Trade plummets
China’s crisis is hitting the German economy hard
8/30/2023 3:28 am
The economic slump in China arrives in Germany. Trade with the important market is declining noticeably – according to the Chamber of Industry and Commerce, this is still a consequence of the Corona crisis and the close ties.
According to DIHK foreign trade chief Volker Treier, the German economy is suffering particularly from the economic slump in China. “This is particularly affecting Germany because of its close economic ties with the People’s Republic. In the first half of 2023, German exports to China fell by 8.5 percent compared to the same period last year. The drop in imports was even 16.6 percent,” said Treier to the newspapers of the Funke media group according to the preliminary report. “All in all, almost a million jobs in Germany depend on exports to China.”
The Chinese economy has not yet managed to “break out of corona sclerosis”, added the foreign trade head of the German Chamber of Industry and Commerce. “In principle, the Chinese are still reluctant to buy during the erratic lockdown measures. The suppliers of German products are also feeling this,” said Treier of the Funke Group. “In addition, the bubble of the real estate boom threatens to burst at some point. That also increases the propensity of many Chinese to save. If there is no consumption, there will be no investment.”
China’s economic weakness is not only affecting classic German export domains such as the automotive industry, the chemical industry or mechanical engineering. “In important areas such as the energy transition, the mobility transition or the digitization of the economy, the dependency on China is particularly high – especially if deliveries were to be interrupted at short notice. In these sectors we need imports from China that we cannot replace quickly,” Treier explained. “Germany needs raw materials such as rare earths, silicon or titanium – and it needs processed raw materials such as cobalt or lithium products. The top suppliers of critical raw materials or processed products often come from China.”
Despite the problems in the Chinese economy, Treier also sees growth opportunities for German companies. “Even if the People’s Republic produces more domestically, it will be dependent on foreign technology. We can expect weaker but significant growth of two to five percent over the next two decades.”