The CDU member of the Bundestag Johannes Volkmann has urgently warned against massive deindustrialization of Germany due to Chinese overcapacity and distorted competition. The drama of the development has not yet reached the German public, said the politician in the “Ronzheimer” podcast published on Wednesday. Without a quick course correction, Germany threatens to lose “the industrial substance of our country”.
Currently, 10,000 to 15,000 industrial jobs are being lost every month in Germany, said Volkmann. “And a very significant part is due to overcapacity and unfair competition from China.” At the same time, German exports to China in the first quarter of this year were a fifth lower than in 2022, while Chinese exports to Europe are increasing massively. The CDU politician said that every third euro of China's trade surplus now comes from trade with Europe.
According to Volkmann's account, German companies are threatened with a double “China shock”. On the one hand, sales on the Chinese market are collapsing, especially in the automotive industry. On the other hand, a rapidly growing number of Chinese products are coming to Europe. In addition to car manufacturers, this “import shock” also affects the chemical industry, mechanical engineering and medium-sized suppliers. In the first quarter, imports of plug-in hybrid cars from China rose by 140 percent, said Volkmann. The associated cut-throat competition could endanger “the very existence of Germany as an automobile location as we know it.”
“It cannot be a solution to feed medium-sized businesses to Chinese overcapacity”
In Volkmann's opinion, the federal government's current China strategy is not enough. Germany is committed to so-called de-risking, i.e. reducing economic risks in relations with Beijing. In practice, however, the dependencies on rare earths and other critical raw materials have continued to grow. Added to this are the trade policy imbalances. “It cannot be a solution to feed medium-sized businesses to Chinese overcapacity in the hope that individual large companies will be the last to be eaten,” said the CDU member of the Bundestag.
Volkmann also referred to an investigation by a French government commission. Without a course correction, 50 percent of industrial jobs in France and 70 percent in Germany could be at risk within the next five to ten years. It's about the possibility of a “de-industrialization of the European continent” in large parts of the automotive, chemical and mechanical engineering industries, said Volkmann.
The CDU politician does not expect any easing of tensions as a result of Beijing giving in voluntarily. In its new five-year plan, the Chinese leadership is sticking to expanding its own industrial capacities and even wants to strengthen its current course. “As long as their exports grow faster than our countermeasures, they have no reason at all to doubt that it is a promising course for them,” said Volkmann. Appeals alone would therefore not persuade China to change course.
What Germany can do against China
Volkmann admitted that effective countermeasures would also burden Germany. There is no free way out. Trade restrictions, reducing dependency on raw materials and greater diversification could increase prices and trigger political conflicts. However, further hesitation will cause even greater damage in the long term. The question is not: Can we afford to change course? But: Can we afford not to change course in our trade relations with China?
The CDU politician compared the situation with Germany's former dependence on Russia. Germany has become increasingly dependent because of concerns about the economic consequences of decoupling. However, Europe is not defenseless against China. However, the prerequisite for an effective reaction is that the Europeans act as one and are credibly prepared to take countermeasures.
Volkmann specifically spoke out in favor of countervailing duties and further trade defense measures against Chinese subsidies and exchange rate advantages. When it comes to critical raw materials, Germany must promote its own capacities and supply chains in friendly countries. Chinese technology for railways, ports or energy systems must also be checked more strictly for possible security risks and technical backdoors. At the same time, domestic political reforms are necessary, including lower wage costs, better tax conditions and less bureaucracy.
