China remains Germany's most important trading partner and is of central importance for our economy. At the same time, the People's Republic pursues a strategically oriented industrial and trade policy that has contributed to significant dependencies. This is particularly true for Germany and the EU with regard to critical raw materials, intermediate products, and future technologies. For some products, more than half of German imports come from Chinese suppliers. The import volume of these goods amounts to a total of €68.1 billion – equivalent to a quarter of German-Chinese trade.

Moreover, the competitive pressure from Chinese companies increasingly poses challenges to Europe's industrial and economic location. According to a recent DIHK survey , two-thirds of businesses feel this growing competitive pressure. Fifty-five percent of the companies surveyed advocate stronger trade policy measures against China – even if negatively affected themselves. How economic de-risking could look is currently being discussed at both the federal and EU levels. To guide these discussions, the DIHK has developed a new position paper (PDF, 779 KB)outlining Dos and Don'ts.

Advancing Resilience Policy

Broadening supply chains and reducing strategic dependencies is crucial for the economic security of Germany and Europe. Such a resilience policy should be vigorously pursued in times of increasing geopolitical challenges. Trade and raw material agreements with countries like India and Indonesia are essential in this regard: they open and secure new markets for companies in the long term. The Network of German Chambers of Commerce Abroad (AHKs) in South and East Asia advises and supports German companies in these efforts through so-called Diversification Desks – cross-border, tailor-made, and comprehensive. Additionally, European trade and development policies should be better aligned.

Strengthening Trade Protection

The German economy is open to China competition but expects fair competition conditions. Unfair trade practices require trade policy protection instruments supported by the breadth of the economy. In this context, consistent action against circumvention through third countries is also necessary. Protective measures should aim at encompassing the entire value chain while targeting trade partners responsible for distortions.

In principle, it is necessary to improve, streamline, and accelerate the implementation of existing instruments instead of introducing new protectionist tools. Additionally, it is important for customs and market surveillance authorities to enforce compliance with existing product and safety standards for imports more rigorously.

No New Supply Chain Bureaucracies

Rather than burdening companies with numerous reporting and notification obligations, authorities should utilize data already available through customs, statistics, or approval procedures and apply it automatically. The planned new EU diversification tool should primarily create incentives for companies instead of imposing reporting obligations and customs costs. Furthermore, state interventions such as price controls, stockpiling, or an outbound investment screening should be avoided. Essentially, the government should focus on enforcing good conditions for entrepreneurial diversification. Additional bureaucratic hurdles and reporting obligations have sometimes even led companies to streamline their supply chains instead.

Avoiding New Dependencies

When assessing supply chains, it is important to consider the economic significance of goods, supply risks, their substitutability, and alternative sources of procurement. Reducing strategic dependencies on China must ultimately not lead to new dependencies on other trading partners. Broad and interest-driven global coalitions, such as with the Trans-Pacific Partnership (CPTPP), should, therefore, be pursued.