Is China’s advanced manufacturing surpassing Germany?

The German Institute for Economic Research (IW) in Cologne recently released a report in which it said that —

Chinese manufacturers are rapidly eating into Germany’s share of the EU, especially in advanced industrial sectors where Germany is a leader.

According to its research, China’s share of exports to the EU continues to increase, with some shares expanding more in 2020-2022 than in the previous 10 years combined. This includes the complex industrial products in which Germany excels.

It also pointed out that with the arrival of the new energy wave, Chinese electric vehicles have further conquered the European market, although the share of Chinese electric vehicles in Europe in 2022 is only 3.5%, but this is twice that of 2020. In sub-fields such as chemical industry and machinery, Germany’s relevant advantages are also shrinking.

Even the author bluntly —

German industrial exports are faltering.

So, where is China’s manufacturing sector stronger? And why?

Let’s take a look.

General situation

Overall, the EU’s share of imports from China has increased significantly, and the gap between the EU and Germany will be less than 4 percentage points in 2022.

As you can see from the chart below, China’s share of EU imports has grown from 2.6% in 2000 to 8.8% in 2022. Most of this growth occurred in the 2000s.

Moreover, since 2015, China’s share has once again grown substantially, growing to 7.1 percent. By 2022, China’s share is 8.8%, which is not far behind Germany’s 12.5%.