The German industrial spine faces an unprecedented challenge. Once a leader in high -class production, Germany recorded a five -year decrease in industrial production. This threatens up to 5.5 million jobs and 20 percent. GDP, as referred to in the London Think Tank CER (Center for European Reform) report.
Moscow's full -size invasion of Ukraine forced Germany to reduce dependence on Russian oil and gaswhich caused a sharp growth prices energy and seriously harmed industrial sectors, including chemical and steel. In addition, disruptions in the supply chain after a pandemic supply reduced the demand for German export.
Another important factor is China's quick transition from low -value production to technologically and innovative advanced industries. This Strategy of the communist party “Made in China 2025”which aims to achieve global leadership in advanced production and technology.
Germany is losing when China breaks in the industry
Germany did not feel the initial economic growth of China at the beginning of the 21st century. Chinese production then focused on low -lived electronics, household appliances and textiles. Today, Beijing's industrial policy is focused on the key sectors for Germany, including the automotive industry, the Cleantech industry (pure technology) and mechanical engineering.
“China has made up for a distance in several advanced industries. They are very strong in these areas … and this contributes to the poor growth of Germany” – admits in an interview with DW prof. Holger Görg, head of the Research Group for Foreign Trade and Investment at the German Institute of World Economy (IFW) in Kiel.
The speed with which China caught up with Germany is probably the most visible in the car industry. German producers cars They were criticized for the lack of innovation, slow transition to electric vehicles and the unnecession of growing fierce competition from Chinese brands such as Saic Motor and BY. These problems led to threaten tens of thousands of layoffs and closing German plants.
German chemical and engineering sectors under pressure
However, the awareness of the growing threat from China in other sectors of the economy was even smaller. In recent decades, its production Chinese chemical giants have drastically increased, for example. Particularly in the production of polyethylene and polypropylene, which led to global hypertension in these areas and a decrease in the profit of German producers, such as BASF.
Even in the European Union, the key market for Germany, China increased their share in the export of chemicals in 2013-2023 by 60 percent. Germany's participation fell by more than 14 percent during this period, according to the research institute associated with the “Handelsblatt” economic journal.
The German sector of mechanical engineering, known for its precision and quality, also faces strong competition from Chinese rivals. While Germany's share in the industrial machine export market in 2013-2023 fell slightly-to 15.2 percent, China's share increased by more than half (from 14.3 percent up to 22.1 percent).
Dishonest competition: State for companies
These challenges are intensified by China's policy, which subsidizes key industries, which allows Chinese producers to produce on a scale and Costin which Western companies are difficult to match.
Careful estimates have shown that Chinese industrial subsidies in 2019 amounted to about 221 billion euro. The report of the International Monetary Fund from 2022 showed that most of the Beijing subsidies were addressed to the chemical, machine, automotive and metal industries.
Claudia Barkowsky, director of the German VDMA machine manufacturers on China, told the “Handelsblatt” daily that German companies of this sector will have more and more difficulties with Chinese competition. Their Chinese rivals offer much lower prices: “Sometimes by 50 percent or even cheaper“.
A study by the German Chamber of Commerce in China (AHK) showed that more than half of German companies operating in China (55 percent) expect that in the next five years their Chinese competitors will become leaders of innovation in their sectors. In turn, 26 percent He is afraid of the effect of preference for Chinese producers in their country.
Berlin was blind to China's ambitions?
Dr. Brad Setser, co -author of the Think Tank CER report, explains in an interview with DW that the Chinese export of high -quality products “did not develop day by day.” “How German industry is to survive Second Chinese shock? Why did the previous governments of Germany not notice it and did not do more to adapt their policy? ” – asks the expert.
Economists warn that Germany, standing at a historic crossroads, must either adapt their commercial, industrial and fiscal policy to the new economic reality, or risk the loss of the position of the world leader in production.
“From an economic perspective, an attempt to regain domination in these sectors is not the best solution due to prices,” warns prof. Holger Görg IFW. “It is important to focus on areas where Germany remain strong: pharmaceuticals, biotechnology and knowledge generation.”
Dutch can force China to switch to the domestic market
German politicians and business leaders are also wondering how their country lost their dominant position and what direction to take.
The CERTA report advises the next German government – probably the CDU/CSU conservative coalition and SPD social democratic – put pressure on China to increase national consumption.
The authors of the study also emphasized the need to use defensive EU commercial policies to increase duties on a highly subsidized Chinese export, including electric vehicles and wind turbines.
“Germany needs alternative markets for their cars and high -class machine exports. And the largest market for Germany is definitely the European market” – reminds Dr. Setser, who is also an older researcher at the New York Council on Foreign Relations.
Germany needs a “change of thinking”
Prof. Serden Ozcan from WHU – Otto Beisheim School of Management in Düsseldorf believes that ?? politicians and business leaders must adopt a significant “cultural change in the way of thinking” to cope with the pace of change.
Ozcan criticizes in the Germans what he considers their “fear of aggressive competition” and the obsessive “overprotection towards failures”: excessive support of Berlin for companies that are no longer competitive. “In China it is the opposite” – says the expert in an interview with Dw.”They work in a much more Darwinian wayallowing dozens of companies to enter the emerging industry, despite the fact that many of them will fall. Those who survive come out incredibly strong. “
A huge plan of Germany's spending on defense and infrastructure – close to a trillion euro In the next 12 years – it is to help stimulate the cooling economy. But due to the fact that most of the money was allocated to German defense and infrastructure, there are fears that Berlin may miss the chance to support the developing industries.
“A large part of the plan is intended for military expenses. If they approach it properly, large investments in new weapon systems can also help strengthen non -military technologies,” says prof. Görg from IFW in Kiel.
Germany still has many strengths
“Germany is very good in generating knowledge – through research and development, patents, etc. – and then in the sale of this knowledge. In this area, the Germans still have the advantage and we should continue to develop it” – advises an expert from IFW.
Prof. Ozcan believes that the new generation of managers better understands the problems that German industry is facing than the current group and will be able to adapt faster to change. He gave the example of Christian Klein, a 44-year-old general director of the SAP corporate software giant, who-as an early AI user-helped increase the company's market value by almost 70 percent.
“The car manufacturer no longer competes with other car manufacturers. He competes with Tencent, a manufacturer of video games” – notes Ozcan, referring to the entrance of the Chinese company to the electrician industry. “In the future, AI companies will design cancer drugs, not pharmaceutical giants.”
The article comes from the website Deutsche Welle