AHK Policy Barometer

Our Policy Barometer provides quarterly economic policy insights for German companies in China. It offers updates on current economic policies, how they impact German businesses, and our evaluation of them. We also provide information on our advocacy efforts regarding these policies with both the German and Chinese governments. In addition to this, the Policy Barometer includes valuable resources and practical tools. The full version of the Policy Barometer is exclusively available to members of the German Chamber and is delivered directly via email.

Vol. 1/2024

Cross-border Data Transfer

Status Quo: Cross-border data transfer has been one of the top concerns of companies in recent months. End of March, the Cyberspace Administration of China (CAC) finally published the “Provisions on Promoting and Regulating Cross-Border Data Flows” as well as the first-ever national standard for data classification.

Pulse Check: With the compliance process for foreign companies becoming increasingly costly, the Provisions ease up some of the regulations around personal data transfer and for the first time it has been explicitly stated that not all data may be classified as important, but only what has been officially published by relevant authorities.

Two Sessions

Status Quo: During the Two Sessions, the Chinese government strongly emphasized the direction towards high quality development, which should be achieved by upgrading industries with the help of productivity (the “new quality productive forces”), innovation, and high-tech development.

Pulse Check: For companies, it is now important to get signals where the Chinese government is heading to. In the wake of the Two Session, many indicators have highlighted the importance of pursuing high-quality development. High-level Chinese government visits to high-tech companies and discussions with foreign CEOs during the China Development Forum serve as examples for this.

24 Points Action Plan

Status Quo: On March 19, the State Council released the “Action Plan to Solidly Promote High-Level Opening Up and Make Greater Efforts to Attract and Utilize Foreign Investment” (Action Plan). It underscores the crucial role of foreign direct investment for China's economic development.

Pulse Check: Foreign Direct Investment in China is on a record low, January to February 2024 saw a 19.9% YoY decline in terms of RMB. Interestingly, the tone of the Action Plan is more urgent than in the 24 measures from August 2023, signaling to speed up processes. The emphasize on market access support for the high-tech sector clearly underlines China’s approach towards high-quality development. 

Green Policies

Status Quo: In the first quarter of 2024 we have seen many policies related to green development, such as the “Opinions on Accelerating the Green Development of the Manufacturing Industry” and the “Guidance Catalogue for Green and Low Carbon Transformation Industries (2024 Edition)”, aiming to achieve China’s decarbonization goals.

Pulse Check: Green development is crucial for German companies in China as it is one outstanding differentiator for competition. They are keen to bring their knowledge and expertise to the Chinese market. Generating and building up new drivers of growth for green development and upgrading the manufacturing industry will offer business opportunities for German companies in green tech.

German-Chinese Relations 

Status Quo: This year we see more high-level visits from Germany in China. Mid of April, German Chancellor Olaf Scholz will travel to China, accompanied by a business delegation.

Pulse Check: German companies strongly welcome increased political exchange. This gives valuable signals to their business partners in China and is another channel to solve issues.

EU Supply Chain Law

Status Quo: The EU Supply Chain Act succeeded on its third attempt, receiving a qualified majority in the Committee of Deputy EU Ambassadors mid-March after two previous failures. Next, the legislation needs to be approved by the EU Parliament at the end of April. Should the legislation be passed, the German government will have a period of two years to adopt and implement the regulations into national law.

Pulse Check: The revised version of the law will impact European companies with over 1,000 employees and a global turnover exceeding 450 million euros. This increased the threshold from the previous draft, which already applied to companies with 500 employees and an annual turnover of at least 150 million euros.