China now Germany’s top partner for trade

CHINA overtook the United States last year to become Germany’s biggest trading partner for the first time, official data showed, a shift likely to reassure Berlin as worries grow over US President Donald Trump’s protectionist leanings.

The figures compiled by federal statistics office Destatis and seen by AFP on Friday showed that the total volume of trade between China and Germany climbed by four percent to just under 170 billion ($180 billion) in 2016.

France remained Germany’s second-largest trading partner while the US slipped to third, as bilateral trade contracted 5 percent to 165 billion.

The development comes as German firms and the government brace for a protectionist backlash under Trump, who has pledged to rip up free trade deals and threatened to slap tariffs on German carmakers.

Berlin has struck back at Trump’s complaints of an “unfair” trade imbalance with Germany, with Vice Chancellor Sigmar Gabriel memorably retorting that the US should “build better cars” if it feared German competition.

But analysts cautioned against reading too much into the latest trade rankings, pointing out that the change was mainly down to strong demand for imports from China.

The US meanwhile remained by far the biggest buyer of German goods, with exports totalling nearly 107 billion in 2016. Imports from the US to Germany on the other hand amounted to just 58 billion

By contrast, Germany imported 94 billion worth of goods from China, compared to exports of 76 billion, although this was a 7 percent increase on the year before.

“As long as the title of biggest trading partner is mostly determined by imports, it doesn’t take away fears that protectionist measures under Trump could hurt the German economy,” analyst Carsten Brzeski from ING-Diba bank said.

While Gabriel has urged Germany to respond to the challenges posed by Trump by building closer trade ties with other countries, particularly in Asia, Brzeski said this was easier said than done.

“If things get tougher under Trump, companies will look at external destinations but no other countries right now have the same size and purchasing power as the US,” he said.