Sino-German industrial collaboration for mutual prosperity

Editor's note: Belunn Se, a special commentator on current affairs for CGTN, is a senior industry observer based in Shenzhen, China. The article reflects the author's opinions and not necessarily the views of CGTN.

On April 14, German Chancellor Olaf Scholz arrived in Chongqing, kicking off his three-day visit to China. This is also the second time he has visited China since taking office as German chancellor. During this visit, Scholz is being accompanied by a delegation consisting of three cabinet ministers from the environment, agriculture and transportation sectors, as well as senior executives from renowned companies such as Siemens, Mercedes-Benz, and BMW. This not only highlights China's importance as Germany's largest trading partner but also underscores German companies' attention to, and confidence in the Chinese market.

Scholz's first stop was at Bosch Hydrogen Powertrain Systems (Chongqing) Co Ltd. This joint venture between the Bosch Group and Qingling Motors specializes in hydrogen powertrain systems, dubbed the "heart" of hydrogen fuel cell vehicles. The Bosch Group, which has long been deeply involved in the Chinese market, will also invest around 1 billion euros in Suzhou this year to establish a research, development and manufacturing base for new energy vehicle core components and autonomous driving.

While German companies remain highly interested in the Chinese market, they cannot hide their concerns about global geopolitical uncertainties and the rise of protectionism. However, in recent years, despite the ever-changing global economic situation, Sino-German economic and trade cooperation has demonstrated remarkable resilience. Companies from both sides have pragmatically promoted bilateral collaboration and actively explored new areas of cooperation, continuously deepening practical cooperation.

Taking Chongqing as an example, as of February this year, 84 German-invested companies have been established in the city, spanning industries such as manufacturing, scientific research, leasing services and finance.

Bilateral economic and trade cooperation is not only the "ballast stone" of Sino-German relations but also the "stabilizer" for EU-China relations. Data shows that in 2023, the trade volume between China and Germany reached 253.1 billion euros, with China being Germany's largest global trading partner for eight consecutive years. The two countries have close cooperation in areas such as maglev trains, automobiles, healthcare, green energy, and jointly addressing climate change. Currently, a mutually beneficial pattern has been formed through two-way investment.

The automotive industry is a key area of Sino-German economic and trade cooperation. Volkswagen Group delivered a total of 3.236 million vehicles in China across all its brands in 2023, an increase of 1.6 percent compared to 2022, accounting for 35 percent of its global deliveries of 9.24 million vehicles. China remains Volkswagen's largest single market. To further localize its operations, Volkswagen will invest 2.5 billion euros to expand its production and innovation center in Hefei.

On the other hand, cost-effective new energy intelligent vehicles made in China by local and overseas brands, leveraging their complete industrial chain, low production costs, and leading advantages in electrification and intelligent technologies, are expanding in the European market. These brands, including BYD, Nio, Volkswagen and others, provide European consumers with affordable options. It was previously pointed out that the selling price of the Volkswagen ID. new energy vehicle produced in China and exported to Europe, including shipping and tariff costs, is still one-third lower than the price of the same model produced locally in Europe.

Moreover, it is worth noting that with market globalization and supply chain localization, Chinese battery industry chain companies are accelerating their pace in Europe, not only supporting the local development of the new energy vehicle industry but also driving substantial local employment opportunities. Back in 2019, EV battery giant CATL invested a total of €1.8 billion (about $1.9 billion) to build its first overseas factory in Thuringia, Germany. In September 2023, Gotion High-Tech's first battery production line in Goettingen, Germany went into operation.

Under the overarching trend of "two-way opening up," the industrial sectors of China and Germany are deepening practical cooperation across multiple domains, achieving win-win cooperation. We have reason to believe that the German chancellor's visit will further enhance mutual trust, expand cooperation space, and help both sides seek more consensus under the new situation and jointly seize new opportunities in the comprehensive strategic partnership between China and Germany.

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