The conundrum of Germany’s business ties with China
ANNALENA BAERBOCK kicked off her first trip to China as Germany’s foreign minister in April with a visit to a production site of Flender. The Mittelstand firm makes parts for wind turbines in Tianjin, a coastal city around 130km south-east of Beijing. Ms Baerbock toured the facility for about an hour, all the while bombarding her hosts with questions, such as whether its suppliers are local.
It is unusual for a foreign minister to tour a factory, but it shows the importance of business ties between Germany and China. The country is Germany’s biggest trade partner and an important destination for foreign investments in several industries that are the backbone of the Mittelstand. Yet as the value of trade increased for the seventh consecutive year in 2022, the bilateral deficit widened. German imports from China rose by a third compared with 2021 to €192bn ($202bn), whereas exports of German wares to China increased by only 3% to around €107bn.
Another cause for concern is the cluster of huge German firms and industries that continue to rely heavily on China. The survival of its large carmakers and chemicals firms could hinge on access to the country. And China supplies 95% of the solar cells installed in Germany as well as 80% of laptops, and 58% of the circuit boards that are integral to other electronic goods. Germany also depends on China for the rare-earth metals needed to make semiconductors and lithium-ion batteries as well as antibiotics and other important medicines.
2023-04-27 08:02:16
Article from www.economist.com
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