German-Chinese economic relations have developed over the last 40 years into a great success story. While as recently as 1972 German companies exported goods worth 270 million US dollars, in 2012 the German exports to China amounted to 67.03 billion euros according to the Federal Statistical Office. Germany is by far China’s largest trading partner in Europe. China is Germany’s most important trading partner in Asia and its third most important trading partner worldwide.
All current developments suggest that trade relations between the two countries will expand even more strongly in future. One of the most important indications of this is the steadily rising quantity of payment transactions processed in renminbi. Alone in the period from April through May 2013, a growth of 71 percent was recorded.
The agreement between the European and the Chinese central bank to carry out a currency exchange (swap), initially over a period of three years, has facilitated this development. With the agreed exchange of renminbi into euros at any time, the commercial banks based in the euro area gain fast and smooth access to the Chinese currency. The German-Chinese government consultations in 2012 prepared the ground for this new stage of development, in which companies in the two countries are to be supported in the use of the renminbi and the euro for bilateral trade and investment.
Germany is assuming a pioneering role in Europe in this respect. According to a survey carried out by Deutsche Bank, only every fifth company on the European continent invoices in renminbi. 80 percent of the affected companies want to change their invoicing. In Germany 9 percent of companies already use the renminbi in their cross-border business with China. This makes German firms number one in this respect in a European ranking.
The benefits of trading in renminbi are obvious. The transaction costs decrease. Substantial price reductions can be generated when purchasing. The currency risk is significantly minimized. The entire project is similar to a self-fulfilling prophecy: since the benefits for all parties involved are self-evident, more and more will join in and actively participate. As a result, trade relations will intensify and the volume of trade between Germany and China will reach new record figures.