German Chancellor Olaf Scholz's visit China on Friday is expected to set the tone for bilateral relations and breathe new life into how the West interacts with China, Chinese experts said.
According to media reports, Scholz will also lead a delegation of senior business leaders to China, including the chief executive officers of Adidas, Deutsche Bank, Siemens, vaccine maker BioNTech, and Volkswagen. Also on the list are the CEOs of BASF, Bayer, BMV, and pharmaceuticals group Merck KGaA and Wacker Chemie.
The delegation list shows the diversity of areas open to cooperation between China and Germany, with such enterprises having made big or quite successful investments in China, said professor Zheng Chunrong, director of the German Studies Center at Tongji University.
"Germany's manufacturing falls into the high end category," Zheng said. "China's manufacturing industry is also strong, but differs in areas from Germany's. And the market in China is vast. So there remains great potential for both countries to complement each other economically.”
China was Germany's top trading partner over the last six years, with bilateral trade reaching $245 billion in 2021, official data shows. On September 6, German chemical giant BASF launched operations in first batch of plants at its Verbund site in Zhanjiang, South China's Guangdong Province. The site will see a total investment of approximately 10 billion euros ($9.7 billion) by 2030 and will be the largest single investment by a German enterprise in China.
“It also indicates that German enterprises are optimistic about the Chinese marketplace,” Zheng said. “They are certain that bigger opportunities are in store in terms of policy incentives and the level of opening-up after the 20th National Congress of the CPC.”
Wang Yiwei, Jean Monnet Chair Professor and director of the Center for European Studies at the Renmin University of China, said the China market cannot easily be substituted for another, especially since the Russia-Ukraine conflict, with production costs in energy-related industries going through the roof.
“For example, the auto industry is undergoing a shift to electric vehicles,” he said. “China is a major raw material provider and also the largest market for such technology.”
Wang also said the 20th National Congress of the CPC unlocked new opportunities for German investors with an emphasis on high quality development and a higher level of opening-up as well as the dual-circulation policy in its mid-and-long term development agenda.
“The dual-circulation strategy pays special attention to industrial sectors including drugs and food, key components of the supply chain, as well as in raw materials and food security,” he said. “Both countries can explore new areas of cooperation and unleash new potential.”
Scholz's trip will make him the first Western leader to visit China since the start of the COVID-19 pandemic. But the decision has been met with skepticism and concerns in Europe over the vulnerability of the German economy due to an increased economic reliance on China.
Decoupling from China is a "pseudo-proposition," according to Wang. "It's unrealistic to completely decouple from China," he said.
In fact, many countries including Germany and China have been adjusting their global supply chain policy in the direction of sporadic distribution, autonomy, and increased resiliency and security. Such adjustments and the decoupling proposal in the narrative of Western politicians are two different things, Wang said.
"Scholz is a pragmatic leader," he said. "A crucial mission of his visit is to find new areas in which the two countries can cooperate and avoid areas of competition. If such areas can be found, there will be a much bigger space for the development of China-Germany relations. It can also set a good example for relations between China and other EU member states, and even all other Western developed countries."
Last month at a business conference in Berlin, Scholz said “decoupling is the wrong answer.” Early on, the top German leader also warned German businesses not to “put all their eggs in one basket.”
“Diversification in trade doesn’t mean decoupling from China,” Zheng said.
The visit coincides with the 50th anniversary of the establishment of diplomatic relations between China and Germany. Zhao Lijian, spokesperson of Foreign Ministry of China, said Tuesday that the visit will meet the interest of both sides and will inject new impetus into deepening the China-Germany comprehensive strategic partnership in a new era, and contribute to world peace, stability, and growth.
Zheng said that Scholz’s visit is likely to also be seen as a contributing effort made by Germany, the largest economy in Europe, to the development of China-EU relations, and sound China-Germany relations will surely turn the wheels of China-Europe relations.
“While the visit will set the tone for China-Germany relations, it also serves as a bellwether for China-Europe relations,” he said.
Facing pressure from economic downturns and soaring prices caused by the energy crisis, Zheng said China and Germany have shared interests in protecting the open and inclusive international trade order for the recovery of the global economy, and the stability of the industrial supply chain.
“Both countries can exchange views through this visit and propose shared beliefs,” he said.
(Hou Chenchen also contributed to the article)