The German government is currently reassessing the bilateral relationship between Germany and China in all areas as part of its "China strategy". This is especially so against the backdrop of political developments in China in recent years and a foreign policy "turning point" (“Zeitenwende”) sparked by the Russian war of aggression against Ukraine. The assessment of China as a cooperation partner, economic competitor and systemic rival is now a consensus among political stakeholders in Germany, the EU, but also in the German economy. It is equally clear that human rights violations are not compatible with the values of German companies. For foreign trade policy, the “turning point” means greater diversification and a reduction in unilateral dependencies. German companies are already strategically adapting to this changing environment by assessing the risks and strengthening the resilience of their China business and supply chains through diversification and other measures. However, decoupling or turning away from China is not a desired outcome. Against this background, this paper aims to provide suggestions for a possible outlook of future economic engagement between Germany and China as well as offer a practical contribution to the German government's emerging China strategy.
A better balance to strengthen the German economy
First and foremost, the German economy in China argues for creating a balanced relationship with the country: Despite increasing differences on systemic issues, China remains one of the crucial global growth markets and innovation drivers for the coming years. Engagement in China help to strengthen the innovative power and speed of German companies. Being successful in China means taking over a stronger position on the global market. Even though companies are aware of increased risks, are diversifying their businesses and making their supply chains more resilient, they cannot and do not want to miss this crucial growth market. For this reason, the German government must continue to support German companies on the Chinese market - especially through personal meetings with government representatives on site in China - in order to reduce market access barriers and advocate for a level playing field. In addition, the German government should actively work towards ensuring that China implements the commitments already made in the negotiations surrounding the investment agreement with the EU.
Better equilibrated economic cooperation to strengthen German companies
Secondly, there is a need for an active and well-balanced economic cooperation with effective dialogue formats. Megatrends in Germany and China (such as in the areas of health, digitalization and nutrition) can serve as a substantive orientation framework for German-Chinese economic cooperation. New interest-driven dialog formats should be created without disregarding the fact that even meetings that are purely symbolic from a German perspective can be very useful as door openers. Taking into account the specifics of the Chinese politics, they can also help influence policy formulation on the ground. Bilateral cooperation formats are therefore important for companies to gain access to political decision-makers in China and thus make their concerns heard. In those fields in which the Chinese economy is advanced and competitive, targeted cooperation could support the transfer of knowledge towards the German industry. The German government should therefore actively support German companies – also with the help of the AHK offices in China – to establish sustainable cooperation in the interest of both sides.
New times call for new cooperation formats
Reciprocity must be the guiding principle for a readjustment of economic cooperation. Cooperation should take place when both sides equally benefit. A catalogue of guiding questions regarding added value, benefits and goals is essential for assessing the meaningfulness of cooperation. We would welcome if decisions on the continuation, creation or termination of cooperation and dialogue formats on specific topics and in particular formats involving German and Chinese companies were made on the basis of such a catalog of guiding questions. Participation in Chinese innovation and a transfer of knowledge to the German economy should be a focus. At the same time, an emphasis should be put on supporting diversification and resilience in the Asian engagement of German companies. Personal exchange at all levels is key to creating better understanding and effective cooperation between governments and companies. Both sides should work together to bring this exchange to life – possibly even before the publication of the China strategy.