Primer: China’s Retaliatory Tools
China and Germany inked a series of trade and investment deals Monday during a meeting overseen by German Chancellor Angela Merkel and Chinese Premier Li Keqiang. Merkel had come to China for three days with a large business delegation to promote trade between the two countries.
German carmaker Volkswagen will team with Chinese state-run FAW Group Corp. to build one manufacturing plant each in Qingdao and Tianjin. China is a huge market for Volkswagen, accounting for more than one-third of its total car sales in the first quarter of 2014. Volkswagen, along with its Chinese partners, plans to invest $24.8 billion through 2018 to increase its annual production capacity in China.
Meanwhile, European aerospace giant Airbus announced a record sale of 123 helicopters to three Chinese companies over six years. While no financial details were provided, the orders were comprised of mainly light single- and twin- engine aircraft to be used for general aviation activities, according to Reuters.
Additionally, China announced that it will allow Germans to invest up to $12.9 billion in its domestic stock exchanges, according to the South China Morning Post. The arrangement, which is similar to those China has with Britain and France, will allow German investors to purchase stock on the Shanghai and Shenzhen exchanges through the Renminbi Qualified Foreign Institutional Investor scheme. Analysts have said the deal will bolster China’s stock market and further internationalize the Chinese yuan.
China and Germany are the world’s two largest exporters. In 2013, Germany sold $91.2 billion worth of goods to China, its second largest trade partner behind the United States. China’s exports to Germany, meanwhile, surpassed $99.4 billion. Merkel’s trip follows Xi Jinping’s March visit to Berlin in which the two leaders oversaw agreements for automakers Daimler AG and BMW AG.