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China agrees to invest billions in German products and know-how

Posted by seumasach on June 29, 2011


29th June, 2011

China and Germany have signed trade deals estimated to be worth 10.6 billion euros ($15 billion), following joint government consultations earlier this week.

The meetings, which included 13 ministers and 300 business managers, were chaired by Chinese Prime Minister Wen Jiabao and German Chancellor Angela Merkel.

Both leaders agreed to increase bilateral trade to 200 billion euros over the next five years. Last year, trade between the two countries amounted to 130 billion, up 34 percent from 2009, according to the Federation of German Industry (BDI).

Move to modernize

The deals, which dwarf the $2.3 billion in trade agreements with British companies signed earlier in the week, come as China moves to modernize its economy and Germany seeks more customers for its high-tech and luxury products.

The largest of them is an agreement between Airbus and China Aviation Supplies for delivery of 88 A320 planes, worth $7.5 billion.

AirbusChina has ordered 88 new Airbus planesGerman carmakers were also part of the action. Daimler agreed to a 2 billion investment in a new engine plant and expanded production of its compact cars. Volkswagen signed contracts for two new factories, including projects to develop electric cars.

The deals also show China taking a big step forward in overcoming its environmental problems with technology “made in Germany.”

Engineering giant Siemens signed a memorandum of understanding with China’s National Development and Reform Commission to help develop green technologies in areas such as smart electricity generation and carbon-capture systems.

Alba Group signed four technology transfer agreements for recycling systems, while Remondis Production and Martin agreed to deliver specialized waste systems.

Easing two-way investment

The deals also covered other areas, such as communications and medicine, and other German companies including T-Systems International, Preh and GermanTech as well as universities, hospitals and organizations, such as the Dresden Technical University, the Median Clinic and the Institute of Pathology at the Charite University Hospital.

Chinese Prime Minister Wen JiabaoChinese Prime Minister Wen Jiabao was in Hungary and Britain before coming to GermanyBesides the business deals, Chinese and German officials signed a series of cooperation accords, with many of them in the environmental sector. The accords include research into energy-efficient buildings, urban development with low carbon emissions and the recycling of electric car batteries.

China and Germany also signed agreements to facilitate two-way investment, with Europe’s largest economy eager to rebalance investments between the two countries. Currently, German investment in China stands at about $20 billion, compared with $600 million Chinese investment in Germany.

Rainer Gehnen, managing director of the German-Chinese Business Council (DCW), referred to the talks as “very helpful” and said they underscore “the successful economic cooperation between Germany and China over the past 20 years and the interest on both sides to expand this cooperation.”

Gehnen told Deutsche Welle that in the mid to long term, China will remain “the most important market for Germany industry, simply because of the size of the market.”

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