As tension with Russia rises, German suppliers have begun to reflect on autonomy and the the potential repercussions of decoupling from China. The German commerce media Markt und Mittestand reported that German economists and industry representatives have put the strategic benefits of decoupling with China in doubt, especially given the labor shortage in the country. For the small and medium businesses (SMEs) contributing to more than half of the country’s GDP, production costs would also be higher, not to mention a full-blown trade war. According to a recent research conducted by the Munich-based Ifo Institute for Economic Research, if Germany ended up descending into a trade war with China, the damage would be six times that of Brexit in terms of costs, even if the United States helped to cushion the impacts.
Energy crisis prompts German industry to reflect on decoupling
04
Oct