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The Star
14 hours ago
- Automotive
- The Star
Cheerleaders to critics: German machinery makers call for EU action on China
Germany's iconic machine makers used to be among the loudest cheerleaders for ever-closer economic ties between China and Europe. Now, as exports dwindle and facing 'increasingly strong [Chinese] competitors' beefed up by 'unfair state subsidies', the industry is demanding that Brussels put in place trade barriers to protect it. A new position paper published on Thursday by the Mechanical Engineering Industry Association (VDMA), representing medium-sized manufacturers that help constitute Germany's famed Mittelstand group of businesses, marks a dramatic reversal for an industry that until recently lauded the Sino-German economic miracle. 'The EU should impose countervailing duties on imports from third countries if they violate EU anti-dumping or anti-subsidy rules. China is a particular focus here with its aggressive export policy,' read the VDMA's paper. The industry group – whose 3,600 members make everything from power transmission systems and machine tools to semiconductor machines and precision tools – made clear that it was ready to compete with Chinese rivals on a level playing field. However, it was also unequivocal that it feels those conditions do not exist and that it wants governments to intervene. 'Chinese companies are heavily subsidised by the government. And they supply products to Europe that sometimes disregard our technical regulations. China is not playing fair, and politicians must respond to this,' said Bertram Kawlath, VDMA's president. The paper marks a break from decades in which German industry grew rich from selling machines made for powering the workshop of the world. Since the Covid-19 pandemic, the VDMA has turned sharp critic of a harsh new reality in Germany's economic ties with China. It has spoken of being out-competed by fierce rivals in China, Europe and third markets. It will provide an early challenge for new Chancellor Friedrich Merz, who has taken a tougher rhetorical line on China than predecessor Olaf Scholz, but who will also have to deal with the country's powerful automotive lobby, whose views are unrecognisable from those of the VDMA. While Scholz backed the EU's de-risking strategy, research has shown that this support did little to unpick Germany's dependencies on China for critical goods. 'Compared to the previous year, there has been little change in Germany's potentially critical import dependency on China,' wrote Juergen Matthes of the German Economic Institute in an assessment published last week. The VDMA's statistics showed a substantial loss of market share in China for its companies. German machinery went from holding a 20.4 per cent share in China's import market in 2015 to 15.1 per cent in 2024. The shipments were down 12.2 per cent over the first quarter of 2025 year-on-year, German government stats showed, exacerbating a trend of declines in five of the last six years. 'Supported by the 'Made in China 2025' strategy, Chinese mechanical engineering companies have become increasingly strong competitors on the global market. Unfair state subsidies for Chinese companies play a major role in international business,' the paper said. The figures chime with broader German and EU trends: over the first five months of 2025, EU exports to China fell 7.3 per cent compared with a year earlier, while Germany's shipments fell 5.9 per cent. At the same time, China's shipments to Germany and Europe are booming. In May alone, exports to Germany – the EU's largest economy – soared 21.5 per cent, following 20.3 per cent growth in April. To France, shipments were up 24.1 per cent in May, stoking fears that Europe will become a 'dumping ground' for Chinese products that are effectively blocked from the United States due to sky-high tariffs. Soapbox, a newsletter focused on Chinese trade, forecast that for 2025 as a whole, Switzerland will import more from the EU than China, the world's second largest economy. The VDMA's intervention comes amid a clamorous debate over the direction of the EU's China policy and ahead of a crunch summit in July, where leaders will meet in Beijing to discuss thorny issues from trade gripes to China's ties with Russia. With the return of US President Donald Trump to the White House and his swift abandonment of the transatlantic alliance, many expected Europe and China to patch up their many differences. A growing body of evidence is emerging, however, to suggest that this will be more difficult than anticipated. While China's commerce ministry has talked up the prospect of a blockbuster deal on electric vehicles – which would see EU tariffs imposed last year replaced with a minimum import price – EU officials and diplomats said that was highly unlikely in the short term. Briefing ambassadors from the bloc's 27 member states on Wednesday, meanwhile, the European Commission gave no hint that a deal was close, diplomatic sources said. - South China Morning Post
New York Times
19-02-2025
- Business
- New York Times
Has America Become a Threat to Europe?
On Jan. 29, Bryan Lanza, a longtime adviser to President Trump, issued a stark warning to a group of German manufacturers. He told them that the president is a 'sledgehammer.' You either work with him, or you get hit, according to Karl Haeusgen, president of V.D.M.A, Germany's Mechanical Engineering Industry Association, who was there. Mr. Lanza was warning the Germans not to sell hydraulics, which can be used for hospital beds as well as missile launchers, to China. It was no small ask. Germany's economy, already shaky without Russian gas, could suffer further if Beijing stops buying its stuff. But it was the aggressive tone of Mr. Lanza's remarks that stunned many in the room that day. Was this just tough love from the United States, they wondered, to prod Europeans to do more against a common threat? Or had the Americans become the threat? It was one of a number of meetings with American officials in recent weeks that have had Europeans re-evaluating their relationship with their most important ally. Indeed, Europeans are waking up to the fact that they are entirely dependent on a foreign power that is no longer acting like itself. America, which once championed the liberal democratic world order, is now turning against it in ways that are shocking to its allies. The Trump administration isn't just demanding that allies pay more for their own military defense. It is threatening to incite a trade war that could make raising money for that purpose more difficult. The administration is championing illiberal, pro-Russian political parties across Europe that could undermine the European project from within. And it's striking a conciliatory tone toward Russia and setting up meetings about Ukraine's fate without including Washington's closest European allies. It reminds me of the 1993 horror film 'Body Snatchers,' when the protagonists slowly realize that the people they love have been replaced by monstrous doubles. Part of the panic comes from not knowing who can be trusted, and realizing how exposed you can be when an ally becomes an aggressor. Consider how Ukraine, the strongest voice in Europe for fighting for its democratic way of life, must feel. It depends on American weapons and Starlink, Elon Musk's satellite network, for survival. Even before Mr. Trump was re-elected, about a third of the people in Germany, Italy and Britain already considered the United States a 'threat to peace and security in Europe,' according to a survey released last week by the Friedrich Ebert Foundation, which is affiliated with Germany's Social Democratic Party. Those numbers are bound to rise as the Trump administration's open contempt for longtime allies comes more fully into view. Many Americans want to retreat from the world, but their leaders still feel entitled to be the boss of it. More than half of Republicans and nearly half of Democrats said they either didn't know which part of the world the United States should focus on — or they wanted no focus at all on anything outside their own borders, according to the survey. Conditions are ripe for Europe to be abandoned or shaken down for protection payments. It must be surreal to imagine betrayal by a longtime ally that has been the foundation for one's entire security infrastructure. Peter Boehm, a Canadian senator, told me he was struck by the shock expressed by Europeans as they were hit with what Canadians have been dealing with for two months. At the Munich Security Conference, one of the world's most prominent annual meetings of elected officials and military brass, some searched for signs of a grand strategy at work. They told themselves that Americans were focused on China, so Europe must play a bigger role in defending itself, which is true. Others surmised that Mr. Trump was trying to peel Vladimir Putin away from China, like Richard Nixon peeled China away from Russia in the 1970s. But as the conference went on, it looked more as if Russia was peeling Americans away from their allies. As the full force of what is happening in Washington seeped in, questions began piling up: If Mr. Trump is really gearing up to compete with China, why would he eviscerate the U.S. Agency for International Development, an essential tool of American soft power influence around the world? Or fire thousands of the scientists needed keep the United States competitive? Or attack the institutions of higher education that Americans need to stay ahead? Or refer to half of his own population as the enemy within? Or threaten good neighbors while making nice with China's no-limits friend? Or hand over so much power to Mr. Musk, who has deep business interests in China? Could it be that this American president had decided not to bother battling autocracies, opting to cut deals with them instead — if you can't beat them, join them? A clarifying moment came when Vice President JD Vance's much-anticipated speech at the conference focused not on how the alliance can push back against Chinese and Russian aggression, but on the way that European governments like Sweden and Britain were making life too difficult for Christian conservatives and the far right. It's true that voters across Europe are increasingly casting ballots for far-right, pro-Russian, authoritarian-leaning parties, and that mainstream politicians have yet to come up with a good response. In an era of TikTok, Russia doesn't have to go to war to take over Europe. Mr. Putin can simply fund far-right politicians and promote social media accounts, and seek to topple governments without firing a shot. It's as if the Trojan horse has arrived and Mr. Vance is commanding Europe's liberal democracies to open the gate. The fragility of democratic decision-making has never been more clear. No matter how forcefully Chancellor Olaf Scholz of Germany pushed back against Mr. Vance's speech — insisting that Germany will support Ukraine until the end — German voters could make a liar out of him in Sunday's elections for his office, just like American voters made a liar out of former President Joe Biden, who vowed Americans would back Ukraine for 'as long as it takes.' At a dinner packed with foreign ministers and a table full of Ukrainian soldiers in uniform, Kellyanne Conway, a senior counselor to Mr. Trump during his first term, said the president sincerely wants to end the war and understands that Ukraine needs real security. In meetings, Mr. Vance and other American officials reportedly sought to convey the message that Americans were still a safe pair of hands. But the truth is that nobody really knows what American and Russian officials discussed behind closed doors this week. It has been generations since Europe felt so naked and exposed. It was President Volodymyr Zelensky of Ukraine — a leader who says he can't hold an election because his country is in the middle of an existential war — who spoke with clarity in Munich last week about what Europe's democracies need: an army of their own. Europeans must be strong, because the man who is threatening them respects only strength. That's how people used to talk about Mr. Putin. This time, they're saying it about Mr. Trump.
