Esteemed Vice-Presidents Professor Wang Weiguang and
Professor Li Yang,
Ladies and gentlemen,

I still remember my first visit to the Chinese Academy of Social Sciences very clearly. Back then, in 2007, the Academy’s broad range of topics and unusually substantive work impressed me greatly. That is why I’m so delighted to be back here with you today. Of course, I haven’t come here alone. Our delegation includes members of the German Bundestag from every party, a large business delegation and of course journalists who have accompanied us to China.

It is an honour to me to speak to you again here today, as CASS is one of the most significant research institutions in China. Because it advises the Chinese Government on political issues, CASS bears a great deal of responsibility for China’s future and its role in the world. This also means that the Academy maintains many international partnerships. We are especially pleased that the Academy collaborates very closely with the Konrad Adenauer Foundation in Germany and is one of its main partners. The collaboration between CASS and German organizations reflects the vitality of our bilateral relations as a whole. My visit here is of course also set in the broader context of current issues such as a sustainable economy and the further development of the international security architecture.

When the Federal Republic of Germany and China established diplomatic relations 40 years ago, it was scarcely conceivable that our countries would someday come to cooperate as closely as we do today. It is because of this close cooperation that we now speak of a strategic partnership. I’ve come here with the intention of further strengthening this partnership. I know that my partner, Prime Minister Wen Jiabao, feels very much the same way I do about this.

I’d like to point out and emphasize three important facets of our relations.

The first facet is the expansion of our partnership in the area of culture. 2012 is the Year of Chinese Culture in Germany. This year we will have the opportunity to learn more about Chinese culture and history. I’m reminded of the initiative “China and Germany – Moving Ahead Together”, which visited many provinces of China. The opening concert of the Year of Chinese Culture in Germany took place this week. I think many people in Germany are keenly interested in both Chinese history and contemporary China.

Being interested in one another also means engaging in debate with one another. It can also mean that these discussions include controversy. But as I say again and again, dialogue creates trust, dialogue creates greater understanding. Trust is always the foundation for fruitful relations between people, as well as for building intense partnership between countries in all areas of life.

China and Germany have long cultivated an open and honest exchange of political views, which has often included controversial issues. We have a dialogue on human rights, we have a dialogue on the rule of law, and we talk a lot about inalienable human rights. This will certainly also be the case during my current visit. We are engaged in a dialogue about how our societies, with their very different circumstances and highly divergent histories, can develop further in the direction of economic freedom, social security and environmental responsibility. We live together in a globalized world and we know that this means we are responsible for one another.

This leads me to the second facet: as you have just mentioned, in the middle of last year I had the opportunity to welcome Prime Minister Wen and numerous members of the Chinese cabinet to the first German-Chinese intergovernmental consultations in Berlin, which took our bilateral relations to a new level. It was extremely interesting to engage in dialogue with the many ministers. We reached some concrete agreements and we will continue to cooperate on highly practical matters. The next round of intergovernmental consultations will take place next year in China.

I think that we will move forward in many areas. One example I’d like to mention here is that we intend to develop common standards for electric cars. This is a growing sector with major future potential. Developing shared norms, rather than working separately to each come up with different norms, could prove highly significant. We have, to name another example, also begun talks about export financing. Both of the areas I’ve mentioned are very important to Germany and China as export nations.

This brings me to the third facet: economic relations. Germany is China’s leading trade partner in the European Union; according to some forecasts, China could within the course of this year become Germany’s top export market outside the European Union. Last year our trade totalled more than 140 billion euro. This set a new record. Relations are developing very dynamically.

Of course, we’re also paying attention to China’s considerable growth rate. Even in 2009, in the midst of the crisis, GDP grew by more than nine per cent. But China also knows what major challenges it faces, as expressed in your twelfth five-year plan. This plan sets out highly ambitious goals: further improvement of technological skills, expansion of social security systems, better environmental protection, reigning in inflation and stronger domestic demand. In some of these areas, Germany would be more than willing to engage in an exchange with you and contribute our experiences with a social market economy – for example, regarding stronger environmental protection, the development of social security systems or more firmly establishing sustainable economic practices here in China.

We know that long-term economic prosperity is only conceivable on the basis of balanced domestic development. This means, at least in Germany’s experience, that steady and appropriate growth rests on a foundation of social harmony, regional balance, environmentally sustainable business practices and – not least – rule-of-law structures. I’m well aware that your country is very large. That is precisely why regional differences are an issue the Government grapples with so intensely.

In the coming years we will continue to further intensify our cooperation in many different areas. We cooperate closely in the areas of education and research, science, energy policy and environmental policy. But there is still room to enhance this cooperation. German businesses are also interested in further and more intense cooperation. Our delegation includes many representatives of the business community – representatives of major firms as well as of medium-sized enterprises. I believe that China will see very dynamic growth of medium-sized businesses in the coming years. That is why we want to make new forms of cooperation in this area possible alongside the already existing cooperation.

So what do international business investors need, what do German business representatives talk about? They need open markets. I can assure you that our market, the German market, is open for Chinese investors. Likewise, we would like German companies here to be treated equally to Chinese companies. This means that a level playing field is utterly crucial for good economic cooperation. Of course, we also need effective protection of intellectual property. Business people have repeatedly spoken about the need for access to appropriate financing in order for companies to grow dynamically in China. I think we’ve made a lot of progress, but during my current visit we will also have to speak about the issues that remain to be solved.

The important thing is always fair cooperation, fair competition based on reciprocity. As I said before, Germany is a place where China’s companies are sure to invest even more in future. There are already some major examples of this happening, but there is a lot of room for developing it further.

We all know how closely intertwined we are in the global economy. We also know that the global economy is faced with certain risks. In the aftermath of the international financial and economic crisis, we are still feeling the effects everywhere, and we need to address them. This applies particularly to Europe.

What is making itself felt in Europe, especially in those countries which have the euro, is that many countries’ post-crisis stimulus packages caused their levels of sovereign debt to rise excessively. We now have a sovereign debt crisis in a number of European countries, which has shone light on the individual euro states’ sometimes vastly divergent levels of competitiveness. It is therefore not our currency which is in crisis; we are dealing with a debt crisis and a question of competitiveness.

In this situation, we sense that there is something in the European Union, particularly in the eurozone, that is not as highly developed as it should be. That something is what we call the political union. This means that, while we have a monetary union, it is as yet a manifestation of too little political common ground. Political common ground – the basis, so to speak, of monetary union – is what we need to work on in the coming years. There has been considerable progress on that score over the last two years, in the EU as a whole and especially in the euro countries. We now have much tighter budgetary discipline. Just in these last few days, we agreed on a fiscal compact committing every euro country to implementing sound budget policy.

At the same time as we were doing that, we also talked about improved competitiveness and better ways of boosting growth. These things are just as vital, given what a key issue unemployment is in a lot of European countries. The current average of youth unemployment in the EU member states, for example, is 20 per cent. In some countries, the level is even twice as high. It goes without saying that this is a bad starting point from which to really create growth. That’s why competitiveness, growth, combating unemployment and creating new jobs are right up there next to budgetary discipline on our agenda, to get us back on a sustain¬able track.

I want to make it absolutely clear that having the euro as our common currency has made the European Union stronger. The euro brought enormous benefits for a country like Germany, as a major exporter could of course function very much better in the eurozone and the EU with a common currency. That is what is behind our thinking. On the one hand, each country must do its homework and make progress on eliminating deficiencies to the best of its abilities. At the same time, however, we need to stand together in solidarity as well, since those who share a currency have to share in defending it.

For the future, however, this will mean that we need more Europe – greater coherence among our economic policies and greater coherence among our initiatives for innovation. The EU will therefore need to become a closer union over the coming years. Germany is going to be especially committed in that work. We may therefore conclude that Europe grows closer in a crisis. Looking at the European Union, with our combined total of 500 million inhabitants, it is clear that we are still small in comparison to your country, with its population of 1.3 billion. Figures like these show that, for us to be able to hold our own in the international arena, the European Union is the perfect answer to globalization. Germany appreciates that fact very keenly indeed.

As we now know, high levels of sovereign debt are by no means a purely European phenomenon. Countries elsewhere have them too – with even higher deficits in some cases. It is therefore very important for us to cooperate within the G20, an objective in which Germany and China are taking an extremely active role. Despite disagreements on many matters of detail, we have nonetheless managed to advance cooperation among the 20 most important industrialized nations considerably in recent years and find fit answers to the challenges of the global economy.

In South Korea, we agreed on an agenda for growth. A number of key points, on regulating the financial markets, for instance, have been achieved. We in Germany still see this as a top priority, as we believe that one of the crucial things that made the global financial crisis possi¬ble was the lack of sufficient regulation of the global financial markets.

That’s why Germany is adamant that we move forwards under the principle that regulation is required for every product and player on the financial markets and for every location where financial transactions take place. That regulation will only work if we make it consistent across the world. As we understand it, that means instituting better equity capital guidelines for banks; finally managing, as we have done, to handle systemically relevant banks in such a way as to prevent them remaining a danger to the global economic system; and eliminating loopholes in financial derivatives regulation. The task of improving global regulation of the entire shadow banking sphere still lies ahead; it is finally going to be dealt with in the coming two years.

Because all of this is so crucial, we are committed to closer cooperation on financial policy, as on other things. Germany’s and China’s financial regulators are already engaged in just that. Our respective central banks are collaborating closely as well. It is my belief that there is room for further development there too.

Ladies and gentlemen, China is not only an important partner for us in economic matters; we are of course also working together on global issues. I won’t dwell too much here on the chal¬lenges facing us in foreign policy, but I do want to bring up the necessity of international regulation in such areas as, for instance, climate change. Progress on that was made at the most recent conference in South Africa, with the decision to negotiate a legally binding climate change agreement. It is thanks to China, in part, that this was possible.

That said, I would point out that it is a long time from now until 2020. It would of course be nicer and better if we could have a direct handover from the Kyoto Protocol to the new regime. Climate change, after all, will not wait. We in Germany and you here in China can sense how necessary sustainable energy supplies are, and how essential greater energy efficiency is. We support all of the things being done to these ends in China. China needs a lot of energy. Energy efficiency, and efficient resource management in general, is as big an issue here as it is in Germany – in some areas, I am sure, it is even bigger for you than for us. These considerations apply not only to energy production but I would also cite the example of water supplies, where we again have very good chances of cooperating fruitfully.

To turn briefly to foreign policy issues, I would like to touch on two subjects which are very important to us at the moment. The first of these is Iran’s nuclear programme. We are addressing this issue in talks by the E3+3 group – which includes China. We hope that these talks will continue. At the same time, given that they have not been successful in recent years, given that we don’t think Iran is acting with transparency, we are of the opinion that we also need sanctions as a way of trying to make Iran more cooperative. We are agreed that we do not want Iran to have a nuclear programme.

The other foreign policy issue I’d like to mention is Syria. Glaring human rights abuses are being perpetrated in Syria. During our visit, I am sure that I will be talking to various representatives of China’s political leadership about ways in which we might increase our common ground on the Syria issue. The Arab League has been playing a pivotal role. I believe that the UN Security Council should formulate a clear position at this time.

Ladies and gentlemen, how will future generations look back at our century, at the 21st century? We need to be asking ourselves that question all the time. Will they see it as a century of clashes over distribution of resources, a century of conflict and environmental destruction? Or will they see this as a century in which countries learned to make their economies sustainable and be fair towards future generations? I am working to see us manage to go down the latter path. This will require us to collaborate closely, build trust and, time and again, struggle to find the right way forwards, with many a debate on sometimes hotly disputed questions.

My visit to China coincides with the beginning of the Year of the Dragon. The Year of the Dragon is a special year in China, a year of new ideas and major changes. I very much hope that we will use the year in German-Chinese relations to get to know one another even better, develop new projects and go down new paths together. The Year of Chinese Culture in Germany, like the many events being held here in China during this anniversary year for our diplomatic relations, are sure to give us plenty of opportunities to do so. This visit is one of them.

It only remains for me to thank you once again for having me here to speak to you today. Thank you.