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Innovation is new impetus in China-Germany cooperation

Updated: Jun 15,2016 5:46 PM

This year marks the year of China-Germany innovation cooperation, and for both China and Germany, innovation is now the key word for economic growth. It is also becoming the new impetus in economic cooperation.

During German Chancellor Angela Merkel’s ninth visit to China recently, leaders from China and Germany agreed that they would boost innovation together, building stronger mutual trust and implementing collaboration between Germany’s “Industry 4.0” and “Made in China 2025”, and strengthen cooperation in many areas, including trade, investment, finance, entrepreneurship, and third-party market exploitation.

Similar strategies in China and Germany set a solid base for cooperation. In China, the government has proposed the program “Made in China 2025”, which is aimed at boosting China’s manufacturing industry, developing brand images and quality products, and transforming “made in China” to “created by China”. Meanwhile, the German government has proposed the project “Industry 4.0”, aimed at promoting intellectual manufacturing. In the China-Germany cooperation guideline signed by the two governments earlier, both sides vowed to boost cooperation regarding “Industry 4.0”, such as promising that support policies will be released for companies that participate in the project.

Industrial base is also an important factor. As the second largest economy and largest exporter in the world, China has an established industrial system. Data shows that Chinese exports account for 12 percent of the world total. However, “big but not strong” is an ongoing problem for Chinese manufacturers. Meanwhile, as a traditional industrial country, Germany is leading the world in many technologies. It is complementary to the Chinese economy in many areas. The two countries have great potential for cooperation in many sectors including finance, automobile manufacturing, information technology, and aviation.

Innovation-oriented cooperation between China and Germany is now on a fast track. Currently, China is the second largest export market for Germany, and Germany the largest economic and technological partner of China in Europe.

With the fast development of technology, the world economic structure is now changing rapidly. That means developed countries need to exploit their advantage in innovation and control the value chain of the world manufacturing industry. And developing countries need to upgrade their manufacturing industry and fight for a larger market. Hence, with highly complementary advantages, the two countries’ cooperation is beneficial for their economies and for the upgrading of an international division of labor.