China overtakes Germany: the 'Chinese shock' laid bare

China overtakes Germany: the 'Chinese shock' Berlin refused to see

Germany, Europe's industrial powerhouse, has watched its flagship car industry wobble under the Chinese onslaught. While Beijing accelerates in electric vehicles, Berlin entangles itself in green bureaucracy and gives up cheap Russian energy. The result: a report from the Centre for European Reform, which has landed on Chancellor Friedrich Merz's desk, warns of an existential threat to millions of jobs.

A Beijing plan or a European suicide

The CER's chief economist, Sander Tordoir, speaks of a «Chinese shock». But the diagnosis divides opinion. Some argue China has orchestrated an industrial conquest strategy, exploiting others' mistakes. Others blame Brussels: the combustion engine ban, suffocating bureaucracy and the turn against Russian gas have dismantled German competitiveness. «The Chinese don't need to conspire, the argument goes; Europe is perfectly capable of destroying itself».

The data is stubborn: Germany gave up the energy that powered its manufacturing base while China built the world's largest fleet of electric vehicles. Now brands like BYD are taking over markets that were once the preserve of Volkswagen or BMW.

The paradox of the green agenda

The ecological transition has backfired. While German manufacturers focused on the combustion engine, where they were unbeatable, China specialised in the «electric scrap» that now dominates. «If the Chinese are guilty of anything, it's bribing German politicians; the German politicians, of letting themselves be bribed», sums up one critical school of thought.

The result: an industry that generates 5% of German GDP, on the edge of the cliff. And the big question nobody fully answers: can Germany turn back without breaking the green EU?