Germany is an economic and technological powerhouse, a key member of the European Union, and plays a leading role in shaping relations between China and Europe. It is far and away China's largest European trade partner, with combined imports and exports totaling US$115 billion in 2008, equal to China's trade with Britain, France and Italy combined. Germany is also the main supplier of technology to China and a major source of investment and development aid. Over the past 30 years, through the Chancellorships of Helmut Schmidt, Helmut Kohl and Gerhard Schroeder, political trust and cooperation steadily improved. Even during the difficult times of the 1990s, German leaders sought to maintain good relations with China. When Chancellor Schroeder was in office, the two countries defined their relationship as "a partnership associated with global responsibility."

But since 2005, with emerging imbalances in China-Germany economic relations, complex changes in the international environment, and political changes in Germany, frictions have emerged. Some German leaders have made provocative remarks about China and the German media has regularly promoted the "China Threat" theory. In September 2007, relations between the two countries were severely damaged when Chancellor Angela Merkel met with the Dalai Lama. But since early 2008 when Germany took a clear-cut stand on the Tibet issue, relations have been back on track. In 2009, with both countries affected by the international financial crisis and with upcoming elections in Germany, many people are wondering how relations will continue to develop.

During 2009, despite some discordant notes, the two sides have generally maintained positive relations and there have been a number of clear highlights.

First, Germany supports the "One China Policy" and has promised to respect China's core interests. According to informed sources on the German side, the leadership has learned its lesson and understood where the crux of Tibet issue lies. It has not gone unnoticed that during the early 2009 visit of the Dalai Lama, none of Germany's top leaders met with him, unless one counts the vice president of the Christian Democratic Union, the Governor of the state of Hesse.

Second, the top leaders of the two countries have maintained close contact with each other, not only by telephone but also in face to face meetings. During a visit to Germany by Premier Wen Jiabao the two sides concluded important agreements on climate change, and scientific and technological cooperation. A number of commercial deals, involving Sany Heavy Industry, the Shanghai Maglev Development Company, ThyssenKrupp and other major corporations were also signed. In October 2009, German Chancellor Merkel visited China and Chinese Vice President Xi Jinping went to Germany during the Frankfurt Book Fair where China was the guest of honor.

Third, despite the global financial crisis, which cut trade volume between the two countries by 12.3 percent, Germany maintains a favorable balance of trade with China. Audi and BMW vehicle sales in China bucked the global trend, up by 28 percent and 46 percent respectively in the first half of 2009. Daimler, despite entering the Chinese market comparatively late, is heading for a 50 percent rise in sales in 2009. These figures indicate that China's rapid economic development has provided a rare commercial opportunity for Germany. Rainer Brüderle, minister of economics and technology, on a visit to China in December, said bilateral trade has "great potential," pointing to opportunities in green technology and energy efficiency. The minister also indicated Germany may relax rules on Chinese investment in Germany.

Fourth, there have been significant improvements in cultural exchanges and between the two countries. Noteworthy events include the exchange program Germany and China - Moving Ahead Together, and China's participation in the 2009 Frankfurt Book Fair. Germany and China – Moving Ahead Together activities were held in Nanjing, Chongqing, Guangzhou, Shenyang and Wuhan. The program aimed to explain Germany to Chinese people and increase understanding and friendship between the peoples of the two countries. China's participation in the Frankfurt Book Fair in October was extremely successful. Chinese participants signed a total of 3,553 copyright exports, breaking records and helping to boost China's influence abroad.