Scholz's China visit: Cooperation still trend of China-Germany ties

Editor's note: Sun Yanhong, a special commentator on current affairs for CGTN, is a Senior Research Fellow and Head of the Division of European Economic Studies at the Institute of European Studies (IES), Chinese Academy of Social Sciences (CASS). The article reflects the author's opinions and not necessarily those of CGTN.

German Chancellor Olaf Scholz, accompanied by senior representatives of a host of renowned German companies including Siemens, BMW, Zeiss, Bayer and Mercedes-Benz, arrived in Chongqing Municipality on Sunday to kick off his three-day official visit to China.

It is Scholz's second visit to China since taking office as German Chancellor, and his first visit to China after Berlin released its first Strategy on China of the Government of the Federal Republic of Germany in July 2023.

Against the backdrop of the aftermath influences of the COVID-19 pandemic and the intensifying geopolitical tensions, voices appealing to reduce economic dependence on China and even to "decouple" from the country have been frequently heard in Germany. For instance, Germany's Strategy on China – firmly rooted in the EU's common policy on Beijing – emphasizes that China is "simultaneously a partner, competitor and systematic rival for the Federal Government." It proposes to "de-risk" from and reduce dependences on China but clearly states its position of not pursuing a"decoupling" of the two economies.

Apparently, Berlin's positioning of China as a "competitor" and "systemic rival" does not reflect the reality. But the German government's clear statement of not "decoupling" from China has created space for the two countries to continue exploring the potential for cooperation. In this context, Scholz undertakes his three-day China trip.

Despite "de-risk" voices, economic cooperation has been the cornerstone of China-Germany relations. According to statistics authority Destatis, China has been Germany's largest global trading partner for eight consecutive years. In the meantime, Germany has been China's largest trading partner in Europe for 49 consecutive years. While China has been Germany's largest source of imported goods since 2015, the Chinese market is the fourth largest export destination for German goods.

Calls for "de-risking" have not thwarted German companies from investing in China. The visit by Scholz and his business delegation to China further demonstrates that German firms are optimistic about the prospects of Beijing-Berlin economic ties.

According to a report from the German Economic Institute (IW), German direct investment in China reached a record high of 11.9 billion euros ($12.7 billion) in 2023, a year-on-year increase of 4.3 percent. Investment in China as a share of Germany's total outward investment increased to 10.3 percent last year, the highest level since 2014. Over 90 percent of surveyed German companies plan to continue doing business in China, and more than half plan to increase investment in the country over the next two years, according to the Business Confidence Survey 2023/24 released by the German Chamber of Commerce in China in January this year.

Admittedly, China and Germany face competitions, but the space for cooperation is still very broad.Take green technologies that the two countries are vigorously developing as an example. Since 2022, China's exports of "new three" products – represented by electric vehicles, photovoltaic products, and lithium batteries – to Germany and the EU have grown rapidly, indicating the importance of China's role in promoting green transformation in Europe.

While the rapid growth of China's green energy has raised the anxiety level of some Germans, the German government and companies remain generally rational and objective in cooperating with China on green technologies. Unlike some other Western countries that blame China for domestic failures, Berlin is clear that continuous efforts in innovation are vital in competition. Confrontation will only lead to multi-lose scenarios. Given China's position as one of the world's largest markets and production bases, strengthened cooperation and innovation are essential in Germany's green transformation.

"Competition should spur us on, but not scare us," Scholz said in a speech at the IAA auto show in Munich last September, urging Germany's carmakers to embrace competition from emerging economies and not be intimidated by the rise of China's electric vehicle producers.

It is also worth noting that despite competition, most German car manufacturers do not support, or even oppose, the recent anti-subsidy investigation launched by the European Commission into Chinese electric vehicles. "We want to sell our cars … But this means that we are also open to get the cars from other countries on the German market," Scholz said earlier with Bloomberg.

Against the backdrop of slowing economic growth, an upgrade in China-Germany bilateral cooperation will not only boost the two countries' economic recovery but also inject impetus into world economic growth. While China-Germany ties have been influenced by geopolitical factors in recent years, there is still vast space for multi-win cooperation as long as the two countries maintain a pragmatic and open attitude, strengthen communications and seek more common ground while reserving differences.

And, Scholz's visit to China is the latest example of respect-based dialogues between China and Europe, a prerequisite to multi-win cooperation between the two economies.

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