China Germany's Largest Trade Partner, Trade Deficit Worth USD 320B

 Trade between Germany and China reached a record high last year, making the Asian country Germany's most important trading partner for the seventh year in a row.

According to data released by the German statistics office, goods worth around 298 billion euros ($320 billion) were traded between the two countries, an increase of around 21% from 2021.

Germany imported 191 billion euros from China in 2022, a third more than in 2021. German exports to China increased by only 3.1% to around 107 billion euros.

Germany had a trade deficit with China totaling around 84 billion euros.

"China is important as an export market, but far less important than it appears in the public perception," said Max Zenglein, chief economist at the Mercator Institute for China Studies (Merics). The United States is much more important for German exporters than China, Zenglein said.

Given their opposing views on social and political liberties, some German politicians and scientists are concerned about the two countries' interdependence in some areas.

According to Lukas Menkhoff, head of the global economy department at the German Institute for Economic Research, the main issue is Germany's reliance on China for critical raw materials required for the transition to cleaner energy and transportation (DIW).

China accounts for roughly two-thirds of Germany's imports of so-called rare earth metals. Metals are required in batteries, semiconductors, and magnets in electric vehicles.

"Russia's war against Ukraine has dramatically shown us how commodity dependence can be used as political leverage by autocratic regimes," Menkhoff said. "Should China attack Taiwan, the German economy could run into supply problems."

The German Ministry of Economics intends to impose stringent requirements on German companies doing business with China, as well as to bar suppliers from authoritarian states from critical infrastructure.