Trade tops Merkel agenda

German Chancellor Angela Merkel's visit to China is seeking to cement economic ties between the economic powerhouses of Europe and Asia. China's remarkable growth, even when other G20 countries were struggling last year to deal with the worst economic recession in decades, has enabled Asia as a whole to emerge in a much better shape.

Recent economic figures suggest that Germany may be playing its traditional "locomotive role" in Europe. Manufacturing output was up 5.6 percent in the second quarter compared to the first three months of 2010. Engineering and chemicals have moved beyond pre-crisis levels of output, while many other key sectors are approaching previous peaks. China is a main driver of the German recovery. Mercedes announced that it sold a record 13,700 cars in China in June. Other German firms have seen a similar surge in demand from China.

Overall, German exports have risen nearly 15 percent this year helped by the 10 percent fall in the value of the euro against the dollar. This is good news for the rest of Europe where governments are struggling to escape recession while seeking to implement tough austerity measures.