Europe groans under competition from the Far East

Current developments are raising worry lines not only on the brow of the Cologne Institute for Economic Research (IW): the economy of Germany, Europe's largest country, is weakening. And while German products are playing an ever smaller role on the European market, Chinese goods are gaining in importance. Expressed in figures: at the turn of the millennium, German products accounted for around 14 percent of total EU imports; by 2022, the figure was only 12.5 percent. In the same period, the share of Chinese goods rose from 2.6 percent to 8.8 percent, according to the IW.

This development is particularly noticeable among products such as machinery, chemical products, metal products and cars, which were previously considered German export hits. Thanks to years of lavish subsidies, German automakers in particular have missed out on the development of electric cars and are now desperately trying to catch up with the Chinese. Although Germany still has the lead with a 22 percent import share, China is rapidly catching up here as well and has been able to expand its share of the European market, especially since the Corona pandemic, as the IW complains.

There is also a threat from the Far East in other areas. Just under ten years ago, political missteps led the European solar industry, again led by Germany, to the brink of collapse. In the meantime, Chinese companies have stepped into the gap and now dominate the global market, while the European and especially the German solar industry is only slowly recovering from this scenario.

So far, the EU is not in agreement. This could be its undoing (Image: Pixabay).

Now the wind industry is threatened by a similar development, which the European wind energy association WindEurope warned about two months ago: "Europe wants a green industrial policy. It wants renewables to be made in Europe. But it’s failing on the policies that will actually deliver that. The Net-Zero Industry Act needs beefing up. Public money has to support the expansion of green supply chains, as it does elsewhere in the world. Otherwise the EU Green Deal will be manufactured outside of Europe, and Europe will simply swap its dependency on Russian gas for one on Chinese clean energy equipment," said WindEurope CEO Giles Dickson.

And while the U.S. has jump-started the domestic economy by introducing the massive Inflation Reduction Act subsidy program, Europe has so far only been able to agree on a toothless counter: The so-called Net-Zero Industry Act (NZIA) has so far been inadequate and urgently needs to be improved.

Johanna Lehne, an analyst at the climate think tank E3G, is therefore sharply critical of European policy. She recently told the Guardian: "It’s very much the EU masquerading as if it is doing industrial policy. When you look into the package itself – the fact that there is no new funding, that they are basically leaving it up to member states, that they haven’t been able to create a really cohesive and coordinated approach – it’s not more than the sum of its parts."

Giles Dickson, CEO of WindEurope, is also unhappy: "Our existing green supply chains bring jobs, growth and investment to thousands of communities. We’ve got to wake up and preserve that AND build on it. NZIA is our chance. We mustn’t blow it."

The Chinese Three Gorges Group has built what is currently the world's largest wind turbine (Image: Three Gorges Group)

Chinese companies are already pushing their way into the European wind market and are enjoying initial successes: for example, the Chinese company Dajin Offshore, which manufactures foundations for offshore wind turbines, has already landed orders for offshore wind farms in the UK and France in recent months, which has led to active consideration of building a factory in Europe. Finally, in May, the company was awarded the contract for RWE's German offshore wind farm Nordseecluster.

And that is probably just the beginning, because other companies in the wind industry are also eyeing the market in Europe. In this context, one cannot allow oneself the impression that the Europeans are relying on the successes of the past - after all, this is where the cradle of the international wind industry is located. But the successes of Chinese turbine manufacturers in recent months alone, where the Chinese company Three Gorges Group, among others, presented the world's most powerful wind turbine with a 16 MW turbine, show that these times are long gone. "This is not about innovation, it’s not a technology challenge, it’s a pure volume challenge," Giles Dickson tells the Guardian, indicating the way forward.