Chancellor Angela Merkel voiced her government's support on Friday for a German arms manufacturer's bid to win a $35.7 billion (A$50 billion) contract from Australia to build it a new fleet of submarines.
Germany's ThyssenKrupp Marine Systems (TKMS) and France's state-controlled naval contractor DCNS are competing with Japan for the deal, seen in part as an Australian effort to counter Chinese assertiveness in the Asia-Pacific region
"The German government supports the German bid," Merkel told reporters, in a rare government comment about such deals, after meeting visiting Australian Prime Minister Malcolm Turnbull.
"We think our companies can offer good quality, and that is something that should be convincing."
Japan had been the front-runner to replace Australia's aging Collins-class submarines with a modified, off-the-shelf version of its 4,000-tonne Soryu-class vessel before Turnbull's predecessor, Tony Abbott, opened up the bidding in February under pressure from ruling party and opposition lawmakers.
TKMS and France's DCNS have both said they would make a full build in Australia part of their offers. Japan has said it is ready to match its European rivals and build a fleet of submarines for Canberra entirely at Australian shipyards
Turnbull said Australia was conducting a competitive evaluation process "to determine the party that will cooperate to construct the new submarines".
"The requirements, the specifications that have been indicated will require a great deal of innovation by whichever company is successful."
(Reporting by Paul Carrel and Joseph Nasr)