Explainer | How are trade relations between China and Germany on the eve of Olaf Scholz’s visit?
- Chancellor Olaf Scholz’s visit to Beijing comes against a backdrop of growing tensions and calls for Europe’s top economy to reduce reliance on China
- But economic ties between the two countries run deep, encompassing industries from manufacturing to pharmaceuticals, and involving some of the world’s biggest firms
German Chancellor Olaf Scholz will lead a business delegation on a one-day visit to China on Friday, marking the first trip by a Western leader to the country since the start of the coronavirus pandemic.
The visit will take place against a backdrop of worsening relations between Beijing and Berlin and growing calls from within Europe to reduce overreliance on China.
The trip will be keenly watched in Washington and by foreign investors in China, who are becoming increasingly frustrated with Beijing’s harsh Covid policies that have effectively kept the country sealed off from the rest of the world for two years.
How are trade relations between China and Germany?
China has been Germany’s largest trading partner for the past six years and by volume accounts for almost 30 per cent of the total trade between China and the European Union (EU).
Germany was China’s sixth largest trading country in 2021, according to the World Trade Organization.
Germany also accounts for the EU’s biggest foreign direct investment (FDI) flows into China, contributing an average of 43 per cent of total investment in the past four years, according to a study by the Rhodium Group.
The country’s three largest car manufacturers and chemical group BASF account for 34 per cent of all European FDI flows in China alone.
