Görg: Economic Dependence on China is Smaller than Often Presented by Politics or the Media

China has been since 2016 the largest trading partner for Germany. In 2022 the bilateral trade between China and Germany reached a new level of almost 300 billion euros, about 10% of Germany’s total foreign trade of that year. Such development, together with the intensifying geopolitical tensions that are latest driven by the Russia-Ukraine war and a rising conflict potential in Taiwan strait, have led to more and more policy and public discussions about Germany’s dependence on China. With the new China Strategy, the German government indicates that it will help diversify Germany’s economic relations to reduce its dependence on China in critical areas.

In a recent interview, Prof. Holger Görg, Ph.D. (KCG Managing Director) emphasises that trading many goods with specific partners like the trading between the European Union and China is per se not a problem, nor a dependence. A real dependence only exists, if firms cannot find alternative supplies for different goods in short term.

Certainly, companies should take a careful look at the state and the further development of their supply chains. Görg emphasises that TSMC’s new investment in Dresden is, however, not a real diversification measure and can only limitedly help reduce the economic dependence of the German economy, because the factory in Germany will still rely on imports from Taiwan and China for its operation on site. Last but not least, he calls for that such discussions on dependences and diversification engagement should be less politicized. And he warns of the high possible costs that could be caused by a fragmentation of global trade.

The interview (in German) “Die Abhängigkeit von China ist kleiner als dargestellt (The dependance on China is smaller than presented)“ is published in the Börsen-Zeitung on Dec. 2, 2023. It is online accessible here.

Contact:

Prof. Holger Görg, Ph.D. (holger.goerg@ifw-kiel.de; +49(0)431-8814-258)