World Economy

China, Germany Sign Contracts Worth $20b

China, Germany Sign Contracts Worth $20b China, Germany Sign Contracts Worth $20b

Chinese Premier Li Keqiang held a red-carpet ceremony to welcome the German leader, who is on her eighth visit to China since 2005 in the capacity of chancellor.

China and Germany have signed a number of business deals despite the current slowdown of economic growth in the Asian nation. German Chancellor Angela Merkel supported moves towards a free trade agreement, Xinhua reported.

On the fringes of Merkel’s two-day visit to China, the two nations on Thursday signed business contracts worth €18.6 billion ($20.3 billion) at the Great Hall of the People in Beijing.

The two sides agreed to maintain frequent high-level contact, promote exchanges in various fields, improve coordination on major international affairs and seek more common interests in diplomacy and security.

The two also agreed to try to coordinate their economic strategies more, as China is pursuing similar programs to integrate conventional industry and information technology.

“We need to adopt advanced technology and concepts from Germany,” Li said, stressing that China offers a big market for the European economic powerhouse.

This year has been designated the Year of China-Germany Innovation Cooperation. Both sides will aim to create new growth points in investment, financial cooperation and technology, he said.

Li called on the two countries to cooperate more in innovative development and modern urbanization as China encourages entrepreneurship to promote growth.

He also urged them to work together to transfer their excess industrial capacity to developing countries.

Merkel said she has confidence in China’s economy, believing the transformation of China’s growth mode will provide new opportunities for Germany-China cooperation.

She said Germany hopes China and the EU will sign a bilateral investment agreement at an early date, noting it is a prerequisite for a later China-EU Free Trade Agreement.

Following their talks, the two leaders witnessed the signing of 13 deals between the two countries, concerning finance, transportation, communication and healthcare cooperation among other fields.

 Airbus Deal

The two countries signed a deal that will see Chinese airlines buy 30 A330 planes manufactured by the Airbus Group. The order, valued at €17 billion ($18.57 billion), was announced after Merkel met the China’s premier.

Airbus is battling Boeing Co for dominance of the Chinese market, where Boeing estimates demand for new planes to reach $1 trillion over the next two decades.

Air China Ltd and other Chinese carriers are expanding fleets as the number of passengers travelling within China and overseas is set to triple over the next two decades.

To help secure more jet orders in China, Airbus agreed in July to build a €150 million A330 completion center in Tianjin where it has been assembling A320s, sold mostly to Chinese airlines.

 Cooperation With EU

Merkel and Li voiced their intention to intensify cooperation in Industry 4.0 projects bringing together conventional industrial production with top-notch information technology. (Industry 4.0 is one of 10 “Future Projects” identified by the German government as part of the High-Tech Strategy Action Plan 2020–to establish Germany as a lead provider and market.)

She also supported a rapid conclusion of an investment treaty between China and the European Union. Such a treaty is a prerequisite for compiling a feasibility study on free trade talks which in turn would pave the way for an EU-China free trade zone.

China is currently one of Germany’s biggest trade partners. Bilateral trade between the two countries stood at €154 billion ($168 billion) in 2014, making the latter China’s largest trading partner in the European Union. However, German officials have, in the past, expressed fears over small and medium-sized German companies being targeted by China’s espionage activities.

 Cybersecurity Deal

China and Germany are looking to sign a cybersecurity agreement similar to one that exists between the Asian nation and the United States, Bloomberg reported Thursday. While details of the potential deal are not yet known, the agreement is likely to be reached “very quickly,” Merkel said Thursday in Beijing.

The Chinese government and hackers traced back to the country have long been accused of cyberespionage–targeting foreign firms and governments for economic gains. However, speaking at an event in Beijing, lidenied the allegations.

“We are against cyber theft and the stealing of trade secrets,” he said.

 Yuan-Denominated Exchange

Germany’s Deutsche Borse Group has joined forces with the Shanghai Stock Exchange and the China Financial Futures Exchange to trade yuan-denominated products.

According to the German exchange, the project will start in November under the brand CEINEX and will be headquartered in Frankfurt. The management board will be comprised of senior officers from the three exchanges.

CEINEX will offer Chinese investment products to international investors, starting with cash market products like exchange traded funds (ETF) and bonds.

The new platform will become the first for authorized-denominated trading outside mainland China.

Deutsche Borse and the China Foreign Exchange Trade System also signed a strategic cooperation agreement earlier on Thursday, to connect markets and foster product innovation.