At a bilateral meeting between Federal Economics Minister Habeck and US Secretary of State Blinken in a hotel on Gendarmenmarkt, the flags of the USA and Germany are on the table. Photo: Christoph Soeder/dpa (Photo by Christoph Soeder/picture Alliance via Getty Images)
Christoph Soeder/dpa | Picture Alliance | Getty Images
After years of being Germany’s top trading partner, China looks set to quietly take that top spot later this year.
Combined exports and imports between Germany and the US amounted to 63 billion euros (US$68 billion) between January and March 2024. According to CNBC calculations, trade between Germany and China amounted to almost 60 billion euros. Reuters first reported the change on Thursday.
Several factors played a role in the move, Carsten Brzeski, global head of macro research at ING Research, told CNBC.
“This shift is due to several factors: Strong growth in the USA has boosted demand for German products. […] “At the same time, decoupling from China, weaker domestic demand in China and China’s ability to produce goods it previously imported from Germany (mainly cars) reduced German exports to China,” he said.
China has been Germany’s largest trading partner for years, but the gap between China and the USA has narrowed in recent years. The USA has also long been a larger market for German exports than China, Holger Schmieding, chief economist at Berenberg Bank, told CNBC.
While the US share of German exports has increased in recent years, China’s share has declined, he noted. “The Chinese economy is stalling and German companies are facing increased competition from subsidized Chinese companies,” said Schmieding.
The crucial difference is that the USA is now also becoming more important in terms of imports, he emphasized.
Germany pursued a new China strategy last year and called on companies to reduce risk from China. China should remain a partner of Germany, the country’s government emphasized, and there should be no “decoupling” – but “systemic rivalry” is increasingly shaping the relationship between the two.
Tensions between the European Union and China have also increased as both countries launch investigations into each other’s trading practices and threaten to impose tariffs on imports.
Last month, a survey by the German economic institute Ifo found that the number of companies saying they are dependent on China fell from 46% in February 2022 to 37% in February 2024. This is due to fewer companies relying on inputs from Chinese manufacturers, the report said.
“The fact that the US has become Germany’s largest trading partner actually highlights the changing trade patterns and gradual decoupling from China,” Brzeski said.
Source link
2024-05-10 13:57:08
www.cnbc.com
