German Chancellor Olaf Scholz (left) visits a Bosch factory for hydrogen drives in Chongqing, China on April 14, 2024. Photo: IC 

German Chancellor Olaf Scholz arrived in Southwest China's Chongqing Municipality on Sunday, commencing his three-day visit to China that will last until Tuesday. It marks Scholz's second visit to China as chancellor, and he is also accompanied by Germany's top corporate brass, a trip which observers and business representatives point out bears certain resemblances to the "Merkel era" - a positive signal that underscores that the European country is active to build on and expand pragmatic cooperation with China despite external noises.   

During Scholz's visit to China, President Xi Jinping will meet with him, and Premier Li Qiang will have talks with him, exchanging their views on bilateral relations and issues of mutual interest.  

Scholz is the first Western major country leader to visit China this year, so the ongoing visit itself demonstrates that Washington-instigated "de-risking" calls, which some EU hawks also push for, are set to be "sidelined" as cooperation prevails and European countries strive to maintain policy independency, observers said.   

The visit comes amid recent complex changes in China-EU relations after Brussels cranked up trade tensions with Beijing over new energy industries. It is expected that Scholz's trip could help address those rifts and play down the risks of a "green trade war," offering a balance to anti-China voices within the EU bloc that would navigate China-EU relations to a healthier and more stable track.  

Scholz is accompanied by three federal ministers of environment, agriculture and transport, and a high-profile corporate delegation composed of executives from German companies including Siemens, Mercedes and BMW, state broadcaster China Central Television reported.   

During the three-day visit starting from Sunday, Scholz will head to Shanghai and Beijing after Chongqing, news portal France 24 reported. It is one of his longest bilateral visits since taking office in 2021.  

"The schedule is richer than the previous visit in November 2022, which shows that the Scholz government looks to maintain and enrich pragmatic cooperation with China. There are discussions on certain similarities between Scholz's trip and the previous China visits paid by former German chancellor Angela Merkel, especially in terms of the level of engagement with Chinese localities," Cui Hongjian, a professor with the Academy of Regional and Global Governance with Beijing Foreign Studies University, told the Global Times on Sunday.  

Cui said that this is a very positive signal since China-Germany relations reached a new height in the Merkel era, and it could indicate that Scholz is looking to stabilize and elevate bilateral relations to the previous course, despite a profound shift in the overall environment.  

A 'productive' visit  

Economists and German company representatives anticipate the trip will be "productive," as both sides have shown clear interest in deepening economic ties with each other.   

Commenting on the visit, Maximilian Butek, executive director at the German Chamber of Commerce in China, told the Global Times that the most important outcome will be to establish a solid basis for cooperation and exchange. "We hope that by personal exchanges across a range of different topics, a mutual understanding of key issues can be achieved."   

The Chinese city of Chongqing, which serves as a pivotal hub for China-Europe freight trains, is Scholz's first stop in China. Observers said that visit thus paves the way for future bilateral cooperation in the basic infrastructure sector.   

"Chongqing is also home to a number of major German investments, so the visit could also be in response to calls from German business society which is looking to strengthen economic links with China," Sun Yanhong, a senior research fellow at the Institute of European Studies of the Chinese Academy of Social Sciences, told the Global Times on Sunday.  

As Germany faces challenges with its green energy push, it is expected that German automakers will take advantage of the visit to deepen collaboration with their Chinese peers, which have become leading global players in new energy vehicles, Sun predicted, expecting green and digital cooperation to be one of the visit's outcomes.  

In terms of global governance, the two countries could also discuss working together on common goals such as grain security, sustainable development and ecological agriculture, analysts said.   

The German business community also reads the visit as Scholz striking a "balanced approach" between different voices in his three-party government and fostering deepened relations with China through open exchange and discussion. The visit, they said, aligns with their strong objection to certain European politicians' "de-risking" push and underscores the overall cooperation mainstream between China and the EU bloc.   

"Healthy competition is necessary, but a decoupling/de-risking push does not make sense because you need to work together. For example, on the environment side, no single country can solve the problem, and you need to keep cooperating with each other to work closely on these topics," Rainer Kern, vice general manager and Chief Financial Officer of Kärcher China, told the Global Times.   

Last year, Germany's direct investment in China reached a record level of 11.9 billion euros ($12.7 billion), up 4.3 percent year-on-year, according to a report by the IW institute. China is also the largest trading partner of Germany for eight consecutive years.   

In July, the German government released a toughly worded China strategy that shifted the focus to de-risking, diversification, and a reduction of dependencies on China. Despite internal pressure, the current German government remains pragmatic and is putting its own economic interests at the top of its priorities.  

Helga Zepp-LaRouche, founder of Germany-based political and economic think tank the Schiller Institute, told the Global Times over the weekend that for an export economy like Germany, it would be "suicidal" to follow these calls for "de-risking."  

"Germany is presently experiencing a dramatic economic downfall. Meanwhile, the US has been luring German enterprises to invest in the US instead of Germany with incentives provided by the Inflation Reduction Act. In this adverse environment, the expansion of economic cooperation with China represents an anchor of stability for Germany," she said.  

Stabilizing relations with China is also consequential for Germany to cope with rising external demand, such as Russia-Ukraine tensions and the upcoming US Presidential election, analysts said.   

Playing down trade tensions  

One of the most important items on the agenda is how the two countries discuss and deal with the "overcapacity" hype by US and EU politicians on Chinese new energy products.   

On Tuesday, an EU official announced the bloc will investigate Chinese wind turbine suppliers over "subsidy" allegations, which follow the EU's investigation over imported Chinese EVs, together with the launch of a special European customs registration process for Chinese-made EVs in March for the purpose of levying retroactive tariffs.   

The mounting trade rifts have fueled concerns that they could morph into a "green trade war" that wracks havoc on the global supply chain and delay the global climate change agenda.  

"The stakes are high. How China and Germany keep close communication on these disputes and find a common way to play down those disputes will have an immediate impact on China-Europe relations, which have become more complicated and unpredictable due to shifting geopolitical dynamics," Cui said.   

According to Reuters, Scholz is scheduled to visit German auto supplier Bosch's hydrogen fuel cell plants in Chongqing on Sunday. Observers expect the inspection to help him develop a deeper and throughout understanding on China's competitive advantage in the new energy sector.   

Cui added that as a healthy and stabilizing China-Germany relationship, which offers a clear manifestation of shared and intertwined economic interests between China and Europe, also sets the stage for the fundamentals of the relations between Beijing and Brussels, especially on the economic front. 

Analysts stressed that a healthy China-EU relationship entails both fair competition and collaboration, rather than targeting Chinese companies with unjustified measures.   

China's solid business relationship with Germany, given the latter's economic weight, can be a corrective to the often protectionist policies of the EU Commission and its geopolitical views of the rise of China, according to Zepp-LaRouche.  

Mao Ning, a spokesperson from the Chinese Foreign Ministry, said on Friday that China and Germany have benefited from each other's development which has contributed to the welfare of both peoples. The two countries have steered China-EU relations on a steady and sustained course and injected more stability to the world.   

Sun Yanhong, Senior Research Fellow at the Institute of European Studies, Chinese Academy of Social Sciences (CASS).    

The article was originally published in Global Times on April 14, 2024.