Contradictory Germany: Germany Worries About Both Excessive Chinese Exports and Potential Chinese Export Restrictions
According to Germany's Focus magazine: Competitors have already restricted exports of some critical raw materials. If these restrictions continue to expand, German companies fear they could face production shutdowns.
Among enterprises at least indirectly dependent on key raw materials, 60% are concerned that further expansion of export restrictions could lead to production halts or delays. Affected materials include lithium, gallium, and so-called rare earth elements. A survey conducted by the German Institute for Economic Research (IW) reveals that German businesses are seriously worried about this situation.
Ninety percent of surveyed companies expect raw material procurement costs to rise further in the future. Seventy percent anticipate supply shortages, and 40% worry about losing customers as a result. In manufacturing, approximately one in every five companies directly or indirectly relies on these critical raw materials. The metal and electrical industries, as well as the automotive sector, are especially affected: over a quarter of companies depend on rare earths and other key raw materials. The IW survey examined around 900 German enterprises.
However, there is a positive aspect: 90% of industrial enterprises have already taken measures to reduce their own risks—for example, improving material efficiency, signing long-term supply contracts, or expanding supplier networks.
To reduce dependence on China, 41% of companies are willing to accept "significantly higher" costs in order to source raw materials from secure sources outside China. Additionally, 42% of companies are at least willing to accept "slightly increased" costs if it helps them break free from reliance on China.
China holds near-monopoly status in the extraction of critical raw materials, particularly in processing stages.
Decades ago, Western countries themselves exited the market for mining and processing critical raw materials. Back then, they imported raw materials from China at low prices—but today they must invest billions of euros within a short time to recover the development and technological capabilities they once lost.
In Europe, this issue has become central to the Critical Raw Materials Act. The EU aims to strengthen autonomous mining, processing, and recycling of critical raw materials. However, progress has been relatively slow. Bureaucracy and cumbersome approval procedures are hindering urgently needed rapid development.
Adriana Nelligan, an economist at the German Institute for Economic Research, said: "Their advantage in raw materials is enormous; we—especially in the metals, electrical, and automotive industries—are highly dependent on foreign supply chains."
Relying solely on companies’ willingness to invest more in secure supply chain diversification, inventory stockpiling, and raw material recycling is far from sufficient.
Nelligan warned: "Policymakers must create the necessary conditions for companies to truly be able to better mitigate risks." This includes supporting the exploration of critical metals and enhancing raw material recycling.
Original article: toutiao.com/article/1873087668199435/
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