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The economy is groaning under pressure from China. Now economist Truger is expressing fears about Germany’s economic resilience. And formulates a demand.
Munich – It continues to be an extremely difficult year for the German economy. The most important domestic German industry, the automotive sector, has been suffering from a significant decline in demand for months. The industry’s nominal sales fell by a total of 4.7 percent in the first half of 2024. As has now become known, the order situation in the entire industrial sector collapsed again in August after two better summer months – according to the Federal Statistical Office, producers received 5.8 percent fewer orders in that month than in the previous month.
A recovery from the economic downturn appears to have been postponed until further notice. While economic research institutes say GDP is likely to stagnate this year, Economics and Environment Minister Robert Habeck (Greens) also recently corrected his economic forecast. According to economist Achim Truger, member of the Economic Advisory Council, the trade dispute with China also played a role in this less than pleasant development, as he now said in an interview with Business Week emphasized.
Economics Truger: Failure to see an economic turnaround indicates “structural problems”.
While the economic institutes and sometimes also the Federal Government Although German potential growth by 2029 is only 0.4 to 0.5 percent, economist Truger is only slightly concerned about this. “In the 1960s, growth rates of four percent were normal, so the question also arises, what is appropriate economic growth today?” he emphasizes. Low growth or even temporary stagnation is not in itself a catastrophe as long as prosperity goals such as employment, inflation and external balance are not affected.
A Chinese car manufacturer in Binzhou (symbolic image) © IMAGO / NurPhoto
In view of the recovered global economic growth, which according to an OECD estimate is 3.2 percent in the current and next year, an economic improvement was also obvious for Germany. According to Truger, the lack of a long-term trend reversal – for example after a better industrial order situation in June and July – also indicates structural problems within the German economy.
And there, for example, on the mix of structural change and the aspect that German companies are increasingly migrating abroad. Truger sees the fundamental goal of decarbonization in particular as being at risk from companies moving abroad. But that’s not all: Germany’s economic resilience could also increasingly suffer from external and self-created problems: “You can’t simply get steel from Asia because it’s cheaper. In systemically relevant economic areas, you have to secure your own capacities and skills. From semiconductors to medicines and even steel – to name a few examples.”
Economist Truger sees economic resilience in danger under pressure from China
The economist Truger emphasizes how clear the current hurdles are that arise from China’s economic pressure: “Germany benefited from the first China shock at the beginning of the 2000s. The second China shock is hitting the German economy with full force,” he sums up.
But how can the German economy manage to remain resilient in times of growing economic pressure from China? After all, the current crisis facing German car manufacturers – especially in the electric car industry – is, among other things, the result of Chinese efforts in the market – and their current dominance there.
From Truger’s point of view, this could be achieved through new and stricter industrial policy measures. In conversation with the Business Week The economist therefore also formulates a concrete demand: “That means that the government needs a plan for what absolutely has to stay here and develop instruments for it. Times are changing.”
There is still no end in sight to the trade dispute between the EU and China
The member states of the European Union already focused on China’s pioneering position in the e-car industry on Friday (October 4th) in order to agree to EU-wide punitive tariffs on Chinese e-cars in the ongoing trade dispute with China. The EU accuses China of massively subsidizing its production of electric cars and thus creating unfair competition for European car manufacturers with cheap exports.
Germany had voted against the punitive tariffs and German car manufacturers had also spoken out vehemently against punitive tariffs because they feared retaliation from China, which could affect their business in the important sales market. The decision in Brussels was a “fatal signal,” warned some BMW-Chef Zipse ZDF Today according to. BDI General Manager Tanja Gönner, however, explained: “The decision on countervailing duties in the market for electric cars must under no circumstances mean the end of the talks.” (fh)
