China has become Germany's largest exporter

According to the German import and export data of the first half of the year recently released by the German Federal Statistics Office, The value of German foreign trade in June increased by 14.9% from the previous month. Imports rose 7 per cent month-on-month, with China being the biggest trading country for German imports and exports.

As a matter of fact, according to the reporter, from April 2020, the order of the top three exporters of Germany changed to China, the United States and France, and by June 2020, the order was changed to China, France and the United States again.

Hu Kun, deputy director of the European Economic Research Office of the Chinese Academy of Social Sciences and secretary general of the China-Germany Cooperation Center, told reporters that China's rise as Germany's top export destination in June was mainly due to the fact that the epidemic had been brought under control earlier in China, so German exports to China recovered more quickly compared with other countries.

Under the epidemic, China-Germany trade ties have deepened. How will it affect china-Germany trade relations? According to our correspondent, the Foreign Affairs Committee of the German Bundestag held an expert hearing on China-Germany issues.

Shi Shiwei, a visiting professor at the University of International Business and Economics in Beijing and the Free University of Berlin, who attended the hearing, told reporters that the reason for the hearing was to discuss the economic dependence between China and Germany on trade.

Export demand has helped German manufacturers recover from the coVID-19 blockade. According to the latest statistics, German industrial output rose 8.9 per cent in June from a month earlier, partly because exports rose 14.9 per cent, the fastest month-on-month increase in nearly three decades.

Take May to June as an example, it can be seen that in May, Germany exported 7.2 billion euros to China, down 12.3% compared with May 2019. Exports to the US totaled 6.5 billion euros, down 36.5 percent from May 2019; Exports to France totaled 6.13 billion euros, down 31.8 percent from May 2019.

In June, the gap widened further. In June, German exports to China reached 8.3 billion euros, up 15.4% from June 2019. Exports to the US totaled 7.3 billion euros, down 20.7 percent from June 2019; Exports to France were 7.7 billion euros, down 10.8% from May 2019.

From the above data, it can be seen that German exports to China have stopped falling and increased, and exceeded the year-on-year trade volume last year. However, German exports to France and the United States are still in year-on-year decline.

In terms of imports, China is still Germany's largest source of imports. In June, for example, Germany imported €9.7bn worth of goods from China, up 20.2 per cent year on year. In the same period, imports of 4.4 billion euros of goods from the United States fell 17.4 percent year on year. Imports from France were 4.4 billion euros, down 20.5 percent year on year.

Overall, in the first half of 2020, German imports from China rose 5.7 percent year on year, while imports from France and the United States fell 17.1 percent and 4.1 percent, respectively.

In 2019, the total trade volume between China and Germany was 205.7 billion euros. China has been Germany's most important trading partner for the fourth consecutive year, and China has been Germany's largest importer of products since 2015.

According to German data, in 2019, German exports to the United States, France and China accounted for 9.0%, 8.0% and 7.2% of the total German exports, respectively, amounting to 133.65 billion US dollars, 119.47 billion US dollars and 107.77 billion US dollars. If the Netherlands is included, German exports to the United States, France, China and the Netherlands accounted for 30.5% of the total German exports.

As mentioned above, after the outbreak of the epidemic, China-Germany trade ties continued to deepen. With exports to China overtaking those of the U.S., many of Germany's top think tanks have written articles about China's imminent emergence as Germany's top export destination.

According to the reporter learned that, at the end of June, in which Germany before officially took over the rotating presidency of the European Union, the German federal parliament's foreign-affairs committee has held a hearing about China and Germany experts, the topic is directly called "light, mingled with the dependent relationship between", in Germany in the foreign relations committee, each party representatives attended the hearing. It is reported that the conference hearing content is very practical, such as involving supply chain reshaping is realistic and many other issues.

"German public opinion is talking about the dependence of the German economy on China, and this hearing is trying to demonstrate that," Schweitzer told reporters. At the meeting, German experts put forward various opinions, such as experts from the Confederation of German Industry, although they also emphasized technological competition, they did not agree with the German government in terms of external review system.

The German experts point out, for example, that there is no need to pass a new, stricter vetting system for outbound investment. "They think that in fact it is not necessary because the relevant German foreign economic law in the past has been used enough to protect so-called sensitive technologies." Shi pointed out to reporters that German experts pointed out that the seemingly security problem is still in fact a tendency to expand, which is not good for Germany, because Germany actually attracted less foreign investment.

At present, Germany ranks the fifth in the world in terms of outbound investment, around 60 or 70 billion euros. However, it attracts only 27 billion euros of investment, ranking the 10th to 14th in the world. Mr Shih explains that attracting foreign investment is good for job creation in Germany, where high wages and a complex tax code make it hard to do so. Tighter controls do not help.

Hu Kun in an interview with reporters also pointed out that Germany in the past two years to launch and constantly updated investment security review, these are in fact targeted.

"These are the paradoxes of the increasingly close economic relationship between China and Germany because of their different economic governance models." Hu said That Germany attaches great importance to economic and trade relations with China, but precisely because the economic, trade and investment ties between the two countries are getting closer, which makes the incompatibility between the two countries' economic governance models increasingly prominent.

On the question of whether Germany is more rational in reshaping its supply chain, Hu said: For Germany, the economic losses caused by the outbreak itself are very big, and it will take a lot of cost to adjust the supply chain now. So I think, first of all, in the short to medium term, Germany does not have much incentive to adjust the supply chain, because it requires cost, and at the moment it is more difficult to bear the cost. Secondly, in a market economy country like Germany, the government's guidance power to enterprises is also very limited. Therefore, in the short and medium term, Germany will not show much efforts to reshape the supply chain value chain in reality, but in the long and medium term, it is hard to say.