thanks, trace amount spa, this will actually of, i'll know join us as we travel around your, facing the history of every day of that. and that's something right around the world. no need to talk to that. just to subscribe already. listen to podcasts and will take you along to the right. 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 formal re venerable car makers 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 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 badging of 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 kime. she is director of business development and china at the car center for automated research, and she joins us as we see online. and clifford, if i may look, let me,

let me start with you. in germany does remain the world's 3rd largest economy bank, but it's competitiveness 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's economic 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, 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 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 change the 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 pioneer and a lot of things and many people are identified with it. yes, i think everybody woke up, especially with the way to wake up calls from china, which was identifying that the technologies or new energy technologies are the way to be established, comic cuz in the, against the internal combustion engine technology. so there is

a wake up 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 and everybody woke up . i'm convinced fast. felix were china share of german, the import, searching 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 the, besides all these aspects of the, there's another problem with that uh, the chinese, the german cock companies have slept in the last we use 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 to obviously all the german car representatives who are in new 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 a chinese car companies have, have continued and, and, and this is a dep now and, and all the drums of 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, medium size firms, for example, have seen their technology be transferred or are copied by the chinese companies,

and they really 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 and a weight on 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 thinks about the economy minister, how back thinks because they both have a very different views on this. so i think that one is, 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. 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 in the domestic market as well. the market share of e carson china increased to 10 percent in the 1st quarter of 2024 and it's still

growing. chinese e cars are smaller, lighter in significantly cheaper vw and its competitors are also lagging behind when it comes to onboard software with digital extras. and autonomous driving has the german 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? and 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 that 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 cannot take ages. they 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. this a german dictated nurse to detail to attend to 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 because yes, of course, in the east side they next and little bit behind. they disagree here. beach, 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 to 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 vw still be or the german comedy because will be still the top 4 under the top 5 for the under the top 10. that is the big question in the v e. vehicle market market. and um, yeah, this is a difficult question, is if they can make it. and 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, uh, 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 already, i do see how fast development is happening. also invoiced. going english started in stuttgart. but i'm not sure if it's fast enough to compete with the chinese competitor 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 and 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 this lack 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? and 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 is with the hospital asleep. but i think ultimately german carmakers can't compete with china. it's not because there are 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 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 itself 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. or it starts with a plan to go the content. because china was already in the late nineties, pushing out the policies that it went once to go into new energy technology use because they comp keep up with the internal combustion engine technologies to see that forward. it was not really a climate driven point. why as a so signs of course the powers agreement, 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 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 where to read 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. very, very early adopters, very playful. know 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, there was 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, in and then off 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's your go into, into hiring the forces to is of course, an abundance of engineers, of state universities is now as well since last 2 or 3 years, very high rate of unemployment amongst the use of 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 states 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 will be punished the most by high terrace in the end. that's, let's add 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 both simultaneously building new factories and hungry and speaking 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 a necessarily instrument. i mean china is not playing fair on this. and china has created over capacities in a, in, in china, with even the zip codes of 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 markets. the u. s. old, already close the market, japan did on the market, is a to and the europeans to 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, uh, 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 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 sheer amount 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 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 the terrace shows that get into place here in our europe enough. 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. so 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 what ever fee is it? is thinking about the china $25.00 policy or due to the china. it is a very sandy and 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 spawn to the. ringback euro 2024, getting 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 turned 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 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 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 and looked into an catastrophe for germany in china and probably be a 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 the coupling or the rest of your skiing, your escape? beatrix one word are we about to see a big anti globalization backlash? look into a couple of the sections such as 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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