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China

Last updated in April 2017

Politics

The Federal Republic of Germany and the People’s Republic of China established diplomatic relations in 1972.

Over the past more than 40 years, these relations have become extremely wide-ranging, remarkably close and of growing political substance. Like all other EU partners, Germany adheres to a one-China policy. China is Germany’s most important economic partner in Asia and Germany is China’s leading trading partner in Europe. Given the growing uncertainties in the world and the repercussions of the global economic and financial crisis which are still being felt, cooperation and coordination of policy between the two strategic partners Germany and China is becoming increasingly important. China views Germany both economically and politically as its key partner in Europe. Important elements of bilateral relations are regular high-level coordination of policy, dynamic trade relations, investment, environmental cooperation and cooperation in the cultural and scientific sectors.

Since 2004, Sino-German relations have therefore been described as a “strategic partnership in global responsibility”. Relations were upgraded to a “comprehensive strategic partnership” during President Xi Jinping’s official visit to Germany at the end of March 2014. Regular intergovernmental consultations have been held since 2011, most recently in June 2016. These are attended by the two Cabinets and presided over by the two heads of government.

In addition, there are a total of more than 60 dialogue mechanisms in place, many of them at senior government level: between line ministers, state secretaries and the heads of government authorities. Important new formats for coordinating policy are the strategic dialogues on foreign and security policy between the two countries’ foreign ministers and the high-level dialogue on financial policy between the two finance ministers and central bank heads.

Although bilateral relations are developing positively overall, fundamental differences remain over human rights, especially individual freedoms. Germany remains keen to see China continue to make progress on the domestic front, in developing the rule of law and social systems, in increasing political and economic justice, and above all in allowing fundamental personal rights and peacefully resolving minority issues. An important cooperation instrument to promote the rule of law in China is the rule of law dialogue. Equally important is the annual bilateral human rights dialogue.


Rule of law dialogue and human rights dialogue

Sino-German dialogue on the rule of law dates back to the agreement reached in November 1999 by then Federal Chancellor Gerhard Schröder and then Chinese Prime Minister Zhu Rongji. It is designed to offer a long-term approach to developing the rule of law and implementing human rights in China. The rule of law dialogue is coordinated on the German side by the Federal Ministry of Justice and Consumer Protection (BMJV), and on the Chinese side by the State Council’s Legislative Affairs Office (LAO).

A symposium is held once a year at which German and Chinese government representatives and experts debate a topical legal issue. The most recent Sino-German Rule of Law Symposium was held in July 2016 in Germany and was presided over by Federal Minister of Justice Maas and Minister Song Dahan of the State Council’s Legislative Affairs Office. The subject of the symposium was Regulation Systems and Mechanisms to Protect Consumer Rights in the Internet Age.

The insights and ideas gained from this dialogue have had an impact on the development of legal norms in China, thus also supporting the Chinese government’s efforts to enforce legal norms in specific areas.

The most recent dialogue on human rights was held from 6 to 9 November 2016 in Berlin and Traunstein. The talks focused on implementing the rule of law (in particular access to lawyers and their rights), restrictions on freedom of speech and of the press, the use of torture and the human rights situation in Tibet, including individual cases.


Economy

With bilateral trade worth 169.9 billion euros, China surpassed France (167.2 billion euros) and the United States (164.7 billion euros) in 2016 to become Germany’s most important trading partner. German exports to China stabilised again in 2016 after experiencing a moderate decline the previous year. According to Federal Statistical Office (Destatis) figures, German exports to China increased by around 6.95 percent, to 76.1 billion euros, compared with 2015, while German imports from China in the same period grew by 2.5 percent to more than 93.8 billion euros.

The transformation of China’s previously export-driven economy into one geared to sustainable, innovation-driven growth and the strengthening of domestic consumption offers great opportunities for German business. In January 2014, China opened in Berlin its first European chamber of commerce with a view to further promoting economic relations and investment. In 2015, China was also the official partner country at the CeBIT technology trade fair, at which numerous Chinese companies were represented.

China is the fourth biggest buyer of German exports, after France, the United States and the United Kingdom, and the principal market for German machinery worldwide. China is the biggest buyer of German motor vehicles, after the United States and the United Kingdom. In 2016, the Volkswagen Group alone sold 3.98 million vehicles in China. In no other country are more German vehicle parts sold. In 2015, German exports of electronic goods to China amounted to 10.4 billion euros, while in the same year sales of machinery totalled 16.3 billion euros and exports of motor vehicles/land vehicles were worth 17.7 billion euros. German exports of food and semi-luxury goods to China (meat, dairy products and beverages) increased in 2015 to approximately 1.1 billion euros. China thus remains one of the most important overseas markets for products of the German food and agriculture industry.


Investment

So far, German companies have been engaged in China to a much greater degree than Chinese companies in Germany, this being not least a reflection of the differences in the two economies’ level of development. There are currently some 900 Chinese companies operating in Germany, compared with the more than 5000 German companies active in China. Overall, investments by German companies in China have so far been many times higher than the other way around. There is, however, evidence of a significant increase in Chinese business activities in Germany, due in part to the Chinese government’s Going Global Strategy, which encourages and supports investment by Chinese companies abroad. In 2015, Chinese business takeovers in Europe were worth an estimated 20 billion euros. Initial estimates for 2016 show another record figure: 35 billion euros of Chinese investment in the EU, of which 11 billion euros (or 31 percent) went to Germany.

Chinese investment in Germany has focused on the following sectors: mechanical engineering, electronics and consumer goods and information and communication technology. Prominent acquisitions have included the purchase of robot manufacturer Kuka (4.4 billion euros), waste management company EEW (1.4 billion euros) and industrial machinery maker KraussMaffei (925 million euros).

In recent years, China has been very successful in attracting foreign direct investment, but it needs to improve transparency and certainty for investors to ensure that it remains an attractive business destination, especially for small and medium-sized companies. Investors expect more freedom of contract and equal market access conditions, in particular the same access to public tenders as Chinese companies. Particularly in the country’s hitherto strictly regulated but fast-growing service sector (banking, insurance, logistics and trade), time will show whether the Chinese government’s reform plans bring about any improvement. Up to now, foreign companies have been legally denied access to many interesting business sectors – or such access has been de facto impossible.

In China, a detailed investment catalogue for foreign companies specifies for each market segment whether and in what form foreign investment is welcome. It contains a detailed list of sectors that can be classified in one of three categories: 1. prohibited, 2. permitted under certain conditions or 3. worthy of support. All non-listed projects are permitted. The catalogue does not, however, contain any legally binding or definitive requirements. A new, revised catalogue has been in force since April 2015, but this does not contain any significant new liberalisations. In December 2016, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) jointly released a draft revision of the Foreign Investment Industrial Guidance Catalogue. This new version, however, also fails to provide major improvements for foreign investors. Market access restrictions in China remain asymmetrical compared with those in the EU, thus putting foreign investors at a disadvantage.

A German-Chinese bilateral investment protection agreement has been in place since 2005. This agreement regulates the overall conditions for mutual investment and creates a level playing field for investors on both sides. In November 2013, negotiations began on a comprehensive investment agreement between the EU and China, which besides regulating investment protection is also designed to improve market access. The negotiations will continue into 2017.


Export trade promotion

To promote German business interests in China, there are – besides the German Embassy in Beijing and the German Consulates General in Shanghai, Guangzhou (Canton), Chengdu and Shenyang – Delegate Offices of German Industry and Commerce (under the umbrella of the German Chambers of Commerce Abroad network, AHK, which is coordinated by the Association of German Chambers of Commerce and Industry, DIHK). Germany Trade and Invest (GTAI) also has foreign staff responsible for foreign trade (in Beijing, Shanghai and Hong Kong) and investment promotion (in Beijing and Shanghai). The Delegate Offices of German Industry and Commerce and the GTAI offices work closely with the German Embassy in Beijing and the German Consulates General. German companies in (mainland) China have set up a chamber, which is headed by the Delegation of German Industry and Commerce in Beijing. There is a German Business Association in Hong Kong.


Energy, the environment and climate

Building an “ecological civilisation” is one of the guiding principles of China’s current leadership under Xi Jinping and Li Keqiang. The idea is to achieve a better balance than in the past between economic development and modernisation, industry, agriculture, urbanisation and ecology. Key issues that China is therefore addressing more vigorously are climate protection measures (in particular emission reduction and climate change adaptation measures), modernisation of its environmental policy, a more eco-friendly energy policy including the development of non-fossil energy sources, improving energy efficiency across the board and dealing with the serious problems resulting from the continuing substantial urbanisation pressures in China. The current state of China’s environmental assets underlines the need for such measures: continuing severe air pollution in wide areas of the country, increasingly visible water-availability and water-quality problems and their negative impact on agriculture as well as poor soil quality. Reinforcing the need for action is the foreseeable increase in energy consumption in the coming years.

The pioneering role played by Germany in many areas of climate and environmental protection as well as in the alternative-energy sector and energy efficiency opens up a wealth of opportunities for establishing partnerships with China. Germany has adopted an ambitious energy programme that involves phasing out nuclear energy and developing renewable sources of energy. With its current Five-Year Plan, China’s national government is increasingly seeking to promote qualitatively sustainable rather than purely quantitative growth.

With its International Climate Initiative, the German Government supports numerous climate protection projects, including advising China on the introduction of an emission trading system, the development of low-carbon transport systems, low-carbon land use and offering further-education measures for decision makers. At an annual Working Group on Climate Change, the two countries engage in an intensive exchange of views on current developments and measures. This work of this body is based on a Memorandum of Understanding on Cooperation in Combating Climate Change, which was agreed between the two countries in 2009.

A bilateral urbanisation partnership has been in place since 2013, which is designed to ensure the sustainability of China’s urbanisation process by implementing concrete projects. As a result, this opens up numerous potential areas of collaboration and opportunities for business.


Development cooperation

After embarking on its opening-up policy in 1978 and implementing a series of gradual economic reforms, the People’s Republic of China has undergone rapid development and has lifted more than 500 million people out of poverty. People in China are considered to be below the poverty level if their income is less than 2300 renminbi (around 325 euros) a year. In its 13th Five-Year Plan, China has committed itself to eradicating poverty among its remaining poor population – some 43 million people – by 2020. If China achieves this, it will have met this central development goal ten years earlier than set out in the 2030 Agenda for Sustainable Development, which the UN General Assembly adopted in 2015.

In 2009, the German Government decided to end traditional development cooperation with China and has since made no new financial commitments. All remaining programmes are to be completed in the course of the next few years. In future, it will be increasingly important to involve China more closely in the resolution of global development problems and in international systems of responsibility. This applies in particular to China’s role as a new donor. The German Government is seeking to engage more intensively with China in dialogues on global development issues and explore new forms of cooperation – such as trilateral cooperation projects – as part of the two countries’ strategic partnership. To this end, it is planned to set up a joint Centre for Sustainable Development in Beijing.


Science and technology

There has been cooperation in science and technology between the two countries for more than 30 years already, and this is being continually expanded and intensified. Germany and China have become partners cooperating on an equal footing. For a number of years now, there has also been successful cooperation in the education and vocational training sectors. Both sides have recently launched efforts to deepen their strategic dialogue and partnership. In October 2015, the Federal Ministry of Education and Research (BMBF) released its China Strategy 2015–2020, and in autumn 2016, the Chinese Ministry of Science and Technology (MOST) issued its own Germany Strategy. Bilateral cooperation between German and Chinese research institutions in particular has for many years been very close. The joint promotion of science is fostered not only through cooperation between the two countries’ relevant ministries but also through the Sino-German Center for Research Promotion (SGC), which is jointly run by the German Research Foundation (DFG) and the National Natural Science Foundation of China (NSFC) in Beijing. In addition, German research organisations such as the Max Planck Society, the Leibniz Association, the Helmholtz Association and the Fraunhofer-Gesellschaft – and since February 2017 also the Max Weber Foundation – engage in their own intensive (and in some cases joint institutional) cooperation partnerships in many different areas of research.

The Chinese government has put the role of innovation at the centre of its efforts to restructure its economy towards a more sustainable path. In line with this, spending on research and development has steadily increased and numerous government initiatives have led the way with ambitious goals. These include the so-called mega projects, the Made in China 2025 strategy and the establishment of new, and expansion of existing, innovation zones and clusters. Often Germany is a preferred partner in these areas. Through the Sino-German Innovation Platform, the strategic partnership in innovation – agreed on in 2014 and extended in 2016 – seeks to promote the exchange of experience among experts and to identify common goals in innovation research and innovation policy. In January 2016, the signing of a Joint Declaration of Intent on Scientific and Technological Cooperation in Intelligent Manufacturing (Industry 4.0) and Smart Services initiated cooperation on the digitisation of manufacturing and business. The two countries have set out to jointly fund projects since the fourth intergovernmental consultation.

Joint declarations provide a framework for close bilateral cooperation in many other areas of science and technology, such as the life sciences, LED technology, clean water, marine and polar research, the vocational training alliance, biomaterials, research promotion and deeper collaboration in the education sector.


Food and agriculture

Since 2011, China has been the world’s biggest market for food, ahead of the United States, and since 2004 has also become increasingly dependent on imports, switching from being a net exporter to a net importer of food and agriculture products. In particular, Chinese imports of grain and soy (used as feed to produce food of animal origin) have risen, but also processed food is being imported in ever greater quantities. China also remained an attractive market for the food and agriculture industry in 2016. The value of imports grew across all products by 30 percent compared with the previous year. The most important export segments for Germany were products of animal origin (1.2 billion euros, an increase of 40 percent) – in particular meat and meat products (887 million euros, an increase of 65 percent) and milk and dairy products (258 million euros, a decrease of 8 percent) – as well as baked goods (166 million euros, an increase of 25 percent) and beer (173 million euros, an increase of 14 percent). Volume growth rates were even higher. In the past four years, Germany’s trade with China in the food and agriculture sector has nearly doubled to 1764 billion euros in 2016. Overall, the bilateral trade balance of the German food and agriculture industry is increasingly negative. This is not least because, more and more, China is tightening its import regulations for many products and applying existing rules more strictly.

For many years, there have also been successful joint research activities and projects in crop science, livestock breeding, forestry and bioenergy, involving a lively exchange of knowledge in which partners from relevant industrial sectors also participate. 


Culture

Since embarking on its reform and opening-up policy, China has gradually opened up to foreign culture as well. At the same time, the Chinese government has for some years now been stepping up its efforts to spread the Chinese language and Chinese culture abroad. It sees this as a contribution to promoting international understanding and improving China’s image abroad. This job is being done by both state-run cultural institutions (“cultural centres”) and the Confucius Institutes, which mostly take the form of university cooperation arrangements.

Privately organised cultural exchange is increasingly gaining importance. In the performing arts sector, for example, numerous outstanding German orchestras, opera and ballet companies have toured China in resent years. The same is true of the visual arts sector: in addition to major state-supported exhibitions, private galleries and art fairs are making an important contribution.

Germany gives particular attention to China in its cultural and education policy abroad. Numerous German cultural and education intermediaries are active in China, including the Goethe-Instituts in Beijing and Shanghai, as well as eight German language learning centres, which are cooperative ventures between the Goethe-Institut and Chinese education institutions. Other important cultural and education intermediaries are the German Academic Exchange Service (DAAD), the Central Agency for Schools Abroad, the German Archaeological Institute, the Book Information Centre, the Academic Evaluation Centre (APS) and a number of private foundations.


Education

The Schools: Partners for the Future initiative (PASCH) is being implemented with great success in China. There are currently more than 120 Chinese secondary schools being looked after by the Goethe-Institut and the Central Agency for Schools Abroad with their own staff on the ground. The Educational Exchange Service (PAD) of the Standing Conference of the Ministers of Education and Cultural Affairs support this initiative by conducting annual school exchanges and further-training programmes for teachers.

There are also a wide range of opportunities for students to be taught in German: there are German schools abroad, which are certified by the Central Agency for Schools Abroad, in Beijing, Shanghai, Changchun and Hong Kong, as well as German sections or German-language instruction at schools in many major Chinese cities.

In the academic sphere, the Higher Education Compass of the German Rectors’ Conference currently lists over 1200 bilateral cooperation partnerships between German and Chinese higher education institutions. The German Academic Exchange Service (DAAD) provides resources, including scholarships and advisory services for students and researchers, aimed at coordinating and supporting academic exchange in both directions. The DAAD is represented in China by a regional office in Beijing, three information centres and more than 30 lectors and language assistants. The Alexander von Humboldt Foundation, which provides fellowships to highly talented scientists and scholars, has a network of more than 1350 alumni – known as Humboldtians – in China. According to Chinese Ministry of Education statistics, there were some 7500 Germans studying in China in 2015. Conversely, there were more than 30,000 Chinese nationals studying as foreign students at German higher education institutions in 2015.

Disclaimer: 

This text is intended as a source of basic information. It is regularly updated. No liability can be accepted for the accuracy or completeness of its contents.

Development cooperation

China is a partner country of German development cooperation. For more information please visit the website of the Federal Ministry for Economic Cooperation and Development

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