Illustration: Chen Xia/Global Times

"German companies are investing in China more than ever before," said a French media outlet. According to foreign media reports, German direct investment into China, much of it driven by big German carmakers, has risen sharply this year. That brings the total for the first half of 2024 to €7.3 billion ($8.06 billion). Some of these reports intentionally highlight the current trade tensions between China and Europe and the so-called "de-risking" context to emphasize the "rebellious" nature of German companies. Some French media have even bluntly remarked that German companies seemingly have "suffered Stockholm Syndrome."

Isn't it entirely normal for German companies to be optimistic about Chinese market after making money there and to increase their investments? The Business Confidence Survey 2023/24 report released by the German Chamber of Commerce in China showed that 91 percent of German companies surveyed stated that they would continue to take root in the Chinese market and have no plans to leave China. More than half of the surveyed German companies plan to increase investment in China in the next two years. However, some European media outlets are having a meltdown over this situation, using terms like Stockholm Syndrome, which describes the pathological dependence of hostages on their captors, to describe the relationship between German companies and the Chinese market. This is puzzling and raises the question of why there is such sensitivity and concern about these investments.

It is likely that those eager to prove the "de-risking" strategy correct and those hyping up the idea of "foreign investment leaving China" are nervous about their mistakes. In reality, using non-market measures like punitive tariffs and "decoupling" to control capital flows is a true example of Stockholm Syndrome. In international investment markets, "over-politicization" and "overstretching the concept of security" are clearly unwelcome. When companies make decisions from a cost-benefit perspective, it is essentially a silent opposition to this. Now that efforts to decouple German companies from China, under the name of "de-risking," have failed, there are attempts to obstruct German investments in China through political and media tactics.

The fish in the water know best if the water is clean. When it comes to the reality of the Chinese market, German companies making substantial investments are the most authoritative sources. Over 500 German companies have established operations in Taicang, East China's Jiangsu Province; Volkswagen has invested €2.5 billion euros ($2.68 billion) to expand its production and innovation center in Hefei, East China's Anhui Province; BMW plans to invest a further $2.76 billion to expand its factory in Shenyang, Northeast China's Liaoning Province; and the first German Association of Small and Medium-Sized Businesses center opened in Shenyang. These reflect a strong vote of confidence in China's business environment, infrastructure, and industrial chain. For German companies, it is not easy to find a global market that offers stable growth and broad prospects like China. 

This trust and confidence are also reflected in the long-term strategic deployment of investments in China. In recent years, a significant portion of German investments in China have come from profits earned in the country being reinvested back into enterprises in China. This not only demonstrates the substantial benefits German companies are gaining from the Chinese market but also indicates their belief in a promising future in China. According to the Foreign Direct Investment Confidence Index (FDICI) report released by Kearney, a global management consulting firm, China has climbed from 7th to 3rd place in the rankings, the highest among emerging economies. In the first half of the year, the number of newly registered foreign-funded companies in the country increased by 14.2 percent year on year to nearly 27,000. 

With the continuous improvement of the business environment and increasing market opportunities, China will continue to expand the use of foreign capital. The Third Plenary Session of the 20th Central Committee of the Communist Party of China has made important arrangements for promoting high-level opening-up to the outside world and expanding the use of foreign capital. The first is to steadily expand institutional opening-up, the second is to further relax market access, and the third is to effectively ensure national treatment and protect the legitimate rights of foreign-funded enterprises. China's high-quality development, especially the comprehensive opening-up of the manufacturing industry and the service industry, is creating new opportunities and space for foreign investment in China. There is already a good foundation for cooperation between China and Germany in the fields of automobiles, pharmaceuticals, and chemicals. German companies are seizing the opportunity to participate in China's high-quality development. Time will prove once again that the choice of the Chinese market by foreign enterprises, including German companies, is wise and profitable. 

German companies' firm choice of China should also serve as a reminder to some in Europe. Should blind faith in the narrative of "de-risking" still be adhered to? South Korea's Samsung Electronics is accelerating its layout in high-tech industries such as chips, OLED displays, and new energy batteries in China. Foxconn has also recently increased its investment in Zhengzhou. European companies with a good foundation for cooperation with China, and with a certain first-mover advantage in China's high-quality development and high-level opening-up, have no reason to ruin their own efforts and opportunities for the sake of satisfying certain political interests.