China remains Germany’s most important trading partner

BERLIN/BEIJING – Trade relations between Germany and China have increased continuously in recent years. China has now been Germany’s most important trading partner for six years in a row. In 2021, Germany imported goods worth around 141.8 billion euros from China, while in 2009 it was around 56.7 billion euros.

The value of German exports to China amounted to around 103.6 billion euros in 2021, compared to around 37.3 billion euros in 2009. This led to Germany always recording a trade deficit in foreign trade with China, which was in 2009 reached its peak in 2021 at around 38.1 billion euros.

The ongoing strengthening of economic relations between Germany and China is also reflected in direct investments. In 2022, direct investment from Germany in China rose to a record level of 11.9 billion euros (equivalent to 12.8 billion US dollars)1. These figures highlight the interdependence and importance of trade relations between the two countries.

However, German companies doing business with China face a number of challenges. Here are some of the most important ones:

  1. Preferential treatment for local competitors: Preferential treatment of Chinese companies compared to foreign competitors is a significant regulatory challenge. This is a consequence of the trend towards self-employment in China. The strategic economic objective of the “dual circulation policy” promoted by the Chinese government is to reduce dependence on foreign companies. German companies report a lack of transparency, local procurement practices, and preferential treatment for local companies, e.g. B. in public tenders.
  2. Innovation competition: Chinese companies are becoming more and more innovative. Almost half of those surveyed believe that their Chinese competitors will become innovation leaders in their sector in the next five years (compared to last year: 41 percent).
  3. Change in business opportunities: The previous reasons for doing business in the People’s Republic of China are becoming less important. For example, only 51 percent of companies now view domestic consumption growth as the main opportunity for their business in China. Last year it was 73 percent. Only 39 percent see the increasing demand for foreign brands as a business opportunity, a significant decline of 26 percentage points since 2019.

Despite these challenges, there is still great interest in the growth market of China. 96 percent of companies surveyed intend to remain active in the country, while only 4 percent are considering leaving China. The economic relations between Germany and China are complex and dynamic – a balance between opportunities and risks. (zai)