The heart of the German economy is making and exporting the big-ticket, complex goods that make global business run: everything from cars and locomotives to factory machinery, aircraft and construction equipment.
That model for growth is under serious pressure from a new competitor whose exports can often match or approach Germany’s in quality and sell for far less: China.
The China shock — as economists call it — is emerging as a key reason for Germany’s chronic economic stagnation since the COVID-19 pandemic. The sluggish economy has helped make Chancellor Friedrich Merz’s governing coalition unpopular ahead of an election Sunday in the eastern region of Saxony-Anhalt in which the far-right Alternative for Germany has its best chance yet of getting its first state governor.
German companies once reaped fat profits selling to China. But the tables have turned as Beijing supports companies in targeted sectors — often where German companies make competing goods. China’s goods cannot find enough buyers in China’s currently tepid economy, so they are shipped to foreign markets, including Europe.
Economic stagnation sours the mood ahead of regional elections
