"Currently, there is an allegation that China's investment environment is worsening. It's not true," Wen said in response to a question from Juergen Hambrecht, chief executive of German chemical company BASF.

The premier's comments, reported by the state-run Xinhua news agency, came during a meeting in Xian, northwest China, with the heads of leading German and Chinese businesses, attended by visiting German Chancellor Angela Merkel.

"Foreign investment will not pour into a country where the investment environment is worsening," he said, alluding to recent ministry of commerce data which showed that foreign investment in China in the first half of the year rose 19.6 percent year-on-year.

International firms have complained of costly regulations, rules benefiting local companies and growing nationalism, with some even questioning their future in the world's third largest economy.

But Wen insisted foreign businesses were not at a disadvantage.

"For those which have entered China, they all enjoy national treatment as Chinese companies do, no matter whether they are a foreign-funded company, a joint venture or a joint stock company, " Wen said.

Wen also promised China would never block the export of rare earth minerals to foreign countries, but said minerals should be exported at a reasonable price and volume.

earlier related report
Germany's Merkel urges China to open up markets
Beijing (AFP) July 16, 2010 - German Chancellor Angela Merkel on Friday prodded China to ease access to its markets, as the world's top two exporting nations signed a series of deals reportedly worth several billion dollars.

After meeting Premier Wen Jiabao and overseeing the signing of the agreements covering trade, energy and culture, Merkel said she had emphasised German wishes for greater openness in the world's third-largest economy.

"Chinese companies, like those of many other countries, enjoy very good access to the German market. We hope that German enterprises can enjoy the same access to the Chinese market," she told reporters.

Trade between the export powerhouses has grown rapidly -- to 91 billion dollars last year, up from 41 billion dollars in 2001, according to Chinese data.

However, in the past few years, the trade balance has tipped decisively in China's favour, with Chinese exports to Germany totalling 55 billion dollars last year, while trade in the other direction amounted to 36 billion dollars.

"Neither Germany nor China pursues a trade imbalance," Wen said during a joint press conference after their talks.

"We hope that trade can be balanced and orderly."

China overtook Germany last year to become the world's top exporter, with some 1.2 trillion dollars in merchandise exported, according to World Trade Organization figures.

Germany exported 1.12 trillion dollars of goods in 2009.

Merkel also said China still had not satisfied all the requirements for attaining market economy status in the eyes of Europe, a designation expected to lessen the occurrence of trade actions being taken against China.

She said Beijing still had to do more to ensure the protection of intellectual property rights and market access.

However, Merkel described her talks with Wen as "friendly", while both sides they would work for an even closer trade relationship.

Just three years ago, a meeting between Merkel and the Tibetan spiritual leader the Dalai Lama angered China, which cut off high-level exchanges for months. China considers the exiled Dalai Lama a separatist.

Among the agreements signed was one between Shanghai Electric Group of China and Siemens AG for the creation of a service joint venture for the steam and gas turbine power plant market.

China's official Xinhua news agency said the deal involved 3.5 billion dollars. Siemens disputed the figure, but did not give another one.

Foton Motor of China and Daimler-Benz AG also signed an agreement for a 50-50 joint venture to produce heavy trucks in China for the domestic and foreign markets.

Trucks under Foton's Auman brand will be produced using Daimler technology in diesel engines and exhaust systems, allowing the vehicles to meet strict European standards, a statement said, without giving financial details.

Xinhua put the value of that deal at 938 million dollars.

China and Germany also signed a pact to create a 124-million-euro (160.2-million-dollar) 'green' fund to encourage emissions reductions and corporate energy-saving, Xinhua reported.

Wen repeated Beijing's intent to remain a "long-term investor" in the euro despite Europe's ongoing debt crisis, saying the continent will remain among "the main markets for investment of China's foreign exchange reserves."

The debt crisis has forced European governments to bail out Greece and set up a 750-billion-euro loan package with the International Monetary Fund to help other states that may need assistance.

China's foreign exchange reserves, the world's largest, hit a record 2.454 trillion dollars at the end of June.

Merkel met President Hu Jintao later in the day.

During her trip to China, which comes on the heels of a visit to Russia, she is also due to visit Xian, home to China's ancient terracotta army.

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