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German economy: decades to reduce dependence on China
The German economy needs decades to reduce its dependence on China. Siemens' CFO warns of long-term challenges. #Germany #China #Economy
German economy: decades to reduce dependence on China
The German economy is likely to be dependent on China for many decades to come, as Siemens CFO Ralf Thomas noted in an interview with the Financial Times. Western companies find themselves in a dilemma as they rely on both the Chinese market and China as a supplier. Thomas highlights the complexity of global value chains that have evolved over 50 years and questions how realistic it is to assume that this could change in a short period of time. It is emphasized that this is a lengthy process.
According to a report by the German Institute for Economic Research, German companies have made only limited progress in reducing their dependence on imports. China remains Germany's largest trading partner, and the exchange of goods between the two countries amounted to 254 billion euros in 2023. The close economic relationship between Germany and China has long been viewed as an essential component of Germany's economic strength.
Given geopolitical developments in other regions such as Russia, Germany is trying to learn from past mistakes and avoid a similar dependence on China. Criticism of the German-Chinese relationship is expressed by investors and politicians who see the German economy at risk from its strong ties to China. The Bundesbank has warned of the risks posed by this dependence, and the German foreign minister has called on companies to reduce their ties to China.
The latest statements from Siemens' CFO coincide with a visit by Chancellor Olaf Scholz to China. Scholz will be accompanied by a high-level business delegation aimed at strengthening trade with China, but with risk reduction and diversification in mind. It is clear that Germany wants to maintain a strong bond with China and deepen cooperation, while taking measures to reduce dependence.