Germany’s central bank says an excessive dependence on trade with China is one of the main reasons why the country’s “business model is in danger”, adding that high energy prices and labour shortages are also weakening Europe’s largest economy.
The Bundesbank warned on Monday that 29 per cent of German companies import essential materials and parts from China, exposing their operations to “significant” damage if this trade route was disrupted as a result of “increasing geopolitical tensions”.
“The past few years have revealed the risk to economic development that comes from strong one-sided dependencies on primary products from abroad,” the central bank said in its monthly report. “There is still a need to reduce dependencies on China — especially for primary products that are very difficult to replace.”