China’s export prowess needs German imports

China's crucial export sector is heavily reliant on imported German goods and would flounder without them, according to a new study.

China's export prowess needs German imports
Photo: DPA

A shortage of precision German machinery would leave Chinese industry in trouble, as most of the equipment used in the sector is German-made and plays a vital role in manufacturing goods it sells around the world, the study by the non-profit Bertelsmann Foundation said.

“German machinery plays a key role in Chinese industry,” said Helmut Hauschild from the Bertelsmann Foundation, which commissioned the study from the Prognos institute.

Reverse the roles, and China is an important provider of textiles and computers to Germany. Textile imports have grown significantly since 1992, when Chinese goods accounted for seven percent. They now make up over 30 percent.

Stronger still are Chinese imports of office equipment, computers and laptops which since 1992 have risen to make up 44 percent of that market.

Yet the study did suggest that China relied on Germany more than vice versa as China tended to export consumer goods – an area in which it did not have the monopoly.

And in order for Germany to maintain its importance to China, it must “invest in research and development to be able to stand up against domestic competition in the long-run,” Hauschild said.

DAPD/The Local/jcw

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German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.


With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.