Germany’s car export to suffer from China downturn image

The German car industry uses its trains to export car parts, machinery and industrial components that leave Duisburg, Hamburg and Leipzig a number of times every week with a sole destination: the car factories in China.

Sending components by train costs less than by air and the process reaches the wanted destination twice as fast than containers by sea. And vice-versa, trains from China bring textiles, electronics and consumer goods to Germany.

With the recent stock market falling in China and also a struggling economy that has been going on for the past months in the region, these trade links are becoming a source of concern for Germany. Why? Because Europe’s biggest economy depends on its exports and has benefited a lot to say the least from China’s previous auto industry boom.

With 11% of expansion last year, German exports to China have only increased for the past five months 1.4%, and there are no signs of improvement as data from China and consultancy agencies predict that there will only be a single digit increase in the car market there in the following year, and it is only slowing down.

German machinery exports to China went down 5% in the first half of 2015, with Volkswagen and BMW witnessing car sales in China beginning to decrease. Moreover, German auto, engineering and chemical stocks have also lost balance.

Thomas Kargl, chief executive of Far East Land Bridge, a Vienna-based logistics company, said that he has not observed a decline in freight volumes on the trans-Siberian route. He actually added that business has increased strongly in the first six months of this year because freight customers have become more aware of costs.

Nevertheless, Ralph Solveen, an economist at Commerzbank, warns that the news from China is not showing any good signs and that the country’s economic problems have increased the risks of the German economy suffering from that.