De-risking, the diversification of sales and procurement markets, has been one of the buzzwords of Germany’s China policy since 2023. In practice, however, little has changed regarding dependence on imports from the People’s Republic, according to a study by the German Economic Institute (IW). The number of product groups for which Germany heavily depends on imports from China has changed only slightly. Chemicals, pharmaceuticals, and similar products comprised the largest share of these product groups in the study, followed by electrical and electronic goods. In third place are raw materials and minerals, including rare earth elements such as scandium and yttrium.
To successfully implement de-risking, the IW advises the German government to conduct a comprehensive risk analysis. This would involve determining which products are indispensable and cannot be replaced in the short term. Information on substitutes or alternative suppliers must also be obtained for this purpose. Clarity is also needed about the potential damage that the absence of these imports would cause. Much of this information would not be available to the state, as it sometimes constitutes business secrets. However, the Institute sees an overriding interest here and proposes a task force to obtain the relevant information from companies under strict confidentiality.
You can find the whole study ici.
Photo: @monsterztudio via Canva
