Trade Relations Between Germany and China, Essay Example

According to the European Council on Foreign Relations, economic trade relations between the nations of Germany (now part of the European Union) and Asian giant China has “exceeded all expectations,” due to the fact that Germany is currently “China’s number one trade partner in the European Union,” while China is the “top foreign investment destination for German companies” (“China and Germany: A New Special Relationship?”).

One major reason for this blossoming economic relationship between Germany and China via a European Council on Foreign Relations 2014 policy brief is because China requires technology while Germany requires new markets for its goods and services. As Hans Kundnani and Jonas Parello-Plesner for the ECFR point out, “Structural similarities and shared economic interests are key for this emerging special relationship,” considering what occurred on a global scale in 2008 in relation to the economic crisis. This symbiotic trading relationship hinges on Germany’s “economic interests and the needs of its exporters,” not to mention Germany’s foreign policies toward China which are founded on the idea that economic exchange will result in much-needed political and social change in China which as of 2014 continues to cling to old and outdated communistic principles and ideals (“China and Germany: A New Special Relationship?”).

In 2014, Xi Jinping, the General Secretary of the Communist Party of China, the President of the People’s Republic of China, and the chairman of the Central Military Commission, made it clear that the nation of China wishes to have stronger economic and trading ties with Germany. Overall, Jinping wishes to see China and Germany as equal partners in a global enterprise in order to “optimize trade structures, develop targeted and complementary products that meet market demand, and increase the proportion of technology and service in bilateral trade (“Xi Urges German Entrepreneurs to Seize China Opportunities”). According to Zhang Yilei, the volume of the bilateral trade between China and Germany in 2013 was more than $193 billion is U.S. dollars; Yilei estimates that the volume of bilateral trade will increase to almost $250 billion in U.S. dollars in 2014 (“Xi: China-Germany Relations Never Been Stronger”).

Statistically, according to 2013 U.S. government agencies that oversee trading relationships between nations, the overall value of exports from Germany which includes mostly automobiles and construction vehicles, machines, and electrical and chemical products, stood at about 67 billion Euros or more than $90 billion U.S. dollars; conversely, exports from China in 2013 to Germany reached more than 73 billion Euros. As of 2014, these figures have risen substantially with German exports to China standing at about 75 billion Euros with China’s exports to Germany exceeding 80 billion Euros (“China President Xi Jinping Pays Visit to Major Trade Partner Germany”). These figures indicate that the economic trading relationship between the two nations continues to grow and prosper, especially in China, considering that its total population currently exceeds 1.2 billion people.

One particular company that operates in China as a trading partner is Daimler which builds some of the most expensive automobiles in the world. As noted by a prominent German news agency in 2014, Daimler signed a deal “worth an estimated 18 billion euros ($24.7 billion U.S. dollars) with Beijing Automotive,” China’s largest automobile manufacturer. This deal is part of a ten year-old joint venture with Daimler  investing an estimated 2 billion Euros in Beijing Automotive. As a result, Daimler is now building in its own facility “E-class and C-class vehicles, as well as its GLK-class sports utility vehicle.” Sales have been so good over the past several years that Daimler plans to begin production on a fourth model sometime in 2014 (“China President Xi Jinping Pays Visit to Major Trade Partner Germany”). There is also talk that Germany’s main central banks have made an agreement with the Chinese government to create a trading center for the Chinese yuan (its main currency) in the German city of Frankfurt (“China President Xi Jinping Pays Visit to Major Trade Partner Germany”).

However, there are those who see things in a different light in relation to the economic trading relationship between China and Germany. One is Sebastian Heilmann of the Mercator Institute on Chinese Studies in Berlin, Germany, who declared early in 2014 that the “promise of the Chinese market has become clouded by a less rosy economic picture,” due to consumer protection crackdowns that target foreign firms, cyber-security concerns, and political risks (Barkin & Rinke).

Heilmann also stated that to some extent, German managers and exporters have become disenchanted because as they see it, China is forcing them to reconsider their investments, due in part to China’s continuing efforts to cut costs and to restructure its economic system more in line with the European model of a free market economy (Barkin & Rinke). What this means for Germany and its exporters is diversification or more of a focus on other goods and commodities that the Chinese public will accept as necessary adjuncts to their ever-thriving middle class lifestyles.

Works Cited

Barkin, Noah, and Andres Rinke. “Economic Honeymoon Between Germany and China Fades.” 2014. Web. Accessed 5 April 2014.

“China and Germany: A New Special Relationship?” 2014. Web. Accessed 5 April 2014.

“China President Xi Jinping Pays Visit to Major Trade Partner Germany.” 2014. Web. Accessed 5 April 2014.

“Xi Urges German Entrepreneurs to Seize China Opportunities.” 2014. Web. Accessed 5 April 2014.

Yilei, Zhang. “Xi: China-Germany Relations Never Been Stronger.” 2014. Web. Accessed 5 April 2014.