Decoupling from China would be an economic shock for Germany
According to a study, a decoupling from China would be a severe blow to the German economy. An abrupt halt to trade with the People's Republic would cause the German economy to collapse by around five percent, according to simulation calculations published on Thursday under the auspices of the Kiel Institute. "Trade with China brings us prosperity and is practically irreplaceable in the short term, said Moritz Schularick, President of the Kiel Institute for the World Economy (IfW Kiel). However, Germany has enough economic resilience to survive even such an extreme scenario. The shock is therefore comparable to that following the financial crisis or the coronavirus pandemic.
According to the scenario, in the medium to long term, the loss will level out at around 1.5% per year. A gradual, cautious reduction in trade relations would avoid the high initial costs. According to the study, high costs would arise for Germany primarily due to the short-term effects of a sudden break in trade, as existing trade links with China could not be compensated for immediately. China's President Xi Jinping has warned the European Union against viewing his country as a rival and embarking on a confrontational course. At a recent summit in Beijing with EU leaders, including Commission President Ursula von der Leyen, Xi emphasized his willingness to work more closely with the EU on economic matters.
Von der Leyen emphasized that the EU would not tolerate unfair competition. The EU states criticize distortions of competition on the Chinese market, as well as Beijing's threats against Taiwan and its close partnership with Russia, particularly with regard to the war in Ukraine.
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If Germany were to decouple from China as suggested in the study, the initial shock to its economy could be comparable to that experienced during the financial crisis or the coronavirus pandemic. However, according to the simulation calculations, the long-term effects would level out to around 1.5% per year. In an effort to avoid the high initial costs of an abrupt decoupling, a gradual, cautious reduction in trade relations with China might be more feasible. Despite the warnings from China's President Xi Jinping against viewing China as a rival and embarking on a confrontational course, the EU states criticize distortions of competition on the Chinese market and Beijing's threats against Taiwan.
Source: www.ntv.de
