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Global Economy

The fear of the China-Taiwan conflict

The Chinese maneuvers in the airspace over Taiwan are also causing a stir in German companies. Because without China, almost nothing would work in the German economy, says Ingo Beyer von Morgenstern, fund manager and China expert at Qilin Capital: "It is interesting that almost 20 percent of the sales of all DAX companies are made in China. All companies are affected. Of course, VW, BMW, Daimler and Adidas are particularly affected."

The past few years have already clearly shown that they all cling to the giant empire. When trade wars bring tariffs, when ports are suddenly closed, the DAX companies feel it immediately. Or: If – as is currently the case – the Chinese economic situation deteriorates, China professor Horst Löchel from the Frankfurt School of Finance and Management says: "The weakness of the Chinese economy due to the lockdowns, the real estate crisis and quarrels in Taiwan do not lift the mood." This weakness in China could also become a risk for many companies.

DAX companies have to rethink

The conflict with Taiwan is particularly sensitive. Some experts believe that the United States will impose severe economic sanctions on the People's Republic should the situation in Taiwan escalate. The Munich-based economic research institute ifo estimates that such an economic war with China could cost Germany six times as much as Brexit.

The DAX managers must therefore rethink as soon as possible, says China expert Ingo Beyer von Morgenstern: "In the future, German companies will no longer make the sales and earnings share that they make with China today on a large scale. That means that the Most of the DAX companies need a new global and regional strategy. And those who don't develop this will experience a rude awakening."

Beginning of the end of globalization

Because Germany could have to decide in the future: do you prefer to do business with China or with the USA? Especially since it is the declared aim of the Beijing leadership to make their country independent of the West in the medium term. Conversely, some German companies are now trying to do the same, says Jörg Krämer, chief economist at Commerzbank: "From the talks you can hear that all companies are concerned about this. A third of the companies have already said that they want to bring production back to Europe, to Germany or even in your own company."

The first projects are already underway: VW wants to set up its own battery cell production in Europe, and C&A wants to strengthen textile production again in Mönchengladbach. Some experts are already calling this the beginning of the end of globalization.

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