Last updated in October 2017
The Federal Republic of Germany and the People’s Republic of China established diplomatic relations in 1972.
Over the past 45-plus 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 growing uncertainties, international crises and global challenges, cooperation and coordination of policy between the two strategic partners 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 German and Chinese Cabinet members and presided over by the two countries’ Heads of Government.
In addition, there are a total of more than 80 dialogue mechanisms in place, many of them at senior government level: between line ministers, state secretaries and government agency heads. Important new formats for coordinating policy are the strategic dialogues on foreign and security policy between the German and Chinese Foreign Ministers and the high-level dialogue on financial policy between the two countries’ 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 Germany’s then Federal Chancellor Gerhard Schröder and China’s then Premier 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 took place in May 2017 in China and was presided over by Justice Minister Heiko Maas and Minister Song Dahan of the State Council’s Legislative Affairs Office. The subject of the symposium was insolvency law.
The insights and ideas gained from this dialogue have had an impact on the development of legal norms in China, thus 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.
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 figures, German exports to China in 2016 increased by approximately 6.9 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 towards achieving sustainable, innovation-driven growth and strengthening domestic consumption offers great opportunities for German business.
China is the fourth biggest buyer of German exports, after France, the United States and the United Kingdom, and the most important market for German machinery worldwide. According to the German Association of the Automotive Industry (VDA), China is the world’s largest single market for automobiles. In 2016, the Volkswagen Group alone sold 3.98 million vehicles in China. In no other country are more German vehicle parts sold. In 2016, German exports of electronic goods to China amounted to 11.3 billion euros, while in the same year sales of machinery totalled 15.1 billion euros and exports of motor vehicles/land vehicles were worth 19.9 billion euros. German exports of food and semi-luxury goods to China (meat, dairy products and beverages) increased in 2016 to approximately 1.8 billion euros. China thus remains one of the most important overseas markets for products of the German food and agriculture industry.
So far, German companies have been engaged in China to a much greater degree than Chinese companies in Germany. 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. The realisation of the Made in China 2025 strategy, an industrial policy aimed at strengthening China’s position in key technologies, is also playing a role in promoting investment in Germany. In the first six months of 2017, Chinese investors have acquired more companies in Germany than in any other EU country.
Chinese investment in Germany has focused on the mechanical engineering, electronics, consumer goods as well as information and communication technology sectors. Following the purchase of robot manufacturer Kuka in 2016 by the Chinese electronics conglomerate Midea Group, prominent acquisitions in 2017 have included the purchase of the Frankfurt-Hahn Airport by the HNA Group, the purchase of Biotest by the Creat Group Corporation as well as the purchase of SEG Automotive Germany GmbH (formerly Robert Bosch Starter Motors Generators Holding GmbH) by Zhengzhou Coal Mining Machinery Group Co., Ltd and China Renaissance Capital Investment.
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 revised version of the Foreign Investment Industrial Guidance Catalogue entered into force in September 2017. However, it fails to provide major improvements for German investors. Market access restrictions in China remain, on the whole, asymmetrical compared with those in the European Union, 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 European Union and China, which besides regulating investment protection is also designed to improve market access. The negotiations will continue in 2017.
Foreign trade and investment promotion
To promote German trade and investment 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 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. The idea is to achieve a better balance than in the past between economic development and modernisation, industry, agriculture, urbanisation and ecology. With its current Five-Year Plan, the Chinese Government is increasingly seeking to promote qualitatively sustainable rather than purely quantitative growth.
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 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 and China have had an energy partnership since 2006. This partnership, which aims to promote policy dialogue and offer a platform for exchanging expertise and experience, was deepened in 2013 by two agreements.
With its International Climate Initiative (IKI), the German Government is supporting 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 activities and developments. The work of this body is based on a memorandum of understanding concerning cooperation in combating climate change, which was agreed by 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 is opening up many potential areas of collaboration as well as opportunities for business.
As a result of embarking on an opening-up policy in 1978 and implementing a series of gradual economic reforms, China has lifted more than 600 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 300 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.
Due to this development progress, the German Government decided in 2009 to end traditional development cooperation with China. 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 dialogue on global development issues and to explore new forms of cooperation – such as trilateral cooperation projects – as part of the two countries’ strategic partnership. To this end, the Chinese-German Centre for Sustainable Development was officially opened on 11 May 2017 in Beijing.
Science and technology
Germany and China will be celebrating 40 years of cooperation in science and technology in 2018. During this time, the cooperation has been continually expanded and intensified. With the China Strategy of the German Federal Ministry of Education and Research and the Germany Strategy of the Chinese Ministry of Science and Technology (launched in October 2015 and autumn 2016 respectively), both countries have developed a coherent and systematic framework for their scientific partnership. For a number of years now, there has also been successful cooperation in the education and vocational training sectors.
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 Made in China 2025 strategy and the establishment of innovation zones and clusters. Germany is often a preferred partner in these areas. Through the Sino-German Innovation Platform, the two countries’ strategic partnership on innovation, which was relaunched in 2017, is focusing on promoting the exchange of experience among experts and identifying common goals in innovation policy through the Sino-German Innovation Platform. The 5th Sino-German Innovation Conference is scheduled to take place in Beijing in late February 2018.
German research organisations play an important role in science cooperation between the two countries. Prominent among the research organisations with an active presence in China are the German Research Foundation (DFG), the Fraunhofer-Gesellschaft (FhG) and the Helmholtz Association of German Research Centres (HGF).
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 processed food is also being imported in ever greater quantities. China remained an attractive market for the food and agriculture industry in 2016. The share of exports of German food products in Germany’s total exports to China increased in the past three years from 1.6 percent to 2.6 percent. German agricultural exports even rose 30 percent in value terms over the previous year, reaching 1.765 billion euros. This means Germany’s trade with China in the food and agriculture sector has nearly doubled in the past four years.
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).
The bilateral trade balance in the German food and agriculture sector showed an export surplus of nearly 200 million euros last year, after recording an import surplus of some 200 million euros the year before that. For many years, there have been successful joint research activities and projects in crop science, modern agricultural technology, livestock breeding and forestry, involving a lively exchange of knowledge in which partners from relevant industrial sectors also participate. The bilateral projects are coordinated by the German-Sino Agricultural Center (DCZ), which was founded in 2015 to serve as a platform for dialogue on agriculture policy and other agriculture sector issues. The DCZ’s activities include organising workshops and seminars on specialist topics such as agricultural subsidy policies and holding bilateral agriculture conferences. The second project phase of the DCZ is scheduled to begin on 1 April 2018. The Federal Ministry of Food and Agriculture (BMEL) also plans to extend the ongoing forestry project in pilot regions in order to provide an exemplary model for the implementation of sustainable forest management and to promote the further adoption of such policy.
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 is being done by both state-run cultural institutions (“cultural centres”) and the Confucius Institutes, which mostly take the form of university cooperation arrangements.
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-Institut’s branch offices 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 (ZfA), the German Archaeological Institute (DAI), the Book Information Centre (BIZ), the Academic Evaluation Centre (APS) and a number of private foundations.
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 recent 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. But there also continues to be state-funded efforts to support cultural exchange, such as the “Deutschland 8” exhibition that opened in September 2017 in Beijing. It follows the “China 8” exhibition that was staged in 2015 in North Rhine-Westphalia.
The first meeting of the Sino-German High-Level People-to-People Dialogue to promote and support social and cultural exchange was held in Beijing on 24 May 2017. Attended by more than 500 people, the meeting was co-chaired by German Foreign Minister Sigmar Gabriel and Chinese Vice-Premier Liu Yandong. The dialogue aims to improve the environment for civil society exchange between Germany and China in the areas of education, culture, language, media, sports and youth.
The Schools: Partners for the Future initiative (PASCH) is being implemented with great success in China. The Goethe-Institut and the Central Agency for Schools Abroad (ZfA) are currently assisting more than 123 Chinese secondary schools through their own seconded staff. 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: this includes the German schools, which are certified by the ZfA, 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 8150 Germans studying in China in 2016. Conversely, there were more than 36,400 Chinese nationals studying as foreign students at German higher education institutions in 2016.
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.