German companies make critical contributions to economy
German-Chinese economic relations have developed into a great success level during China’s opening started by Deng Xiaoping’s reforms in 1978. The Chinese government’s reform policies set up a new framework within which German industry and commerce was again and again able to give new and decisive momentum to growth through its investments.
30 years of cooperation
In the last 30 years, an important factor of the cooperation between German and Chinese enterprises has been training Chinese employees and technology transfer. German has brought more technology to China than any other country, according to the National Development and Reform Commission of China.
The main pillar of cooperation between German and Chinese enterprises has been mechanical and plant engineering, followed by electronics and electrical engineering as well as chemistry.
In the early 1980s, critical contributions were made by the German enterprises to the development of the steel industry in Wuhan, while in the automotive sector a licensing agreement between German and Chinese truck manufacturers was the first of its kind. With the German government’s financial support, the contribution of German enterprises to the construction of Shanghai’s subway system was especially important.
Compared to other investors in China, German enterprises are highly noticeable by virtue of their involvement in manufacturing joint ventures as early as the 1980s. An important milestone was the founding of an extraordinarily successful automobile joint venture in Shanghai in 1984. But the first joint venture of a German cosmetics manufacturer in the same year and the founding of the first JV with Germany in the aerospace sector are noteworthy as well.
To date, in cumulative direct foreign investment in China, Germany’s $15 billion tops the list of European countries. High-developed German technology has made a major contribution to the industrial development of China. Today, 88 percent of Chinese exports in the hi-tech sector come from foreign-invested firms.
Bilateral relations
A compact network of economic relationships has developed between China and Germany. German exports to China were all of $270 million in 1972, while today’s exports of 45 billion euros ($67 billion) show the increase of more than 160-fold. And China has increased its exports to Germany 280-fold to $48.7 billion. Today Germany is China’s most significant trading partner in the EU and China is Germany’s most significant partner in Asia.
The Chinese government’s opening policy offered a solid environment for the nation’s positive development. In the last 30 years, GDP growth has been impressive—-from 364.5 billion yuan in 1978 to 24.95 trillion yuan in 2007. At the same time, the part the service sector plays in the economy has grown from a subordinate one to a major player today.
Future prospects
In the coming years and decades, German and Chinese enterprises will continue down the path of successful industrial cooperation jointly. Sectors like environmental protection technology, logistics, healthcare and research and development will get importance.
Chinese enterprises with increasing numbers today are aware of the German market. Their investment, already $310 million, is welcome in Germany. The German Chamber of Commerce in China is interested in both supporting German companies’ market access in China and accompanying Chinese enterprises on the road to German market entry.
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