China, Germany Pledge to Deepen Trade, Investment Ties

12 July 2018

German Chancellor Angela Merkel and Chinese Premier Li Keqiang pledged to deepen trade cooperation between them this week, including on supporting the multilateral order. They also endorsed nearly two dozen accords aimed at easing trade and investment between them. 

"On trade issues as in other fields we trust in multilateralism," said Merkel following the meetings, according to a summary issued by the German Federal Government. 

Li and Merkel similarly told reporters in a joint press event that safeguarding the multilateral, rules-based trading system under the WTO umbrella is essential for both countries, while pledging to take further action to facilitate cross-border investment flows and establishing an investment climate that is conducive for meeting that goal. 

Xinhua, the Chinese state-run news agency, reported that both sides welcomed efforts to also facilitate financial flows and deeper macroeconomic discussions, and said that the Chinese premier had emphasised Beijing’s commitment to also improve intellectual property rights enforcement. The latter area has been raised in EU-China talks previously, including at recent meetings meant to lay the groundwork for a leaders’ summit planned for next week. (See Bridges Weekly, 28 June 2018

"Germany and China are united by their interest in working together on progress and solutions for great, global issues," said Merkel’s Christian Democratic Union (CDU) party, according to comments reported by Deutsche Welle. 

The two officials endorsed various government cooperation documents whose scope ranged from agriculture and education to telecommunications and cars, according to Xinhua. Meanwhile, the commercial pacts are set to cover €20 billion (US$23.5 billion), officials said, and involve various sectors. 

Industrial and technological cooperation

Besides governmental cooperation projects between German and Chinese agencies, the forum brought together private sector representatives from both countries to facilitate deals between companies such as chemicals producer BASF and the BMW, Daimler, and Volkswagen car companies, to name a few.

Among the commercial deals was an accord between the Chinese firm Contemporary Amperex Technology Ltd (CATL) to build an EU electric car battery plant in the German state of Thuringia. 

"This is a new step for Germany, and good news for the state of Thuringia," said Merkel about the Thuringia plans. 

Another step was the signing of a non-binding memorandum of understanding (MOU) by BASF, a top chemical producer, and the governor of the Chinese province of Guangdong. The MOU was signed in front of Merkel and Li, and would allow BASF to potentially invest €10 billion over several years in a chemical complex in Guangdong while retaining full control of the plant, without needing a Chinese partner. Merkel had also highlighted the value of this accord, noting the change in approach from past “joint venture” projects. According to BASF, China is the world’s most significant market for chemicals. 

Other commercial deals include a strategic partnership between Suning Holdings Group and SAP SE to collaborate on technological research into topics like cloud computing and artificial intelligence, among others, which proponents say could support connectivity efforts within the framework of the Belt and Road Initiative (BRI). 

Chinese, Eastern European leaders meet

The Berlin meeting was one of several on the Chinese premier’s agenda as he visits Europe this week. Li also met with leaders from 16 countries from Central and Eastern Europe, within an existing framework known as the “16+1” group, in Bulgaria this past weekend. 

The 16+1 summit format aims to develop Chinese collaboration with eleven EU member states and five Balkan countries across various policy areas. These 16 countries include Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia. 

Li described the framework as yet another opportunity for Beijing to support "European integration," given that the coalition also has participation from other European countries and the EU institutions. The meetings in the Bulgarian capital city of Sofia saw both sides endorse various bilateral accords, which officials say could support infrastructure projects that will be part of the Belt and Road Initiative. 

ICTSD reporting; “China, Germany agree to oppose protectionism,” XINHUA, 10 July 2018; “Merkel, Li affirm belief in free trade as they sign cooperation ventures,” HANDELSBLATT, 10 July 2018; “Trade worries put extra burden on Germany-China talks,” DEUTSCHE WELLE, 10 July 2018; “Premier Li calls for further efforts for stronger China-Germany trade,” XINHUA, 10 July 2018; “With raft of deals, China and Germany swear to keep trade free,” REUTERS, 9 July 2018.

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