Why Beijing-Berlin cooperation is not a 'risk'

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Against "de-risking" voices, the world's second- and third-largest economies are seeking to improve their bilateral relations in an all-round way.

"The two countries have huge potential for win-win cooperation in both traditional fields such as machinery manufacturing and automobiles and emerging fields including green transformation and digital artificial intelligence," Chinese President Xi Jinping made the remarks when meeting with visiting German Chancellor Olaf Scholz in Beijing on Tuesday.

The deeply intertwined industrial and supply chains of China and Germany determine the high interdependence between the two economies. Over the past half a century, Germany has been China's largest trading partner in Europe, with their bilateral trade accounting for one-third of the total China-EU trade, according to official statistics.

During his high-profile stay in three Chinese cities, Scholz's intense visits to German firms in the areas of renewable energy are seen as a signal of strengthened Beijing-Berlin cooperation in green energy. "Only by working together will we be able to find solutions to stop climate change and manage the green energy transition in a socially just way," Scholz said during his China trip, one of his longest bilateral visits since taking office.

But in the meantime, voices calling for "de-risking" are increasingly heard in the EU.

It is worth noting that Scholz's China trip was his first since the launch of Strategy on China of the Government of the Federal Republic of Germany last July, which labeled China as "simultaneously a partner, competitor and systematic rival." The positioning of a "systematic rival" – an attempt to avoid tethering Germany too closely to China – apparently has cast Beijing-Berlin ties under shadow.

Meanwhile, criticisms against China's alleged "dumping, overcapacity and violations of intellectual property rights" mount in Europe, prompting the EU to undertake an anti-subsidy investigation into Chinese electric vehicles.

True, the China-Germany relationship faces some difficulties. But this cannot thwart their multi-win cooperation. As Xi emphasized, China's export of electric vehicles, lithium batteries and photovoltaic products have not only enriched global supply and alleviated global inflationary pressure, but also contributed greatly to the global response to climate change and green and low-carbon transformation.

In this context, German companies – against criticisms of China's "unfair competition" and calls for "de-risking" – are boosting their investments in the Chinese market. German direct investment in China witnessed a 4.3 percent year-on-year increase last year, reaching a record high of 11.9 billion euros ($12.7 billion).

The fact that top brass from renowned German firms including BMW, Mercedes-Benz, Zeiss, Bayer and Siemens were vying to join Scholz's China trip demonstrates German investors' confidence in the Chinese market. "We believe in the Chinese market, and we'll be doubling down on our investment," Siemens CEO said on Sunday.

"China plays a pivotal role in Mercedes-Benz's global strategy, serving not only as the home of our largest market and one of our largest manufacturing sites but also one of our global centers for technological innovation. We will continue to invest in China," the Global Times quoted Ola Källenius, chairman of the board of Mercedes-Benz Group AG, as saying.

In the era of global integration, "de-risking" or "decoupling" is not possible. Economic principles require Germany and the EU to view the issue of production capacity objectively from a market-oriented and global perspective. While Germany is considering accelerating its green transformation, China has advantages in costs and production capacity.

Against "de-risking" calls, the only certainty for Berlin is cooperation with Beijing. As Xi stressed, cooperation between the two countries is not a "risk" as some Westerners hype, but an opportunity for the future.

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