Partners look to innovate and modernize together

China and Germany can make their products more competitive worldwide as they work together under their respective initiatives Made in China 2025 and Industry 4.0, said German Ambassador to China Michael Clauss.

"It is in both countries' interests to innovate and to modernize, in order to be more productive and to remain competitive because both of us rely strongly on exports of manufactured goods, more than any other country."

In an interview days before German Chancellor Angela Merkel's visit to China from Thursday to Friday, her eighth since she took office 10 years ago, the German ambassador said innovation will be a focal point of her talks with Chinese leaders.

"Industry 4.0 and Made in China 2025 both aim at digitalizing manufacturing; that is at bringing the digital world and manufacturing together," Clauss said.

Industry 4.0 is a strategy the German government has devised that promotes computerization in manufacturing. It aims to improve production by creating a networked, flexible and dynamically self-organizing manufacturing process for highly customizable products.

Made in China 2025 was unveiled by China's State Council in May, a project aimed at moving China from the low-end manufacturing it has relied on for the past 30 years to advanced manufacturing.

"We share the same approach because our economic structures are similar," said Clauss.

Different countries take different approaches to modernizing industry. The United States, for example, emphasized information technology, while Germany and China have stressed automation.

Manufacturing is critical to the economies of both countries, accounting for 40 percent of China's GDP and 25 percent of Germany's GDP.

Leading industries in both countries are working together under the frameworks of Industry 4.0 and Made in China 2025, and Clauss said that such collaboration will not only make what they eventually produce more competitive, but that it will transform the way they work, too.

He cited the German software company SAP and the Chinese networking and telecommunications company Huawei, which are looking at new manufacturing methods that will make production more efficient.

Another case in point is the German multinational Siemens, which has worked with rubber and tire machinery supplier Mesnac in Qingdao, Shandong province, to build a digitalized factory.

Zhang Bin, head of Mesnac's research institute, said Siemens' software has helped the company deal with big data, resulting in much more efficient communications between different manufacturing areas.

"Drawing on big data, equipment is able to identify potential failures and can issue warnings, meaning technical experts can do maintenance work that forestalls problems."

Trade between China and Germany was worth 160 billion euros ($182 billion) last year, which is equal to China's combined trade with Britain, France and Italy, and accounts for nearly one-third of total trade between China and Europe.

Clauss said that among European countries, industrial power is Germany's strong suit.

Merkel's visit comes as China presses on with reform in many areas.

Tough challenges

A previous announcement made after a meeting of the Political Bureau of the Communist Party of China Central Committee said the nation is entering a new normal of economic development and facing not only great opportunities but tough challenges, yet it will continue to focus on growth, putting a premium on quality, efficiency and sustainability.

In recent months a slowdown in growth, turbulence in China's stock markets and depreciation of the renminbi have spurred debate about the country's economic prospects.

European countries that have pinned their hopes on China's reforms to boost their own economic prospects have been decidedly pessimistic.

"Many countries believe there will be a hard landing of the Chinese economy," Clauss said, "We think this is a possible but unlikely scenario, especially unlikely if structural reforms are accelerated. A determined push for further reforms of the economy becomes ever more urgent. A clear signal towards accelerated reform and further opening-up, including towards foreign companies, is expected."

During the Third Plenum of the 18th Central Committee of the CPC at the end of 2013, Chinese leaders decided to deepen reform and opening-up. Under Premier Li Keqiang's direction, numerous administrative approvals rules have been eased or abolished.

However, signals of further opening-up of the Chinese economy are contradictory, Clauss said.

Chen Zhimin, an expert on international studies with Fudan University in Shanghai, said, "As reform proceeds, there is a period in which new regulations overlap old ones, which may make it seem as though there are contradictions. But two years is too short a time to see substantial results of reform. Things need to be to dealt with in a strategic way over the long term."

The European Union Chamber of Commerce in China undertook an audit on the progress of reform this year based on the input of 37 working groups that cover different sectors.

Sixty-six percent of the groups said they saw some progress, but that work still remained. Ten percent felt targets had essentially been reached, or that there was a clear working plan. However, 24 percent said they perceived little or no progress, or even regression.

Jia Xiudong, an international affairs expert at the China Institute of International Studies, said more patience is needed for China to implement reforms, given that industries may be at varying levels of development.

For industries that are important but less developed, such as banking, "it's best to take the time to ensure an efficient system of risk controls is in place" because if they are not that could pose risks worldwide, he said.

zhouwa@chinadaily.com.cn

Delegates from the China Entrepreneur Club visit the SAP Innovation Center in Potsdam during their German tour earlier this month. Zhang Fan / Xinhua

(China Daily 10/29/2015 page10)