Overview
- The Centre for European Reform study, published Wednesday, May 20, calls Germany the “epicentre of the second China shock” and estimates roughly 400,000 industrial jobs lost so far.
- Preliminary Q1 2026 data show German exports to China fell about 12.5% to €18 billion while imports from China rose about 6.4% to €43.5 billion, illustrating a widening trade gap that weakens German factory output.
- CER attributes the pressure to China’s state support for industry—large subsidies, cheap credit, and exchange‑rate effects—that have produced global overcapacity and let Chinese firms displace German competitors in autos, machinery, chemicals and aerospace.
- Brussels has already imposed tariffs on Chinese electric vehicles and is developing an ‘overcapacity instrument’, and Berlin is publicly split between protecting domestic industry and preserving market access and investment ties with China.
- The shift risks regional industrial decline in centres such as Stuttgart and Wolfsburg, could provoke Chinese retaliation on trade or inputs, and follows decades in which Germany’s growth depended on deep export and investment links with China.