00:00China is now Germany's largest trading partner. It overtook the U.S. in the first eight months of this year
00:06as President Trump's tariffs dampened Berlin's enthusiasm for trade with Washington.
00:11German imports and exports with China totaled over $190 billion at the end of August.
00:17Germany imported far more than it exported during that time.
00:22China bought German goods worth $64 billion,
00:25but Germany bought Chinese exports worth $126 billion.
00:30That's a record trade deficit.
00:32But trade between the two countries has been growing for decades.
00:36In 2001, it totaled at $27 billion.
00:39By 2024, it had ballooned to $273 billion.
00:45That's a 900% increase.
00:47Germany accounts for over a third of total EU China trade.
00:52Horst Lachelle is Professor of Economics and Co-Chairman of the Sino-German Center
00:57at the Frankfurt School of Finance and Management.
01:00The concern is that sometimes the German, but also the European companies in general
01:08have the feeling that their business conditions in China are a little bit disadvantaged
01:15compared with their Chinese peers, or the Chinese domestic companies,
01:21though they hope very much that the market exists for the German companies,
01:26plus also the general treatment by the regulator and the government
01:32is also fair to foreign companies in China.
01:35Okay.
01:36And in terms of the trade tensions we saw from Trump's tariffs,
01:41that's played a huge part in this shift, hasn't it?
01:45This is really a huge, huge challenge for all.
01:50On the other side, it brings, let's say, Germany and China more together,
01:55but because both of our countries are very much in favor of free trade
02:00and against productionism or against tariffs,
02:04so maybe he has a new coalition merging up.
02:07So where do we go from here?
02:09I mean, how do you see Germany rethinking its trade policy towards China?
02:14I think we are underway in Germany to change, to adjust, let's say, somehow our China policy again
02:23and put more in focus our economic interests,
02:28because also we have some struggles here with the economy in Germany,
02:33and so we hope very much that trade and other direct investment, for example,
02:39with China, the overall business, will develop well in order to improve also the growth rate here in Germany.
02:47And how does all of this affect China's trade relationship with Europe more broadly?
02:55This, I mean, within Europe, Germany is the largest economy in Europe.
03:01In Europe, we have the largest business with China.
03:04So if the largest economy and the largest business maker with China is moving forward
03:10in a somehow not new direction, but in more business with China,
03:14I think this will have an impact on the European Union and the European countries as well,
03:20more or less in the same direction.
03:22So looking back on 2025 and then looking ahead to what 2026 might bring,
03:29what's your outlook for the German economy and trade with China?
03:34Yes, I think we will see a recovery in Germany.
03:38There's already all projections are in this direction to have a higher growth rate,
03:44basically driven by the spending, fiscal stimulus by the German government.
03:51But overall, expecting also for the world economy and hence for trade,
03:56that we will see increase in a leverage of trade, also with regards to China.
04:02And that means we will have more business in future, which is a very good thing.
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