3 Reasons New ETF Could Boost China, Germany Investment Ties

In addition, the fund is expected to broaden Chinese investors' appetite for broader European investment. "This product … opens the door to invest in Germany and EU for China investors. The era of global asset allocation has come to China," said Li Qing, CEO of HuaAn, in a statement.

2. Other financial ties. Deutsche Börse also has an agreement with the Bank of China to collaborate on a mutual trading and clearing arrangement. That will permit Bank of China to underwrite Chinese IPOs in Frankfurt.

Not only that, but interest generated by an ETF accessible to institutional, and other, investors in China could also help Frankfurt advance its position against London as the two vie to become China's go-to offshore financial center. Earlier this year, the People's Bank of China (PBOC) signed a memorandum of understanding with the Bundesbank to set up a German center for offshore yuan clearing and settlement. Germany beat out both Paris and Luxembourg for the honor within the eurozone.

That was perhaps not surprising, considering that according to SWIFT data, Germany is one of the top five countries to use the RMB for trade with China; the others are Hong Kong, Singapore and Australia.

In addition, many German companies already use the renminbi for cross-border invoicing and payments, although some rely on renminbi clearing centers in Hong Kong and are slow to change the status quo. However, the SWIFT data show that in September of 2013, payments made in renminbi between Germany and China skyrocketed 70%, to make up 14.1% of all payments.

3. Builds on previous investment strategies. Another move made earlier this year was a boost in China's renminbi qualified foreign institutional investor (RQFII) allowance. That opens the doors more widely to foreign investors and allows them to invest in mainland China A shares. With greater exposure to Chinese companies through increased Chinese investment in Germany, it's likely that the interest within Germany will also increase in investing in China—although it's already at a pretty impressive level, at nearly €39 billion ($52.392 billion).

According to the German Federal Foreign Office, "China is Germany's most important economic partner in Asia and Germany is China's leading trading partner in Europe." Office statistics indicate that China is the fifth largest buyer of German exports and the second largest supplier of German imports. China's direct investment in Germany in 2014 is approximately $3.1 billion, primarily in the sectors of mechanical engineering, electronics and consumer goods, as well as information and communication technologies.