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backEUROtalk April, 2012

Economic interests keep China and Germany close

Wen Jiabao is opening a trade show in Hanover with German Chancellor Angela Merkel. Afterward, they will visit a Volkswagen factory. The agenda highlights the dominance of economic ties in Sino-German relations.

When German Chancellor Angela Merkel meets with Chinese Prime Minister Wen Jiabao on Sunday, it will almost be like old friends coming together. Both politicians have known each other for years. Merkel last visited China at the beginning of the year and paid tribute to the Sino-German friendship, which this year is celebrating 40 years.

"Cooperation is solid; from science and technology to economy, rights dialogue and agricultural cooperation - we have strengthened our cooperation in many areas," the German chancellor said.

Economic cooperation

Dialogue is taking place on over 30 different levels. Many of them take place at a high level - between ministers, state secretaries, and heads of ministries. So exchange at the ministerial level takes place quite often - as does the exchange of goods.

Germany is China's number one trading partner in Europe and China is Germany's top trading partner in Asia. The Chinese premier's visit, which will include a trip to the Hanover Messe trade show and the Volkswagen factory in Wolfsburg, speaks for the predominance of the trade in Sino-German relations.

Sebastian Heilmann, a political scientist from Trier, Germany, says "Everything else more or less follows economic ties."

Strategic cooperation

Since 2004, both countries have had what is called a "strategic partnership in global responsibility." Heilmann believes even this partnership is first and foremost of economic importance.

"Many discussions about the world economy focus on the regulation of the financial markets, fighting inflation, the role of national deficits - in all of these points, Germany and China share far-reaching macropolitical and macroeconomic similarities."

To the dismay of the eurozone, however, these shared interests are not playing that large of a role in the rescue of its currency. During Merkel's trip to Beijing in February this year, Wen Jiabao promised help for the euro. But not without saying that the Europeans will also have to help themselves - that this would be the "foundation and key to overcoming the debt crisis."

Euro help

China is willing to participate in saving the euro through the International Monetary Fund but is reluctant to buy European bonds directly. Heilmann sees a strategy behind that: "Multilateral help through the IMF, yes, but only under the condition that China gets more say, more influence in the regulation of these programs."

Merkel and Wen will surely have other topics on their agenda, such as Iran and Syria. While the two sides are not always of the same opinion with regard to the conflicts going on in the two countries - China looks at pressure coming from the West critically - there is one common goal: to avoid a military conflict.

Talking to Merkel in February, Wen emphasized that only through dialogue and cooperation could the issue with the Iranian nuclear program be solved. China, along with Russia, has also used its veto power to block a UN resolution on Syria twice now.

Source: Deutsche Welle - GAI

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