German exporters are under pressure from China in their domestic market

A shopping center in Berlin

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German exporters face increasing pressure in their domestic market from Chinese exports to the EU, according to a study by the Cologne Institute for Economic Research.

Chinese exports to the region contain increasingly sophisticated industrial products – such as machinery, pharmaceuticals and automobiles – which have long been considered the domain of German manufacturers. According to the study, which was reported by the German newspaper Welt am Sonntag, the share of these products in all EU imports from China increased from 50.7% in 2000 to 68.2% in 2019 .

The figures serve as a warning to German politicians and businesses, who are already facing growing questions about the country’s future economic success. Germany’s legendary auto industry grapples with the end of combustion engines and competition from Tesla, its tech industry lags its European rivals, and automakers are worried about the cost of the energy transition.

“With China, Germany is experiencing strong export competition not only globally, but also in its own European domestic market,” said IW economist Juergen Matthes, as quoted by Welt am Sonntag .

At the same time, China is increasingly turning to the German economic model as a guide for its future success, some analysts say. Beijing’s “Made in China 2025” program, which emphasizes increasing manufacturing in technology sectors, is inspired by Germany’s Industry 4.0 master plan. China’s recent regulatory crackdown also drew comparisons with Europe’s largest economy.

Yet others say China’s success in emulating Germany’s economic model will likely be held back by its uncertain political environment.

“You create structures by making sure that economic policy is predictable and clear, so that companies can invest,” Achim Wambach, president of the German ZEW institute, told Bloomberg last week. “What we are seeing in China right now is the opposite – there is a lot of uncertainty and guesswork and sudden changes in policy. It is the opposite of the German concept of coherent economic policy.

© 2021 Bloomberg LP

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