China Drops from Germany's Top Five Export Destinations

For the first time since 2010, China is set to fall out of Germany's top five export destinations, dropping to seventh place in 2025. According to a forecast by Germany Trade & Invest (GTAI), shipments to China are expected to decline by 10% to 81 billion euros ($95.04 billion) this year. This decline will see China overtaken by both Britain and Italy, which are projected to rank higher in German export destinations. Christina Otte, an analyst at GTAI, attributed this shift to a weakening Chinese domestic market and an increasing trend of German suppliers opting to produce locally rather than exporting to China.

Reuters

China's share of total German exports is anticipated to decrease from approximately 7.5% in 2021 to 5.2% in 2025. In contrast, the United States remains Germany's largest export market, despite a projected decline of 7.3% to just under 150 billion euros. Other significant markets include France, the Netherlands, and Poland, which are also expected to see varying levels of export activity.

Reuters

While exports to China are declining, German imports from the country are on the rise. Imports are expected to increase by more than 7% to around 168 billion euros, resulting in a record trade deficit with China of 87 billion euros. This deficit accounts for 12% of all German imports, highlighting a complex trade relationship where de-risking from China is progressing slowly on the import side. Otte noted that despite the decline in exports, China's share of German imports has rebounded after a slight decrease in the previous two years.

Reuters

GTAI's forecast indicates that overall German exports will rise by 0.6% to around 1.6 trillion euros in 2025, remaining stagnant at 2022 levels for the third consecutive year. The agency also projects a more robust growth in German imports, expected to increase by 4.4% to 1.4 trillion euros, which will reduce the trade surplus to 195.4 billion euros—the lowest since 2012, excluding the COVID-19 pandemic years.

Reuters

Critics of the current trade dynamics argue that the increasing reliance on Chinese imports poses risks to Germany's economic stability. The slow progress in de-risking from China raises concerns about the long-term implications for German businesses and the economy as a whole.

Reuters

While GTAI's projections provide a clear outlook for the coming years, there are discrepancies regarding the potential acceleration of declines in U.S. exports, which could reach 8% or 9% for the full year. Additionally, the overall economic impact of these shifts remains to be fully assessed, particularly in light of global economic uncertainties.

Reuters

“On the other hand, more and more German suppliers are producing locally instead of exporting there.” — Christina Otte, Analyst, Germany Trade & Invest

Reuters

“The developments reveal that de-risking from China is progressing only slowly on the import side,” — Christina Otte, Analyst, Germany Trade & Invest

Reuters