Two sides should bolster cooperation to shore up world economy, mitigate geopolitical risks

German Chancellor Olaf Scholz led a high-level business delegation and three federal ministers on a visit to China, which concluded on April 16, signifying Berlin’s willingness to strengthen cooperation with Beijing.

Sino-German relations are at the forefront of China’s ties with Europe and the two nations work closely on global governance. In the face of geopolitical conflicts, a sluggish world economy, and the risk of a global disorder, China and Germany should expand cooperation and inject stability into a world undergoing tumultuous changes.

READ MORE: Xi, Scholz call for mutual progress

Germany has long been the economic “locomotive” of the European Union and played a key role in lifting the EU out of its debt crisis. Since the Russia-Ukraine crisis broke out, the German economy has been hit hard, sliding into recession last year. Nevertheless, the country remains an important anchor of the European economy.

While the country’s total exports dropped 1.4 percent last year, exports of machinery and auto products grew 8.9 percent and 5.5 percent respectively, underscoring the strength of “made in Germany”.

Germany’s public debt-to-GDP ratio stood at 64.8 percent, close to the pre-pandemic level, which gives the country larger fiscal policy room compared with most European countries. Germany is also the largest contributor to the EU’s budget, and it overtook Japan as the world’s third-largest economy in 2023.

China and Germany, as the world’s second and third-largest economies, should strengthen coordination and bring more benefits to the world.

Despite domestic political obstruction, German enterprises still attach high importance to the Chinese market. Last year, German companies’ direct investment in China reached a new high of 11.9 billion euros ($12.7 billion), a year-on-year increase of 4.3 percent.

Meanwhile, various affordable products from China have helped Germany maintain lower inflation and ensure the security of supply chains. The two countries have jointly provided abundant products to the rest of the world and eased global inflation pressure.

China and Germany should jointly smooth global supply chains, reject “decoupling”, and break “small yards with high fences”. The two countries also need to safeguard and improve the global financial system, uphold the rules of the World Trade Organization, enhance coordination in macroeconomic policies, and foster more inclusive economic globalization.

The world is fraught with turbulence as the Ukraine-Russia crisis and the Palestine-Israel conflict drag on. China and Germany should work together to preserve global peace. During Scholz’s China visit, the two countries reiterated their commitment to upholding the principles of the UN Charter, and oppose the use of nuclear weapons or attacks on nuclear facilities that are used for peaceful purposes.

China supports Germany to maintain a prudent position in the Ukraine crisis and actively promote peace talks. During Scholz’s China visit, the Gaza crisis further spilled over in the Middle East after Iran launched drones and missiles against Israel in retaliation for an Israeli airstrike that hit an Iranian diplomatic building in the Syrian capital of Damascus.

To prevent the tensions from further escalating, China and Germany called for implementation of UN Security Council Resolution 2728, and for influential countries to jointly push for an early resolution of the Palestinian question. These calls demonstrate that the significance of China-Germany relations has gone beyond the bilateral scope and carries important global influence.

As geopolitical risks rise, China and Germany should oppose a “new Cold War” and bloc confrontations, uphold multilateralism and peaceful development, and safeguard the UN-centered world order.

ALSO READ: Li, Scholz vow to strengthen ties

In recent years, the German political situation has encountered severe challenges such as the rise of far-right populism and political polarization. In addition, an economic downturn has worsened the livelihoods of ordinary people and sparked nationwide strikes in the agriculture, transport, and public service sectors.

Germany faces other headaches, such a massive influx of refugees. Another problem is the housing shortage. The Scholz government failed to deliver its promise of building 400,000 housing units a year. These governance problems threaten social stability and public welfare, which constitute the foundation of the country’s political stability, and in turn have an impact on the global situation.

Under the new circumstances, China and Germany should bolster cooperation to promote socioeconomic development and create a stable environment for growth. The two countries can share experience in areas such as social security, healthcare, education, an aging society, industrial policy, and data security, thereby jointly contributing their wisdom for building a better world.

The author is deputy director of the Institute of European Studies at the China Institutes of Contemporary International Relations. The author contributed this article to China Watch, a think tank powered by China Daily. 

The views do not necessarily reflect those of China Daily.