Competitive Pressure from China on the EU Market: A Deep Look at Foreign Trade Statistics and Industry Sectors

August 22, 2021

For the demanding industrial product groups considered in this study as a whole, this contrast is even more pronounced than for all goods imports. In addition, Chinese exports have shifted very significantly in the direction of these sophisticated industrial goods. Their share of EU imports from China in all product groups rose from 50.7 percent (2000) to 68.2 percent (2019). In almost all individual double-digit product groups, which can roughly be assigned to the well-known German industrial sectors, China expanded its shares, here too with a focus on the 2000s. In contrast, the share of EU imports from Germany largely declined moderately, but did not decline until the 2010s. This development took place in parallel with a depreciation of the euro against the Chinese yuan. So Germany lost market share in Europe, although its exchange rate-related price competitiveness compared to China tended to improve. That makes the share decline even more relevant. In addition, China's export successes can no longer be put into perspective with the previously valid reference that they mainly consist of imported preliminary products that are only assembled in China - on an extended workbench, so to speak. On the contrary, the share of domestic added value in China's exports rose sharply between 2005 and 2016 and is now even higher than the German share in most industries. In addition, China's export successes can no longer be put into perspective with the previously valid reference that they mainly consist of imported preliminary products that are only assembled in China - on an extended workbench, so to speak. On the contrary, the share of domestic added value in China's exports rose sharply between 2005 and 2016 and is now even higher than the German share in most industries. In addition, China's export successes can no longer be put into perspective with the previously valid reference that they mainly consist of imported preliminary products that are only assembled in China - on an extended workbench, so to speak. On the contrary, the share of domestic added value in China's exports rose sharply between 2005 and 2016 and is now even higher than the German share in most industries.

If Chinese and German products were complementary to each other, an increasing share of China in EU imports in the individual product groups should not tend to go hand in hand with a falling share of Germany, but at the expense of the shares of other countries with less sophisticated products. At the four-digit product level, however, there is a - albeit only slightly - negative correlation of around –0.2 between the changes in the proportions of China and Germany. There is a tendency, but by no means consistently, of a rising share of imports from China being accompanied by a falling share of Germany. For the top 25 imported goods from a German perspective, the negative correlation is in the order of magnitude of –0.3 in the 2000s and –0.5 in the 2010s. For various reasons, these results should be interpreted with caution and be seen as one of several indicators of increasing competitive pressure. In the 2010s, there were significantly more groups among the top 25 product groups in which an increase in China's share coincided with a decrease in the German share. In twelve of the 25 product groups with an increasing Chinese share, the German import shares fell in the 2010s, while they had increased in the 2000s. The value of EU imports from Germany in these twelve product groups was 242 billion euros in 2019. This is also an important indicator that Chinese competition appears to be increasing in the product groups that are important for Germany. In the five most important product groups from a German point of view, significantly more negative changes in proportions can be seen in the 2010s than in the 2000s. These include the product groups motor vehicles, motor vehicle parts, pharmaceutical specialties, plastics in primary forms as well as aircraft and frame vehicles. In five of the ten most important product groups, the approximate quality of imports from China has mostly increased significantly in recent times.