Germany Maps China’s Weaknesses in Preparation for a Trade War
German officials are working behind the scenes to identify Chinese economic vulnerabilities that they could exploit if the European Union finds itself in a trade war with the world’s second-largest economy. The German government is informally mapping China’s weaknesses by analyzing trade flows, supply chains and company-level data, according to people familiar with the matter. The exercise is aimed at identifying where China remains dependent on German and European technology, specialized components and industrial know-how — and where Beijing could face pressure in a potential economic confrontation.
Initial findings include the German companies
and
, key suppliers of technologies used by
to manufacture machines that make advanced semiconductors, as potential vulnerabilities in China’s supply chain, said the people, who requested anonymity because of the highly sensitive nature of the assessment. The report may also include semiconductor firms such as
,
and
, whose highly specialized technologies occupy critical positions across the supply chain.
The vulnerabilities are concentrated in highly specialized products, intermediate goods and services that Chinese companies are still unable to replicate. While China has caught up dramatically in sectors such as automobiles and industrial machinery over the past decade and now competes with German firms on quality, it remains dependent in niche, technology-intensive areas requiring highly specialized know-how.
In many of those sectors, Germany’s most powerful lever would not only be halting exports of machinery and components but also suspending maintenance and servicing of equipment already operating in China, the people said.
Germany is having confidential exchanges with companies, including ones about country-specific risks, according to a government official when asked to comment on the new assessment. The official added that Germany’s policy on China hasn’t changed and there is no plan for mandatory data collection from companies.
Another sector Germany is looking at is advanced patented medical products, something China depends on, particularly as its population ages. Experts say, however, that this would be among the most politically and ethically sensitive options because it could directly affect patients. Other significant sectors outside high technology that employ millions of Chinese workers include steel, chemicals, plastics, textiles, toys and household appliances, according to Tobias Gehrke, a senior policy fellow at the European Council on Foreign Relations researching China’s vulnerabilities. A disruption in these industries could quickly become politically sensitive for Beijing by affecting employment, local economies and social stability — issues closely watched by China’s leadership.
