Visiting German Chancellor Gerhard Schroeder yesterday said he expects automaker Volkswagen maintain its market share in China's car market, despite acute competition in the auto sector.

"I hope Volkswagen will keep its market share (in China) to benefit itself and China's auto industry, and to preserve Germany's job and investment opportunities," Schroeder said.

The chancellor made his remarks yesterday during a ribbon-cutting ceremony at the opening of a second large plant for Volkswagen's car joint venture with First Automotive Works Corp (FAW) in Changchun, capital of northeast China's Jilin Province.

"I have confidence in the vigor of China's market and economy, and the capabilities of the two sides in the joint venture," he added.

The completion of the second plant, with an investment of 12.3 billion yuan (US$1.5 billion), will double the venture's annual production capacity to 660,000 vehicles.

"We will strive to maintain our leadership in China's car market, although competition is becoming fiercer," said Bernd Pischetsrieder, Volkswagen's chief executive.

"China is and will continue to be one of the world's most important growth markets, despite a slowdown in car sales in recent months," Pischetsrieder said.

Volkswagen has been the biggest foreign car producer in China for almost two decades, but its market share has plunged to less than 30 percent from 50 percent three years ago. Last year, Volkswagen sold 697,000 cars in China.

The company also runs a joint venture with Shanghai Automotive Industry Corp, which now has an annual production capacity of 450,000 units.

The second FAW Volkswagen plant will produce the Caddy model at the beginning of next year and other models from Volkswagen's PQ35 platform later on.

Accumulated output of FAW Volkswagen, set up in 1991, will reach 1.3 million cars at the end of this year, Pischetsrieder said.

"The equity structure of FAW Volkswagen will be 50 to 50," he said without revealing a timetable.

At present, FAW and Volkswagen control a 60 percent and 40 percent stake in the venture, respectively.

Partnership advances

Before flying to Changchun, Schroeder held separate talks with President Hu Jintao and top legislator Wu Bangguo yesterday.

Both Hu and Wu expressed their strong willingness to advance China's "strategic partnership" with Germany.

Hu expressed appreciation for Germany's adherence to the one-China policy as well as its efforts to develop strategic relations between China and Europe.

Schroeder said Germany is willing to participate in rejuvenating the nation's old Northeast industrial base because of its experience in revitalizing industry.

He said that Germany will strengthen mutual political trust with China and deepen relations in all fields.

While Wu, chairman of the Standing Committee of the National People's Congress, said the congress and the German Parliament have increased exchanges and visits and have had "effective co-operation."

"As a result, we have increased mutual understanding and expanded our consensus," said Wu.

Schroeder also attended the Sino-German Economic Co-operation Forum yesterday in Beijing.

He said trade volume between the two countries is expected to double with concerted efforts by both sides. Bilateral trade volume exceeded US$40 billion this year and is expected to reach US$50 billion.

Germany is China's largest trading partner in Europe.

"Governments of both sides will promote cooperation between the small and medium-sized enterprises in both countries, because they are the most energetic segment of the economy," he said.

(China Daily December 8, 2004)