Published: 11:41, April 19, 2024 | Updated: 11:42, April 19, 2024
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Scholz's visit fosters ties, say experts
By Wang Mingjie in London

German firms see opportunities in China as investment hits record high

Federal Chancellor of Germany Olaf Scholz visits Bosch Hydrogen Powertrain Systems (Chongqing) Co, Ltd in Jiulongpo District of southwest China's Chongqing municipality, April 14, 2024. (PHOTO / XINHUA)

The three-day visit to China by German Chancellor Olaf Scholz has garnered praise from experts, who describe it as a crucial step in maintaining dialogue and fostering bilateral cooperation.

Against the backdrop of escalating geopolitical tensions, Scholz's visit was a clear statement that China is crucial to Germany, and Germany is vital to China likewise, they said.

The visit "should be seen as a clear sign of willingness to engage in high-level talks, rather than relying on distant rhetoric", Jochum Haakma, chairman of the EU-China Business Association, said.

Scholz’s visit clearly indicates Germany’s stance, that it will continue to embrace a flourishing, mutually beneficial relationship with China to the greatest degree possible.

Mario Cavolo, a longtime China observer and nonresident senior fellow at the Center for China and Globalization

Germany perceives China as both a vital partner and competitor, Haakma said. By keeping the doors open and actively discussing pertinent issues, trust between the two countries can be fostered, he added.

German companies made significant direct investments in China last year, reaching an all-time high of 11.9 billion euros ($12.7 billion), according to a report from the German Economic Institute. This represents a year-on-year growth of 4.3 percent and accounts for more than 10 percent of Germany's total overseas investments.

Haakma highlighted the automotive sector as a focal point of concern in trade relations between China and the European Union. During a media conference, senior managers from Mercedes-Benz and BMW requested that Scholz lobby against increased import duties on Chinese cars exported to the EU.

Despite fierce competition in China, both companies view the Chinese market as an opportunity rather than a threat, Haakma said.

According to a recent survey conducted by the German Chamber of Commerce in China, there is a strong belief in the potential of Sino-German economic and trade cooperation. Out of 566 member companies surveyed, 91 percent expressed their intention to continue operating in China, and more than half of respondents said they plan to increase their investments in the Chinese market.

Direct communication

Hermann Simon, chairman of consultancy company Simon-Kucher and Partners in Bonn, Germany, emphasized the importance of direct contact, saying, "This direct communication between the leader of Europe's largest country and the Chinese president is very important."

Simon also stressed the need for Europe to avoid being caught between disputes involving China and the United States.

"Otherwise, Europe risks being caught between the millstones of US-Chinese relations," he said.

Christian Sommer, chairman of the German Center Shanghai, said: "Scholz's visit is a clear statement that China is important for Germany, and Germany is important for China. That is the base to let both countries work closer together with the consequence (that) the trade volume will further increase."

It is in both countries' interest to have and maintain close bilateral ties, he said.

"These bilateral ties have not just developed a few years ago ... They have seen decades of growing numbers and growing volumes. Even if these numbers would shrink for one or two years, the importance of the strategic interest remains unchanged," Sommer said.

Mario Cavolo, a longtime China observer and nonresident senior fellow at the Center for China and Globalization, said: "Scholz's visit clearly indicates Germany's stance, that it will continue to embrace a flourishing, mutually beneficial relationship with China to the greatest degree possible."

Cavolo, who lives in Shenyang in Liaoning province, highlighted the city's importance to Germany because of significant investments such as BMW's operations.

Continued success

German companies have made strategic commitments in the automotive sector, driven by the expectation of continued success in their own market segments, Cavolo said.

A contentious bilateral relationship would pose a threat and undermine the achievements made in the automotive sector, he said, but a strong and cooperative relationship between Germany and China, which addresses any differences and concerns, serves as a strategically healthy and wise foundation for both parties.

Daniel Teichmann, CEO and founder of Hydrogenious LOHC Technologies in Germany, said the two countries also have great potential in green energy cooperation.

"China and Germany are among the leading nations in the field of renewable energies and share a long-standing partnership," Teichmann said.

"We welcome and support the efforts of both governments to strengthen the bond between the two countries and to jointly accelerate the ramp-up of the hydrogen economy."