Trade boosted by stronger economic collaboration

Improvements in trade and business ties advantageous for both countries

The economic and trade ties between China and Germany will be further bolstered by advanced manufacturing, trade in services, and their complementary industrial structure despite challenges threatening the recovery of the global economy, said officials and business leaders.

With this year marking the 50th anniversary of the establishment of bilateral diplomatic relations, they said the two countries, amid increasing pressure on the global economy, have not only helped ensure the stability of Eurasian production cooperation and the smooth operation of the China-Europe freight train service but also contributed to the healthy growth of European Union-China relations.

While Germany is one of China's most important trading partners in Europe, China has been Germany's top trade partner for six consecutive years. The trade volume between them has mushroomed to more than $250 billion in 2021 from less than $300 million at the very beginning of diplomatic relations, according to the Ministry of Foreign Affairs.

The Chinese market is of paramount importance to many German companies. They said they are committed to the Chinese market and will keep investing. German companies expect growth in many industries — especially in the field of decarbonization, e-mobility and connected driving in the years ahead, said Jens Hildebrandt, executive director of the German Chamber of Commerce in North China.

Zhou Mi, a senior researcher at Beijing-based Chinese Academy of International Trade and Economic Cooperation, said even though both the Chinese and German economies have been affected by the COVID-19 pandemic and weak global demand, the degree of interdependence between the two remains stable in bilateral cross-industry trade.

Trade between the two countries totaled $155 billion between January and August this year, up 2 percent on a yearly basis, data from the General Administration of Customs showed.

China exports mainly computers, mechanical and electrical products, base metals, chemical products, textiles, garments and household appliances to Germany.

In addition to vehicles and auto parts, mechanical appliances, toolmaking machines, precision instruments, motors, and electrical and pharmaceutical products, Germany's exports to China also include daily necessities, excavator parts, optical instruments, sensors, steel plates and chemical products.

Currently, more than 2,000 Chinese companies are running businesses in Germany and more than 7,000 German companies have built a business presence in China, said the Ministry of Foreign Affairs.

Nearly 60 percent of German companies in China reported improved business operations last year, and 71 percent plan further investment in the country, according to a report released by the German Chamber of Commerce in China and global consulting firm KPMG early this year.

"As part of our strategy, China remains our fastest-growing market and one of the focus markets for future growth. Our company has achieved record-breaking financial results over and over again in recent years," said Frank Heinricht, CEO and chairman of the management board of Schott AG, a German producer of specialty glass and a supplier to the pharmaceutical and medical industries.

Boosted by huge market demand, the company's sales in China surged by 24 percent to 350 million euros ($359 million) in its last fiscal year.

These positive results were driven by rapid developments in local industries, including consumer electronics, home appliances, healthcare and pharmaceuticals, and telecommunications and data communications, he said.

"We expect to achieve our growth goals in the upcoming years, and are committed to an ongoing and robust investment strategy," said Heinricht, adding the Mainz-headquartered group has increased its global investment to 450 million euros in the current fiscal year and a big part of this plan will be invested in China.

He said that foreign companies can still contribute to China's technological progress and economic growth, especially in high-tech sectors such as consumer electronics, astronomy and medical and life sciences.

Echoing such a positive sentiment, Kilian Aviles, senior vice-president of DEKRA APAC and managing director for China at DEKRA group, a Stuttgart-based testing, inspection and certification organization with more than 48,000 employees worldwide, said the company will further expand its service network and raise investments in the area of sustainability services in China.

"China's service sector has become the main driver of the country's economic growth and the basis for the next stage in its development. Its market will keep the fast growth pace of trade in services under further opening-up," said Aviles.

As economic cooperation between China and Germany is cohesive, he said both countries have a tight connection to global supply chains and markets, particularly in the areas of automotive manufacturing and related innovative activities.

The sustained China-Germany cooperation will make great contributions to global development in new areas such as new energy and the green and digital economy and unleash the growth potential in trade in services, Aviles added.

Rajat Agarwal, president of Henkel China, a unit of the German chemical and consumer goods manufacturer, said the company will continue investing in China with sustainable innovations and solutions for the industrial sectors such as packaged food, home improvement, new energy vehicles, telecom, electronics and consumer segments such as hair coloring and home cleaning.

After investing in a material science-focused fund in China last year, he said the company is looking forward to the completion of its new inspiration center in Shanghai, which will be the group's second-largest facility of this kind in the world. It will help the company better serve a variety of industries and develop leading adhesives, sealants, and functional coatings solutions.

China has made a lot of progress in further opening up the economy, offering easier market access and creating a more transparent business environment. These ongoing initiatives pave the way for a greater level of market access and provide a better environment for foreign enterprises in China. As a result, multinationals like Henkel continue to enjoy shared opportunities, Agarwal noted.

Sun Fuquan, vice-president of the Beijing-based Chinese Academy of Science and Technology for Development, said German companies continue to see business opportunities in China not only in areas like the rapidly growing trend of high-quality domestic consumption, but also in new areas like new digital technologies that the country has shown time and again it readily adopts.

Eager to attract more foreign direct investment, the government will accelerate the pace of introducing the new edition of the industry catalog of sectors encouraging foreign investment, further expanding the scope of foreign investment in advanced manufacturing, scientific and technological innovation and modern services, the Ministry of Commerce announced in early September.

The government has also established a number of working teams to enhance the service guarantees for foreign-funded companies and key foreign-funded projects, giving full play to the role of foreign trade and foreign investment coordination mechanisms.