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UPDATE 1-China must open up, create level playing field -German economy minister
* Economy Minister going for talks in Beijing later this week
* Altmaier: China not only a partner, but also a competitor
* Says Europe must protect its own economic interests
* Altmaier: WTO reform must be tackled quickly
* Openness for plan B on WTO's dispute settlement body (Adds Altmaier quotes, background)
By Michael Nienaber and Christian Kraemer
BERLIN, June 17 (Reuters) - China must open up its markets and create fair rules for German companies, Economy Minister Peter Altmaier said ahead of talks in Beijing this week, adding that he would also discuss intellectual property protection and steel overcapacity.
China's trade and business practices have drawn the ire of U.S. President Donald Trump who has begun an escalating trade war with Beijing.
Germany also wants China to change, but it hopes to achieve this through talks.
"China and the European Union are economic partners, but also competitors," Altmaier told Reuters in an interview on Monday.
He added that German companies should have the same business opportunities in China as Chinese firms had in Germany.
"We need a level playing field, this means no discrimination and no disadvantages," Altmaier said.
During his three-day visit to China, Altmaier will meet senior Chinese officials including Vice Premier Liu He, who is President Xi Jinping's top economic adviser.
Altmaier said the Chinese government was pushing ahead with policies aimed at securing its economic interests around the globe for the coming decades, pointing to infrastructure programmes such as China's Belt and Road Initiative (BRI).
"The Europeans have started too late with developing similar ideas," Altmaier said. But the debate in Europe about industrial policies is changing and Brussels is more willing now to protect its economic interests and secure export markets, he said.
"This will be one of the main tasks for the new European Commission."
Altmaier said the European Union was the only large trading bloc in the world backing World Trade Organization (WTO) reform without any conditions.
"We want disputed issues such as market access and protection of intellectual property to get addressed. In this area, we're pulling together with the U.S.," Altmaier said.
"On the other hand, we want to preserve the principle of multilateralism. We want to ensure that the WTO remains functional. So new judges should be appointed to the dispute settlement body, the so-called Appellate Body," Altmaier said.
"We agree with China that we urgently need a solution here."
Trump is blocking appointments to the WTO's Appellate Body, saying its judges have overstepped their mandate and ignored their instructions. Trump's critics say he resents their power over U.S. law.
Asked if Germany backs a proposal to create a parallel dispute settlement system to get around the U.S. block, Altmaier said he hoped the issue could still be solved through talks, but he also hinted that he was open to new approaches.
"Whether we need a plan B, and how this would look, can only be answered when we know the result of the talks," Altmaier said.
On the thorny issue of looming U.S. tariffs on European car imports, Altmaier said Germany would stick to its stance that trade disputes must be solved through talks and that measures violating WTO rules must be avoided.
"The United States and the European Union must urgently start negotiations on an industrial trade deal," Altmaier said. Such an agreement should abolish all tariffs for industrial goods in transatlantic trade, he added. (Reporting by Michael Nienaber and Christian Kraemer; Editing by Hugh Lawson)
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