Does Germany Need a China Strategy?

In July 2023, the German government published the long-awaited China strategy. Is it useful, redundant or just well-intended? The lecture will first dig into the empirical evidence of assumed German trade dependency on China. It will show that high import ratios in purchasing “critical” goods from China just signal the importance of precautionary measures to be taken by companies when adjusting production technologies, assessing the availability of non-China originating supply and securing the profitability of production against rising commodity prices. Next, the lecture will discuss pros and limits of a top-down government-driven China-targeted strategy in a decentralized open market economy and proposes an alternative: a strategy of a highly foreign-trade dependent country like Germany embedded into the EU single market targeted to cope with trade shocks stemming from autocratically governed countries which could use trade as a weapon to enforce political objectives. Finally, the July 2023 German strategy is screened on whether it meets the ambitions of this alternative approach. Positive developments compared to earlier drafts are recognized while a number of missing elements clarifying responsibilities of the private sector, the German government and EU institutions will be discussed.