such as seeking rest, we should have to dw 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 formal re 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, a sweep 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 the price. 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 the aging is trying his correspondent for numerous german language media. great to have you with us. and it's a pleasure to welcome my colleague, clifford cronan. 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 online and cooper. this may let me,

let me start with new in germany does remain the world's 3rd largest economy being, but it's competitive. nest rankings are absolutely languishing, and in fact, the growth rate legs 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 these 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 faster moving and then germany. at the same time, you start thinking about a nokia or co doc, you think about these, these great brands that sort of disappeared when you think about german carmakers, you think about similar things happening in, in that 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 us. beatrix 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 yourself the the kindest tree is a driver of economy. it is kind of the front front of the pyre, needed 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 the 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 off the time use technology drive and they are still here in germany. it's a lot of german and european, smaller, medium enterprise in the supply industry for the automotive industry and for the technology, which i think us still tried in ford and willie push up again as everybody woke up . i'm convinced fast felix with china share of german the import searching germany's economy minister, robert, how back 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 the kind of in kind of st especially besides all these aspects of the, there's another problem with that uh, the chinese the german cock companies have slept in the last 3 years in technology development. what was happening in, in, in china. it is actually quite similar to the pen demik, the suite use of pandemic. every one was did in germany was dealing with a pen demik. obviously all the german car representatives who are in the quite

a number in china also with people 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. it is that the 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 to medium size firms. for example, i've seen that technology be transferred to or, or copied by the chinese companies and they,

we do resent task and are 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 purpose when it comes to china within germany. i think there's a big difference between lot old off shelves, things and what do you call me minister? how back things because they both have a very different views on this. so i think um one is very opposed to to grace or engage in which on one 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 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 and 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, as they all turning around, we just recently hundreds of congress of our 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 to t a one or the other ones. but of course they need to speed up the need to revise the processes that cannot take ages. they cannot take too long to defend up and you cause some huge 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 gym, and 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 as for the, for the german cause. yes, of course in the east side. they next and little bit behind. they disagree here, reach the legislation switch for 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, this is the 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 the 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 for the under the top 10. that is the big question in 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,

they 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 or i do see how fast developments is happening, also invoiced log into english dot and then shook. got, but i'm not sure if it's fast enough to compete with the chinese competitors 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 to? 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, 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 mccain. and, and the chinese competitors, they developed further and the german costs didn't. and now we have this like off 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? i think it's possibly both. um. there's a lot of different factors that 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 that they're taking steps to address the bus is with the hospital asleep. but i think ultimately german carmakers can't compete with china. it's not because there aren't 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 are far cheaper than german workers. and there's a all, this is 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 that germany can really can piece unless some german carmakers 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 manufacture in europe. we're 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,

it's not like would like when it comes to competitiveness. let's, let's drill a little deeper on that. a beatrix. when you talk to german car makers, what are you hearing about why they believe china is now in the lead in 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 a political advantage because china was already in the late nineties, pushing out the policies that it went once to go into new energy technologies because they can't keep up with the internal combustion engine technologies to see that forward. it was not really a climate driven point why they see signs, of course the power is agreements, but it was rather okay find where can we be in, in advance and the stage was pushing with ever seem to have attend to, to push that advantage. are they in the state owned enterprises, or then of course,

in any support for the startups which were then forming as of 2009. this is of course something where to read germany or the german manufacturers clearly did not see the danger coming. why they, of course, already developed a cost was so up to phoenix point, it was already in 2019 the plant in some high folks 5 and was already ready for the i the free, which was then produced and assistance 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, where that is not happening. so of course they wished and the need for the technology needs for the oems in china to, to set that purpose. and as of course then the foreign manufacturers were more

steam in internal combustion in, let's say, and i don't know, promote, then they didn't catch up on that one. that's where it has not, that's maybe engineering forces to go in that direction. and just it's of course, the price question as well, and way to go into into hiring the forces phase, of course, an abundance of engine. busy think universities is now as well since last to 3 years, very high rate of unemployment and most of the use of use means here it's the university of degrees. undergraduates, this is of course then with china and 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. states subsidized and unbeatable low prices. the u 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 have some 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. well,

simultaneously building new factories and hungry and spain will punitive terrorists 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 an export nation? and in 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 even vehicles of 50000000. b is the whole own market can absorb only

$22000000.00. so they're more than 20000000 cars over capacities from china. and they're looking for market. the u. s. old, already close the market, japan did on the market, is a to and the europeans do think, okay, we are for you. well, we are free of market and just to let them come, that will be great big problem. so i think the terrace, how important measurement to put a china under pressure to negotiate with china, to change. that's the clifford is some environmental argue. advocates are arguing that in fact, by shutting out shape eaves, we are undermining our own green goals. is there something to that as well? i think, i think the whole arguing we could talk about the visa as, as the environmental aspect tvs. 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 admission 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 a bar, mentally friendly. and um, i think ultimately manufacturing the, the sheer amount of metal that's going into this massive over capacity production. it's not being done for environmental reasons. it's done totally 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 out. 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 the 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 our 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 a very clear 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 easy because they still got trust, much sewage and they can now sponsor the euro. 2024, get 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. and that's that they have a good representation. let's do that. let's take time. so in one hand, such as the consumer to decide such on the other side just as well as pricing points with the tariff saw and to think it might, they might be coming down or they on you. i turn the chips in, for example, putting up the same as china dates 40 years ago that you need to have the joint venture to build costs here could be another way forward as well, despite the fact that they're all rich terry 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 reign for the way john 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 like the company is definitely not a good solution that looked into an catastrophe for germany in china and probably be a whole world. but you are risking yes, we have to talk about it terrace, of a 100 percent in the us. 40 percent in europe is that the coupling or the rest of your skiing, your escape? patrick's one word are we about to see a big anti globalization backlash. much entitled to the section, but looking more into a region large station. so rich no,

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

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