It would take decades for German businesses to end their reliance on imports from China, the chief financial officer of industrial giant Siemens told the Financial Times on Sunday.
Last year Berlin drew up a strategy that policymakers called “de-risking,” seeking to reduce economic dependence on China, the world’s second-largest economy. However, a study by the German Economic Institute, published last week, revealed that German manufacturers remain highly dependent on China for various products and raw materials, despite efforts to diversify to other markets.
“Global value chains have been building up over the last 50 years. How naive do you need to be to believe that this can be changed within six or 12 months?” company CFO Ralf Thomas told the British newspaper. “This is about decades.”
His remarks came after German Chancellor Olaf Scholz embarked on a high-profile three-day visit to China on Sunday, seeking to strengthen economic relations at a time of growing tensions between Western countries and Beijing over trade and geopolitical issues.
“It would be a gross misunderstanding to think that it was the intention of this government [to reduce trade with China]. We want to further expand trade with China, taking into account the need for de-risking and diversification,” the FT cited a German government official as saying.
“Regarding critical dependencies, we have to tackle those. We don’t want to close ourselves off, but we want to have balanced partnerships.”
China is Germany’s single largest economic partner, with trade worth €254 billion ($269.8 billion) last year, according to the German statistics agency.
While overall imports from China fell by nearly a fifth between 2022 and 2023, the share of product groups for which Germany relies on China for more than half of its imports has barely changed, including chemicals, computers and solar cells, the data shows.
The economic ties across German industries encompass major firms such as Volkswagen and BASF, and also small and medium-sized businesses, which have long been seen as a pillar of the country’s economic power, the FT noted.
Last year, the Bundesbank warned that Germany’s “business model is in danger” due to an excessive dependence on China.
However, Thomas said Siemens “cannot afford not to be [in China]” and that rise of aggressive local competitors was a “challenge.”
“If you can stand the heat of the Chinese kitchen, you are successful in other places as well,” he added.