China's Rise Costs Germany 400,000 Industrial Jobs, Berlin Considers Action

Germany faces a significant economic challenge as China's industrial prowess leads to substantial job losses and market share erosion within the German economy.

Since 2019, over 400,000 German industrial jobs have disappeared due to competition from China, according to research from Germany's Institute for the Study of Economic Affairs (IW). China has surpassed Germany as the world's leading exporter of machine tools and continues to gain ground in other critical sectors. Germany's share of the global market has fallen to 12 percent, while China's has risen to 37 percent in this sector.

“

We will protect our interests and our industry, and we will not stand idly by while others break common rules.

The dependency on China is also growing, with over 90 percent of solar panel imports, 73 percent of antibiotics, and over 65 percent of lithium batteries coming from China in 2025. Economists like Carsten Brzeski of ING bank describe China as having become "the better Germany" in terms of industrial competitiveness.

“

Merz's statements are clear. But the government is divided on the issue, and a clear German line is lacking.

This dramatic shift has prompted a re-evaluation of Germany's approach to China. Chancellor Friedrich Merz has signaled a potential change, stating Germany will "protect its interests and its industry" and will not "stand idly by while others break common rules." However, there is internal division within the German government regarding the speed and extent of such measures, with some advocating for a more cautious approach.

Concerns remain about the potential impact on German companies operating in China, which account for approximately one-fifth of China's imports. Despite these complexities, the German business community is largely skeptical of China's competitive practices. Even Volkswagen, a major player in the Chinese automotive market, has reportedly urged the government to consider countermeasures, such as anti-dumping or protective tariffs, to address what is perceived as unfair competition.

“

China has, in a way, become 'the better Germany.'