Recently, the Institute of World Economics in Kiel, Germany, released a report saying that in some key products, Germany relies heavily on imports from China. Among them, Germany has the highest dependence on the import of notebook computers, with 80% of notebook computers coming from China, while the share of mobile phones and computer components (such as sound cards and graphics cards) imported from China is as high as 68% and 62% respectively. In addition, China is also an important supplier of German imported textiles and LED lamps, accounting for 69% and 61% respectively.
According to the report, some rare earths and other raw materials which are important for the production of special technologies and listed as key raw materials by the European Union also depend on imports from China. For example, more than 85% of scandium and antimony imported from Germany come from China, and these raw materials are widely used in battery production. In addition, Germany is highly dependent on China for certain medical products, such as medical masks or painkillers, and in some cases the import share of these products from China has exceeded 90%.
According to the report, at present, there are 221 kinds of products in Chinese mainland and Taiwan Province, most of which account for more than 80%. According to the analysis of the report, in the short term, no other supplier can shake China’s dominant position in certain essential raw materials and products.
Sandkamp, one of the authors of the report, said that if the EU boycotted China’s imports, they would not find an alternative supplier. In addition, Sandkamp made it clear that if the EU imposes sanctions on China, it will definitely affect China’s product supply and aggravate the supply crisis of some key German products.
The report also points out that Germany’s dependence on China is generally lower than that shown by trade statistics, and only a small part of German production depends on China’s capital investment. So far, Germany’s own investment still occupies the largest share. Of course, although German enterprises are extremely dependent on imports from China only for individual products, their dependence on these products is "crucial".
According to the report, the German consumer sector is more dependent on China than the production sector. At present, only about 0.6% of the direct intermediate inputs required for German production come from China, while the share of the final products consumed in Germany directly comes from China is about 1.4%. If we consider the indirect relationship of interdependence, the importance of China to German production and consumption will be doubled. According to the analysis of the report, even if Germany doesn’t import any products or raw materials from China at all, the German economy can’t help but be influenced by China.
The report also hypothesizes the consequences of "decoupling" between the EU and China through the model. The results show that once the EU chooses to "decouple" from China, even if the EU establishes a new supply system, German economic output will decrease by 1% in the long run. If calculated according to Germany’s gross domestic product (GDP) in 2021, Germany will lose 36 billion euros every year. Sandkamp said that the German economy is less dependent on macroeconomics. However, the sudden interruption of trade relations between Germany and China will lead to the shortage of important raw materials, medicines and final products, and the consequence will be that Germany’s economic prosperity will suffer great losses.