Ambassador Clauss on the 2017 plenary sessions of the NPC and the CPPCC

The 2017 sessions of the National People’s Congress and the Chinese People’s Political Consultative Conference will be significant yardsticks showing to what extent China is willing to move forward its policy of opening and reform. It is likely that stability will play an important part and that economic growth targets will be shown to be on track. The key challenge will be to make stability and growth sustainable. Opening and reform need to move forward more aggressively than before in order to create more confidence among the private sector, including foreign investors.

From a global perspective, a reaffirmation of China’s strong support of an open and rules-based global order would be welcome. Germany’s and China’s overlapping interests have grown further. As the two leading forces in trade and manufacturing worldwide we have to stand together to defend the multilateral system with a strong and well-financed United Nations, the multilateral open trading system with the WTO as its core, implementation of the Paris climate treaty and preserving stability throughout Asia and Africa. The handover from the Chinese to the German G20 presidency has been one of the smoothest ever. Our close cooperation is an excellent foundation for a successful G20 summit in Hamburg in July.

Defending an open global trading system and preventing retrogression into coerced bilateral deals under the threat of unilateral protectionist measures will be one of the main challenges on the global agenda this year. In order for partners like Germany and China to keep the global trade order on track, it will be crucial to lead by example. First and foremost this means not give in to protectionist temptations at home.

China has become Germany’s largest trading partner for the first time in 2016. We cracked the 170 billion Euro barrier, a healthy growth of around 5%, with trade growing in both directions. Germany has also again been by far the largest European investor in China in 2016, especially in high-tech manufacturing. The ability to grow together despite international headwinds, even bucking the trend of falling trade among China’s other major trade partners, shows the enormous strength of our partnership. Germany is and wants to remain China’s key modernization partner. This is why our companies have concerns about some industrial policies such as the Made in China 2025 blueprint. There is nothing wrong in itself with China’s ambition to become a world market leader in virtually all promising future sectors of manufacturing, such as robotics, electric cars, bio-tech, health, high-speed rail, aviation und IT. These plans have caught particular attention in Germany because these are exactly the fields where German industry is strong. There are concerns about the means employed to achieve China’s industrial upgrading goals. Setting precise numerical targets for every sector and even decreeing that purely home-grown Chinese companies would have to occupy the top positions in major industry fields by 2025 look more like a strategy for replacement than partnership.

Recent signals from the political leadership on further opening and more equal treatment of foreign trade and investment have been encouraging. We appreciate the willingness of China’s leadership to actively reconsider planned moves that could have been detrimental to further growth in our economic relationship. The twenty-point plan on further opening China’s economy, published by the State Council at the time of President Xi’s speech in Davos, should be implemented swiftly. China could also re-emphasize the decisive role of the market in all of China’s economic policies, including its plans for upgrading industry. Such commitments, backed up by action, would greatly enhance China’s global position.

Ambassador Clauss on the 2017 plenary sessions of the NPC and the CPPCC

Micheal Clauss