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The German Chancellor will soon lead a delegation to visit China because Germany still cannot do without Beijing

At this time, German trade relations are not aligned with the interests of German companies in China

German Chancellor Scholz will lead a delegation to visit China at the end of April. It will be his first visit to Beijing since the German government announced its "China Strategy" last year.

Chinese President Xi Jinping (R) welcomes German Chancelor Olaf Scholz at the Grand Hall in Beijing on November 4, 2022. (Photo by Kay Nietfeld / POOL / AFP) (Photo by KAY NIETFELD/POOL/AFP via Getty Images)

On April 9, however, the German think tank “Deutsches Institute for Economic Research” published a report in which it stated that, although the German government urges the “risk reduction” of China, the data shows that the German economy is still heavily dependent on China, and that "an obvious structural trend towards risk reduction" has not appeared."

The report analyzed Germany's trade with China in 2023 and found that overall, despite some changes, Germany's reliance on imports from China last year was still similar to the previous year."

The data shows that in 2023, China's share of total German imports fell from 12.8% to 11.5%, but it still remained Germany's most important import trading partner. More importantly, in key product categories such as chemicals, computers and solar cells, Germany is still “heavily dependent on China” (i.e., has a high dependence on imports from China, with an import share of at least 50%).

The report highlights that from 2013 to 2023, the number of product groups with a high dependence on German imports from China increased significantly, indicating that "Germany's dependence on Chinese imports has worsened in recent years."

Last year, the total number of goods for which Germany was heavily dependent on China for imports fell only slightly to 200 from 213 in 2022, with almost no change.

Specifically, in the list of goods for which Germany is heavily dependent on China for imports in 2023, 85 product groups belong to the chemical, pharmaceutical and related sectors; electrical and electronic products follow closely, with 38 product groups, including notebooks. computer accessories, solar cells, magnets, batteries, etc.; mechanical engineering and related products, as well as raw materials and minerals each have 24 product groups; Rare earth metals have 6 product groups...

“Therefore, a clear structural reduction in China risk – a further, strong and sustained decline in imports – has yet to emerge,” the report concludes.

The categories of goods for which Germany is heavily dependent on China for imports, photo from the German Economic Institute report

This research report was published on the eve of the visit of German Chancellor Scholz's delegation to China. Reuters had previously cited news that Scholz will visit China in April and will be accompanied by executives from Germany's largest companies. This shows that despite efforts to diversify risks, German companies continue to rely on China.

Germany's Frankfurter Allgemeine Zeitung first announced in February that Scholz would visit China in April. According to the invitation letter from the German Asian-Pacific Economic Committee seen by German media, Scholz will travel to China from April 15 to 16 and representatives of German companies will be able to join the accompanying delegation, which will leave on the evening of April 14.

The report mentions that the accompanying delegation includes Roland Busch, CEO of Siemens and president of the German Economic Council for Asia-Pacific, Ola Kaellenius, CEO of Mercedes-Benz, Oliver Zipse, head of BMW, executives of German companies such as Bayer CEO Bill Anderson and the CEO of the German industrial giant ThyssenKrupp Miguel Lopez.

It is worth remembering that in July last year the German government announced the vague "China Strategy", which aims to push for "risk reduction" and reduce economic dependence on Beijing, without however providing specific measures or binding objectives.

However, the German business community does not agree with the German government's "China strategy". In fact, shortly after its publication, the German Chamber of Commerce, the "Federal Association for Economic Development and Foreign Trade" (BWA), issued a statement stating that it "does not welcome" this "Chinese strategy."

German trade relations are therefore not in line with the interests of German companies in China.

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