Last updated in November 2013
The Federal Republic of Germany and the People’s Republic of China established diplomatic relations in 1972.
Over the past 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. In the face of the global economic and financial crisis, stable cooperation between the two countries’ strongly export-oriented economies is of great importance. China views Germany both economically and politically as its “gateway to Europe”. Important elements of bilateral relations are dynamic trade relations, investment, environmental cooperation, cooperation in the cultural and scientific sectors as well as frequent high-level visits in both directions.
Since 2004, Sino-German relations have therefore been described as a “strategic partnership in global responsibility”, being elevated to a new level in July 2010 by the establishment of annual intergovernmental consultations. The most recent intergovernmental consultations were held in Beijing in August 2012. Besides Federal Chancellor Merkel and then Prime Minister Wen Jiabao, more than ten line ministers from both sides took part in these consultations. Apart from economic and environmental issues, questions relating to social development and the stepping up of cooperation on education, science and research were also on the agenda. Both sides agreed to actively promote more intensive civil society exchange, including youth exchange and town twinning arrangements. So far, the intergovernmental consultations have resulted in a total of more than 40 concrete agreements.
Apart from the intergovernmental consultations, there are very frequent high-level official visits between the two countries, including the visit to Germany by Prime Minister Li Keqiang in May 2013, his first trip abroad. During this visit, he also officially opened the German-Chinese Language Year together with Federal Chancellor Merkel.
There are now 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.
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.
Dialogue on the rule of law
Sino-German dialogue on the rule of law dates back to the agreement reached in November 1999 by then Federal Chancellor Gerhard Schröder and former 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. On the German side, the rule-of-law dialogue is coordinated by the Federal Ministry of Justice and on the Chinese side by the State Council’s Legislative Affairs Office.
A symposium is held once a year at which German and Chinese government representatives and experts debate a topical legal issue. The 13th Sino-German Rule of Law Symposium was held on 8 and 9 April 2013 in the Chinese city of Hangzhou. The subject of the symposium was The Avoidance and Settlement of Administrative Disputes.
The rule of law dialogue is also underpinned by concrete projects to promote cooperation in the legal sphere. In this connection, Federal Justice Minister Leutheusser-Schnarrenberger and the head of the State Council’s Legislative Affairs Office, Minister Song Dahan, signed an agreement in Berlin in November 2010 on a three-year programme (2011-2013) designed to foster exchange and cooperation in the legal field. Agreement was reached on a follow-up programme during talks held on the sidelines of the 2013 Rule of Law Symposium.
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 in May 2013 in Yinchuan in the Ningxia Hui Autonomous Region. The talks focused on issues relating to the situation and working conditions of migrant workers, freedom of opinion and the situation of national minorities.
Over the past 40 years (1972-2012), Sino-German economic relations have evolved into the great success story they are today. In 1972, German companies exported to China goods worth just USD 270 million. According to Federal Statistical Office figures, in 2012 German exports to China were worth EUR 66.6 billion, an increase of 2.7 per cent compared with the previous year. German imports from China were worth EUR 77.3 billion, a decline of 2.8 per cent compared with the previous year. Germany is by far China’s biggest European trading partner and ranks sixth among China’s trading partners worldwide (and fourth if Hong Kong and Taiwan are not taken into account). China is Germany’s principal trading partner in Asia and its third most important trading partner worldwide.
China is Germany’s second biggest export market outside Europe, after the United States, and was its fifth most important export market overall. In 2012, the main German exports to China were motor vehicles and vehicle parts (accounting for 29 per cent of exports), machinery (25.3 per cent), data-processing equipment, electrical and optical goods (8.8 per cent), electrical equipment (8.7 per cent) and chemical products (6.2 per cent).
China is also the second largest supplier of German imports, after the Netherlands. In 2012, the principal German imports from China were data-processing equipment electrical and optical goods (accounting for 35.6 per cent of imports), clothing (10.4 per cent), electrical equipment (10.1 per cent), machinery (7.7 per cent) and metal goods (4.3 per cent). German companies import more goods from China than China does from Germany, which has resulted in a German trade deficit since 1989, though this has been trending downwards again (a decline of EUR 26.8 billion) since 2008. In 2012, it stood at EUR 10.7 billion.
As part of the strategic partnership between China and Germany, bilateral intergovernmental consultations are held regularly. In August 2012, the two governments’ cabinets met in Beijing for the second intergovernmental consultations, the first having been held in June 2011. At the meeting, which was was presided over by China’s then Prime Minister Wen Jiabao and Federal Chancellor Angela Merkel, 17 cooperation agreements were signed, mainly on economic matters. The third intergovernmental consultations are to held in Germany in 2014.
German companies are currently engaged in China to a much greater degree than Chinese companies in Germany, this probably being not least a reflection of the differences in the two economies’ level of development. 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 2011, German direct investment in China was worth some EUR 35 billion. Conversely, Chinese companies have so far invested approximately USD 3.1 billion in Germany. Chinese investment in Germany has so far focused on the mechanical engineering, electronics and consumer goods sectors as well as on information and communication technologies. Takeovers in 2012 included the purchase of concrete pump manufacturer Putzmeister by China’s Sany Heavy Industry (for EUR 360 million) and the acquisition of automotive supplier Kiekert and concrete pump manufacturer Schwing by Chinese companies.
There are currently some 900 Chinese companies active in Germany (many of them small). By contrast, there are already more than 5,000 German companies operating in China.
In recent years, China has been very successful in attracting foreign direct investment, but it needs to improve transparency and security for investors to ensure that it remains an attractive business destination, especially for small and medium-sized companies. Rule of law deficits remain a fundamental problem here. Investors expect more freedom of contract and equal market access conditions, in particular the same access to public tenders as Chinese companies. Basic conditions must continue to improve here, especially in the hitherto strictly regulated service sector (banking, insurance, logistics and trade).
A detailed investment catalogue for foreign companies, compiled under the responsibility of the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM), specifies for each market segment whether and in what form foreign investment is welcome. It contains a detailed list of investment projects 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 investment catalogue came into effect in January 2012. Investment promotion focuses on a total of four sectors: the environment, energy (e.g. electromobility), high tech (e.g. chip and touch systems) and heath care (e.g. hospitals). This contrasts with additional restrictions in other sectors, e.g. industries that are particularly harmful to the environment, heavy industry and strategic commodities. The draft provides for prohibitions, e.g. in the case of the construction and management of residential developments and domestic courier services. There are no changes in the banking and insurance sectors or in most of the service sector.
An exception from the investment catalogue system is to be made for the new Shanghai Free Trade Zone, which was set up in autumn 2013: foreign investments in sectors that are not on the “negative list” are not subject to approval; they must merely be registered. The negative list currently encompasses around 200 sectors, with a 90 per cent overlap with the investment catalogue’s “prohibited” or “permitted under certain conditions” categories. However, the Chinese government has announced its intention to further trim the negative list.
A 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. Negotiations are scheduled to begin on a comprehensive investment agreement between the European Union and China.
Export trade promotion
To promote German business interests in China, German industry and commerce has delegates’ offices in Beijing, Hong Kong, Shanghai and Guangzhou (Canton) (under the umbrella of the German Chamber Network of the Association of German Chambers of Commerce and Industry, DIHT). Germany Trade & Invest (gtai) also has foreign staff responsible for foreign trade (in Beijing, Shanghai and Hong Kong) and for investment (in Beijing). The delegates’ offices and the gtai offices work closely with the German Embassy in Beijing and the German Consulates-General in Shanghai, Guangzhou (Canton), Chengdu, Shenyang and Hong Kong. German companies in (mainland) China have set up a Chamber of Industry and Commerce, which is headed by the Representatives of German Industry and Trade in Beijing. There is a German Business Association in Hong Kong.
Cooperation on energy, the environment and climate
Building an “ecological civilisation” is one of the guiding principles of China’s new leadership headed by 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 relative emissions reduction) as well as climate change adaptation, modernisation of its environmental policy, a more eco-friendly energy policy including developing its alternative-energy sector, 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 12th Five-Year Plan, China’s national government is increasingly seeking to promote qualitatively sustainable rather than purely quantitative growth.
That is why the Energy-Environment-Climate triangle constituted one of the priority issues addressed at the 2011 and 2012 intergovernmental consultations. Both countries – working from totally different premises – have decided to implement structural change towards a green economy. Over a period of 30 years, the two countries have worked together trustfully in development cooperation to achieve broader environmental goals and have since 2008 implemented targeted cooperative measures in the area of climate protection. This opens us further potential areas of collaboration and a host of opportunities for business, too.
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 in recent years has made a major contribution to attaining the United Nations Millennium Development Goal of halving extreme poverty by 2015.
In 2009, the Federal Government decided to end traditional development cooperation with China and has since made no new financial commitments. All ongoing programmes are to be completed in the course of the next few years and new forms of cooperation with China are to be developed as part of the two countries’ strategic partnership. This involves providing support for China’s continuing reform policy and for restructuring the Chinese economy towards greater sustainability – a process in which greater involvement of German business is also being sought.
Scientific and technological cooperation
Cooperation in science and technology has steadily evolved over a period of more than 30 years. 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 sector. Cooperation between universities and institutions involved in vocational training and further education is being constantly expanded. The key partners are, on the German side, the Federal Ministry of Education and Research (BMBF) and, on the Chinese side, the Ministry of Science and Technology (MOST) and the Ministry of Education (MOE).
For many years now, there has been very close cooperation between German and Chinese research institutions. Along with the Sino-German Centre for Science Promotion, which is jointly run by the German Research Foundation (DFG) and the National Natural Science Foundation of China (NSFC) in Beijing, the Fraunhofer Society has opened two institutes together with the High Technology Research and Development Center at Beijing University of Astronautics and Aeronautics: the Sino-German Joint Software Institute (JSI) in Beijing, and the Sino-German Mobile Communication Institute (MCI) in Berlin. In 2005, the Max Planck Society (MPS) and the Chinese Academy of Sciences (CAS) set up a joint Institute for Computational Biology in Shanghai. Since 2004, the Leibniz Association (WGL) has been working to implement a network comprising WGL research institutions, Chinese research institutes and industrial partners on both sides. Its task is to isolate, characterise and test biologically active substances derived from plants known in traditional Chinese medicine. Over the past five years, marine and ecosystems research has become increasingly important in the WGL’s bilateral cooperation. In 2011, the Center for Sino-German Cooperation in Marine Sciences in Qingdao was co-founded by the Ocean University of China, the Leibniz Institute of Marine Sciences at the University of Kiel and the Leibniz Centre for Marine Tropical Ecology at the University of Bremen.The Helmholtz Association of German Research Centres (HGF) cooperates in an extensive network with leading Chinese institutions in areas such as environmental, health and energy research.
At the second intergovernmental consultations on 30 August 2012, German research cooperation with China was further intensified, the focus being on cooperation in the area of innovation policy and LED technologies. In future, cooperation is also to be stepped up in the water sector and in marine and polar research and extended to include deep sea research. In addition to long-standing successful cooperation with MOST, this will now make it possible to intensify cooperation with China’s State Oceanic Administration (SOA). Two new joint declarations have been signed in these two areas.
Vocational training continues to play an important role in bilateral cooperation. Besides the Dialogue Forum on Vocational Training, held in Beijing in June 2012 and organised by the German Chamber of Commerce in Shanghai as part of Sino-German cooperation on sustainability, a second bilateral symposium, jointly organised by the BMBF and the MOE, was held in Chongqing directly before the second intergovernmental consultations. On this occasion, the first Sino-German training centre specialising in automotive mechatronics was opened in Chongqing.
Cooperation in vocational training also focuses on Qingdao, Shanghai and Canton.
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 cultural institutions (‘cultural centres’) and the Confucius Institutes, which mostly take the form of university cooperation arrangements and are now represented at 14 German locations (Berlin, Duisburg, Düsseldorf, Erfurt, Erlangen, Frankfurt/Main, Freiburg, Hamburg, Hanover, Heidelberg, Munich, Leipzig, Trier and Bremen). In 2012, China also organised a Year of Chinese Culture in Germany featuring more than 500 cultural events and discussions (external link, opens in new windowwww.cn2012de.com).
In 2013 and 2014, the two countries are holding a Year of the German Language in China and a Year of the Chinese Language in Germany. The aim is to promote the German language in China and the Chinese language in Germany – in teaching at schools and universities, through teachers training and further training as well as through language-related cultural events.
Privately organised cultural exchange is increasingly gaining importance. In recent years, for example, numerous outstanding German orchestras, opera and ballet companies have been on tour China. The same is true of the arts sector: in addition to major state-supported exhibitions, private galleries and art fairs are making an important contribution. In view of this, a separate chapter is devoted to cultural exchange in the Sino-German joint communiqué issued by both governments in July 2010.
A high point in cultural exchange was the major exhibition “The Art of Enlightenment”, which was on show from 1 April 2011 to 31 March 2012 at the newly opened National Museum of China. The exhibition showcased ideas relating to the European Enlightenment and was accompanied by a series of lectures and discussions under the heading “Enlightenment in Dialogue”, in which many – especially young – Chinese citizens discussed the ideas and values of the Enlightenment.
Numerous German cultural intermediaries are active in China, the main one being the Goethe Institute in Beijing and its branch office in Shanghai as well as several language, information and learning centres. Other important cultural intermediaries are the German Academic Exchange Service (DAAD), the Central Agency for Schools Abroad, the German Archaeological Institute, the Book Information Centre Beijing and a number of foundations.
The Schools: Partners for the Future initiative (PASCH), which was launched in 2007 and set out to increase the number of pupils learning German and provide further training for teachers of German, is being successfully implemented in China. Involved in this initiative, with their own experts on the ground, are the Goethe Institute, the Central Agency for Schools Abroad and the Educational Exchange Service. There are now 81 PASCH schools being looked after by the German side.
The German International Schools in Beijing and Shanghai teach the German school curriculum and offer German school-leaving qualifications as well as serving as important places of cultural encounter. There are also two German International Schools in Changchun and Fuzhou as well as German sections at international schools in Wuxi, Suzhou, Guangzhou (Canton), Shenyang, Nanjing and Shenzhen.
In 2012, some 36,000 Chinese students enrolled in programmes offering German as a foreign language at Chinese universities. A bachelor’s degree in German can be obtained at 96 universities in China.
In 2012, there were approximately 24,000 Chinese students enrolled at German universities, making them the largest group of foreign students. Engineering programmes are especially popular with these students. Applicants wishing to study in Germany, Austria or Belgium are served by the Academic Evaluation Centre Beijing (APS), a joint service provided by the DAAD and the German Embassy in Beijing.
There were around 4,000 German students enrolled at Chinese universities, three-quarters of them short-term or language students.
The number of cooperation projects between German and Chinese universities and other higher education institutions has risen to over 580. The DAAD provides resources including scholarships and academic teachers to coordinate and support academic exchange in both directions.