The China Shock 2.0 warning bells are ringing loud and clear for Germany: the country must urgently address the risks of deindustrialisation posed by its increasing trade dependence on China. According to data from the Centre for European Reform (CER), Germany's exports to China have grown significantly over the past five years, with the EU's largest trading partner accounting for nearly a quarter of all EU trade – a total value of €1.4 trillion (£1.2 trillion) in 2025 alone.
The CER's report highlights that Germany's close trade ties with China make it particularly vulnerable to the risks of deindustrialisation, citing an estimated 12% decline in German manufacturing output between 2018 and 2025 – a trend mirrored by the UK, which has seen its manufacturing sector shrink by over 20% during this period.
With Germany's manufacturing industry already facing intense competition from Chinese imports, the CER warns that China is now poised to expand its dominance in EU markets through increased investment and strategic partnerships. The report's author notes: 'Germany must wake up to the reality of China's growing influence in the EU and take decisive action to protect its manufacturing industry.'
As the UK's close trade ties with Germany make this a pressing concern for British businesses, the implications of China's growing influence on the EU economy are far-reaching. The potential ripple effects could be felt across the entire EU economy, with widespread job losses, industrial decline and significant economic disruption likely to follow.
The UK Government has yet to comment directly on the CER's report, but a Department for Business, Energy and Industrial Strategy (BEIS) spokesperson stated: 'We are monitoring the situation closely and will take all necessary steps to protect British businesses and workers.'