Talking point
New deal(s)? Chinese investment in Germany is entering a new phase
China-Europe relations are increasingly being shaped by the expanding bilateral exchange between China and Germany, its largest trading partner in the EU. Germany accounted for 45% of EU exports to China and 28% of EU imports from China in 2013. In the first nine months of 2014, EUR 114 bn worth of goods were shipped between the two countries, up 8% from the same period in 2013. Building on these well-established trade ties, China and Germany are now embarking on a concerted push to strengthen investment relations in sync with a surge in Chinese M&A activity into Germany.  [more]
Natural resources
CO2 emissions from cars: Regulation via EU Emissions Trading System better than stricter CO2 limits
The integration of road transport into the EU Emissions Trading System (EU ETS) using an upstream approach (with refineries and fuel importers as participants) is superior to the instrument of CO2 limit values for cars on the counts of ecological effectiveness and macroeconomic efficiency. This applies in particular if a cap on CO2 emissions enjoys top political priority. Higher taxes on fuel would also be more appropriate than a further tightening of limit values after 2020/21. Nonetheless, if policymakers should decide that (stricter) CO2 limit values for cars are to remain the instrument of choice after 2021, it would be appropriate to gear them to the (lower) targets in other large auto markets. [more]
Germany
Monitor Corporate funding in Germany
In Q3 2014, lending to German corporates and self-employed fell back into stagnation, even though the yoy comparison remained positive (+0.5%). Most export-oriented industries saw a setback; however, many industries that rely more on the domestic economy recorded an increase in loan volumes. Growth differentials between banking groups shrank further, while interest rate levels once more slid to new all-time lows. The German economy returned to growth in Q3 (GDP +0.1% qoq) thanks to a significant rise in consumption and a positive development of net exports. By contrast, fixed investments – which were weak again – and a substantial shrinking of inventories contributed negatively to growth (available only in German) [more]
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