China crisis looms as Europe’s gravy train stalls: ‘Nobody is making money’

Trump has threatened to impose high tariffs on Chinese goods, with many predicting that a large portion will be diverted to Europe, which remains relatively open to many Chinese goods.

All of this comes ahead of a German federal election in February, which is “haunted by the spectre of deindustrialisation”, wrote analysts in a joint paper from the Centre for European Reform, and the Council on ForeignRelations this week.

“Germany is starting to realise that China’s new automotive, clean technology and civil aviation industrial base directly competes with Germany’s manufacturing foundation. China’s macroeconomic imbalances now directly infringe on German industrial interests,” the analysts said.

The paper is part of a growing body of literature dedicated to the “second China shock”. The first such shock was when China joined the World Trade Organization in 2001 and subsequently gobbled up a large share of globalmanufacturing, helping hollow out swathes of industrial economies in parts of the United States, Britain, France and Italy.

...“That is no longer the case: China’s economy is much larger; its industry now produces the same goods as Germanyand its export-biased growth is cutting into Germany’s European and global export markets,” the analysts wrote.