Germany faces a potential deindustrialization threat similar to the US in the early 2000s if it continues to admire China’s export achievements, a report has cautioned. The Centre for European Reform highlighted a significant increase in bilateral trade imbalances and targeted Chinese industrial policies impacting Europe’s largest economy. China’s trade surplus with Germany surged to $25 billion between 2024 and 2025, leading to a $94 billion trade gap and reduced demand for German industrial products.
The report referenced the “China Shock 1.0” that caused substantial job losses in the US, affecting up to 2.5 million workers, and subsequent social issues in areas that lost industries to China. Concerns were raised that German cities like Wolfsburg and Stuttgart, home to major automotive companies, could face a similar fate due to China’s growing influence on the country’s industrial landscape.
According to the report, Chinese policies, particularly the “10,000 little giants” program, are directly aimed at Germany’s mid-sized industrial suppliers, known as Mittelstand. It attributed the trade imbalance to factors like weak domestic demand in China, unfavorable exchange rates, and Chinese industrial strategies targeting Germany’s industrial sector. The report urged Berlin to take a proactive stance and collaborate with Paris to address issues like China’s currency undervaluation and trade practices at international forums.
Another study highlighted that China’s advancements in electric vehicles, solar energy, and batteries are more a result of political centralization and regional competition rather than a grand strategy.
