GT Voice: the pragmatism of German firms will be rewarded by the market

The group photo taken in front of the automated smart warehouse at BASF Zhanjiang Verbund site on Sept. 6, 2022 in Zhanjiang, south China’s Guangdong Province. Photo: Courtesy of BASF

According to German media reports.

It would be the largest business delegation to visit China since the start of the COVID-19 pandemic. The enthusiasm expressed by German companies during the visit to China testifies not only to the high expectations of German business circles that Scholz’s visit to China could further promote pragmatic cooperation between the two countries, but also to the attractiveness of the Chinese economy.

More importantly, at a time when certain forces in Germany are pushing domestic companies to “decouple” from China in order to reduce the country’s so-called “economic dependence” on China, the trade delegation is a clear indication of the desire of the German business community to deepen economic ties with the Chinese market, instead of “decoupling” from it.

Germany is one of China’s most important trading partners, while China is Germany’s largest trading partner, which is the foundation of mutually beneficial economic and trade relations between the two countries. In 2021, bilateral trade between China and Germany reached 245.3 billion euros, or 30% of total trade between China and the EU.

Moreover, with the worsening energy crisis in Europe, there is a need for German companies, already facing increased domestic pressure, to seek more opportunities by expanding their business in China. It is conceivable that the pragmatism shown by German companies will be amply rewarded in the Chinese market.

There is every reason to be confident in China’s economic prospects and in the continuity of its policy of openness. China’s economy is steadily recovering with vitality and resilience, and the Chinese government is committed to promoting high-quality development through high-level opening up.

Last week, the National Development and Reform Commission, China’s top economic planner, issued a series of measures to facilitate foreign investment, particularly in the manufacturing sector. The measures urged localities to make full use of the existing expedited travel channel and called for more streamlined rules for international travel for foreign executives, management, key personnel and their relatives.

On the contrary, this development sends a clear signal that after the 20th National Congress of the Communist Party of China, China has accelerated the promotion of foreign investment cooperation and will continue to work on relevant policies. Meanwhile, foreign investors should understand the need for certain measures in epidemic prevention and control.

It should be noted that China’s basic policy of attracting foreign investment to promote cooperation has not changed, and the country is still opposed to “decoupling”. Indeed, China’s economic development requires continued opening up and more foreign investment as part of its growth momentum. Meanwhile, facing the US containment strategy, it is also important for China to break the US-led “decoupling” push with an open mind. Greater openness and cooperation with the rest of the world will prove that the American strategy will not work.

The sooner foreign investors correctly understand China’s commitment to opening up, the sooner and more they can share the dividends of China’s economic development.

Sound and stable economic and trade cooperation is based on reciprocity. Therefore, the Chinese market will favor those who are willing to pursue pragmatic cooperation, rather than those who want to “decouple” from China, while taking advantage of the Chinese market.

The investments made by German companies in China this year and their support for Scholz’s visit to China testify to the confidence of German business circles in China. Such a pragmatic approach will surely bring them more dividends from China’s development, which will help them get a head start in competing with other foreign investors in China. By comparison, those who claim that China would shut down and begin to “decouple” from it will certainly regret doing so in the future.

James R. Rhodes