Huge potential in partnership

The author is CEO of Rudolf Scharping Strategie Beratung Kommunikation GmbH.

As the rise of China leads to much stronger outbound investment, Chinese companies are shifting towards advanced economies, including Germany, which is its second-largest recipient within the European Union.

With its much anticipated Belt and Road Initiative, China is willing to invest more than $900 billion in infrastructure expansion projects along the land and maritime Silk Roads.

Germany, in the center of Europe and known for its highly advanced industry, is the beneficiary of annual Chinese investment of approximately $1.5 billion, flowing foremost into mechanical engineering, electronics and information, and communications technology.

However, other sectors such as consumer products, finance and transportation services, and renewable energy are catching up. The latter bears huge potential for the implementation of joint innovative projects in various fields, such as environmentally friendly technologies meeting specific Chinese demands for clean air and water, soil protection, and others.

Against the backdrop of a still existing imbalance between Chinese FDI in Germany and vice versa, the Chinese long-term investment strategies could lead to a win-win-situation for both sides.

Germany on the one hand is equipped with the desired know-how and advanced technologies in relevant fields. China, on the other hand, is in favor of access to the market and eager to supply certain wants, backed by the government's new "Made in China 2025" strategy that is aimed at helping China become a globally acting manufacturing superpower.

With a German-Chinese bilateral investment protection agreement in place since 2005, this recent shift of Chinese FDI plays well into the hands of the German Chinese Innovation Partnership declared this year, most likely fueling merger and acquisitions transactions and facilitating the linking of both economies.

In the long run, this recent development tackles market asymmetries accountable for unwanted market distortions. Considering the latest GDP growth rates and overall market development, this wouldn't be such a bad scenario after all.

(China Daily 10/29/2015 page13)