Wen Jiabao: Global Crisis Not Over, Reforms For Foreign Investments In China

HANOVER, Germany (Reuters) – The global financial crisis is not over and technical innovation and investment will be key to sustaining what remains a “tortuous” recovery, Chinese Premier Wen Jiabao said on Sunday during a visit to Germany.

Wen also said China, the world’s biggest exporter and second largest economy, would press on with reforms aimed at creating better legal protection for foreign investors — a major concern for the growing number of German firms active in the country.

“Currently, the international financial crisis is not over and the global economic recovery is difficult and tortuous,” Wen said at the Hanover trade fair that was also attended by German Chancellor Angela Merkel.

More investment in the real economy and technical innovation will be the most powerful drivers of global recovery, he said.

China’s annual economic growth slowed to 8.1 percent in the first quarter of 2012 from 8.9 percent in the previous three months – the fifth consecutive quarter of slowdown.

“The reason why the global economy cannot walk out of the shadow of the (financial) crisis is also related to the lack of new growth points in the real economy,” Wen said, adding that China and Germany had fared better than most during the crisis due to their strong manufacturing bases.

“(The two countries) will surely have an ever more important role to play in innovation and development of worldwide industry,” he said.

Merkel, whose country has faced criticism over its insistence on reducing debts even during a time of poor growth in much of the developed world, said Germany wanted to strike a good balance between fiscal discipline and fostering growth.

“We must succeed with both because responsibility rests with Germany too for a sensible global economic development,” she said.

Merkel praised China’s huge stimulus package launched during the financial crisis, saying it contributed to Germany’s own export-led recovery.

Germany has also welcomed China’s pledge last week to contribute towards new funding for the International Monetary Fund that is meant to protect the global economy from the euro zone debt crisis.

The economies of China and Germany – the world’s second biggest exporter – are increasingly intertwined, with bilateral trade jumping to 130 billion euros in 2010 from 94 billion in 2009.