'Decoupling' from China will hurt German economy

Recently, the Kiel Institute for the World Economy released a report stating that Germany is heavily dependent on imports from China in certain key product areas. Among them, Germany has the highest dependence on the import of notebook computers, 80% of notebook computers come from China, and the share of mobile phones and computer components (such as sound cards and graphics cards) imported from China is as high as 68% and 62% respectively. In addition, China is also an important supplier of imported textiles and LED lights to Germany, with import shares of 69% and 61% respectively.

The report pointed out that some rare earths and other raw materials that are important to the production of special technologies and are listed as key raw materials by the European Union also rely on imports from China. For example, more than 85 percent of Germany's imports of scandium and antimony, which are widely used in battery production, come from China. In addition, Germany is also very dependent on China for certain medical products, such as medical masks or painkillers, and the import share of these products from China has exceeded 90% in some cases.

According to the statistics of the report, a total of 221 kinds of products from mainland China and Taiwan currently dominate the imported products from Germany, and most of them account for more than 80% of the total. According to the analysis of the report, in the short term, no other supplier can shake China's dominant position in certain essential raw materials and products.

Sandkamp, one of the authors of the report, said that if the EU boycotts Chinese imports, they will not be able to find alternative suppliers. In addition, Sandkamp made it clear that if the EU imposes sanctions on China, it will definitely affect the supply of Chinese products and exacerbate the supply crisis of some key products in Germany.

The report also pointed out that Germany's dependence on China is generally lower than the level shown by trade statistics, and only a small part of German production depends on China's capital input. So far, Germany's own investment still accounts for the largest share. Of course, although German companies only rely heavily on imports from China for individual products, the dependence of these products is "critical."

The report pointed out that compared with the production field, Germany's consumption field is more dependent on China. At present, only about 0.6% of the direct intermediate inputs required for German production come from China, while in the field of final products consumed in Germany, the share directly from China is about 1.4%. If the indirect relationship of interdependence is taken into account, the importance of China for German production and consumption is doubled. According to the analysis of the report, even if Germany does not import any products or raw materials from China at all, the German economy will not be immune to China's influence.

The report also uses a model to make assumptions about the consequences of the "decoupling" of the EU and China. The results show that once the EU chooses to "decouple" from China, even if the EU establishes a new supply system, Germany's economic output will be reduced in the long run by 1 %. If calculated according to the German gross domestic product (GDP) in 2021, Germany will lose 36 billion euros per year. In this regard, Sandkamp said that the German economy is less dependent on macroeconomics. However, the sudden interruption of German-Chinese trade relations will lead to shortages of important raw materials, medicines and final products. As a result, Germany's economic prosperity will suffer. huge loss.