Policy Article

Empty shelves made in China: When China blocks trading

Authors

  • Alexander Sandkamp
  • Vincent Stamer
  • Falk Wendorff
  • Steffen Gans
Publication Date

In their Kiel Policy Brief, the authors highlight some of Germany's dependencies on China for a better understanding of the potential impact of a Chinese export blockade on Germany. They note that intermediate products sourced directly from China account for 0.6 percent of German production and the Chinese share of German final consumption is 1.4 percent. German consumption is therefore more dependent on China than production. Taking indirect linkages into account, these dependencies further increase: the share of Chinese value added in German production is 1.5 percent and in German consumption 2.7 percent. Accordingly, the authors believe that a strategy for greater independence from China should also consider these indirect linkages. In the long term, decoupling the EU from China would permanently reduce German economic output by 1 percent, which would correspond to a lost value added of EUR 36 billion per year in terms of the gross domestic product of 2021. In the case of individual products, some of which are essential, the dependencies on China are much greater: In 2021, for example, Germany imported more than 80 percent of its laptops and almost 70 percent of its cell phones from China. Since, economic models only inadequately reflect these dependencies, the costs of decoupling from China could be even higher. Against this background, for reasons of supply security the authors recommend diversifying the procurement of essential products - for example by concluding additional free trade agreements.

Kiel Institute Expert

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Key Words

  • China
  • Germany
  • Global Value Chains
  • international trade