Germany can only blame itself for its poor policies that led to its demise. War against their energy and metals supplier Russia has nothing to do with China. Lack of globally competitive innovation has nothing to do with China. Using export controls to prevent China from accessing CNC technologies, etc., at the command of the US created their own economic detriment, like ASML/Japan et al. The West complains, but it's their own actions that doom its future. These irritating trade restrictions, tariffs, etc. won't stop China from innovating, won't diminish China's infrastructure advantages, and won't displace the labor China has.
I don’t think it is the ideological constraints of ordoliberalism so much as the idea that, for example, German car companies need to have access to the Chinese market to stay competitive. Heads China wins, tails Germany loses.
Noah, this data is the obituary for the 'German Model'.
The decoupling of German exports from Chinese GDP confirms the 'Great Substitution': China has moved from being Germany's customer to being Germany's replacement.
The ChinArb Synthesis:
The Auto Collapse (-66%): This isn't a cyclical downturn; it's a technological regime change. System B (China/EVs) has fundamentally out-engineered System A's legacy pride (ICE vehicles).
The Hostage Dilemma: Merz is walking into a trap. He cannot get tough on China because German corporates (VW, BASF) are too heavily invested there, yet he cannot save the domestic economy because China is eating their lunch globally.
The Hollowing Out: Losing 10k manufacturing jobs a month is the sound of System A losing its only real industrial engine.
Europe is becoming a museum (Tourism) and a nursing home (Social spending), while the factories move East. Structural deindustrialization is now mathematical fact.
Thanks Noah. Excellent insights
Germany can only blame itself for its poor policies that led to its demise. War against their energy and metals supplier Russia has nothing to do with China. Lack of globally competitive innovation has nothing to do with China. Using export controls to prevent China from accessing CNC technologies, etc., at the command of the US created their own economic detriment, like ASML/Japan et al. The West complains, but it's their own actions that doom its future. These irritating trade restrictions, tariffs, etc. won't stop China from innovating, won't diminish China's infrastructure advantages, and won't displace the labor China has.
I don’t think it is the ideological constraints of ordoliberalism so much as the idea that, for example, German car companies need to have access to the Chinese market to stay competitive. Heads China wins, tails Germany loses.
Noah, this data is the obituary for the 'German Model'.
The decoupling of German exports from Chinese GDP confirms the 'Great Substitution': China has moved from being Germany's customer to being Germany's replacement.
The ChinArb Synthesis:
The Auto Collapse (-66%): This isn't a cyclical downturn; it's a technological regime change. System B (China/EVs) has fundamentally out-engineered System A's legacy pride (ICE vehicles).
The Hostage Dilemma: Merz is walking into a trap. He cannot get tough on China because German corporates (VW, BASF) are too heavily invested there, yet he cannot save the domestic economy because China is eating their lunch globally.
The Hollowing Out: Losing 10k manufacturing jobs a month is the sound of System A losing its only real industrial engine.
Europe is becoming a museum (Tourism) and a nursing home (Social spending), while the factories move East. Structural deindustrialization is now mathematical fact.