Strengthening sustainable bonds

German Chancellor Olaf Scholz (right) welcomes Chinese Premier Li Qiang in Berlin (Germany).

China-Germany relations have been going well over the past decade. China's rapid economic growth and its demand for German cars and technology have fueled the growth of Europe's number one economy. 2022 marked the seventh consecutive year that China has been Germany's largest trading partner, with trade worth around 300 billion euros. More than 5,000 German companies with 1.1 million employees are operating in the East Asian country. The German economy benefits greatly from its partner's cheap labor, abundant raw materials and huge domestic market.

In that context, it is not surprising that the two sides place each other in a strategic position in the development process amid many difficulties in the global economy. The importance is shown first of all by the first foreign trip of the new Chinese Prime Minister Li Qiang. The statements of the two countries' leaders also show the need to get closer.

Chinese Premier Li Qiang pointed out that the world today is in a new phase of change and it is necessary for China and Germany to maintain the tradition of bilateral friendship. “Lack of cooperation is the biggest risk, lack of development is the biggest insecurity,” Chinese Premier Li Qiang stressed when meeting with leading German companies. For his part, German Chancellor Olaf Scholz welcomed the visit and stressed the importance of the seventh round of government-level consultations between Germany and China, under the theme “Acting Together for Sustainability,” which Berlin only conducts with particularly close partners.

In addition to efforts to strengthen cooperation, observers believe that China also wants to overcome differences with Germany in the context of a volatile world. Common understanding is especially important at this time when there are more and more "headwinds" affecting the bilateral relationship. Among them, it is necessary to mention the relationship between China and the US is becoming tense and the European Union (EU) wants to reduce economic dependence on China as well as the impacts from the conflict in Ukraine... With the European Commission proposing a strategy to control investment and exports to China, Berlin's voice will be important in ensuring that the EU does not go too far in decisions to regulate trade relations.

Germany, like some European countries, also wants China to play a supporting role against the risks that may arise from recent US policies. Washington's exploitation of Europe's energy supply shortage due to the Russia-Ukraine conflict to export liquefied natural gas (LNG) at prices four times higher than domestic prices has been described as "unacceptable" to Germany. Meanwhile, the US Inflation Reduction Act (IRA) is ostensibly intended to support domestic industry during a period of supply chain disruption, but in reality it is protectionist in nature, causing German industries to lose their competitive advantage.

However, these aspirations are currently facing some obstacles. There is a growing sense of wariness within Berlin regarding the mergers and acquisitions that leading Chinese companies are undertaking with many German companies. There are also concerns about technology leaks and patents. Moreover, promoting cooperation with China at this time will require German Chancellor Olaf Scholz to be skillful in balancing relations with allies in the Group of Seven (G7): Canada, France, Italy, Japan, the UK and the US. For its part, Beijing has long been critical of Berlin's stance on the conflict in Ukraine, as well as on the Taiwan issue.

In any case, the trend of a “win-win” relationship between Germany and China is obvious and can be seen as inevitable. Some differences in views certainly cannot prevent the two sides from seeking opportunities for cooperation. In that context, the visit of the Chinese Prime Minister is clearly a valuable opportunity for the two sides to sit down together, clearly define the direction and appropriate steps for the coming time.

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