Germany's economy has been struggling with weak growth for years. In economic policy debates, this is attributed above all to high costs, lack of innovation, and structural problems that have accumulated over many years.
Many economists think that the real need for reform is within the country. For example, Clemens Fuest, president of Ifo, calls on the federal government, as he himself said. the Capital City ,implement far-reaching changes to encourage investment, foster innovation and create new momentum for growth. What is needed, according to Fuest’, is “Germany, a comprehensive strategy on how ’ can achieve stronger growth in the long run.
A new study challenges this prevalent view, at least in part. Economists Sander Tordoir and Brad Setser of the British think tank “European Reform Centre, ”China shock 2.0 “ GermanyThe cost of –'s indifference Under the title ’, Germany”'s economic weakness is mainly due to pressure from Chinese industry. They say Chinese companies are becoming increasingly dominant in key markets and are able to push European competitors aside.
China has achieved a particularly strong position in areas such as raw materials, rare earth elements and basic chemical inputs for the pharmaceutical industry in recent years. The same applies to future-oriented industries such as semiconductors, robotics, batteries and electronics. Electric Vehicles (Electric Vehicles. In the opinion of the authors, China now dominates most of these markets both technologically and economically.
This development is especially evident in the automotive sector. Since the end of the coronavirus pandemic, Chinese manufacturers have significantly strengthened their position in the global market. According to Tordoir and Setser’, this is a sign of how quickly industrial power balances can change and potentially have serious consequences for traditional manufacturing centers.
China’in exports are increasing
The authors expect that European companies will continue to lose market share not only in international markets but also in Europe ’ in the coming years. For example, they show ’'s solar energy sector, Germany, which was once a global showcase industry and is now almost extinct. The decline of industrial centers in ’ in the 2000s also serves as a warning to them about what might happen in the industrial areas of ’ in Germany.
While many economists predominantly criticize high labor costs, bureaucracy and lack of competition, Tordoir and Setser see the main cause of the problems in China’'s targeted economic and industrial policy. Through market barriers, comprehensive government support, strategic control of raw materials and direct economic policy interventions, People of ChinaIt has provided significant benefits to their companies.
According to the research, the results are already clearly visible. China’in exports have recently grown much stronger than global trade in general, while Germany has been declining in business with China since 2023’. According to the authors, this has a significant impact on industrial value creation and employment.
Tordoir and Setser make concrete policy recommendations based on their analysis. They are advocating stronger protective measures against Chinese competition. These include higher import tariffs in sensitive industrial sectors, higher priority on European products, and stricter requirements for Chinese companies looking to produce in Europe’. They also think that the rules of the joint venture modeled on China’i are plausible.
Germany renounces China ’'s tough stance
Germany has so far reacted cautiously to such proposals. The reasons for this include close economic ties with China and concerns about possible retaliation. At the same time, Europe remains dependent on Chinese supply in key areas such as critical raw materials and industrial intermediates.
Minister of Economy in order to strengthen economic relations between Germany and Beijing Katherina Reiche(CDU) will travel to China’e in person this week. He will be accompanied by a delegation of about 40 business representatives who want to explore potential cooperation projects.
Disappointment is also growing within the European Union: France, Spain, Italy, the Netherlands and Lithuania are calling for an unofficial opinion document calling for a tougher response to ’'s commercial practices. Germany did not participate in this initiative. In March, Chancellor Friedrich Merz (CDU) called for a trade agreement with Beijing. Brussels rejected the idea.
