https://www.wsj.com/articles/china-once-germanys-partner-in-growth-turns-into-a-rival-11600338663
An informal partnership that kept Germany’s economy tethered to China’s for decades is unraveling, threatening Berlin’s—and Europe’s—post-pandemic recovery as the Asian giant stages a powerful comeback.
The relationship that saw Germany provide China with the machines to power its economy helped the German economy recover rapidly after the financial crisis. But German business leaders say the model is no longer working as China turns from partner to rival.
Germany should see its gross domestic product shrink by between 5.8% and 7.1% this year according to German public- and private-sector economists—better than most other Western economies but much worse than China’s expected 2.5% growth.
While Germany’s exporters are benefiting from a recovery in international trade, they aren’t getting the lift from China that they did a decade ago. In July, German exports were up from June but still 11% lower from a year earlier. China’s exports have exceeded last year’s levels for two months.
This divergence, economists and German business leaders say, is partly the result of Beijing’s strategy to encourage manufacturers to produce more sophisticated machinery that is more competitive with high-end German capital goods that were previously unmatched.