Germany's industrial production has faced a significant decline over the past five years, with manufacturing contributing 5.5 million jobs and accounting for 20% of the nation's GDP. The situation has been exacerbated by China's aggressive new industrial policies, which directly compete with German manufacturing capabilities. Since 2021, China has doubled down on investments in priority sectors, leading to a notable increase in Chinese exports that outperformed global trade in 2024 [bf2eefa7].
In stark contrast, Germany's car exports have plummeted to 1.2 million units, a reduction of nearly 50% from pre-pandemic levels. This decline is indicative of the broader challenges facing the German manufacturing sector, which is now at risk due to China's competitive policies [bf2eefa7]. The upcoming federal elections in February 2025 have raised concerns about deindustrialization in Germany, prompting calls for a reevaluation of trade policies to better support the EU's protection of industrial sectors and to implement buy-European provisions [bf2eefa7].
In addition to these challenges, Germany's exports to China have been steadily declining, representing a loss of 0.5% of GDP. Currently, China exports 5 million more vehicles than it imports, further highlighting the competitive imbalance [bf2eefa7]. The EU has responded with tariffs on Chinese electric vehicles, which vary between 7.8% and 35.3%, but these measures may not be sufficient to counteract the growing influence of Chinese manufacturing [bf2eefa7].
As Germany seeks to stabilize its economy and industrial sector, it must adapt its industrial policy to effectively counter China's expanding economic footprint. This includes rethinking trade strategies and enhancing support for domestic industries to ensure long-term sustainability in the face of international competition [bf2eefa7].