German Chancellor Scholz is about to embark on his first trip to China after taking office, accompanied by a "luxury sky group" of German executives.

According to the website of the Ministry of Foreign Affairs, on October 10, Foreign Ministry spokesman Wang Wenbin announced that at the invitation of Premier Li Keqiang, German Federal Chancellor Scholz will pay an official visit to China on November 28.

Comprehensive (foreign media) information shows that 12 German business executives will visit Scholz this time, including Volkswagen President Oliver Blume, Siemens President Roland Busch, Merck Group Executive Chairman Belén Garijo, Deutsche Bank CEO Christian Sewing, Martin Brudermüller, Chairman of the Executive Board of BASF SE, and Sahin, founder of the German biotech company BioNtech, among others.

Ding Chun, director of the Center for European Studies of Fudan University and vice president of the European Society of China, said in an interview with the first financial reporter that economic and trade relations are the ballast stone of Sino-German relations, and the follow-up companies are all the head enterprises of Germany's pillar industries, which are important to the German economy. These companies have long-term cooperation with China and have a large scale of business in China.

"The reason why these companies want to strengthen cooperation with China is because of the huge market scale and perfect supply chain layout in China, as well as the company's globalization strategy." Ding Chun said, "Globally, China is a relatively large single market. In the long run, multinational enterprises strengthen their investment and layout in China, on the one hand, they hope to be close to the market, make full use of China's market size, and consider the comparative advantages of cost and profit. On the other hand, it is also based on China's perfect supply chain conditions. In addition, the short-term factor of the energy crisis has also made European industry show a certain degree of migration trend, and China's lower energy costs and perfect supply chain advantages are more prominent. ”

Oppose "decoupling", the head German enterprise "Tiantuan" accompanied

In addition to the above-mentioned companies, Germany's leading companies on the accompanying list include BMW, Wacker Chemie Group, Adidas, baby food manufacturer Hipp, heating technology company GeoClimaDesign and Bayer AG.

It can be seen that the accompanying enterprises are mainly distributed in the automotive, manufacturing, chemical, pharmaceutical, food and other fields.

According to the latest data from the Ministry of Commerce, in January ~ September this year, the actual amount of foreign funds used in the country was 1,9.10037 billion yuan, an increase of 6.15% year-on-year (the same below), equivalent to 6.1553 billion US dollars, an increase of 18.9%. Among them, from the perspective of origin, Germany's actual investment in China increased by 114.3% (including investment data through free ports).

According to the Ministry of Commerce, BASF (Guangdong) Verbund Base Project and BMW Brilliance Third Plant Project have been put into operation one after another.

Earlier, research firm Rhodium Group released a report showing that the top ten European investors in China accounted for an average of nearly 80% of total European direct investment in China over the past four years, which is higher than the 49% figure in the past decade. Among them, companies from Germany, the Netherlands, the United Kingdom and France accounted for 87% of the total investment in the last four years and 69% in the last decade.

The report also shows that the five sectors – automotive, food processing, pharmaceutical/biotechnology, chemicals and consumer goods manufacturing – accounted for nearly 70% of all European FDI in China over the past four years, compared with 2013% between 2017 and 65 and 2008% between 2012 and 57.

According to the report, these trends are driven by a variety of factors. For example, German companies are often located in capital-intensive manufacturing and engineering industries, which require significant fixed investment. The German automotive sector is particularly prominent, accounting for about a third of European direct investment in China. This percentage is even higher in the first half of 2022, as German automaker BMW increases its stake in its joint venture in China from 50% to 75%. Other European automakers are also pouring money into new facilities to build electric vehicles. The report reads.

Clemens Fuest, director of the German Ifo Economic Research Institute, also said in an interview with the first financial reporter that in recent years, German investment in China has been dominated by large companies, especially those automobile companies that have existed in China for a long time.

This time, executives from Volkswagen and BMW will accompany them to China. Recently, Obermu said in an earnings call that "it is very important to communicate between countries and listen to the ideas and perspectives of both sides."

In October, Volkswagen announced a new partnership between its group software company CARIAD and Horizon, a provider of intelligent driving computing platforms, to accelerate the development of advanced driver assistance systems and autonomous driving systems for the Chinese market. CARIAD will form a joint venture with Horizon and take a controlling interest. The Volkswagen Group plans to invest approximately EUR 10.24 billion in this partnership.

Professor Wu Huiping, deputy director of the German Research Center of Tongji University, said in an interview with the first financial reporter that most of the follow-up companies and visit schedules of the German chancellor's previous visits to China have been carefully selected and carefully planned. The characteristics of the companies visited are, first, they are all leading enterprises in the pillar industries of the German economy; Second, it has been in the Chinese market for a long time, and its business in China has been relatively large-scale, and it has accumulated a lot of business experience, and is a first-hand experience and beneficiary of the deepening of Sino-German economic and trade relations.

Wu Huiping believes that in the future, whether in the field of trade or investment, these enterprises are expected to continue to increase cooperation with China. The reason for this is that from the perspective of overseas markets, the German economy is characterized by physical manufacturing, but the local market is not large, and raw materials are seriously scarce, which means that manufacturing companies need to expand their business territory with the help of overseas markets to ensure the supply of raw materials and primary products.

"Taking the automotive industry as an example, nearly one-third of the market of Germany's top car companies is in China, which is closely related to China's demographic structure and consumption upgrading trend. From the perspective of production costs, Germany's manpower and energy costs are higher, while China's business environment is more friendly, infrastructure is more perfect, labor quality is higher, and energy costs are lower, which is also an important reason why China can attract German capital. Wu Huiping said that in addition, in the field of digital research and development and application, China has a very large scale and deep accumulation, and constantly pursues high-quality development from Made in China to Made in China in the field of scientific and technological innovation, which is why German companies firmly oppose the "decoupling theory" and hope to strengthen cooperation with China.

Foster told the first financial reporter that Sino-German cooperation has great potential, from trade, foreign direct investment to science, technology and culture and other projects.

What kind of signal does the first visit to China send?

Scholz reportedly made clear his support for globalization, saying that decoupling was a completely wrong path and that Germany must trade with many countries, including China. Dombrovskis, executive vice president of the European Commission for economic affairs, also believes that decoupling from China is not an option for EU companies, that EU-China trade relations need more balance and reciprocity, and that the EU should continue to engage with China in a pragmatic manner.

Chinese Foreign Ministry spokesman Mao Ning said on October 10 that we positively evaluate the relevant statements of the European side. China also supports globalization and opposes decoupling. In the context of the current downturn in the world economic situation, adhering to open cooperation and strengthening economic and trade ties is not only beneficial to China and the EU, but also to world economic recovery.

It is worth mentioning that on the eve of Scholz's visit to China, despite twists and turns, the German government approved COSCO's acquisition of 24.9% of the shares of Hamburg Container Terminal in Germany.

On the evening of October 10, COSCO SHIPPING Ports issued an announcement disclosing the latest progress on the acquisition of the rights and interests of Hamburg Container Terminal in Germany. German terminal operator Hamburg Port & Logistics AG (HHLA) also issued a press release confirming the news. In response, Wang Wenbin once responded that cooperation is mutually beneficial. We hope that relevant parties will take a rational view of China-Germany pragmatic cooperation and stop groundless speculation.

According to the statistics of the General Administration of Customs, in the first nine months of this year, the total trade between China and Germany was 9,11361.2 billion yuan, an increase of 5817% year-on-year, of which China's exports to Germany were 5.9 billion yuan, a year-on-year increase of 8.<>%.

Ding Chun told First Finance and Economics that Scholz's visit to Huawei has released a positive signal for the continuation and deepening of Sino-German economic and trade cooperation. Given Germany's influence within the EU, this could lead the rest of the EU to follow suit.

"In addition, Germany's visit to China also released a signal, that is, although there are many rumors within Germany, including the Green Party in the ruling coalition, the European Union and the United States, to get rid of dependence on China and even decouple, Chancellor Scholz and the German economic circles still hope to strengthen their continued support for globalization and continue to promote economic and trade cooperation with China." Ding Chun said.

Wu Huiping believes that Germany is an important member of the European Union and the Group of Seven (G7), and Scholz's visit to China has strong symbolic significance, releasing an important signal of hope to stabilize Sino-German economic and trade cooperation and strengthen pragmatic cooperation.

"Scholz's move continues the steady and pragmatic policy approach towards China of former German chancellors such as Merkel - placing economic and trade cooperation at the center of gravity in Sino-German relations." Wu Huiping explained, "At the same time, Scholz is also sending a voice in Germany that although the Greens are currently in charge of the country's foreign ministry, the most important foreign policy decision-making power in the country is still in the hands of the chancellor. ”