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China became Germany's biggest trading partner for the first time in 2016. The European Union (EU) is now in the process of recognizing China's market economy status, under the Article 15 of the Protocol on China's accession to the World Trade Organization (WTO). In addition, Germany is one of the first batch of countries to publicly support the China-proposed Belt and Road (B&R) initiative, and to join the China-initiated Asian Infrastructure Investment Bank (AIIB).
With the B&R Forum kicking off on Sunday, Global Times reporter Zhang Xin (GT) sat down with German Ambassador to China Michael Clauss (Clauss), to talk about the prospect of bilateral cooperation under the B&R initiative and how to deal with the existing differences between the two sides.
GT: Germany has been showing strong willingness to participate in the B&R initiative. What's your expectation for the upcoming B&R Forum?
Clauss: Since it is not possible for Chancellor Merkel to attend personally, she will be represented by Federal Minister for Economics and Energy, Brigitte Zypries. Quite a few CEOs of big companies will also participate.
Both the Chancellor and the government have expressed support for the initiative and welcome its philosophy. The B&R initiative is potentially about connectivity and about more open markets, which we both value. I think what's especially important is that it can make a push for infrastructure construction in countries that didn't receive a lot of investment in the past. In order to spark economic development, it's important to invest in infrastructure. Moreover, economic development contributes to political stability. The B&R initiative covers many countries in Asia, Europe, and also Africa. That will help to alleviate the root causes of migration. Germany is particularly affected by the global refugee crisis, so this is very important to us.
Furthermore, German companies are interested in participating in specific projects, particularly on high-tech infrastructure and independent risk assessment, if the conditions are right.
GT: As you just mentioned, Ms Zypries will come to Beijing for the B&R Forum. What will be the most important items on her agenda during the visit?
Clauss: B&R will of course dominate the agenda, but other issues might come up as well, like the Article 15 of the Protocol on China's accession to the WTO and market access in China.
GT: Talking about Article 15 and the market economy status, China has become Germany's biggest trading partner, and Germany is the largest economy in the EU. How will this influence Germany's position concerning the EU granting the market economy status to China under Article 15?
Clauss: Germany wants to solve this issue as soon as possible. Actually, the EU was supposed to have already implemented that by December 2016, but legal procedures in the EU are quite complex and time-consuming.
I'm optimistic that it can be done by the summer of this year. The 28 EU member states have already consented to the legal draft. Now, it's up to the European Parliament to give the green light. There is no doubt that the EU will fulfill its legal obligations under the treaty.
GT: Chinese enterprises are practicing the „go global“ policy, what kind of assistance can Germany provide to China in this aspect? What will be the biggest potential for bilateral cooperation in the future?
Clauss: The B&R initiative has the potential for companies from both sides to cooperate more in third countries. That is especially true for infrastructure projects, where German specialized high-tech companies can make important contributions. The Chinese side also seems interested in professional and independent risk assessment.
GT: Recently, European Chamber of Commerce in China criticized China Manufacturing 2025 (or commonly known as Made in China 2025) as harming European business. In what way do you think the guideline on manufacturers might influence China's counterparts in Europe?
Clauss: Made in China 2025 offers interesting opportunities for European companies. But there are also concerns: For example, the strategy includes quotas of 80 percent and more for purely Chinese-made new energy vehicles by 2025. Even higher quotas are envisioned for other products such as agricultural machinery. That sounds like it might not be a fair competition. Some companies worry that the plan is for a future without them.
GT: So, do you think Chinese manufacturers will become a serious competitor for German producers in the future?
Clauss: Definitely. Chinese companies will move up the high-tech ladder, this is only natural. We do not fear competition, as long as it is fair. And that's why we would like to see changes toward more reciprocity.
For example, Chinese investors are free to buy any company in Germany, we are completely open, but the same cannot be said for German investors in China. Recently Hainan Airlines bought a 10 percent share of Deutsche Bank. Can you imagine a German company acquiring 10 percent of ICBC?
What we've seen as a positive sign is President Xi Jinping's Davos speech, in which he clearly said that China is going to open up and that he believes in free trade. Premier Li Keqiang and the State Council made similar announcements, so there is hope for improvement, now we expect the administrative level to walk the talk.
GT: China and Germany are vigorously promoting economic and trade cooperation, but the two countries have different ideologies and political systems. Germany is one of the toughest European countries in criticizing China about its values. How much do you think the political differences have affected the pragmatic cooperation in trade and economy? Is it possible to reconcile the two?
Clauss: As you just said, we have very close economic relations. Against the global trend, our bilateral trade is strengthening. With 170 billion euros, China has become Germany's largest trading partner in 2016. There's a lot of trust between the leaders. They meet frequently. This year, Premier Li Keqiang and President Xi Jinping will visit Germany. That's on top of a large number of regular visits by federal ministers and provincial leaders.
Obviously, on some issues, we have different views. Our bilateral relationship is mature enough to deal with that. I think it's because the Chinese side sees us as predictable and they know that there is no geopolitical rivalry between us.