China

Prof. Dr. Rolf J. Langhammer, trade expert at the Kiel Institute for the World Economy, comments on Chancellor Olaf Scholz's trip to China.

A new study by the Kiel Institute indicates that Beijing heavily subsidizes its domestic industries, particularly in sectors such as green technologies like electric mobility or wind power. Estimates suggest that China's overall subsidies range between three to nine times that of other OECD countries such as the USA or Germany. According to the analysis of new data, one of the major beneficiaries is the electric car manufacturer BYD. This reflects BYD's significant expansion in both technological and production capacities, as well as its increasing competitiveness.

Rolf J. Langhammer, trade expert at the Kiel Institute for the World Economy (IfW Kiel), comments on the Hong Kong court decision to dissolve the real estate company Evergrande.

An abrupt halt to trade with China would cause Germany's economy to shrink by 5 percent in the short run. The slump is comparable to that following the financial crisis or the COVID crisis. This is the result of a simulation study led by the Kiel Institute. In the medium to long term, the loss will stabilize at around 1.5 percent annually. A gradual, cautious reduction in trade relations would avoid the high initial costs.

Europe and Germany have to shift perspective: not the strength but the weakness of the Chinese economy will be a central challenge going forward.

Dr. Katrin Kamin, expert on geo-economic issues and deputy director of the Trade Policy Research Center at the Kiel Institute for the World Economy, comments on the German government's China strategy presented today: