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View as HTML version PSI Journal 5/2016 ily emphasized. The economic transformation which has been taking place in China for some time was as predictable as it was necessary. Ever since March 2013, when the fifth generation of leaders in Beijing came to power, it has been conceded that the previous development model is not sustainable. For the three decade-long economic miracle, which most recently culminated in double-digit growth, has generated not only economic problems but also serious social and environmental problems which will continue to worsen. STILL NO MARKET ECONOMY By joining the World Trade Organization in 2001, China’s economic growth was further boosted: Trade restrictions were partly removed and, in turn, foreign markets were allowed to be developed. As a result, China‘s foreign trade has increased more than tenfold in the last 12 years. Many countries have benefited from the extraordinary dynamism of the Chinese economy and do so to this day because the sheer size of the Chinese economy ensures considerable growth momentum. Joining the WHO was a clear sign of the opening and re-integration of the country into the global economy. However, not all expectations of the international community have been met, as many economic sectors are still under state control and the necessary reforms are still to be implemented. According to European assessments, China meets only a fraction of the requirements to be recognized as a market economy. In addition to the equal treatment of companies and the reduction of state intervention, the protection of intellectual and material property are among the demands that are being too hesitantly implemented. The Foreign Office has criticized that too little has happened, particularly in key areas such as the restructuring of state-owned enterprises and fiscal reforms. TRADING PARTNER CHINA The EU is the largest trading partner of China; Germany is the leading economic partner in Europe. Conversely, China is Germany’s third most important trading part- ner worldwide. These figures underline the success of a German-Chinese economic cooperation which has continuously developed for over 35 years. According to the German Chamber of Commerce in Beijing, more than 5,200 German companies are actively operating in China, and are responsible for more than one million jobs. Since 1990, the trade volume between Germany and China has doubled almost every five years. German investments in China also rose steadily to around 50 billion euros in 2015. With a share of five per cent of German exports, China is certainly an important partner for Germany, but not a bluechip trading partner. In 2015, German exports to China fell for the first time in 10 years; China‘s exports also slumped. The European Chamber of Commerce has spoken of „disturbing, fundamental problems.“ One thing is certain: The golden age of China‘s economy is coming to an end. NECESSARY STRUCTURAL CHANGE Horst Löchel, Professor of Economics, MBA Director at the Frankfurt School of Finance 9

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