BERLIN, Aug 8: German imports and exports to the world's largest economy totalled around 127 billion euros ($139 billion) from January to June, while for China the figure was 122 billion euros, according to Reuters' calculations based on the data Cargo ship 'Cosco Shipping Gemini' of Chinese shipping company 'Cosco' is loaded at the container terminal 'Tollerort' in the port in Hamburg, Germany. Photo: Reuters/File
The United States overtook China as Germany's biggest trading partner in the first half of 2024, according to preliminary German statistics office data, as Berlin's drive to reduce dependency on Beijing takes shape amid a resilient U.S. economy.
German imports and exports to the world's largest economy totalled around 127 billion euros ($139 billion) from January to June, while for China the figure was 122 billion euros, according to Reuters' calculations based on the data.
The U.S. had already overtaken China in the first quarter, after 2023 was the eighth year in a row that China remained Germany's number one partner, by a few hundred millions.
The shift comes as Germany has said it wants to shrink its exposure to China, citing political differences and accusing Beijing of "unfair practices", though it has been vague on policy steps.
Lola Machleid, foreign trade expert at the German Chamber of Industry and Commerce (DIHK), told Reuters that the resilience of the U.S. economy had helped to boost Germany's exports.
Overall, German exports to the U.S. increased by 3.3% to almost 81 billion euros in the six months, while business with China shrank by almost 3% to just over 48 billion euros.
Imports from China fell by almost 8% to 73.5 billion euros, while U.S. imports fell 3.4% to 46.1 billion euros, supported by supplies of energy commodities.
"In view of the current geopolitical uncertainties and the uncertain further economic development, not only in the U.S. and China, but also here in Germany, it is difficult to predict how the neck-and-neck race will continue to develop," said Machleid.
Global burger chains to car manufacturers are increasingly feeling the pinch from a faltering recovery in the world's No. 2 economy, China, and are strapping in for a bumpy ride ahead.
A protracted downturn in the property market and high levels of job insecurity have knocked the wind out of a fragile recovery in China, a global trading powerhouse, and the effects of its slowdown can be felt across borders.
Coffee chain Starbucks, carmaker General Motors and technology firms hurt by curbs on exports to China are among those that have sounded the alarm on weakness in the nation. The Chinese government's stimulus measures have so far failed to boost consumption, and the overleveraged property market has made consumers less likely to spend.
"It's a difficult market right now. And frankly, it's unsustainable, because the amount of companies losing money there cannot continue indefinitely," General Motors CEO Mary Barra said last week as the automaker's division in China shifted from being a profit engine to a drain on its finances.
China's $18.6 trillion economy grew more slowly than expected in the second quarter, and cautious households are building up savings and paying off debts. Retail sales growth sank to an 18-month low in June, and businesses cut prices on everything from cars to food to clothes.
In a bid to stem the rot, China outlined stimulus directed at consumers last month to support equipment upgrades and consumer goods trade-ins, but that has not allayed concerns.
US stocks plummeted for second straight session on Friday, and the Nasdaq confirmed it was in correction territory, after a soft jobs report stoked fears of an oncoming recession.
Some analysts have warned that barring a structural shift that gives consumers a greater role in the economy, the current path fuels risks of a prolonged period of near-stagnation and persistent deflation threats.
"There is a deep concern that Beijing is not introducing the kind of stimulus that helps broaden the economic base," said Quincy Krosby, chief global strategist for LPL Financial.
"It's becoming more difficult for US companies to look to the Chinese market as a reliable partner."
China remained a drag on Apple last quarter. The iPhone maker's sales declined a much steeper-than-expected 6.5 percent in the country, which accounts for a fifth of its total revenue.
French cosmetics giant L'Oreal said the Chinese beauty market will remain slightly negative into the second half of 2024 with no visible improvement in sentiment.
Other consumer companies' sales have been hurt as well, including Starbucks , McDonald's and Procter & Gamble, while soft domestic travel demand prompted a revenue warning from Marriott.
The sluggish growth was also evident in underwhelming results from luxury goods makers LVMH and Gucci-owner Kering and profit warnings from Burberry and Hugo Boss.
"The world was surprised at how weak China was economically as this year unfolded," said Marc Casper, CEO of medical equipment maker Thermo Fisher.Meanwhile, foreign automakers from Tesla to BMW, Audi and Mercedes, are locked in an intense price war in China after ceding market share to domestic EV makers, led by BYD, who offer high-tech, low-cost models.
To be sure, the MSCI World with China Exposure Index , which tracks 52 companies with high revenue exposure to China, is up 11.6 percent this year, not far off a 12 percent rise in MSCI's broad gauge of global stocks. —Reuters
