Germany to face huge brunt of China's 'one-sided trade model': Report
New Delhi, May 21
Germany risks repeating the United States' early‑2000s deindustrialisation if it continues to admire China's export success, a report has said and warned Europe's largest economy about a sharp rise in bilateral trade imbalances and targeted Chinese industrial policies.
"Germany remains hesitant, even as China has already eaten much of German industry's lunch and is preparing to start on dinner," the Brussels-based think tank Centre for European Reform (CER) said, according to a report by UK-based media outlet The Guardian.
China's surplus with Germany doubled to $25 billion between 2024 and 2025, creating a $94 billion trade imbalance, indicating a fall in demand for German industrial goods.
"China Shock 1.0" inflicted severe damage in the United States, with job losses of up to 2.5 million, followed by a rise in suicides and drug use in US towns that lost industries to China.
The report warned that Germany's cities like Wolfsburg and Stuttgart, bases of Volkswagen and Mercedes-Benz, could face a similar future as Chinese advancement is "more consequential in Germany than in any other country and is worsening."
The think tank alleged that German political leaders "struggled to see the problem clearly", adding that Xi Jinping's five-year policy cycles have triggered a second China shock similar to the early 2000s.
Beijing's policy project named the "10,000 little giants" programme is specifically targeting Germany's Mittelstand of mid-sized industrial suppliers. The report blamed the Chinese trade imbalance on weak domestic demand in China, an extremely unfavourable exchange rate and Chinese industrial policy targeting Germany's industrial base.
The report urged Berlin to play an offensive role and support Paris in pushing the IMF and G7 to confront China's currency undervaluation and one-sided trade model."
Another recent report said that China's gains in EVs, solar and batteries owe less to a master plan than to political centralisation combined with rivalry across provinces and cities.
— IANS
Reader Comments
Interesting how the West suddenly cares about trade imbalances when it's Germany affected. When India faced this in steel and solar panels, nobody called it "China Shock 2.0" 🤷♀️
The "10,000 little giants" programme is exactly what India should study carefully. China is systematically targeting Germany's Mittelstand, but India's MSMEs are even more vulnerable. We need a robust domestic industrial policy, not just tariffs.
As someone who studied economics, this is a textbook case of what happens when you ignore comparative advantage shifts. Germany's auto sector is in trouble, but blaming China's "one-sided model" ignores that German companies themselves invested heavily in China 🤔
Look at the exchange rate point they raised! China keeps Yuan undervalued to boost exports. India should coordinate with Germany and France at IMF to push for fair currency valuations. Alone we're weak, together we can create pressure 💪
India should learn from Germany's mistake. China's EV and solar dominance didn't happen overnight. While Germany admired China's success, we've been building our own manufacturing through PLI schemes. Still, we need to be smarter about protecting our markets.
The real issue is China's weak domestic
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