China must ‘urgently’ find solutions to boost trade ties with Germany, Berlin’s top diplomat says
- Travel and quarantine restrictions are two of the difficulties faced by China and Germany, said Berlin’s acting ambassador Frank Rueckert on Tuesday
- He was speaking at an event in Beijing marking the release of the annual survey of business sentiment by the German Chamber of Commerce in China
To boost trade ties with Germany, China must “urgently” address numerous issues, including its strict travel and quarantine restrictions and “differences in values” with the European Union, Berlin’s acting ambassador said on Tuesday.
Travel and quarantine restrictions are two of the difficulties in “various directions” faced by China and Germany, said Frank Rueckert, who is currently Germany’s top diplomat in China following the sudden death of ambassador Jan Hecker in September.
China’s commitment to opening-up its markets is also an obstacle, according to Rueckert.
There are uncertainties about risks and potential disadvantages for foreign businesses and global trade that weigh on the business environment
“We urgently need to find pragmatic solutions to facilitate mobility between China and the European Union. … European societies are increasingly striving for sustainable value chains. And it’s clear that differences in values, particularly with respect to fundamental human rights, come with negative commercial impacts,” Rueckert said, who was speaking at an event in Beijing marking the release of the annual survey of business sentiment by the German Chamber of Commerce in China.
“There are uncertainties about risks and potential disadvantages for foreign businesses and global trade that weigh on the business environment.”
Rueckert also noted a lack of commercial flights between China and Germany this month, as these have all but ground to a halt, outside chartered flights arranged by Berlin for chamber of commerce members.
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China was Germany’s most important trading partner in 2020 for the fifth consecutive year, with traded goods worth €213.2 billion (US$243 billion) in 2020, according to data from the German Federal Statistical Office.
According to the survey, a “lack of equal treatment” has become the most significant regulatory challenge for German business in China, with a third of firms saying they have experienced unfavourable treatment amid Beijing’s campaign for increasing technological self-reliance.
Some 36 per cent of the 596 German companies that took part in the survey by the German Chamber of Commerce in China last year listed preferential treatment offered to local companies, protectionism and legal uncertainties as their top business challenges, compared with just 20 per cent last year.
Of the German companies surveyed between October 14 and November 3 that had taken part in public procurement where a public body purchases goods, works or services from private companies, 42 per cent said that they had been affected by preferential treatment offered to Chinese competitors.
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They reported a lack of transparency and so-called buy-local policies, while they also have to compete with state-owned enterprises that have received state subsidies.
Other discriminatory measures include exclusion of certain projects as a result of government procurement rules and requirements to establish a joint venture with a local company.
Looking ahead, 55 per cent of the respondents said the impact of economic and technological decoupling for their business in the next 24 months would be negative.
Economic policy tendencies toward self-reliance seem to have left their mark: lack of equal treatment has become the most significant regulatory challenge for German business in China.
“German companies in China are quite optimistic about the new year, and their commitment to the market remains firm,” Clas Neumann, chairman of the German Chamber of Commerce in China, said in the report, released on Tuesday.
“However, economic policy tendencies toward self-reliance seem to have left their mark: lack of equal treatment has become the most significant regulatory challenge for German business in China.”
This approach has raised concerns for foreign companies, and some fear they could be squeezed out of the Chinese market.
Our member companies expect the Germany government to act on this [survey] and start a dialogue
In terms of investment in China, 24 per cent of the firms surveyed said they were not planning to invest, or had planned to decrease investment, with 34 per cent citing ongoing travel restrictions as a key reason, while 30 per cent said politicising business was another concern.
China’s harsh border restrictions prompted by the coronavirus pandemic have been sharply criticised by international business groups and have increased the risk of losing foreign experts.
Of the firms that took part in the survey, 70 per cent said they had production operations in China, while 86 per cent employed fewer than 1,000 people. A total of 33 per cent were involved in the machinery and industrial equipment sector, with 21 per cent focused on the car industry.
“Our member companies expect the Germany government to act on this [survey] and start a dialogue, because indeed many things are not in the hands of business, these are sometimes political issues or because there are certain agreements to be made, therefore, we need the help of the government. That being said, there is also the Chinese government,” added Neumann.
