The flags of the US and Germany are on the table during a bilateral meeting between German Economic Minister Habeck and US Secretary of State Blinken at a hotel on the Gendarmenmarkt. Photo: Christoph Soeder/dpa (Photo by Christoph Soeder/picture Alliance via Getty Images)
Christoph Soeder/dpa | Photo Alliance | Getty Images
After years of being Germany's top trading partner, China appears to be quietly taking over the top spot as the year progresses.
Combined exports and imports between Germany and the US totaled 63 billion euros between January and March 2024. Meanwhile, trade between Germany and China amounted to just under 60 billion euros, according to DailyExpertNews calculations. Reuters first reported the change on Thursday.
Several factors played a role in the change, Carsten Brzeski, global head of macro research at ING Research, told DailyExpertNews.
“This shift is the result of several factors: strong growth in the US has boosted demand for German products. […] At the same time, China's decoupling, weaker domestic demand in China and China's ability to produce goods it previously imported from Germany (mainly cars) reduced German exports to China,” he said.
China has been Germany's largest trading partner for years, but the gap between China and the US has narrowed in recent years. The US has also long been a bigger market for German exports than China, Holger Schmieding, chief economist at Berenberg Bank, told DailyExpertNews.
While the U.S. share of German exports has grown in recent years, China's has declined, he noted. “The Chinese economy is faltering and German companies are facing stiffer competition from subsidized Chinese companies,” Schmieding said.
The main difference is that the US is now also becoming more important when it comes to imports, he emphasized.
Germany is pursuing a new China strategy and last year urged companies to reduce risks from China. China must remain a partner for Germany, the country's government has stressed, and there should be no “decoupling” – but “systemic rivalry” has increasingly characterized the relationship between the two.
Tensions between the European Union and China have also increased, with the two launching investigations into each other's trade practices and threatening to impose tariffs on imports.
Last month, a survey by the German economic institute Ifo showed that the number of companies saying they were dependent on China fell from 46% in February 2022 to 37% in February 2024. This was related to the fact that fewer companies were dependent on Chinese input. manufacturers, the report said.
“The fact that the US has become Germany's largest trading partner indeed illustrates changing trade patterns and the gradual decoupling from China,” Brzeski said.