Where Germany depends on China

Chinese supply chains are becoming increasingly important for Germany

Since China began controlling exports of rare earths, it has become clear how dependent Germany is on these raw materials – and on the goods produced with them, such as permanent magnets. The automotive industry is also dependent on supplies of intermediate products such as semiconductors from China. This dependence has steadily increased over the last 25 years. Today, every product manufactured in Germany for export contains around 2% added value from China. For every 100 euros earned from exports, two euros flow back to China. At first glance, that doesn't sound like much. However, this share has roughly quadrupled over the past twenty years. In addition, this share conceals many intermediate products that are difficult to replace and yet are important for complex goods such as cars.

We analyze the product groups in which China particularly dominates the supply chains.

The dependency in electronics is particularly high.

Dependence in the economic sense is defined by two conditions: First, imports must be important for consumers or producers – such as pharmaceuticals or semiconductors. Second, they cannot be replaced in the short term by other sources or similar products. While the importance of goods for everyday life and production can still be assessed based on personal experience (Christmas decorations from China are less essential for everyday life than pharmaceuticals and computers), this is more difficult when it comes to substitutability. After all, goods from other countries or from German production could be a substitute. In addition, consumers and companies could switch to related products.

For full text see attached PDF-Version.