cut-off. ECB policymakers have said accommodative monetary policy
would be maintained until inflation is on a sustainable path to the target.