Germany’s Share of Exports to China Hits Lowest Level Since 2015
According to a report from the German Handelsblatt, Germany’s share of exports to China has dropped to its lowest level since 2015. The latest data from the German Federal Statistical Office reveals that in the first half of 2023, Germany’s share of exports to China stood at 6.2%, a significant decline from the all-time high of 7.9% reached in 2020. The report suggests that this trend will continue in the following years, with predictions of a drop to 7.5% in 2021 and 6.8% in 2022.
In contrast, the United States remains the most important buyer of goods “Made in Germany,” accounting for approximately 10% of German exports in the first half of this year. This is not surprising considering the US is the world‘s largest economy. France and the Netherlands also rank ahead of China in terms of importing German goods.
The “Berliner Zeitung” recently reported on Germany’s stagnant export growth and increasing dependence on China. The article highlighted how mistakes in politics and monetary policy have led to the American economy surpassing the European economy. This has put Germany and other European countries in a difficult situation.
The German Federal Statistical Office’s data for June showed that German exports increased by a mere 0.1% from the previous month, amounting to 131.3 million euros. The Economic Federation attributed this lackluster performance to a “global economic downturn.” The chairman of the Foreign Trade Association (BGA), Chandura, explained that although both the Chinese and US economies have shown slight improvement, German exporters do not expect a reversal of their declining exports.
Adding to the concerns for the German economy, international investors have started betting on a painful economic downturn in Europe. According to the Financial Times, Ahmadinejad, a portfolio manager at Fidelity International, expressed that Europe’s weak growth momentum compared to the strong demand and growth in the US is causing investors to worry. Ahmadinejad blamed the European Central Bank’s (ECB) decision to raise interest rates too far and suggested that measures should be taken to prevent a deeper recession.
The German Chamber of Industry and Commerce voiced their concerns over the weak performance of German foreign trade in the first half of the year, stating that the backlog of orders is shrinking. Additionally, the persistently high inflation rate is putting pressure on export-oriented enterprises, making the economic outlook for German exports in the second half of the year “cloudy.”
The Munich Institute for Economic Research (Ifo) reported that orders from automakers and their suppliers, who heavily rely on exports, are currently falling. Given the ongoing uncertainty in the global market, the expectations for the auto industry in the coming months are also pessimistic.
Carsten Brzeski, an analyst at ING Bank, commented that foreign trade is no longer a reliable growth engine for the German economy but has become more of a brake. At the same time, he emphasized the high dependence on Chinese imports, particularly in the context of the ongoing energy transition, stating that it would not be possible without Chinese raw materials and solar modules.
The decreasing share of German exports to China and the challenges posed by the global economic environment highlight the need for Germany to diversify its export markets and reduce its reliance on China. The German government and business community will need to find ways to boost competitiveness and adapt to the changing global trade landscape to maintain the strength of the German economy.