German firms trapped between US and China, study finds
Why it matters: German firms face financial losses and difficult decisions as intensifying US-China trade moves impact their deeply integrated operations.
- German firms are deeply entangled with rival businesses in China and the US, unable to escape either superpower, according to new research published by the University of Sussex and King's College London.
- The study, published in the journal Review of International Political Economy, mapped sales, production, and supply chain exposures of firms on the DAX and MDAX stock indices, showing dependencies at every level.
- Leading industrial players like Siemens and BMW cannot decouple from either China or the US without devastating losses and impossible practical problems, according to Dr. Steven Rolf of the University of Sussex.
- Carmakers and machinery firms rely most heavily on the Chinese market, while chemical and pharmaceutical companies depend on the US for R&D and production.
- Digital, telecoms, and semiconductor firms are highly dependent on suppliers in both countries, with individual firms often facing divided pressures, such as relying on Chinese supply chains and US markets.
- Dr. Joseph Baines of King's College London notes that Germany's economic entanglements prevent it from aligning with either superpower or effectively hedging between them amidst the US-China trade war.
New research from the University of Sussex and King's College London reveals that Germany's largest companies are deeply integrated with both US and Chinese businesses, making it impossible for them to decouple from either superpower without severe economic repercussions. This entanglement, which goes beyond simple trade data, sees German industry woven into both economies at every level, from supply chains to R&D and market reliance, leaving individual firms highly exposed to intensifying US-China trade tensions.
