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German Chancellor Angela Merkel and China's President Xi Jinping arrive for an agreement signing at the Chancellery in Berlin March 28, 2014. REUTERS/Fabrizio Bensch


By Stephen Brown

BERLIN (Reuters) - A German intelligence chief warned, as Chancellor Angela Merkel embarks on her latest visit to China, that some firms in Europe's biggest economy face a growing threat from industrial espionage by Chinese government agencies with huge resources.

"Many German Mittelstand companies are easy prey," Hans-Georg Maassen, head of the BfV domestic intelligence agency, told a Sunday newspaper, referring to the small and medium-sized family firms that are the backbone of the economy.

"They often don't really know what their crown jewels are or what the other side is interested in," he told Welt am Sonntag.

"They are up against very powerful adversaries. The Chinese technical intelligence agency alone has over 100,000 employees," Maassen said, in an excerpt of an interview to be published on Sunday, when Merkel begins her seventh trip to China.

Beijing rejects U.S. charges it uses cyber espionage to acquire technology to modernise its military.

The former U.S. intelligence contractor Edward Snowden has leaked documents that purportedly show that the U.S. National Security Agency has spied on Chinese companies such as Huawei Technologies [HWT.UL].

Trade between Germany and China has been worth about 140 billion euros (110.74 billion pounds) per year for the past three years but in the first quarter of this year, German exports to China surged by 9.8 percent, according to one German trade organisation, the GTAI.

The chancellor is taking a business delegation along with her and deals may include a joint venture between Lufthansa <LHAG.DE> and Air China, according to the media.

The chief executive of German auto giant Volkswagen <VOWG_p.DE>, Martin Winterkorn, told a conference in Berlin this week that China had proved "a recipe for stability".

Merkel will visit the city of Chengdu on Sunday and hold talks with Chinese Premier Li Keqiang in Beijing on Monday.

She may also meet civil rights groups.

(Reporting by Stephen Brown; Editing by Sophie Hares)

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