Nation overtakes Germany in export of some products

Trade tide turns in favour of mainland as major gains made in European markets, report finds

China has surpassed Germany in the exports of some products, a changing of the guard which has already altered the balance of trade in major markets, posed challenges to the European manufacturing powerhouse and cast a cloud over bilateral relations, according to a report.

While Germany had historically been a major source of imports in the European Union, particularly in advanced sectors such as motor vehicles and machinery, its market share had been declining, insurer Allianz Trade said in a publication that declared “the trade tide is turning”.

In contrast, the company said, China had been “making significant gains” in the European market across sectors such as computers, electronics and optical products, metals and basic pharmaceuticals.

“The momentum is especially strong in electrical equipment, which has risen by 5.1 percentage points from 2018 to 2023 and 7 percentage points from 2013 to 2023,” the report said. “This trend highlights the growing competitiveness of China.”

German Chancellor Olaf Scholz will arrive in China today with a business delegation for a three-day visit that will include meetings with President Xi Jinping and other senior officials. Trade is expected to be high on the agenda.

China remains Germany’s largest trading partner. However, figures from China’s General Administration of Customs showed that exports and imports between the two countries in 2023 dropped by 8.7 per cent from a year ago, falling to US$206.8 billion.

“China is moving up global value chains, with global export market shares surpassing Germany in key sectors,” the Allianz report said.

“It has steadily moved up the value chain and captured market share in advanced industrial sectors while simultaneously squeezing out European products from its domestic market.”

Data from Allianz showed that China’s global export market share had continued to increase, from less than 4 per cent in 2000 to 14 per cent in 2022.

Meanwhile, the corresponding figure for Germany dropped to 8 per cent in 2022, after a long period of stagnation at about 10 per cent.

“China’s global export share has surpassed that of Germany in three out of four main export sectors,” Allianz said.

The company noted that German machinery firms, manufacturers of internal combustion engine vehicles and producers of specialised chemicals were facing “intense competition from Chinese rivals” backed by competitive prices and state support.

“China has been able to integrate long sequences of value chains domestically, thus providing goods that require less participation of other countries,” it said.

Despite difficulties in the Chinese market, the report said it remained an attractive destination for investments by large German firms, sharing figures that showed the country’s direct investment in China increased fivefold between 2010 and 2022.

A survey by the German Chamber of Commerce in China this week found that two-thirds of German businesses in China had observed “unfair competition” when operating in the country.

Both nations have continued to stress the importance of economic ties, even as Berlin moves towards de-risking its supply chains and joins complaints levelled by the West over an alleged overcapacity generated by China’s state subsidies.