Li Keqiang’s Germany Visit: Industriousness and Wisdom

Li Keqiang (李克強), vice chief state councillor and likely to succeed his boss Wen Jiabao next year, is currently on a European tour. After visiting Spain and Germany, he will arive in the UK today.

According to Li, “China remains the world’s largest developing country”. Although China’s economy belongs to the world’s biggest, it is ranks as the world’s 100th in terms of GDP per capita, Li wrote in a guest editorial for Germany’s Sueddeutsche Zeitung (Munich), published on January 5. Some of the usual artificial honey is included, too:

Germany is known as the country of philosophers, scientists, and musicians. While the Germans’ industriousness and wisdom enjoy the admiration of the Chinese, “Made in Germany” is greatly popular with Chinese consumers for high quality, excellent technology, and innovation. The Chinese have fond feelings for the Germans. During the Expo 2010 in Shanghai, more than four million Chinese people have visited the German Pavillon , and even more did that online, or by watching television. The first prize in the category of implementing the expo theme’s concept helped to make the Chinese understand Germany better.


Exchange and cooperation on culture, science and technology, education, health, and justice, are bearing rich fruit.

Li lists the bilateral homework, as he sees it:

We have to work to maintain an open market, promote liberalization and facilitation of trade and investment, advocate the resolution of economic and trade disputes by consultation, and to fight against protectionism of all kinds. We hope that the EU will ease its restrictions on the export of high-tech products to China. It is essential to bring the international system of trade and finance to perfection, and to shape balanced and sustainable trade relations.
We welcome more foreign investment in China, especially in the fields of modern agriculture, new and high-technology, energy efficiency and environmental protection, new energies and new material. We encourage high-performing and creditworthy Chinese enterprises to invest more abroad. At present, Germany’s investment in China are only at two per cent of its foreign investment in total.

The most notable point seems to be his case for resolution of economic and trade disputes by consultation. Mere consultation requires a degree of good faith which is hardly ever there. Consultation may help to – occasionally – ease the degree to which the Chinese-foreign playing field is tilted in China’s favor, but it won’t do the job as promptly and impartially as arbitration can, provided that arbitration remains accepted and acknowledged, even when it really matters, in times of differences and conflicts.

There are good reasons not to ease restrictions the export of high-tech products to China. For what can be exported, and for the technology transfer which is required for investment in China, foreign companies are taking more than a fair share of risk already.

In certain fields, and in all those where a foreigner has more know-how, investors have to find Chinese partners for joint ventures. To get permission from the authorities, they have to describe the technology in great detail and the documentation then becomes state property,

the Voice of Germany (DW) quotes a lawyer who is specialized in national and international joint ventures. The procedure helps to weaken the foreign party’s rights to its own patents.

The head of the Association of German Chambers of Commerce and Industry’s Asia-Pacific Division, Sabine Hepperle, also quoted by DW, looks at China’s precondition for foreign investment – technology transfer – much more benignly:

[…] German companies would not have a problem on the Chinese market, despite the restrictions, as long as they remained one step ahead.

Which is quite a shaky undertaking. Two per cent of German foreign investment going to China is, under such circumstances, no small number. Not every German company is Siemens-size, and can afford to lose a complete field to a competitor without going out of business altogether.


UK State Visit, BBC News, January 9, 2011
A Model and an Outline, January 4, 2011
Just a little bit longer, June 16, 2010
No more Development Aid, Nov 2, 2009

7 Responses to “Li Keqiang’s Germany Visit: Industriousness and Wisdom”

  1. A timely post on China’s next major game plan ie picking off the strongest EU economy and acquiring thru a jaw-fest those high-end German technologies which have long provided China with an industrial role model.

    Are western powers and industrial enterprises ever going to wake up to the snares being laid for them? About the only thing which will kill off this lemming like rush to self destruction by western enterprises will be a bit of good old fashioned political instability in China.

    Glad I live in a mineral based export economy.


  2. That’s been a game for at least a decade and a half… What helped Germany to retain much of its industry is that companies here are usually smaller than in other OECD countries, and run by their owners. That makes them much more careful than companies run by hired CEOs who only stay for a couple of years and care more about short-term, than about long-term results.
    It’s the SMEs here, more than politics, who deserve credit for this comparatively good situation. It enables R&D, applying it at home, and making money with it here, rather than there. It creates jobs here, not (only) there.
    The concept doesn’t look as “old-fashioned” today, as it did during the past decades of de-industrialization madness.



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