China overhauls Germany to become world’s top machinery exporter
- Chinese exports topped US$195 billion and report from German Engineering Federation said the country’s faster recovery from Covid-19 helped it take top spot
- European firms urged to improve competitiveness but says there are opportunities in China’s need to catch up in sectors such as industrial robotics
China overtook Germany to become the world’s top exporter in the machinery and equipment sector last year, according to an industrial association.
Machinery exports from China reached €165 billion, (US$195 billion) around 15.8 per cent of the total foreign trade volume, according to an initial estimate by the German Engineering Federation, compared with German exports of €162 billion.
The federation said this was largely down to China’s faster recovery from the economic impact of Covid-19 and warned that German and other European businesses needed to improve their competitiveness to meet the challenge.
“The pandemic in particular gave China’s rise a strong boost because the country was hit very early and only very briefly, while the European sales market suffered a strong damper as a result of the pandemic,” Ulrich Ackermann, the director of the federation’s foreign trade department said.
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He said a strong economic recovery in the EU could ensure that German and other European countries grow more strongly again this year, “but the long-term trend clearly favours China”.
China is striving for technological supremacy in various industrial fields by 2035, with various programmes in place to overhaul its manufacturing sector and promote innovation.
This month six Chinese ministries jointly issued guidelines on plans to develop 10,000 “little giant” manufacturing enterprises by 2025 and 1,000 enterprises that are champions in every single industry.
The extensive resources Beijing has put into research and development not only benefit Chinese companies but also export-oriented companies from Europe, the German Engineering Federation said.
“Germany and the EU should not call for protectionism, however, but meet this challenge with market-based measures,” said Ackermann. “They should improve their competitiveness, and the EU should realign trade policy instruments to protect the domestic market from subsidised competitors from China and take measures to open up Chinese markets for public procurement.”
China still lags behind its international competitors in sectors such as industrial robotics, the report said, and the need to catch up could benefit foreign manufacturers.
According to a survey of 222 member companies on which the study is based, around 36 per cent of mechanical and plant engineering companies from Germany and Switzerland consider the “Made in China 2025” strategy to be positive for their business.
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However, the association said Beijing’s striving for technological autarky in mechanical engineering creates additional challenges.
“Nevertheless, it should not be forgotten that China, in its pursuit of technological self-sufficiency, is increasingly influencing framework conditions, technological developments and even individual market segments, which pose additional challenges for our medium-sized companies now and in the future,” the report said.
