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Tapping China’s Growth: Western Companies Seek Investment

DW Staff(du) 20/03/09March 20, 2009

The global economic crisis has also affected booming China: Gone are the days of double-digit growth in the country. The Chinese government estimates that its growth this year will go down to about 8 percent. The World Bank forecasts that Chinese growth may fall to just six percent. Yet, these figures give hope to Europe and America, which are battling the financial crisis too. Many western companies are on the lookout for investment opportunities in China. German firms are no exception.

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China wants to invest more in infrastructure development
China wants to invest more in infrastructure developmentImage: AP

The question for German companies, at the moment, is not if they should do business in China, but how, says Manfred Rothgänger. He is the director of the German Chamber of Commerce in Shanghai.

"How far should I use China? Am I going to get supplies from China or am I going to sell products there or am I going to use it as a production site? Or a combination of these three options? And there, the companies have different approaches to take part in growth."

Since the late 90s China has become hugely dependent on exports. Therefore it is facing a sharp downturn now, as global trade is shrinking.

Stimulus measures

The government has put big economic stimulus polices in place amid the slump. This includes state aid of about nearly 470 billion Euros. The government wants to improve the infrastructure, help exporters and boost domestic demand.

This may prove beneficial to many German companies as well, says Rothgänger, especially for those who have expertise in areas such as technologies:

"The companies, which are involved in the infrastructure work, for example road or airport constructions have good opportunities there. Also those, which work in the medical sector or in the field of environment, energy and renewable technologies, are very much in demand."

Alternative energy sector

China is one of the fastest-growing wind power markets in the world. It has set itself the target of renewable energy making up 10 percent of its total energy consumption by 2010, and by 2015 the figure should be 15 percent.

And these alternative energy initiatives will create more opportunities for German firms, says Gisbert Schulze. He is the managing director of the SSB Group, a German company based in eastern China's Qingdao region and is working in the field of drive and wind power technology.

"When we look into our order books, we are satisfied. But, despite these orders, we also see a series of delays in new projects. We think that 2009 will be relatively uncertain, but we expect that in 2010, the projected growth will actually be achieved."

Experts say, unlike many western nations, China is better placed to weather the financial storm. It has foreign reserves of around two billion dollars and other financial resources to invest.