China eating German manufacturing

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Huh. Imagine that:

The Mittelstand—a broad tier of midsize manufacturers, mainly specialized in capital and intermediate goods and reliant on exports—once thrived by making machines for factories everywhere. But China is now closing the quality gap and offering prices as low as half those of their European rivals.

wsj.com - China is devastating the last stronghold of german industry

The German economy is faltering in a big way.

For the first time in decades, Germany now imports more advanced capital goods from China than it exports there. Manufacturers are suddenly on the defensive, not just in China and elsewhere, but also at home. Many Mittelstand firms are idling workers, cutting jobs or shifting production, including to China. Germany’s trade balance with China in capital goods slid from a surplus of roughly 750 million euros to a 500 million deficit between mid-2024 and August 2025 on a 12-month rolling average, according to New York-based Apollo Global Management. Germany’s machine-tools exports to China slumped by around one-third in the first quarter from a year earlier.

What’s the problem? Only Trumpians want to stop factory outsourcing, especially of capital goods.

This evolution was a deliberate, state-backed engineering feat. Under its “10,000 Little Giants” initiative, the Chinese government funneled massive subsidies, tax breaks and state resources into thousands of specialized midsize firms, explicitly designed to replace Germany’s famed “hidden champions.”

It’s like they have a plan or something they’ve been following. Imagine that.

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