Germany is examining China's economic vulnerabilities that could be exploited if the European Union becomes embroiled in a trade war with Beijing, according to Bloomberg. Chancellor Friedrich Merz's government is analyzing trade flows, supply chains, and company data to map China's weaknesses.
Preliminary estimates indicate that key vulnerable links in Beijing's supply chain include Trumpf, Carl Zeiss, as well as Siltronic, Aixtron, and SUSS MicroTec, which are involved in leading semiconductor manufacturing technologies. This work is taking place as the European Commission prepares new policy proposals regarding China ahead of the EU summit scheduled for October.
Last year, the EU's trade deficit with China reached 360 billion euros, of which 95 billion euros was accounted for by Germany. The automotive sector has come under the most pressure, losing ground due to the rise in Chinese imports and weakening demand in China.
At the same time, Beijing has imposed export controls on 14 European companies, including Rheinmetall, in response to EU sanctions. However, forming a unified position on China within the EU is challenging, as some countries, such as Spain, continue to support cooperation with Beijing.
ECB Chief Economist Philip Lane noted that lower prices for Chinese imports have contributed to easing inflation in Europe, although risks related to offshoring and strategic dependence remain.
