”Germany’s trade deficit with China has been growing and will likely reach a record level of over 2% of GDP this year. This is driven by both falling exports to and rising imports from China, with road vehicles and electrical machinery contributing most to the rising deficit. At the same time, Chinese export restrictions on certain chips and several rare earth elements and magnets used in the defence, energy, and automotive sectorthreaten German supply chains. German China action plan in the making.
The German government is currently working on a new China action plan, updating the 2023 China strategy of the previous government. In this note, we first discuss three key themes defining the evolving relationship with China. We then outline our own thoughts on how to best cope with the potential “China shock” and existing asymmetric dependencies. Three key themes are setting the scene for the upcoming China action plan.”
Morten W. Langer
