Senior Strategist at the brokerage company Soochow Securities Co. Chen Li said that China has moved away from the American to the German path of economic development. Now the Chinese economy has taken an example from Berlin. This is reported by Bloomberg.
Chen Li’s theory has been widely disseminated on Chinese social networks. He was followed by the chief economist for China at DBS Group Holdings Ltd. Chris Leung confirmed that Europe’s leading economy has become a model for China, as it still has large state-owned banks and a strong export-oriented manufacturing sector. In addition, there has not been a financial crisis since the Second World War. “Beijing’s departure from the Anglo-Saxon model has already begun,” Leung said. The trend is confirmed by some similarities that have been implemented in China.
According to Peter Hoefele, head of the Asia-Pacific Department of Konrad-Adenauer-Stiftung, China consulted with German experts when writing its antitrust regulations. “They copied a lot from German legislation,” Hoefle said.
In addition, Beijing’s Made in China 2025 program, aimed at increasing production in the technology sectors, echoes the plan of the so-called Fourth Industrial Revolution in Germany (Industry 4.0). Beijing’s five-year economic plan, published in March, says that the share of production will be maintained at 25 percent. This echoes the German model, where, according to the World Bank, production accounts for about 18 percent of gross domestic product (GDP).
In the draft law on vocational education in 2021, Beijing promised a “merger of industry and education”, similar to the German system, where private companies provide opportunities for paid internships. “The only country where I have seen this imitated on a larger scale is China,” said Herman Simon, chairman of the German consulting company Simon — Kucher & Partners.
Unlike the German model, which focuses on production, the American model prioritizes the service sector, which accounts for 78 percent of the country’s GDP. If in Germany, production accounts for 18 percent of GDP, then in the United States this figure is only 11 percent. The basis of the German economy is made up of medium-sized manufacturers. Beijing has also adopted a policy of supporting small and medium-sized companies. In the United States, there is rather another trend, confirmed by the presence of large corporations in the American market.
Nevertheless, China wants to avoid some features of the German economy. It will maintain public investment at a higher level than Germany and rely on domestic demand rather than exports. Jakob Guenther, an analyst on the Chinese economy from the MERICS think tank in Berlin, believes that China wants to learn from Germany, but this can be implemented in regions where the private sector prevails. In other parts of the country, Beijing tends to have “a handful of big players” because they are easier to manage.
