Chancellor Olaf Scholz’s trip to China in mid-April will undoubtedly be remembered as one of Germany’s last – failed – attempts to convince itself of the sustainability of a world whose “made in Germany” has benefited so much. The one born at the end of the Cold War, considered a golden age of globalization, where relations between States were dominated not by geopolitics, but by free trade and the rules of law. The German export industrial model flourished strongly during this period, particularly when China, admitted to the World Trade Organization in 2001, began to industrialize at high speed, with the help of capital goods. Germans.
The shock of the Russian attack on Ukraine on February 24, 2022, supported by China, put an end to this era. The G20, which brings together the twenty richest economies on the planet, is today deeply divided between “Western” countries, including Japan and South Korea, and the bloc formed by Russia, China and their allies. .
In its report on the world economy, published in April, the International Monetary Fund (IMF) warned of “the geo-economic fragmentation of the world”susceptible to “weigh on global trade and the growth of prosperity in the years to come”. Gita Gopinath, deputy managing director of the IMF, said the institution’s data indicated fragmentation “already in progress” and warned of the risk of “new cold war”.
This development should seriously affect “made in Germany”. The winning recipe of this model was to import cheap energy, raw materials and intermediate goods to transform them into high-end manufactured goods in Germany, before exporting them at a high margin.
Breaking point
In total, 27% of jobs across the Rhine are dependent on foreign trade, and up to 54% in industry, which represents 20% of gross domestic product, compared to 10% in the United States or France. However, the machine seized up. Since the war in Ukraine, trade with Russia, a major supplier of energy and raw materials, has been banned.
The relationship with China, on which many German companies are still dependent for their supplies and sales, is probably reaching a breaking point. Olaf Scholz, under pressure from major groups in his country, had placed bilateral economic relations at the heart of his trip to the People’s Republic, but did not obtain from President Xi Jinping any of the guarantees that he had come to negotiate. Neither on the Ukrainian issue nor on Beijing’s subsidies to its export industry, deemed unfair.
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