Editor's note: Gunter Schoech, a special commentator on current affairs for CGTN, is the founder and managing director of the market research and consulting company Debrouillage. The article reflects the author's opinions and not necessarily the views of CGTN.

On July 20, 2023, the German government, for the first time ever, published a strategy on China. It had been presented by the Green Party-led foreign ministry and its head, Annalena Baerbock, notorious in China for her rather confrontational style and open critique.

On October 1, 2023, Chinese Vice Premier He Lifeng and German Minister of Finance Christian Lindner co-chaired the third China-Germany High Level Financial Dialogue in Frankfurt, attended by senior officials from the two countries.

In the joint statement release after the dialogue by the two sides, we can observe some reiterations but also some new key notes: 

On a high level, the joint statement emphasizes deepening the cooperation bilaterally and multilaterally within the frameworks of the UN, the IMF, the WTO, the World Bank and G20, explicitly including the common framework for restructuring government debt.

Lindner acknowledges that no global financial solutions are viable without China. As we already knew, Germany does not want de-coupling or a renewed formation of political blocks as during the Cold War. Germany refuses to be put into a situation where it or other countries would have to choose one camp or the other exclusively.

In both documents, Germany insists on fair and equitable cooperation on a level playing field. The terms "rules based international order" appeared multiple times in the China strategy. Unfortunately, "rules based" is one of those buzz words which would need some context and explanation. Who made these rules and when? Do they still reflect the current balance of power?

The China-Germany High Level Financial Dialogue clarifies the situation for the financial and insurance industries.

It must be noted that this negotiation was led exclusively by the Ministry of Finance, under the Free Democratic Party (FDP) leadership, while the China Strategy was the end product of almost two years of internal negotiations between the Social Democrats (SPD) of Chancellor Olaf Scholz, the FDP, and the most hawkish – the Green Party-led Foreign Ministry, known for ideological stances and historically very few friends in industry and commerce.

So what we see here is the handwriting of the economy-friendly FDP. In the press conference after the High Level Financial Dialogue, the tone was decidedly warm, cooperative, and personal as between old friends, in stark contrast to Baerbock's visit to Beijing this April.

There wasn't much coverage in the German press though. Yet the economic elites in Germany are paying close attention and seem to like what they heard. "Money doesn't stink" is a German adage, meaning people should not forego long-term business for ideological zealots. Germany's export-oriented industry in general is not fond of protectionism. For instance, the German automotive industry rejects the European Commission's intentions to start an anti-subsidy inquiry into Chinese electric cars. Decreasing barriers instead of the opposite, and competing fairly is what German businesses favor.

Not explicitly mentioned, but nonetheless a reality in the background, is the accelerating de-dollarization of international trade, and the implied risks and opportunities for countries and financial institutions. Germany needs to be compatible with both sides.

The greenback's share in global reserves slid last year at 10 times the average speed seen in the past two decades. Weaponizing the dollar for sanctions in the wake of the Russia-Ukraine conflict has made many countries especially with large foreign currency reserves think twice.

Both the RMB and the euro are obvious potential alternatives. Adjusting for exchange rate movements, the dollar has lost about 11 percent of its market share since 2016 and double that amount since 2008, according to Stephen Jen, CEO and co-CIO of Eurizon SLJ Capital. The U.S. currency now represents about 58 percent of total global official reserves, down from 73 percent in 2001 when it was the undisputed global reserve currency. 

Lindner did not tire of pointing out the importance of private enterprises participating increasingly in mutual opening up in the talks. Meanwhile, China welcomes qualified German insurance companies to apply for operational licenses, while encouraging at least one bank headquartered in China to establish a subsidiary in Germany as its European hub.

Qualified German entities are encouraged to actively participate in the China Inter-Bank Market, or to conduct RMB business to facilitate cross-border trade and investment by lifting bilateral restrictions and possible obstacles for cross-border transactions.

So beyond lofty but vague declarations of intent, there were tangible results at the dialogue, and the pace of China-Germany financial cooperation is slated to increase.

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