China-EU decoupling would knock 1 per cent off Germany’s GDP, report says, as diversification push intensifies
- A decoupling of the EU from China, in which trade is reduced by 97 per cent, would reduce German economic output by 1 per cent, says the Kiel Institute
- The report comes amid worsening relations between Beijing and Berlin and growing calls from within Europe to reduce overreliance on China
A decoupling of the European Union (EU) from China will reduce Germany’s gross domestic product by 1 per cent in the long term, according to a report from the Kiel Institute for the World Economy.
“The impact if measured in terms of the country’s gross domestic product in 2021 corresponds to a lost value added of €36 billion every year,” said the policy briefing recently released by the Kiel Institute, an independent economic research institute and think tank based in Germany.
The calculations were modelled on a decoupling of the EU from China in which trade is reduced by 97 per cent.
The report said although only a very small proportion of German production depends on inputs from China, it dominated supply of specific raw materials and products, particularly in the field of electronics, and “could not be replaced as a supplier in the short term”.
Laptops have the highest share of imports from China at around 80 per cent, mobile phones accounted for 68 per cent and certain textile products accounted for 69 per cent.