Sino-German ties

Last week saw China's top brass meet with their counterparts from Germany for the third time this year, after China's President Xi Jinping traveled to Berlin in March and Chancellor Angela Merkel visited Beijng in July. With 15 ministers in tow, Chinese Premier Li Keqiang arrived in Berlin for the third Sino-German intergovernmental consultations, which resulted in business deals worth more than in two billion euros ($2.5 billion).

Closer inspection, moreover, reveals that the 30 contracts signed by businesses have an even greater value: Daimler, for example, has teamed up with its Chinese partner Beijing Automotive to start assembling compact cars and developing new models in Beijing. CEO Dieter Zetsche is planning on investing up to four billion euros in China.

No big surprise, then, that Volkswagen CEO Martin Winterkorn is following suit and looking to expand his company's share of the Chinese market by inking a deal with FAW, China's state automobile manufacturer valid until 2041. Deutsche Telekom, meanwhile, is launching a cooperation with China Mobile, the world's largest mobile phone operator. In Telekom's Bonn headquarters, the Chinese will be granted a glimpse into the company's research and development, with China Mobile, in return, opening up its mobile network in China to Deutsche Telekom - helping German know-how gain traction in the vast, booming Chinese market.

Trading technology for market share

This sort of mutual back-scratching is nothing new. The German and Chinese economies have both been thriving thanks to a simple but effective business model for years - one based on a trade-off of state-of-the-art western technology for a share of the Chinese market. Progress has advanced in leaps and bounds in the last ten years.

But both sides like to gripe. The Chinese complain that they aren't being kept up-to-date on the latest technological advances, while the Westerners maintain they have only limited access to the Chinese market and that their partners are actually stealing their ideas. Nevertheless, neither side is disgruntled enough to put a spanner in the works. Far from it.

China cooperates more closely with Germany than with any other country, which is not to say than it gives it preferential treatment. Germany is useful, because not only is it Europe's biggest economy, but it is also home to its most powerful politicians and its finest mid-sized companies and technologies. But this could change. Beijing is therefore playing it safe and simultaneously nurturing ties to Britain and France, Europe's other two main players, and keeping a close eye on up-and-coming players in eastern Europe.

Fraught with risk

The Chinese priority is to bolster their economy even further with German help. This could prove risky, but the fact that Chinese businesses are increasingly rivalling German ones benefits the German economy more than it harms it.

In Berlin last week, the Chinese delegation was extremely interested in the German government's "Industry 4.0" project, designed to computerize industrial manufacturing. The idea is not only to usher in automated production but to develop the intelligent factory, characterized by adaptability, resource efficiency, and ergonomics, as well as the integration of customers and business partners in business and value processes.

The German Economy Ministry, which is playing a leading role in the project, is none too thrilled by the prospect of allowing the Chinese to look over its shoulder, at least not without the German economy getting something in return from China. The dispute will rumble on for as long as the deal - an exchange of technology for market share - continues to exist. As Economy Minister Sigmar Gabriel pointed out, it can only work for as long as both parties feel they are benefitting - a principle that applies to any relationship. German business and the Chinese state will never be completely satisfied. There's always a rub.

DW columnist Frank Sieren has lived in Beijng for 20 years.