France's Le Monde: The Rise of Chinese Technology, Germany's Transformation in the Changing Era: Technology Aligns with Defense, Enterprises Follow the Nation

In the international edition, Le Monde extensively covered the impact of China's rise on Germany's economic pillars, titled "The German Economic Model is Shaky." The article opens with a photo of about 60 leaders from major groups and some startups, along with Chancellor Merkel and Vice Chancellor Klingbeil, standing on the stairs of the Chancellery. On July 21, they all came: Roland Busch of Siemens, Christian Zwen of Deutsche Bank, Oliver Blume of Volkswagen and Porsche, Ola Källenius of Mercedes-Benz, and Christian Klein of SAP. The reporter from Le Monde pointed out that this gathering seemed so "male-dominated" that only two women, German Economy Minister Katrin Rehak and CEO of Commerzbank Bettina Orlow, had to be placed in the front row. In short, the business leaders gathered together and promised to invest 63.1 billion euros in Germany by 2028.

Le Monde commented that these often-criticized German capitalist bosses, who are always focused on shareholders and overseas markets, now promise to make large-scale investments "in Germany." This major initiative aims to provide support for the Merkel government from the private sector. The Merkel government announced a historic 50 billion euro debt plan in March for infrastructure renewal, while also relaxing debt rules to invest in defense. Germany's defense budget will triple over the next four years, reaching 15.28 billion euros by 2029, which is considered to help revive the sluggish economic growth since 2019.

However, Le Monde pointed out that behind the smiles and promises, many of the big shots present that day were already in a mess. Their world was undergoing a dramatic upheaval: the two pillars of "German engineering," automotive giants and machinery manufacturers, were collapsing in terms of sales and profits, due to changes in the Chinese market. Germany's economic growth is also being affected: Germany's GDP fell by 0.3% in the second quarter of this year.

Le Monde declared that over the past five years, the Chinese have transformed from "obedient consumers" into "fearsome competitors," surpassing Germany in future technologies such as batteries and in-vehicle software, and exporting to Europe and other countries. Another traditional big market for German industry - the United States - is self-locking with tariffs. International trade rules have been largely replaced by control over strategic resources, raw materials, sensitive technologies, and markets. The era of globalization and free trade that brought great benefits to Germany after 1990 has ended.

On June 16, the German Mechanical Engineering Association issued an unprecedented position paper, acknowledging the short-term challenges posed by China's "aggressive economic and trade policies." Previously, the organization had strongly criticized all tariff barriers in the name of free competition, but now it calls on the German political sphere to take measures and respond with rules. Soon after, Peter Leibinger, president of the Federation of German Industries, admitted that Germany has long held an "engineer's arrogance" towards certain technologies or competitors, especially China, leading to underestimated risks. He called for emphasizing the concepts of "resilience" and "sovereignty," which have long been absent from the industrial vocabulary, and advocated establishing a common technological strategy through new forms of cooperation between politics and the economy, focusing on defense industry, emerging technologies, and raw material security. Additionally, Le Monde cited the evaluation of Sandor Todor, chief economist at the European Reform Center in Berlin, who said, "We can observe the evolution of the relationship between the state and large enterprises around the world. In the United States, 'Silicon Valley' and the Pentagon's 'Pentagon Valley' are drawing closer, with the tech and defense sectors connecting. In China, this has long been standard practice. Germany seems to be moving in this direction because the market distortions caused by geopolitics are too severe."

Daria Marlin, professor of international economics at the Technical University of Munich, believes that Chancellor Merkel's willingness to relax the debt brake for large-scale investment is a major breakthrough. We will witness a "military Keynesianism," where defense spending will drive economic development. The German Agency for Disruptive Innovation is already considering expanding into the military field, and part of the automotive industry will also shift in this direction.

However, Torsten Benner, director of the Global Public Policy Institute, is concerned that this awakening is still incomplete: he pointed out that Merkel still has a single-dimensional understanding of competitiveness. He mainly talks about reducing employer burdens, deregulating, and lowering energy costs. These are important, but they are far from enough when facing China's state capitalism. Many German companies are still unwilling to give up cheap supplies from China. In Berlin, the discussion on this topic has not yet truly begun.

This issue of France's Le Monde also focuses on the employment situation in Germany's industrial sector suffering from a second wave of impact from China. It points out that in the first five months of 2025, Germany's exports to China dropped by 14.2% compared to the same period in 2024. Moreover, the growth rate of Germany's imports from China is twice that of its overall import growth rate. These are precisely the traditional strengths of "Made in Germany": automobiles and machinery. For Germany, the severe situation is not only reflected in the employment field but also in third-party markets, where Chinese products increasingly overshadow German goods.

Le Monde quoted the view of Sandor Todor, chief economist at the European Reform Center, that this is a "Second China Shock," twice the scale of the first one, and more destructive to Europe because Europe depends much more on industry than the United States did in the 2000s.

To avoid repeating the U.S. experience, he suggests setting conditions for Chinese goods entering the European market, referencing the joint venture model of the 2010s: all sales entering the European market must be accompanied by investment and technology transfer, especially in areas where Europe lags, such as battery technology. However, in some fields, such as civil aviation, turbines, or robotics, Europe still holds a leading position and must be defended.

Original: www.toutiao.com/article/1841850512821259/

Statement: This article represents the views of the author.