Shift to e-cars may herald “strong disruption” in Chinese-German trade relations – economists
Clean Energy Wire
An accelerating trend towards electric mobility puts German carmakers’ success in China at risk, as trade flows in the automotive sector show unprecedented fluctuations in the first months of 2023, economic research institute IW Köln has warned. “There appear to be strong disruptions playing out in the automotive sector, especially regarding China’s increasing importance as an exporter of electric cars,” the researchers said. A “remarkable” increase of 338 percent in vehicle and engine imports from China in the first quarter of 2023 has elevated the sector to 2.9 percent of total imports from China, up from 0.6 percent in the year before. At the same time, car exports to China were shrinking at a fast pace, IW added. “On the export side, the automotive industry’s contribution is even larger,” the researchers said. German car and engine exports to China dropped 26 percent in the first three months of the year.
Due to the German car industry’s high export share, this accounted a significant portion (44%) of the total drop in exports of 12 percent between January and March. If other vehicle groups and supplier industries are included, these account for more than 80 percent of reduced exports to China. “If these trends in vehicle construction, a sector that has been very important for Germany’s past export success, persist then the prospects for German exports to China will deteriorate further,” IW argued. “A former strength thereby threatens to become a liability.”
The disruption expected in the car industry due to a large-scale shift to electric mobility has been a concern for German companies for several years, especially since the country’s leading manufacturers have been slow to embrace electrification. The ‘dieselgate’ emissions fraud scandal, which cost carmakers billions of euros, slowed the German auto industry’s shift to electrification. Germany’s general reliance on China as a trade partner has also come under intense scrutiny in recent years, since the turmoil caused by the coronavirus pandemic and the subsequent energy crisis highlighted the German industry’s dependence on China as both a supplier and as a customer.