do we need to put a stress stops on the screen for help find beyond says get smaller on dw science, outtake talk channel, the is germany losing its mojo. europe's biggest economy is steadily sliding downward in international rankings. and now it's leading industry looks to be losing speed. germany's formerly venerable carmakers, once responsible for more exports turnover and jobs than any other branch of the economy. risk being surpassed by electric vehicles made in china were carmakers of sleep at the wheel and our terrace like those, imposed by washington the answer. or could they put globalization into reverse? today we're asking electric shock is china overtaking car country germany

the welcome to to the point. it is a pleasure to greet our guests beginning with felix lee who writes for the online website. china table professional briefing he has reported from virginia is chinese correspondent for numerous german language. media. great have you with us, and it's a pleasure to welcome my colleague, clifford cronum. he's an editor in china analyst at w, and he previously served for over 15 years as the irish times china corresponded. and joining us virtually is beatrix kind. she is director of business development and china at the car center for automated research, and she joins us as we see uh, online and corporate. if i may let me, let me start with you. in germany does remain the world's 3rd largest economy being,

but its competitive nest rankings are absolutely languishing. and in fact, the growth rate likes behind that of many other e u member countries. would you say that europe so you can now make motor is stalling? i think germany has a lot of strength. it's a very, it's a very powerful economy. it's got great scale. it's a, it's a fantastic trading nation that has all of the strength. but i do sense that there's a lack of flexibility that is becoming endemic. and the system and making it very difficult to compete, particularly when it comes to to countries like china, which can move, which are much foster moving then then germany. at the same time you start thinking about, uh, nokia or co doc. you think about these, these great brands that sort of disappeared and when you think about german carmakers, you think about similar things happening in, in to german carmakers, largely because of this inflexibility. so i think it's probably fair to say that

with the big industries in germany, in particular, the lack of flexibility on the, the failure to adopt in many ways to the changing environment. particular, when it comes to the world of online is, is working against as metrics. would you agree with that? to what degree would you say that the problems of the car makers are symptomatic for the german economy as a whole? a little bit. the thing is because, um set by itself the, the kind of street is a driver or economy. it is kind of the front door on the pyre, needing a lot of things and many people are identifying with it. yes, i think everybody woke up, especially with a way to wake up calls from china, which was identifying that the technologies or new energy technologies are the way to be established comment because in the against the internal combustion engine technology. so there is a wakeup call has been heard and on the other side is as typically for germany. the

small and medium enterprises are the engine of the time use technology drive and they are still here in germany. it's a lot of german and europeans, small and medium enterprise in the supply industry for the automotive industry and for the technology, which i think i still tried in ford and willie push up again and everybody woke up . i'm convinced fast felix with china share of german the import, surging germany's economy minister, robert how black is now in china, and he says, the auto industry here does remain the key industry for the german economy. he's hoping clearly to show up that position on this trip, but what can you possibly achieve? well, um, uh, says it's, it's a fact that the german automotive industry is the most important industry of germany. and to be honest, i mean, who profited most of china's economy grice and was germany and who profited which

industry profited most. it was a kind of the see the drum and kind of industry. and now china economy itself is not doing very well. and now we have all these to political conflicts, and of course, germany is heard most from all of the in comparison to the european countries and because it kind of st especially besides all these aspects of the, there's another problem with that uh the trying, the german cock companies have slept in the last we use in technology development. what was happening in, in, in china is this actually quite similar to the pen demik, the suite use of pen demik. every one was did in germany was dealing with a pen demik. obviously it all the german car representatives who are in the quite a number in china also with be with dealing with the pen they make and they didn't see that the technology,

the technology development of the chinese car companies have have continued and, and, and this is a dep now and, and all the germans i've trying to catch up and it's not an easy task out. clifford one reason that both of the chancellor will actual and the economy minister has made the pilgrimage to china. is it? in fact, it has been a very important market for german x borders. beatrix mentioned the role of small and medium enterprises that also sell, for example, to making machines. but luxury cars made in germany were also long apprised. export in china is that uh, open road. now closing, i think the german auto industry is very diverse and i think you've got also very diverse views on china within that auto industry. a lot of the small, medium size firms. for example, i've seen that technology be transferred to or are copied by the chinese companies, and they really resent us on our fearful about building a chinese marcus. at the same time, the big carmakers are driving

a political debase and they've got much more political ways in a way down to the smaller companies. so i think, i don't think there's unity of a purpose when it comes to china within germany. i think there's a big difference between a lot of shelves thinks about the economy minister, how back thinks because they both have a very different views on this. so i think um one is very opposed to to gratian or engaging which on them on not so. so i think um, i think germany, the german car industry is in crisis. it's failed to build this a cheap electric vehicle for example, that can, that can compete with a chinese car. so there's a lot of the sort of issues that it's facing. and it's, it's a deeply complex issue as how back travels to china. and let's take a closer look at that crisis. german carmakers are still delivering good numbers, but their share prices are flat on international stock market that looks like a sign to future travel industry analyst have been warning for quite some time. the

germany's auto industry is driving in the wrong direction. the cars made in germany at one point they were in high demand across the german, in international roads. a like the automotive industries. germany's most important branch of industry with almost 800000 employees of 1000000000 dollar business. but it's days are numbered because the german car manufacturers have relied on combustion engines for too long. germany is lagging behind an electron mobility. in china today, german e cars barely play any role. b y d has replaced volkswagen as the market leader in the people's republic and the top 10 best selling car brands in china. there's not a single german manufacturer. and now the former top dogs are under attack in the domestic market as well. the market share of e commerce on china increased to 10 percent in the 1st quarter of 2024 and it's still growing. chinese e cars are smaller, lighter,

and significantly cheaper. vw and its competitors are also lagging behind when it comes to onboard software with digital extras and autonomous driving. has the driven car industry missed the boat? beatrix, what would you say to that? can the car industry here in germany still turn things around? what would it need to do differently? tomorrow they are turning around. we just recently had to the congress about transformation. what is needed overall for the strategies for sustainability for, for digitalization, they are doing this. they heard the signs and are moving forward. if it just the big ones, they are we m c for just some of the big suppliers, the tier one or the other ones. but of course they need to speed up. they need to revise the processes that can not take ages. that cannot take too long to defend nothing. you cause a new developments overall. it must be foster. they need to learn in this way from

the time the speed, but still with a german proficiency. the german, um, detailed in us to detail to attention attention to detail. so i think this is what they all realized and they are moving forward and there is still a market in china as well for the, for the german cause. yes, of course, in the east side, they next and little bit behind. they disagree here. beach, the legislation switch. we're coming out from china, but they're learning and they are doing that very fast. would you agree with that a felix? if we look at the numbers today, china is vehicle manufacturers produce cars and trucks together as much as europe and the us do. so clearly they are definitely doing something right. and german and carmakers are doing something wrong. well, i a good deal. if you take a look at the chinese you vehicle mark, there are more than 100 chinese car companies and this is also for china too much

on you. probably 10 only will survive a china created is huge over capacity in the car industry. and of course, this is a and most of them will not survive. the only question is will v, w still be or the german comedy because will be the still the top 4 under the top 5 or the under the top 10. that is the big question. in the the vehicle market market and um yeah, this is uh, a difficult question is if it can make it. um, what is shocking is the china speed. i mean, the germans will always very, very good. uh, uh, quality wise and uh, now the chinese competitors is a big caught up on this. and still they can uh,

built much faster in new models than what the germans can do. and to be honest i, i already, i do see how fast development has happened. they also invoiced go, you mean, go start and then shortcut. but i'm not sure if it's fast enough to compete with the chinese competitive or to make up for the very long time when the german carmakers were absolutely clinging to the internal combustion engine. why did they do that? well, i remember in 2017, i was still a china corresponded in, in engaging and we talked to the v w a chief of china. and he said, well, the signs of the chinese government were clear. they said, we will, we will go into each each vehicles and we ask, what is the w doing? and he said, what, as long as we can say, oh combustion? so well of why should we change all the plans? are we the old times already? but we should, we shouldn't change on until we see because we sell so well with

a combustion. and then, uh, and then a few years later than the independent became and, and the chinese competitors. they develop further and the german costs didn't. and now we have the dislike of a few years and it's hard to catch up. now put that together for us, if you would, clifford with the last point that was made in the report, the idea that the german industry is often often lagging behind when it comes to onboard software. would you say that the greater disruption has been de carboned ization or has it been digitalization, or is it both so i think it's possibly both. um. there's a lot of different factors of play here. um, germany has been very, has been much foster on the de compensation response of the digitalization aspect.

germany has trailed as bad success. now they're taking steps to address the bus. it really has voted to sleep. but i think ultimately german carmakers can't compete with china. it's not because there aren't a level playing field, you know, you've got this incredibly cheap workforce. you've got 300000000 urban dwellers who are working in factories the, the labor conditions are far worse. they're far cheaper than german workers. and there's all this. the state interests that are involved in the, in the car industry. all of these factors combined to mean that there isn't it. there's no way the germany can really can piece unless some german comic is of suggested that the chinese comic or should come to germany and make you know, manufacturer here if they want real competition. if they want to compete in europe, then they should manufacturing europe. i'm are seeing a little bit of that now happening, you know, but it's, um, i think this is a key point that ultimately it's that soft like would like when it comes to competitiveness. let's, let's drill

a little deeper on that. a bad tricks when you talk to german car makers, what are you hearing about why they believe china is now in the lead? and so many ways is this a technological advantage, an engineering advantage, or a political advantage on the part of the chinese uh come competitors. it starts with the fund. i took all the content because china was already in the late nineties, pushing out the policies that it went once to go into new energy technologies because they comp keep up with the internal combustion engine technologies to see that forward. it was not really a climate driven point why they saw signs of course, the powers agreement, but it was rather okay find where can we be in, in advance of the stage was pushing with ever seem to have attend to, to push that advantage. are they in the state don't enterprises or then of course, in any support for the startups which were then forming as of 2009. this is of

course something which it with germany or the german manufacturers clearly did not see the danger coming. why they, of course, already developed the cost was so up to phoenix point, it was already in 2019 the plant and some have folks 5 and was already ready for the i the free, which was then produced and f as in is it's and of course the acceptance of the models and yes, on the digitalization as let's say the europeans on not as digital natives as the chinese out, who very, very early adopters, very playful. and all of these things. and the whole life in china is on the, on the mobile phone, in countries to europe with that is not happening. so of course they wished and the need for the, the technology needs for the oems in china to, to set that purpose. and as of course then the foreign manufacturers were more streamed in an internal combustion in, let's say, and, and then the mode,

then they didn't catch up on that one. that's where it had some up stuff, maybe engineering forces to go in that direction. and just it's, of course, the price question as well. and where you go into, into hiring the forces state is of course, an abundance of engineers. state universities is now as well. since last 2 or 3 years, a very high rate of unemployment amongst the use and use means here, it's the university degrees. undergraduates, this is of course, then red china at the times, companies have very good point on graphing them on very low cost. let's come back to the point about chinese political support for the industry, which means essentially industrial policy and its effects. european and u. s. companies as well as consumers have in fact arrive massive benefits from trade with china as we've heard. but with you manufacturing jobs. now,

being threatened by cheap imports, brussels is threatening to retaliate against china is massive subsidies for targeted industries. these are the spectres. e cars from china are flooding, the european market. state subsidized and unbeatable low prices. the claims this is neither fair nor legal and wants to impose a tariff of 48 percent on e cars from china. they say this will protect the european car market. europe is following the us these example, which recently quadruple terrace on chinese electric vehicles, to a whopping 100 percent. it's a risky game because it's still anyone's guest who will be punished the most by high terrace in the end. that's fuss at somebody to hear that protections being proposed for the automotive industry could very likely lead to new trade conflicts at the end of the day when fuel and china is already threatening to retaliate while simultaneously building new factories and hungry and speaking will punitive

terrorist cause more harm than good felix, what's your answer to that question? could tentative terrorist if imposed by the you as well as the us wind up and ways leasing a full fledged trade for and how problematic with that be for germany. of course, the full scale trade. what would be a big problem for a, an export nation and the nation was so focused on the chinese market as germany. but i still think the, this terrorist f o r and necessary instrument. i mean, china is not playing fair on this. and china has created over capacities in a, in, in china, with each vehicle. it's a 50000000, b is the whole market can absorb only 22000000. so they're more than 20000000

cars over capacities from china. and they're looking for market. the us old, already close the market, depended on the market, is a to and the europeans do think, okay, we are for you. well, we are free markets and just to let them come, that will be great big problem. so i think the terrace, uh, how important measurement to put a china under pressure to negotiate with china, to change that. clifford is some environmental argue, advocates are arguing that in fact, by shutting out ship eaves, we are undermining our own green goals. is there something to that as well? i think, i think the whole argument we could talk about the visa as, as the environmental aspect gives it's another argument. i mean essentially when you have electronic vehicle, a lot of this is a bad batteries and ultimately be id. for example. the comment is, is a battery company and everything they do is around building around batteries and producing batteries and lithium battery production is pretty grim. as we've seen

all these pictures, a lot of people are saying that it takes so long for, for them to become emission neutral. that may be, these aren't the way forward. other people are arguing in terms of hydrogen. so i think these themselves are not, are not a done deal in terms of being environmentally friendly. and um, i think ultimately manufacturing the share of metal that's going into this massive over capacity production. it's not being done for environmental reasons. it's done choking for political and for trade reasons. and so i think ultimately the environmental argument, obviously these are better than the internal combustion engine. but at the same time it's, it's, it's not as simple as up. beatrix, do you think there is anything short of punitive terrace that can possibly influence china to change its approach clearly, robert, how back the economy minister is. they are now in part in hopes that that he can exercise that kind of influence. what's, what's your thinking?

so number one is if within these 2 weeks until you reach uh, july 4th with and the provision of terrace shows that get into place here in europe . and i'm sorry just pointing out that that's the european terrace. the us ones are already in place. yeah, yes, yes. so i don't think that the time on to july 4th, when the provision of the chariots are getting into place or this is not enough to turn everything around. i think it's to, to make a point to point out as well. uh, the gym and voice which is very well heard in, in china because you do some very, very big play in china or the both of the directions between both of very, very deep and long. um, it was history, take another 4 months until the final terrace of done the right. yes, i do think it is necessary to show china that they can kind of just do whatever

they want. i guess they already planned a very long time for getting on top of the overall global economy. and whatever fee is it is thinking about the china $25.00 policy or due to the china. it is very clear in the political layout. but on the other side, it is harming the consumer just harming exactly what you just said. the, the green goals we have. so in the final and it's helps nobody on the other side as long as terrace were not in place. the last 2 or 3 years when the chinese oems were coming into the country into europe. and there was not that much the amount of time you see because that is still that trust, much stated in the canal sponsor the euro. 2024 gets a little bit more into the awareness, but the image is still not fast. so all the chinese oems still need to finish up the image that have that they can deliver at the cost of goods that they have

a quick service net that they have a good representation. let's do that next take time. so in one hand, such as the consumer to decide such on the other side, it just as well about pricing points with the tariff saw and to think it might, they might be coming down or they are new. i turn districts in, for example, putting up the same as china dates 40 years ago that you need to have a joint venture to build costs here. could be another way forward as well, despite the fact that they're all just cherry and be why do you know, facing up the companies? but i think there are other opportunities to, to help out of this disaster. now, let me ask all of you because we are slowly coming to the end of our time. our title mentions electric shock. all of you are saying tariffs are needed. are you not concerns that a full? the coupling from china could on wish the end of globalization, which would be a very big electric shock. indeed clifford to, um, i think uh, i think that

a certain amount of disengagement is inevitable because clear. we have 2 very different systems here, and there's been such a free rain for the way child has behaved for the last. while that it was inevitable that people were finally going to take stock and say that this kind of go along that way. i think that ultimately things will settle down and that will be a trade again and going forward, but them feel that the company is definitely not a good solution. it looked into an catastrophe for germany in china and probably the whole world, but you're getting yes. we have to talk about it terrace, of a 100 percent in the us, 40 percent in europe. is that decoupling or the rest of your skin? the risk a bad tricks? one word are we about to see a big anti globalization backlash. look into a couple of the sections that looking more into a region large station. so rich, so i'll go forward, no call. it needs to go that way. thank you very much to all of you for being with

us. and thanks to you, our viewers for to and again, check out our youtube channel and tell us what you think by the, the

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