（Wo-Chiang Lee, Professor of the Department of Banking and Finance at Tamkang University）
German Chancellor Olaf Scholz just wrapped up his second visit to China. He is also the first leader of a Western power to visit China this year. And thus his trip attracted global attention. It is worth noticing that Scholz was accompanied by Minister for Environment Steffi Lemke (Green Party), Minister for Transport and Digital Infrastructure Volker Wissing (FDP) and Minister of Food and Agriculture Cem Özdemir (Green Party). Sholz also travelled with a business delegation of top German companies, including Siemens AG, BASF, BMW, Mercedes-Benz, Bayer, Merck KGaA, Carl Zeiss AG and DHL. Sholz made an open remark soon after his inauguration that he would continue former Chancellor Angela Merkel's pro-China policy during his chancellorship. It is clear that the visit aimed to achieve some goals. So, what are the economic and trade goals that Sholz intended to achieve during his latest trip to China?
Close and interdependent trade relations between China and Germany: According to the latest data released by the German Federal Statistical Office, Germany's total direct investment in China reached 11.9 billion euros last year, an annual increase of 4.3%. Bilateral trade volume with China amounted to 253.1 billion euros (only about 800 million euros higher than that of the United States), making China Germany's most important trading partner for eight consecutive years. The United States and the Netherlands ranked second and third, with trade volumes of 252.3 billion and 214.8 billion euros respectively. However, Germany's trade deficit with China reached 58.4 billion euros, the second highest after a record 86.1 billion euros in 2022. On the other hand, Germany had an export surplus of 63.5 billion euros in trade with the United States. The huge deficit has become one of the reasons that German opposition parties and enterprises oppose China's export subsidies and support the EU's possible move to impose tariffs on China. In terms of goods, motor vehicles and their components are Germany's most important import and export products, with volumes amounting to 268.2 billion euros last year, an increase of 8.9% from 2022. Germany imported about two-thirds of its rare earths from China. These figures demonstrate high economic and trade interdependence between the two countries. It is certain that Germany will not follow the United States to determinedly decouple from the Chinese economy.
First stop of the visit indicated cooperation between German and Chinese companies: Scholz’s first stop in China was Chongqing, the economic center of the upper regions of the Yangtze River and an international transportation hub. Chongqing is also the starting point of the Chongqing-Xinjiang-Europe Railway (Yuxinou railway), a main artery of railways connecting China and Europe. The Yuxinou railway ends in the Port of Duisburg, the largest port in Germany. Chongqing is also where established German companies in fields such as automobile, rail transit, equipment manufacturing operate their business in China. One of the companies visited by Scholz was Bosch Hydrogen Powertrain Systems (Chongqing), a joint venture between Germany's Robert Bosch AG and China's Qingling Motors. Scholz also met with representatives of the foreign trade chamber in Shanghai and visited the local innovation center of Covestro, a German manufacturer of polymer materials.
Reservation about imposing tariffs on Chinese electric vehicles: China has already dominated the global electric vehicle (EV) market, accounting for 69% of global sales in December last year. European automakers have been important players in the global market for decades. German auto giant Volkswagen has long held the title of the best-selling car brand. However, its top position was replaced by BYD, a Chinese manufacturer focusing on EVs, in 2023. Nonetheless, Volkswagen announced an investment of 2.5 billion euros to expand its production and innovation center in Hefei, Anhui Province, on April 11, showing the importance it attaches to the world's largest consumer market for automobiles. Currently, Chinese electric vehicles are subject to a 10% tariff when imported to Europe. European carmakers pay 15% tariff when exporting to China. Most German models sold in China are made in the country. Therefore, whether China has dumping or intellectual property infringement problems has become a sticking point of the EU's consideration of imposing tariffs. The European Commission has been investigating China's subsidies since October 2023. Whether to impose tariffs to protect manufacturers in the EU will depend on the findings of the investigation due to complete by November 2024. However, the German Association of the Automotive Industry (VDA) opposes the imposition of punitive tariffs on Chinese EVs. They fear potential trade disputes triggered by the EU's punitive tariffs, which will damage the German car industry and the transformation process and may even affect employment. Scholz expressed support for an open and fair European market for Chinese automobiles and hoped for a level playing field without dumping, overcapacity and infringement of intellectual property rights.
In summary, Scholz's visit has sent a clear signal of cooperation between China and Germany. He reiterated Germany's conviction that it does not seek economic decoupling from China. The two countries will resolutely work together in the economic, political, technological and educational fields. In particular, Berlin and Beijing will continue to expand multi-field and in-depth cooperation in the fields of digital economy, green and low-carbon development, modern manufacturing and technological innovation and achieve better mutual benefit and win-win results. The in-depth economic and trade cooperation between China and Germany also sends a message to the incoming Taiwanese government that trade decoupling from China is not an option for Taiwan.
（Excerpt translated to English by Cindy Li）
