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News - Editor, 25 April 2012

China Aims to Strengthen Ties with Germany



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During a recent visit to Germany, where he attended the Hanover Trade Fair, China's Premier Wen Jiabao made it known at the Germany-China business forum that his government is aiming for bilateral trade to increase by 50 percent by 2015. In 2011, trade between the two countries totaled €144 billion ($190 billion) with Germany accounting for roughly a third of the trade China conducts with the 27 member nations of the European Union.

At the forum Premier Wen emphasized his opinion that China's labor force and extensive domestic market, coupled with Germany's managerial expertise and advanced technology, will be advantageous to both parties. He also noted that practical steps should be taken to remove investment barriers and actively promote investment opportunities, pointing out that China welcomes an increase in German enterprises in the high and new tech sectors of his country, with specific mention being made of China's central and western regions.

Germany is reportedly the second largest exporter in the world, after China. Of the European Union member nations, Germany has had the greatest success in penetrating the Chinese market, with nearly 7 percent of its total exports going to China in 2011. This bilateral trade relationship has assisted Germany in weathering the financial storm in Europe, a point which German Chancellor Angela Merkel reportedly acknowledged when welcoming Premier Wen to Hanover.

While recognizing that trading with a country with a population of more than 1.3 billion presents opportunities, some German business people have expressed their concern that China's exports will become a threat to Germany's export market, particularly if China continues to gain ground internationally as it has in recent months. Many small and medium-sized German companies are family owned, and have been for generations, contributing to economic stability in the country. A major cause of concern in German business circles is that these companies may become buy-out targets by Chinese companies, as was recently the case with the purchase of Putzmeister by China's largest construction company, Sany Heavy Industry, for €360 million.

The fact that trade ties are strengthening between China and Germany was evident by the 500 Chinese exhibitors at the Hanover Fair. Moreover, while in Germany, Premier Wen formalized the signing of a deal with Germany's car manufacturer Volkswagen for the construction of a new plant in China's Xinjiang province to meet the growing demand in China for luxury vehicles.

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