Red scare: German firms facing perfect storm as Chinese growth slackens

When China slows down, Germany will take a particularly painful hit. Twenty years ago, China was not important to the German economy. Back then, German exports to the People’s Republic amounted to just €5.4 billion ($6.2 billion). By 2007, that figure was €30 billion. Last year it was €90 billion, almost 3 percent of German GDP.

Germany’s 2018 economic growth was just 1.5 percent, with the country narrowly avoiding a recession in the fourth quarter. Although Brexit and American tariffs did not help, the main reason seems to have been the Chinese slowdown.

In recent years, Germany has become remarkably dependent on the Chinese market. Three years ago, it was Germany’s fifth most important export market. Last year China was third, behind the United States and France.

The average German firm raises 7 percent of its revenues in the Middle Kingdom. But for large German corporations, however, that figure is a lot higher. For the 30 companies that make up the DAX blue-chip index, the Chinese market represents an average 15 percent of revenues, totaling around €200 billion.