As ill trade winds blow across the Pacific from the Trump Administration’s decision to impose tough tariffs on Chinese products, across the Atlantic there’s a growing commercial relationship between the European Union (EU) states and China. The nexus for this business and a primary transportation hub rests in Germany’s port of Hamburg, a key seaport for container cargo and a historical entrepôt for goods and services.
The first salvo of $34 billion in tariffs was fired in what could be a blistering trade war between Beijing and Washington, and many diplomats and business executives look to the counterbalancing role played by the European Union, which saw bilateral trade with China reach $573 billion in 2017, nearly double the figure from a decade ago.
Indeed, Mainland China is now the European Union’s second-largest export market, right after the US. Equally, the EU is China’s largest total trade market, just ahead of the United States.
Given China’s meteoric commercial rise, the statistics may not be as surprising as many may expect. For Germany, the commercial tilt towards the Far East has emerged as an economic fact. By 2016, China became Germany’s most significant trading partner, just ahead of the US, with bilateral trade between Beijing and Berlin reaching $180 billion. Now clearly in the light of Washington’s protectionist clashes with both China and the European Union countries, there’s a perceptible shift by some German business and political leaders to view an unlikely alliance with China as a “new normal” and top-tier trade partner.
The managing director of the Association of German Chambers of Trade and Commerce, Martin Wansleben, warned: “The United States used to be a good trading partner for us, but Trump obviously wants us to lose this partner.” Beijing now poses as a paragon of free trade.
As recently as May, Chancellor Angela Merkel made her eleventh trip to China in the past 12 years.
Corinna Nienstedt, director of the Hamburg Chamber of Commerce’s international department, explained her city’s key role in China trade: “For China, the Port of Hamburg is by far the biggest and most important port in Europe. The Chinese products come in and we distribute the goods to all parts of Europe, especially to Middle and Eastern Europe and the Baltic states.” She added, “Nine million containers come to the port and one third comes from China.”
China Shipping and COSCO merged and it’s now called COSCO Shipping; the European headquarters for this giant enterprise is in Hamburg. Taiwan’s Evergreen has a notable presence, too.
Hamburg’s mercantile roots date to the Middle Ages as this was a key city in the Hanseatic League, a mercantile union of Baltic city-states that stressed the benefits of free trade and shared economic interests over formal political structures. The league extended throughout northern Germany to seaports in Estonia, Latvia and Sweden. Hamburg still retains its formal title, “The Free Hanseatic City of Hamburg.”
It’s no coincidence that Hamburg is a point along China’s ambitious and controversial Belt and Road Initiative linking East Asia with Europe and Africa.
Unlike Rotterdam in the Netherlands, which processes a higher volume of traffic but primarily handles crude oil, Hamburg focuses on container shipping. Though the top 20 container ports in the world are mostly in East Asian locales such as Shanghai, Singapore and Shenzhen, Hamburg is Europe’s third-largest container port.
“But as far as the relationship with China is concerned, we are more important,” Nienstedt stated. “We here have the advantage of very good transportation links by train with countries such as the Czech Republic and Hungary. We have the logistics nexus here in Hamburg.”
Interestingly, computers and iPhones are shipped to Hamburg by ocean containers.
Besides shipping the city is the world’s third-largest aircraft production site with a massive Airbus facility. The signature A 320 model is produced here. In fact, Hamburg is the number three center for aircraft production in the world after Boeing in Seattle and Airbus in Toulouse, France.
It’s no secret that many regional Chinese airlines are buying Airbus. Just recently, French Prime Minister Edouard Philippe was in Beijing to follow up on an earlier deal for 184 Airbus 320s. Despite China’s fast-growing civil aviation sector, Premier Li Keqiang said, “China has bought a lot of planes over the past few years and China needs time to absorb them into the market.”
The importance of the China trade was recognized years ago when former Chancellor Helmut Schmidt, himself a proud son of Hamburg, started the Hamburg Summit: China Meets Europe. On November 29-30 European and Chinese political and business officials will convene to discuss widening commerce and cooperation.
As an example, Germany sells more passenger cars to China than any other country according to the Chinese Association of Automobile Manufacturers.
On the wider issue of trade with China, Nienstedt stresses, “As a major trading partner, the German business structure focuses on Quality ‘Made in Germany.’ Quality, reliability, and focus on not earning money quickly. It’s a long-term approach. Every deal must be a win-win deal or it’s not a good deal.”
Facing a USA-China trade war, Germany and China seem poised to unite in opposing Washington’s tariffs. Ironically, President Donald Trump may have unwittingly created a self-defeating strategy by fostering and reviving new commercial cooperation between EU states and China.