German Chancellor Olaf Scholz paid an official visit to China from April 14 to 16, visiting Chongqing, Shanghai and Beijing. This is Scholz's second visit to China since he took office as German chancellor, and the first visit by a major Western leader this year. The German economic delegation to China has a luxurious lineup, including executives from Mercedes-Benz, BMW, Bayer, thyssenkrupp, Siemens and other companies. Reuters pointed out that the list of executives highlights the "important weight" of China as Germany's largest trading partner.
In July 2023, the German government issued the first "China Strategy" document that sets out Germany's policy and position on China, advocating for "de-risking" China. On the occasion of the 10th anniversary of the establishment of an all-round strategic partnership between China and Germany this year, what are the profound meanings of Scholz's trip?
Sino-German Consensus
Scholz's last visit to China was on November 4, 2022. He is the first European leader to visit China since the outbreak of the pandemic, the only G7 leader to visit China twice, and the first European leader to visit China since the 20th National Congress of the Communist Party of China.
Commenting on the visit, Radio France Internationale commented that Scholz had "never visited a country for such a long time" and summed up Scholz's itinerary with "two days of economy and one day of politics".
On April 16, President Xi Jinping met with Scholz at the Diaoyutai State Guesthouse in Beijing.
Xi Jinping pointed out that this year marks the 10th anniversary of the establishment of an all-round strategic partnership between China and Germany. Over the past 10 years, despite great changes in the international situation, China-Germany relations have always developed steadily, and cooperation in various fields has been consolidated and deepened, providing impetus for the development of the two countries. At present, the world is undergoing changes in a century at an accelerated pace, and the risks and challenges facing human society are increasing. China and Germany are the second and third largest economies in the world, and the significance of consolidating and developing Sino-German relations goes beyond the scope of bilateral relations and has an important impact on the Eurasian continent and the whole world. The two countries need to view and develop their bilateral relations from a long-term and strategic perspective, and work together to inject more stability and certainty into the world.
Scholz said that at present, German-Chinese relations are developing well, and the two sides have close exchanges at all levels and in all fields. The two sides have successfully held government-to-government consultations, high-level dialogues in the areas of strategy and finance, and will also hold a dialogue on climate change and green transition. In the past two days, I visited Chongqing, Shanghai and other places with representatives of the German business community, and personally experienced the tremendous achievements made by China's economic development in recent years, and was deeply impressed by the close and good cooperation between the German and Chinese business circles. Germany is willing to work with China to continue to strengthen bilateral relations, deepen bilateral dialogue and cooperation in various fields, and promote people-to-people exchanges in education, culture and other fields, which are of great importance to Germany and China as well as to the world. Germany is ready to strengthen communication and coordination with China to jointly address global challenges such as climate change, and is committed to upholding the multilateral international order and promoting world peace and development. Germany opposes protectionism and supports free trade. As an important member of the European Union, Germany is willing to play an active role in promoting the sound development of relations between the EU and China.
On the morning of April 16, President Xi Jinping met with German Chancellor Olaf Scholz at the Diaoyutai State Guesthouse in Beijing. Image source: Xinhua News Agency
At a press conference of the Ministry of Foreign Affairs on April 16, Chinese Foreign Ministry spokesman Lin Jian said that the leaders of the two countries exchanged views on international and regional issues of common concern, and the two sides reached consensus on issues such as the Ukraine crisis and the Palestinian-Israeli conflict.
Lin Jian said that on the issue of the Ukraine crisis, China and Germany are committed to abiding by the purposes and principles of the UN Charter, including safeguarding sovereignty and territorial integrity. This is an essential foundation of a sustainable security architecture and should be respected. China and Germany encourage and support efforts to find a peaceful political solution in Ukraine, and are willing to continue to maintain close and active communication on the hosting of the high-level meeting in Switzerland and other relevant international peace conferences in the future. China and Germany jointly call for opposing the use or threat of use of nuclear weapons, opposing attacks on nuclear power plants and other peaceful nuclear facilities, properly resolving the issue of international food security, contributing to ensuring world food security, and not hindering food production and exports, abiding by international humanitarian law, protecting civilians, releasing prisoners of war as soon as possible, and respecting the basic rights of prisoners of war.
Lin Jian said that on the issue of the Palestinian-Israeli conflict, China and Germany are worried about the grim humanitarian situation in the Gaza Strip and the danger of further escalation of the situation in the region. China and Germany jointly call for the guarantee of barrier-free and sustainable humanitarian access in the Gaza Strip, support for the United Nations and its Relief and Works Agency for Palestine Refugees in the Near East to play a coordinating role in humanitarian relief, the implementation of UNSCR 2728, the implementation of the two-state solution as the only option for lasting security and peace for Israelis and Palestinians, and the joint maintenance of the safety of trade and navigation in accordance with international law, especially in the waters of the Red Sea.
Attaches great importance to economic and trade issues
Germany's economy shrank by 0.3 percent last year and is expected to grow by just 0.2 percent this year, battered by inflation, high interest rates and cooling exports. Hu Chunchun, head of the "European Civilization Studies" at Shanghai Wai Chinese University, said that the close economic and trade relations between China and Germany are the cornerstone of the development of relations between the two countries. At present, the German economy is facing the difficult situation of recession and the pressure of transformation, and it is all the more necessary to consolidate and expand economic and trade cooperation with China.
On April 14, Scholz arrived in Chongqing for a first visit to Bosch Hydrogen Power Systems (Chongqing) Co., Ltd., a joint venture between Bosch and Qingling Motors to bring Bosch hydrogen fuel cell solutions to the Chinese market.
Hydrogen fuel cell vehicles are an important future option for the development of new energy vehicles and have broad prospects. Scholz said that he was deeply impressed by the cooperation between German and Chinese enterprises in the field of "hydrogen" technology, and that Germany is willing to continue to deepen German-Chinese friendly exchanges and promote bilateral cooperation to a new level.
On April 14, German Chancellor Olaf Scholz visited Bosch Hydrogen Power Systems (Chongqing) Co., Ltd. in Jiulongpo District, Chongqing. Image source: Xinhua News Agency
In many developments and constructions in Chongqing, there are German companies. As of February 2024, Germany has set up a total of 84 foreign-funded enterprises in Chongqing, mainly in manufacturing, construction, scientific research and technical services, leasing and business services, and finance.
On April 15, Scholz arrived in Shanghai, where he met with representatives of the Chamber of Foreign Trade and held a discussion with students from Tongji University.
Zheng Chunrong, director of the Center for German Studies at Tongji University, believes that in Shanghai, the main focus of Scholz's visit is scientific research and economic and trade cooperation. Shanghai is not only China's financial center, but also a leader in the Yangtze River Delta region, where a large number of German companies have always been concentrated. Scholz continued to visit the projects of German-funded enterprises in Shanghai and held talks with representatives of German enterprises, highlighting the great importance he attaches to Sino-German economic and trade issues.
According to data released by the German Federal Statistical Office, the trade volume between Germany and China in 2023 will be 253.1 billion euros, and China has been Germany's largest trading partner for eight consecutive years since 2016.
According to the Bundesbank, in 2023, the total amount of German direct investment in China will reach 11.9 billion euros (about 91.887 billion yuan), a year-on-year increase of 4.3%, a record high, and the proportion of German investment in China in its total overseas investment will also rise to 10.3%, also hitting a new high in the past 10 years.
Germany is the EU country with the largest amount of investment and projects in China. According to the Ministry of Commerce of China, as of November 2023, China has approved a total of 12,634 investment projects by German companies in China, with an actual use amount of US$42.4 billion, mainly in the fields of automobiles, chemicals, power generation equipment, transportation, iron and steel, and communications.
Speaking at Tongji University in Shanghai, Scholz stressed the importance of ensuring fair competition in the European automotive sector.
Scholz said that the German market welcomes Chinese cars. He stressed the need for the European market to compete openly and fairly with Chinese automobiles, while warning that Europe would not tolerate dumping, overcapacity and intellectual property infringement.
Scholz also said that when Japanese and South Korean cars entered the European market, people were worried that Japanese and Korean cars would conquer the European market, but "that did not happen."
Scholz's visit comes at a time when the EU is preparing to impose tariffs on Chinese electric vehicles, and the issue of so-called "China's overcapacity" has recently sparked discussions in Europe.
The German Association of the Automotive Industry issued a document on the 13th to publicly oppose the EU's imposition of additional tariffs on Chinese imported electric vehicles, saying that this could trigger a trade war and threaten German employment, jeopardizing the EU's goal of promoting electric vehicles and digital transformation.
German companies are optimistic about the Chinese market
According to the Business Confidence Survey 2023/24 released by the German Chamber of Commerce in China on January 24, more than half of the companies surveyed plan to increase their investment in China in the next two years, after all, the Chinese market is too attractive to give up.
Ma Mingbo, chief representative of the Shanghai Representative Office of the German Chamber of Commerce and Industry, said in an interview that German companies are generally optimistic about China's investment environment. He said that in 2023, German direct investment in China will rise against the trend, which shows the confidence of German companies in the development of China.
It is understood that the competition for seats in the delegation of the same plane to China is very fierce, and the BMW Group Chairman Zipzer, Mercedes-Benz Chairman Kang Linsong, Siemens CEO Brähreren, Bayer CEO Bill Andersen, Zeiss Group President and CEO Karl Lamprecht and other corporate executives accompanied by a luxurious lineup, showing the firm confidence of the company to continue to expand its investment in China.
"This year marks the 10th anniversary of the establishment of the all-round strategic partnership between Germany and China, and I am deeply honored to accompany Chancellor Scholz on his visit to China again. The BMW Group has been rooted in China for 30 years and has benefited from free trade between Germany and China and China's high-level opening-up policy. We are confident in the prospects of the Chinese market and are determined to continue to invest in China and make a greater contribution to deepening German-Chinese cooperation. Zipzer said.
Scholz's first stop on his trip to China was Bosch, accompanied by Mercedes-Benz and BMW executives, which once again highlighted the importance of the Chinese market to the German automotive industry. In the wave of intelligent and electrification of Chinese automobiles, German car companies also hope to get a piece of the pie.
Zipzer pointed out that the successful development of the BMW Group in China is an example of long-term win-win cooperation between Germany and China, and that cross-border cooperation should be a key force in meeting current and future challenges. The development of new productive forces provides a broad space for further deepening German-Chinese cooperation. This covers a number of key areas, such as green development, industrial upgrading and digital innovation, which coincide with the core strategy of the BMW Group.
"China plays an important role in Mercedes-Benz's global strategy, not only as our largest single market, but also as one of the world's largest Mercedes-Benz production sites and technology innovation hubs. In the future, we will continue to invest in China, strengthen cooperation with Chinese partners, vigorously promote electrification and digital transformation, and continue to contribute to Sino-German economic and trade cooperation." Kang Linsong said.
In addition to German car companies, the "luxury delegation" also has good technological content, including the Zeiss Group, a pioneer in the optical and optoelectronic industry and a global benchmark in lithography technology.
"It is a great honor for the CEO of ZEISS Group to accompany the German Chancellor on his visit to China, and the prospects for German-Chinese economic and trade relations are promising. Maximilian Foers, President and CEO of Zeiss Greater China, said in an interview with the International Finance News, "China has been Germany's most important trading partner for eight consecutive years, demonstrating the depth and potential of bilateral cooperation. China will continue to be an important contributor to global economic growth over the next five years, so we are confident in our business and investment in China. ”
Forster and ZEISS look forward to deepening cooperation and learning from each other in the fields of sustainable development and technological innovation, so as to lay the foundation for a solid economic and trade relationship between the two countries.
"ZEISS operates in 50 countries around the world, and economic and trade cooperation is the only way for us to achieve a win-win situation. We look forward to working with our Chinese partners to develop together and share new opportunities in high-end industries such as scientific research and innovation, healthcare, etc." Foster said.
ZEISS entered the Chinese market in 1957. Over the years, ZEISS and Foster have been impressed by China's continuous investment in scientific research, open innovation system, talent training strategy and policy support for industrial development. At present, China has become ZEISS's largest single market in the world.
Foster believes that China is the main driving force shaping future technology and innovation trends, and is at the forefront of the world in digital transformation, new energy vehicles, clean energy, artificial intelligence, healthcare, myopia management and other fields.
In Shanghai, Scholz visited the Covestro Innovation Center in Asia Pacific. Covestro presented its leading innovations in the field of circular economy to the delegation and discussed opportunities for Sino-German cooperation.
"We are deeply honoured to welcome Chancellor Scholz and to have the opportunity to highlight the potential of the chemical industry and Covestro to contribute to the sustainable transition in China and around the world. Covestro CEO Dr. Steilemann "Our decades of development in China are the epitome of the spirit of Sino-German cooperation, which is beneficial to both sides. We look forward to the support of the two Governments in further promoting openness and mutual trust. ”
Lei Huanli, President of Covestro China, also said, "Covestro's commitment to the Chinese market remains unwavering. We continuously strive to build close partnerships across the value chain, actively advocate for a circular economy, and strive to achieve climate neutrality, so as to support customers, industries and countries in the success of green transformation and high-quality development. ”
The Asia-Pacific Innovation Center in Shanghai is one of Covestro's three global innovation hubs, with a focus on future-oriented applications such as electric vehicles, wind and photovoltaics, consumer electronics and buildings, and China is also one of Covestro's largest markets, accounting for more than 20% of the Group's total sales in 2023, with a cumulative investment of more than 4 billion euros in China.
On April 15, German Chancellor Olaf Scholz (front row, center) visited the Covestro Asia-Pacific Innovation Center in Shanghai's Pudong New Area. Image source: Xinhua News Agency
There is a lot of room for cooperation
Although economic and trade cooperation is the "ballast stone" of Sino-German relations, last year, the trade volume between China and Germany fluctuated to a certain extent. Bilateral trade between China and Germany totaled 15.5% compared to 2022. At the same time, some people in the EU and German political circles have concocted the discourse that economic and trade exchanges with China need to be "de-risked" and advocated reducing "dependence" on China.
On July 13, 2023, the German federal government unveiled a comprehensive China Strategy for the first time, using the European Commission's "three-in-one" vocabulary to describe China, claiming that China is "a partner, a competitor and a systemic adversary at the same time".
Hu Kun, secretary-general of the Sino-German Cooperation Research Center of the Chinese Academy of Social Sciences, said in an interview with the International Finance News that the "de-risking" proposed by Germany It is mainly reflected in the following four aspects: first, the close economic and trade ties between China and Germany, Germany's huge dependence on China's economy makes them realize that this is a risk, once China's demand declines, or geopolitical factors lead to supply chain disruptions, it will have a catastrophic impact on Germany; second, the issue of fair competition between Chinese enterprises in the international market; third, the risks posed by Chinese-backed enterprises involved in the construction of key infrastructure in Germany; and fourth, human rights and other issues.
The German government stressed that based on the lessons learned from the Russia-Ukraine conflict, Germany and Europe have had to reduce their economic dependence in key areas to strengthen their resilience, but this does not mean "decoupling" from China, and the two countries remain important markets for each other.
In an interview with the media before leaving for China, Scholz said that "there is no mention of 'decoupling' in our 'China strategy'". "Even if we want to diversify our supply chains, Germany and China will still have extensive economic and trade exchanges."
Hu Kun said that it is necessary to understand and respect Germany's idea of "de-risking". They want to reduce their dependence on China through diversification of investment and trade, but Germany itself believes that "decoupling" from China in the short term is unrealistic and unnecessary. For German companies, "decoupling" too quickly is unaffordable for them. These big companies have benefited a lot from China in the past few years, so they still want to maintain economic and trade relations with China, but they also want to be close to China and Germany on the issue of fair competition.
Hu Kun believes that China and Germany are each other's important markets, and there are many industries, and the economic and trade ties between the two sides are not so deep, so communication and cooperation can be strengthened in these fields.
Liu Ying, director of the cooperative research department of the Chongyang Institute for Financial Studies of Chinese University, believes that there is still a very broad space for cooperation between the two countries, especially in high-end manufacturing and advanced manufacturing. In addition to the traditional automobile, steel, medicine and biotechnology, the two countries have also become increasingly close in cooperation in the fields of artificial intelligence, digital economy, information and communication technology, energy and environment in recent years.
Chinese Ambassador to Germany Wu Ken previously said that amplifying contradictions and differences, inciting ideological confrontation, and peddling anxiety about competition with China are extremely harmful, and that non-cooperation is the biggest risk, and non-development is the biggest insecurity, and that joint response to challenges through closer cooperation is the proper meaning of "de-risking".
Journalist Wu Di also contributed to this article