China, Germany to find common growth engine amid rising uncertainties

By Shen Weiduo Source:Global Times Published: 2019/11/12 23:18:41 Last Updated: 2019/11/13 10:57:55

A freight train bound for Dusseldorf of Germany departs from a logistics base in Hefei, east China's Anhui Province, Sept. 27, 2019. The train X8020 carrying household electrical appliances and mechanical equipment departed from the logistics base of Hefei north railway station, marking the 300th trips of the two-way China-Europe freight trains in Hefei this year. (Xinhua/Huang Bohan)

China and Germany are set to continue to deepen bilateral ties despite uncertainties and challenges arising from the China-US trade war, while some in the European country should also set their minds straight toward the rise of China and find new cooperation patterns to benefit the two country's economies, experts said on Tuesday.

The comments came after the Business Confidence Survey 2019/20 showed that German companies in China hold low expectations, citing a slowing Chinese and global economy, paired with uncertainty due to the US-initiated trade war. 

According to the survey, which was released by the German Chamber of Commerce in China on Tuesday of 526 member German companies, only 27 percent of them expect to reach or exceed their 2019 business forecast.

Experts from the two countries said the given rising uncertainties in the world, even though trade volume between Germany and China has been rising, further improvement of China-German ties have encountered certain barriers.

Stephan Ossenkopp, a Berlin-based expert associated with the Schiller Institute, an international think tank, told the Global Times on Tuesday that one of the major obstacles is the current contradictory position of Germany toward China, seeing it as both a rival and a partner.

"The erection of de facto investment barriers by Germany under the pretense of national security threats is just one example, having caused a drop in Chinese direct investments," Ossenkopp said.

German companies in China also called for a comprehensive systematic market opening on all levels, a sound regulatory framework and voiced concerns over technology transfer, according to the survey.

German products are also facing increased competition from their Chinese counterparts, especially in the auto sector where it has strength, just as Germany's economic growth weakens, said the survey. 

The IMF has downgraded its growth forecast for Germany's economy to 0.5 percent in 2019 and 1.2 percent in 2020, saying that weaker Chinese demand was one factor behind a broader slowdown in industrial output.

New cooperation pattern

"Trade between China and Germany has been an engine for trade ties between China and Europe. As China's opening-up has come to a new level, it is inevitable that China-German cooperation will continue, and cooperation between the two will surely go deeper despite short-term barriers," Zhao Junjie, a research fellow at the Chinese Academy of Social Sciences' Institute of European Studies in Beijing, told the Global Times on Tuesday.

In 2016, China overtook the US to become Germany's largest trading partner, and it still is. In the first 10 months of the year, bilateral trade between China and Germany reached 1.05 trillion yuan ($149.85 billion), up by 4.8 percent year-on-year, almost a quarter of the total trade number between China and Europe, which stood at 3.98 trillion yuan.

While Zhao noted that to further upgrade bilateral ties, some people in Germany should put their minds straight, drop their prejudices and welcome that momentum, instead of projecting a protective attitude toward Chinese investment and Chinese companies.

"When asking China to open up its market further, Germany and the Europe should also open its market to Chinese investment," Zhao said. 

He noted that a recent visit by French President Emmanuel Macron could also be a stimulus to Germany, which urgently needs new growth impetus.

China and France signed contracts totaling $15 billion in the fields of aeronautics, energy and agriculture during Macron's visit to China.

China, at the same time, will also continue to open up its market to German companies operating in China, scrap limits, reduce administrative interaction in unnecessary sectors, and address other concerns such as intellectual property rights, experts noted.

Despite their "low expectations," Germany companies say they still see various significant opportunities emerging, such as demand for high-quality, international brands, stressing that China is still a big and important market for them, according to the survey.

The survey showed that 67 percent of the companies said they are planning to further invest in China in the next two years, and the "outlook is strong."

Andreas Glunz, managing partner at International Business of KPMG, told the Global Times on Tuesday that German firms are also adapting, including changing their construction in trying to find ways to optimize and to increase the productivity of  their production lines, adding that there are untapped fields and further chances of increasing business in China, such as interaction between R&D institutes, universities and startups. 

"There is even room for a major shift," Ossenkopp said. "The two could further cooperate in infrastructure sector such as high-speed rail, airports and sea bridge in other markets, especially in developing countries and the European Balkan states." 

China could also be a beneficial partner in rebuilding some of the aging infrastructure in Germany itself, where the construction sector is not able to keep up with demand or finish large projects in a reasonable time and cost, he added.

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